IDEAS home Printed from https://ideas.repec.org/a/bla/stratm/v41y2020i10p1933-1951.html
   My bibliography  Save this article

Why do some insider CEOs make more strategic changes than others? The impact of prior board experience on new CEO insiderness

Author

Listed:
  • Qi Zhu
  • Songcui Hu
  • Wei Shen

Abstract

Research Summary This study draws attention to the impact of prior board experiences on the variation in new insider CEOs' degree of “insiderness” in terms of commitment to the status quo and their propensity to make strategic change. We theorize and find that new insider CEOs' prior board experience at the focal firm has a negative effect on strategic change, whereas their prior board experience at other firms has a positive effect. Moreover, the positive effect of prior board experience at other firms is stronger (weaker) for new insider CEOs who have less (more) prior board experience at the focal firm. Our study contributes to upper echelons theory and research on new CEOs, and has important implications for organizational practices regarding CEO succession and strategic change. Managerial Summary Although new insider CEOs tend to make less strategic changes than new outsider CEOs, some of them do make more than others. Our study focuses on new insider CEOs' prior board experiences to explain the difference in their tendency to make strategic change. We find that new insider CEOs who have greater prior experience on the focal firm's board make less strategic changes, whereas those who have greater prior experience on the boards of other firms make more strategic changes. Moreover, our analysis shows that new insider CEOs who have both a high level of prior board experience at other firms and a low level of prior board experience at the focal firm make the most strategic changes.

