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Turnover at the Top: Executive Team Departures and Firm Performance

Author

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  • Jake G. Messersmith

    (College of Business and Technology, University of Nebraska Kearney, Kearney, Nebraska 68849)

  • Jeong-Yeon Lee

    (School of Business, University of Kansas, Lawrence, Kansas 66045)

  • James P. Guthrie

    (School of Business, University of Kansas, Lawrence, Kansas 66045)

  • Yong-Yeon Ji

    (College of Business and Economics, Towson University, Towson, Maryland 21252)

Abstract

In a departure from the historical focus on individual-level turnover, scholars have recently examined turnover at the collective level. Building on this work, we invoke human and social capital arguments and analyze the implications of varying rates of top management team (TMT) turnover for firm performance. Our principal finding is that TMT departures have deleterious effects on subsequent firm performance, though we find evidence to suggest that this effect is nonlinear. Results also suggest that higher levels of average organizational tenure of the TMT will modestly attenuate this negative effect. Contrary to arguments grounded in the managerial discretion literature, environmental munificence weakened the negative effects of TMT turnover rates on subsequent firm performance, whereas the hypothesized moderating effects for both industry complexity and instability were not supported.

Suggested Citation

  • Jake G. Messersmith & Jeong-Yeon Lee & James P. Guthrie & Yong-Yeon Ji, 2014. "Turnover at the Top: Executive Team Departures and Firm Performance," Organization Science, INFORMS, vol. 25(3), pages 776-793, June.
    • Handle: RePEc:inm:ororsc:v:25:y:2014:i:3:p:776-793
    DOI: 10.1287/orsc.2013.0864
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    References listed on IDEAS

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