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What Are CEOs Really Worth?

The Economist this week turns its very sharp eye to corporate leadership, asking, How important is the CEO to a company’s overall performance? The answer (like all good things): It depends on how you look at it. On average, a leader accounts for about 14% of a company’s performance, according to work undertaken by Nitin Nohria and colleagues at Harvard Business School. Not impressed? An earlier study by Anita McGahan and Michael Porter indicated that the industrial sector in which a company operated explained 19% of its profitability. Translation: The choice of a CEO matters nearly as much to a company as the sector it’s in.