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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Michael L. Tushman & Lori Rosenkopf, 1996. "Executive Succession, Strategic Reorientation and Performance Growth: A Longitudinal Study in the U.S. Cement Industry," Management Science, INFORMS, vol. 42(7), pages 939-953, July.
  • Handle: RePEc:inm:ormnsc:v:42:y:1996:i:7:p:939-953
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    File URL: http://dx.doi.org/10.1287/mnsc.42.7.939
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    Citations

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    Cited by:

    1. Sarah E. A. Dixon & Klaus E. Meyer & Marc Day, 2010. "Stages of Organizational Transformation in Transition Economies: A Dynamic Capabilities Approach," Journal of Management Studies, Wiley Blackwell, vol. 47(3), pages 416-436, May.
    2. repec:spr:busres:v:10:y:2017:i:1:d:10.1007_s40685-016-0041-8 is not listed on IDEAS
    3. 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.
    4. Vicente Safón & Alejandro Escribá-Esteve, 2011. "Antecedents and consequences of external risk perception in franchising: evidence from the hospitality industry," Service Business, Springer;Pan-Pacific Business Association, vol. 5(3), pages 237-257, September.
    5. 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.
    6. Behlul Usdiken & Suleyman Ozmucur, 2002. "Succession Effects in Radically Different Environments: A Study in Turkish Banking before and after Liberalization," Working Papers 0210, Economic Research Forum, revised 04 Apr 2002.
    7. Demir, Robert & Wennberg, Karl & McKelvie, Alexander, 2016. "The Strategic Management of High-Growth Firms: A Review and Theoretical Conceptualization," Ratio Working Papers 273, The Ratio Institute.
    8. 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.
    9. repec:bla:jomstd:v:54:y:2017:i:1:p:58-87 is not listed on IDEAS
    10. Guoli Chen, 2015. "Initial compensation of new CEOs hired in turnaround situations," Strategic Management Journal, Wiley Blackwell, vol. 36(12), pages 1895-1917, December.
    11. Alexander S. Alexiev & Justin J. P. Jansen & Frans A. J. Van den Bosch & Henk W. Volberda, 2010. "Top Management Team Advice Seeking and Exploratory Innovation: The Moderating Role of TMT Heterogeneity," Journal of Management Studies, Wiley Blackwell, vol. 47(7), pages 1343-1364, November.
    12. 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.
    13. 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.
    14. Barbara Voußem & Utz Schäffer & Denis Schweizer, 2015. "Top management turnover under the influence of activist investors," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(3), pages 709-739, August.
    15. Habermann, Harald, 2017. "Business takeovers and firm growth: Empirical evidence from a German panel," Working Papers 01/17, Institut für Mittelstandsforschung (IfM) Bonn.
    16. repec:bla:jomstd:v:54:y:2017:i:7:p:1019-1049 is not listed on IDEAS
    17. Andrew A. King & Christopher L. Tucci, 2002. "Incumbent Entry into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities," Management Science, INFORMS, vol. 48(2), pages 171-186, February.
    18. 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.
    19. Y. Sekou Bermiss & Johann P. Murmann, 2015. "Who matters more? The impact of functional background and top executive mobility on firm survival," Strategic Management Journal, Wiley Blackwell, vol. 36(11), pages 1697-1716, November.
    20. repec:eee:ijrema:v:32:y:2015:i:2:p:164-178 is not listed on IDEAS
    21. 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.
    22. repec:eee:worbus:v:53:y:2018:i:4:p:555-567 is not listed on IDEAS

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