Companies with different attributes are managed by executives with different skill sets. The realized productivity of a manager depends on both who she is and where she works. As a result, the assignment of managers to firms contributes to the substantial variation in corporate outcomes as well as executive compensation. This paper studies the sources of value creation in executive-firm matches and shows that job-matches are driven by complementarities in firm attributes and manager characteristics.

A structural estimation of the executive labor market quantifies the relative importance for generating firm value of: a) complementarities between firm size and managerial talent in; b) complementarities between the firm’s diversification degree and the manager’s cross-industry experience; c) complementarities between the firm’s research intensity and the manager’s innovation propensity. In a unified setting, the latter two previously unexplored matching dimensions are more value-relevant than the size/talent dimension.