Empire-Building

Empire-Building

The act of attempting to increase the size and scope of an individual or organization's power and influence. In the corporate world, this is seen when managers or executives are more concerned with expanding their business units, their staffing levels and the dollar value of assets under their control than they are with developing and implementing decisions that best benefit shareholders.

Notes:

Empire-building is typically seen as unhealthy for a corporation, as managers will often become more concerned with acquiring greater resource control than optimally allocating resources. Corporate controls imposed by a company's board and upper-level management are supposed to prevent empire building within a corporation's ranks. Failure to screen out empire-builders in a corporation's upper ranks can lead to acquisitions being made that serve to boost the control of executives while not necessarily providing the best growth opportunities for a corporation and its shareholders.

See also: Acquisition, Board of Directors - B of D, Corporate Governance, Inside Director, Shareholder, Takeover