How do multidivisional firms select executives?: Balancing interdivisional transfers, intradivisional appointments, and external recruitment

While the multidivisional form remains prevalent among diversified firms, sharing and redeploying resources across divisions pose persistent governance challenges. We examine the role of executives not as redeployable resources, but as governance agents who manage resource flows and exchange relations across divisions to realize synergy through corporate-wide coordination and control. We also examine how external market conditions affect firms’ relative reliance on interdivisional transfer, intradivisional appointment, and external recruitment. Using data from Korean business groups, we find that interdivisional executive transfer is more likely when firms possess scale-free intangible resources, require oversight for capital redeployment, or face intensive interdivisional transactions. In contrast, external recruitment increases under stronger product market competition and tighter capital market control. Overall, our findings suggest that effective resource redeployment requires synergy-seeking coordination and governance by executives, and that firms’ use of interdivisional executive transfer relative to external recruitment varies with product- and capital-market conditions.