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Executive Succession, Strategic Reorientation and Performance Growth: A Longitudinal Study in the U.S. Cement Industry

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Author Info

  • Michael L. Tushman

    (Graduate School of Business, Columbia University, New York, New York 10027)

  • Lori Rosenkopf

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6370)

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    Abstract

    This research explores the performance consequences of CEO succession, executive team change, and strategic reorientation in different contexts. Based on team demography and organization learning ideas, we argue that CEO succession or executive team change enhances incremental organization change, while either strategic reorientation or the combination of CEO succession with executive team change triggers discontinuous organization change. We hypothesize that these contrasting intervention modes are appropriate in different contexts. A longitudinal study of the U.S. cement industry from 1918--1986 demonstrates that simple CEO succession is positively associated with subsequent performance when context is stable, but significantly more negatively associated with subsequent performance in turbulent contexts. Executive team change has significant effects on organization adaptation in both stable and turbulent contexts. Strategic reorientations are negatively associated with subsequent performance in stable contexts, but significantly more positively associated with subsequent performance in turbulent contexts. As a set, these results reinforce a demographic approach to succession research and indicate that CEO succession, executive team change, and reorientation are each distinct and important levers shaping organization adaptation. The impacts of these levers are contingent on organization context.

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    File URL: http://dx.doi.org/10.1287/mnsc.42.7.939
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 42 (1996)
    Issue (Month): 7 (July)
    Pages: 939-953

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    Handle: RePEc:inm:ormnsc:v:42:y:1996:i:7:p:939-953

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    Related research

    Keywords: executive succession; reorientation; organization learning; top management teams; turbulence;

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    Cited by:
    1. David Prentice, 2012. "The rise of the US Portland cement industry and the role of public science," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(2), pages 163-192, May.
    2. Weiwen Li & Yuan Lu, 2012. "CEO dismissal, institutional development, and environmental dynamism," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 1007-1026, December.
    3. Cheng, Louis T.W. & Chan, Ricky Y.K. & Leung, T.Y., 2010. "Management demography and corporate performance: Evidence from China," International Business Review, Elsevier, vol. 19(3), pages 261-275, June.
    4. Mezias, Stephen J. & Kuperman, Jerome C., 2001. "The community dynamics of entrepreneurship: The birth of the american film industry, 1895-1929," Journal of Business Venturing, Elsevier, vol. 16(3), pages 209-233, May.
    5. David Prentice, 2006. "A re-examination of the origins of American industrial success," Working Papers 2006.02, School of Economics, La Trobe University.
    6. Beckman, Christine M. & Burton, M. Diane & O'Reilly, Charles, 2007. "Early teams: The impact of team demography on VC financing and going public," Journal of Business Venturing, Elsevier, vol. 22(2), pages 147-173, March.
    7. Robert S. Huckman & Jason Barro, 2005. "Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals," NBER Working Papers 11182, National Bureau of Economic Research, Inc.

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