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Leadership succession and firm performance in an emerging economy: Successor origin, relational embeddedness, and legitimacy

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  • Chi‐Nien Chung
  • Xiaowei Rose Luo

Abstract

We examine how leadership transition affects firm performance in emerging economies. Building upon the social embeddedness and neo‐institutional perspectives, we argue for the importance of alignment between successor origin and social context for firm performance. We suggest that as a baseline outside successors enhance firm profitability because of the large‐scale and rapid changes in emerging markets. However, this outsider premium is reduced in firms embedded in family and business group relationships, where family and inside successors can better access network resources. But the outsider premium is amplified in firms embedded in a mature market‐based logic, such as high tech or foreign invested firms, because the perceived legitimacy of outsiders facilitates resource acquisition. Our arguments are supported through the analysis of Taiwanese listed firms between 1996 and 2005. Copyright © 2012 John Wiley & Sons, Ltd.

Suggested Citation

  • Chi‐Nien Chung & Xiaowei Rose Luo, 2013. "Leadership succession and firm performance in an emerging economy: Successor origin, relational embeddedness, and legitimacy," Strategic Management Journal, Wiley Blackwell, vol. 34(3), pages 338-357, March.
    • Handle: RePEc:bla:stratm:v:34:y:2013:i:3:p:338-357
    DOI: 10.1002/smj.2011
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    Cited by:

    1. Roy Mersland & Leif Atle Beisland & Daudi Pascal, 2019. "The Origin of Chief Executive Officers and Performance in Hybrid Businesses: The Case of Microfinance," Journal of Small Business Management, Taylor & Francis Journals, vol. 57(4), pages 1578-1594, October.
    2. 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," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 167, pages 1-15.
    3. Wu, Bao & Chen, Feng & Li, Lanhua & Xu, Lei & Liu, Zijia & Wu, Yaoyao, 2025. "Institutional investor ESG activism and exploratory green innovation: Unpacking the heterogeneous responses of family firms across intergenerational contexts," The British Accounting Review, Elsevier, vol. 57(4).

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