Changing from the top: new outsider CEO and TMT structure change

Official URL: https://dx.doi.org/10.1111/1467-8551.70050

Understanding how new CEOs change top management teams (TMTs) is central to explaining post-succession outcomes. We examine how new outsider CEOs change the TMT's structural interdependence, which refers to the horizontal, vertical and reward linkages that influence collaboration and coordination. Building on CEO succession research and the CEO–TMT interface perspective, we theorize that outsider CEOs reconfigure the TMT structure to support two interrelated post-succession processes: realignment, which redirects the firm's strategy and structure, and integration, through which CEOs embed within the organization's leadership context. Using data from 182 CEO successions in S&P 500 firms between 2007 and 2018, we find that outsider CEOs enhance collaboration, flatten hierarchies and align incentives to increase TMT interdependence. CEO power strengthens these effects and amplifies outsider CEOs' ability to strengthen horizontal and vertical interdependence. Our findings contribute to TMT research by highlighting CEO succession as a central driver of structural change. They also extend succession research by revealing how outsider CEOs use structural design to achieve realignment and integration, and they enrich the CEO–TMT interface literature by showing how outsider CEOs use structural levers to shape their relationships with the TMT.