Performance consequences of new CEO "outsiderness": moderating effects of pre-and post-succession contexts

Official URL: http://dx.doi.org/10.1002/smj.589

This study seeks to reconcile inconsistent findings on the performance consequences of new CEO origin. Drawing on five decades of empirical research on CEO succession outcomes, I develop a more refined theoretical conceptualization and a finer-grained measurement of the underlying construct of the insider versus outsider CEO, and build and test a more comprehensive and nuanced framework of the succession context. A longitudinal investigation of the U.S. airline and chemical industries (1972-2002) indicates that new CEO “outsiderness”, conceptualized as a continuum raging from new CEOs who have a greater combination of firm and industry tenure to those who have no experience in the firm and the industry, has no main effect on post-succession firm performance. However, significant moderating effects are found when environmental munificence, pre-succession firm performance, and concomitant strategic and senior executive team changes are considered. Together, these findings highlight the need to consider both pre- and post-succession contextual factors for evaluating the performance effects of new CEO outsiderness.