Suggested Citation

  • Qi Zhu & Songcui Hu & Wei Shen, 2020. "Why do some insider CEOs make more strategic changes than others? The impact of prior board experience on new CEO insiderness," Strategic Management Journal, Wiley Blackwell, vol. 41(10), pages 1933-1951, October.
    • Handle: RePEc:bla:stratm:v:41:y:2020:i:10:p:1933-1951
    DOI: 10.1002/smj.3183
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/smj.3183
    Download Restriction: no
    File URL: https://libkey.io/10.1002/smj.3183?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
    2. S. Trevis Certo & John R. Busenbark & Hyun‐soo Woo & Matthew Semadeni, 2016. "Sample selection bias and Heckman models in strategic management research," Strategic Management Journal, Wiley Blackwell, vol. 37(13), pages 2639-2657, December.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. Yan Zhang & Nandini Rajagopalan, 2010. "Once an outsider, always an outsider? CEO origin, strategic change, and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 334-346, March.
    5. David H. Zhu & Wei Shen, 2016. "Why do some outside successions fare better than others? The role of outside CEOs' prior experience with board diversity," Strategic Management Journal, Wiley Blackwell, vol. 37(13), pages 2695-2708, December.
    6. Timothy J. Quigley & Donald C. Hambrick, 2012. "When the former ceo stays on as board chair: effects on successor discretion, strategic change, and performance," Strategic Management Journal, Wiley Blackwell, vol. 33(7), pages 834-859, July.
    7. Yasemin Y. Kor & Vilmos F. Misangyi, 2008. "Outside directors' industry‐specific experience and firms' liability of newness," Strategic Management Journal, Wiley Blackwell, vol. 29(12), pages 1345-1355, December.
    8. Danny Miller & Jamal Shamsie, 2001. "Learning across the life cycle: Experimentation and performance among the hollywood studio heads," Strategic Management Journal, Wiley Blackwell, vol. 22(8), pages 725-745, August.
    9. James D. Westphal & James W. Fredrickson, 2001. "Who directs strategic change? Director experience, the selection of new CEOs, and change in corporate strategy," Strategic Management Journal, Wiley Blackwell, vol. 22(12), pages 1113-1137, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sven Kunisch & Julian Birkinshaw & Michael Boppel & Kira Choi, 2023. "Why do firms launch corporate change programs?," Post-Print hal-04325790, HAL.
    2. Yujia Liu & Ligang Liu & Ying Li, 2023. "Executive Hometown Identity and Green Innovation in Enterprises of Heavy Polluting Industries—A Dual Perspective Based on Conscious Motivation and Resource Access," Sustainability, MDPI, vol. 15(8), pages 1-20, April.
    3. Paula Villalba‐Ríos & Carmen Barroso‐Castro & Julio Darío Vecino‐Gravel, 2022. "The influence of CEO profile on corporate social responsibility companies. A qualitative comparative analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(2), pages 356-366, March.
    4. Moritz Belling & Ulrich Pidun & Dodo zu Knyphausen-Aufseß, 2021. "Unbundling Strategic Change in Family Firms: the Influence of Familiness on the Strategic Change Process," Schmalenbach Journal of Business Research, Springer, vol. 73(3), pages 381-411, December.
    5. Lin Yang & Jingyi Yang & Chenjian Zhang & Liangliang Lu, 2023. "CEO narcissism and cross-boundary growth: Evidence from Chinese publicly listed manufacturing firms," Asian Business & Management, Palgrave Macmillan, vol. 22(5), pages 2164-2188, November.
    6. Istipliler, Baris & Ahrens, Jan-Philipp & Bort, Suleika & Isaak, Andrew, 2023. "Is exposure to the family firm always good for the next CEO? How successor pre-succession firm experience affects post-succession performance in family firms," Journal of Business Research, Elsevier, vol. 167(C).
    7. Xiaode Ji & Yanzhao Su & Yue Zhang & Hui Wang, 2023. "Making Our Firm More Sustainable: The Role of CEO Vision Communication of Sustainability on Sustainability Performance," SAGE Open, , vol. 13(4), pages 21582440231, November.
    8. Hui Zhang & Yuan Mo & Dong Wang, 2021. "Why do some academic entrepreneurs experience less role conflict? The impact of prior academic experience and prior entrepreneurial experience," International Entrepreneurship and Management Journal, Springer, vol. 17(4), pages 1521-1539, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jana Oehmichen & Sebastian Schrapp & Michael Wolff, 2017. "Who needs experts most? Board industry expertise and strategic change—a contingency perspective," Strategic Management Journal, Wiley Blackwell, vol. 38(3), pages 645-656, March.
    2. Sam Garg & Qiang (John) Li & Jason D. Shaw, 2018. "Undervaluation of directors in the board hierarchy: Impact on turnover of directors (and CEOs) in newly public firms," Strategic Management Journal, Wiley Blackwell, vol. 39(2), pages 429-457, February.
    3. Danni Wang & Qi Zhu & Bruce J. Avolio & Wei Shen & David Waldman, 2023. "Do employees' views matter in corporate governance? The relationship between employee approval and CEO dismissal," Strategic Management Journal, Wiley Blackwell, vol. 44(5), pages 1328-1354, May.
    4. Xin Liu, 2020. "Impression management against early dismissal? CEO succession and corporate social responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 999-1016, March.
    5. Ayse Karaevli & Edward J. Zajac, 2013. "When Do Outsider CEOs Generate Strategic Change? The Enabling Role of Corporate Stability," Journal of Management Studies, Wiley Blackwell, vol. 50(7), pages 1267-1294, November.
    6. Henning Behr & Kerstin Fehre, 2019. "CEO succession and the CEO’s commitment to the status quo," Business Research, Springer;German Academic Association for Business Research, vol. 12(2), pages 355-381, December.
    7. Prabashi Dharmasiri, 2023. "Social connections, CEO turnover and corporate policy change," Australian Journal of Management, Australian School of Business, vol. 48(3), pages 567-595, August.
    8. J. Yo-Jud Cheng & Boris Groysberg & Paul Healy & Rajesh Vijayaraghavan, 2021. "Directors’ Perceptions of Board Effectiveness and Internal Operations," Management Science, INFORMS, vol. 67(10), pages 6399-6420, October.
    9. Carl Åberg & Wei Shen, 2020. "Can board leadership contribute to board dynamic managerial capabilities? An empirical exploration among Norwegian firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(1), pages 169-197, March.
    10. Michael K. Bednar & Steven Boivie & Nicholas R. Prince, 2013. "Burr Under the Saddle: How Media Coverage Influences Strategic Change," Organization Science, INFORMS, vol. 24(3), pages 910-925, June.
    11. Carlos Jiménez-Angueira & Nathan Stuart, 2015. "Relative performance evaluation, pay-for-luck, and double-dipping in CEO compensation," Review of Quantitative Finance and Accounting, Springer, vol. 44(4), pages 701-732, May.
    12. Peter J Baldacchino & Jean Paul Abela & Norbert Tabone & Simon Grima, 2021. "Board of Director Diversity and Its Corporate Governance Implications in Maltese Equity-Listed Companies," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(4), pages 37-65.
    13. Chia-Ying Chan & Iftekhar Hasan & Chih-Yung Lin, 2021. "Agency cost of CEO perquisites in bank loan contracts," Review of Quantitative Finance and Accounting, Springer, vol. 56(4), pages 1221-1258, May.
    14. Neeraj Gupta & Jitendra Mahakud, 2020. "CEO characteristics and bank performance: evidence from India," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 35(8), pages 1057-1093, August.
    15. Volonté, Christophe, 2015. "Boards: Independent and committed directors?," International Review of Law and Economics, Elsevier, vol. 41(C), pages 25-37.
    16. Ryan Federo & Angel Saz-Carranza & Xavier Fernandez-í-Marin & Carlos Losada, 2023. "CEO selection in intergovernmental organizations: the clash between control and efficiency in governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(1), pages 155-180, March.
    17. Yensen Ni & Yirung Cheng & Yulu Liao & Paoyu Huang, 2022. "Does board structure affect stock price overshooting informativeness measured by stochastic oscillator indicators?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2290-2302, April.
    18. Marco Cucculelli, 2018. "Firm age and the probability of product innovation. Do CEO tenure and product tenure matter?," Journal of Evolutionary Economics, Springer, vol. 28(1), pages 153-179, January.
    19. Lélis Pedro Andrade & Aureliano Angel Bressan & Robert Aldo Iquiapaza, 2017. "Dual class shares, board of directors’ effectiveness and firm’s market value: an empirical study," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 1053-1092, December.
    20. Bastian Grühn & Steffen Strese & Tessa C. Flatten & Nikolai A. Jaeger & Malte Brettel, 2017. "Temporal Change Patterns of Entrepreneurial Orientation: A Longitudinal Investigation of CEO Successions," Entrepreneurship Theory and Practice, , vol. 41(4), pages 591-619, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:stratm:v:41:y:2020:i:10:p:1933-1951. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/0143-2095 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.