The Professionalization-Development Paradox: How Family Firms in Bangladesh Hire Professional CEOs?

• In Event: 20867 - Problem-Solving Sociology of Development

Abstract

Inefficient professionalization among developing economy firms has long puzzled students of economic development who are told professionalization will unlock virtuous processes leading to firm growth, entrepreneurship, poverty-reducing jobs, and overall welfare-improving outcomes. This paper studies how CEO professionalization unfolds among developing economy family firms, theorizing the consequences of weak legal institutions for the decisions of owners, and proposes a novel explanation for why the link between professionalization and development is broken. Based on a 20-month qualitative case study of the Bangladeshi garment exports sector—using participant observations, interviews, and archival data—I argue that professionalization is more than just a search for the competent 'best athlete'; it is fundamentally a process of comfort-seeking by owners. Owners recognize the need for professionalization in response to external pressure, but fear employee deviance in their weak institutional environments. Rather than prioritizing competence, they search for a confidant—like the outgoing family CEO. Since finding a confidant is hard, they settle for controllability, interpreted as a lower likelihood of deviance and greater ease of sanctioning, gauged in terms of salarymen motivations, structural isolation, and emotional neutrality. Controllability explains why outsiders— strangers—get hired as professional CEOs over competent, similar locals, implying a professionalization-development paradox. Professionalization occurs but development does not necessarily follow. I discuss implications for scholarship on professionalization, economic development, and hiring.

Author

• Priyam Saraf, Stanford University