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Executive Succession and Organization Outcomes in Turbulent Environments: An Organization Learning Approach

Author

Listed:
  • Beverly Virany

    ((deceased))

  • Michael L. Tushman

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

  • Elaine Romanelli

    (Fuqua School of Business, Duke University, Durham, North Carolina 27706)

Abstract

This paper explores executive succession as an important mechanism for organization learning and, thus, for organization adaptation. We argue that executive succession can fundamentally alter the knowledge, skills and interaction processes of the senior management team. These revised skills and communication processes improve the team's ability to recognize and act on changing environmental conditions. Especially in turbulent environments, succession may be critical for improving or sustaining the performance of the firm. We explore continuity and change of CEOs and their executive teams as associated with first- and second-order organization learning, which are differentially important under stable versus turbulent environmental conditions. We also link these organization learning ideas to the nature of organization evolution. A series of hypotheses link executive-team succession and strategic reorientation to subsequent organization performance.Results in a study of 59 minicomputer firms, all founded between 1968 and 1971, indicate that succession exerts a positive influence on organization performance. We also show that it is important to distinguish between CEO succession and executive-team change, which independently improve subsequent organization performance. The positive impact of succession is accentuated when it coincides with strategic reorientation. Finally we examined how longer term patterns in succession and reorientation affect organization performance. We discovered two modes of organization adaption in this turbulent industry. The most typical mode combines CEO succession, sweeping executive-team changes, and strategic reorientations. A more rare, and over the long-term more effective, adaptational mode involves strategic reorientation and executive-team change, but no succession of the CEO. Consistently high-performing organizations are managed to sustain a relatively high level of learning (through turnover of senior executives and strategic reorientation), and at the same time to maintain links with established organizational competencies (through retention of the CEO).

Suggested Citation

  • Beverly Virany & Michael L. Tushman & Elaine Romanelli, 1992. "Executive Succession and Organization Outcomes in Turbulent Environments: An Organization Learning Approach," Organization Science, INFORMS, vol. 3(1), pages 72-91, February.
  • Handle: RePEc:inm:ororsc:v:3:y:1992:i:1:p:72-91
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    File URL: http://dx.doi.org/10.1287/orsc.3.1.72
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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. Jae Wook Yoo & Richard Reed & Shung Jae Shin & David J. Lemak, 2009. "Strategic Choice and Performance in Late Movers: Influence of the Top Management Team's External Ties," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 308-335, March.
    3. repec:bla:stratm:v:38:y:2017:i:5:p:1121-1133 is not listed on IDEAS
    4. Alessandro Minichilli & Mattias Nordqvist & Guido Corbetta & Mario Daniele Amore, 2014. "CEO Succession Mechanisms, Organizational Context, and Performance: A Socio-Emotional Wealth Perspective on Family-Controlled Firms," Journal of Management Studies, Wiley Blackwell, vol. 51(7), pages 1153-1179, November.
    5. Susanne Durst & Guido Bruns, 2016. "Sustaining the Future of the Public Sector: Insights into a Swedish Municipality’s Dealing with Knowledge Management and Succession Planning," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 15(02), pages 1-19, June.
    6. repec:spr:infosf:v:19:y:2017:i:3:d:10.1007_s10796-017-9754-2 is not listed on IDEAS
    7. repec:eee:fambus:v:9:y:2018:i:1:p:73-90 is not listed on IDEAS
    8. repec:pal:jintbs:v:48:y:2017:i:5:d:10.1057_s41267-017-0080-1 is not listed on IDEAS
    9. Kuntara Pukthuanthong & Saif Ullah & Thomas J. Walker & Xuan Wu, 0. "Timely vs. delayed CEO turnover," Information Systems Frontiers, Springer, vol. 0, pages 1-11.
    10. Schrader, Stephan & Lüthje, Christian, 1993. "Das Ausscheiden der Spitzenführungskraft aus der Unternehmung: Eine empirische Analyse," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 325, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    11. repec:eee:iburev:v:27:y:2018:i:2:p:367-379 is not listed on IDEAS
    12. repec:bla:stratm:v:38:y:2017:i:7:p:1391-1415 is not listed on IDEAS
    13. Amit Jain, 2016. "Learning by hiring and change to organizational knowledge: Countering obsolescence as organizations age," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1667-1687, August.
    14. repec:bla:jomstd:v:54:y:2017:i:1:p:58-87 is not listed on IDEAS
    15. repec:eee:labchp:v:3:y:1999:i:pb:p:2485-2563 is not listed on IDEAS
    16. 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.
    17. repec:bla:stratm:v:37:y:2016:i:12:p:2413-2424 is not listed on IDEAS
    18. repec:kap:jbuset:v:149:y:2018:i:3:d:10.1007_s10551-016-3089-7 is not listed on IDEAS
    19. Cho, Theresa S., 2006. "The effects of executive turnover on top management team's environmental scanning behavior after an environmental change," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1142-1150, October.
    20. 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.
    21. Sea-Jin Chang & Jungwook Shim, 2015. "When does transitioning from family to professional management improve firm performance?," Strategic Management Journal, Wiley Blackwell, vol. 36(9), pages 1297-1316, September.

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