Not logged in.

Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title When Do Outside CEOs Underperform? From a CEO-Centric to a Stakeholder-Centric Perspective of Post-Succession Performance
Organization Unit
Authors
  • Thomas Keil
  • Dovev Lavie
  • Stevo Pavicevic
Item Subtype Original Work
Refereed Yes
Status Published in final form
Language
  • English
Journal Title Academy of Management Journal
Publisher Academy of Management
Geographical Reach international
ISSN 0001-4273
Volume 65
Number 5
Page Range 1424 - 1449
Date 2022
Abstract Text How does the appointment of an outside CEO affect the hiring firm’s performance? Prior research reports that outside CEOs tend to underperform compared to inside CEOs, with high performance variance. Extending CEO-centric perspectives, we predict that experiential learning enhances post-succession performance, while negative transfer learning undermines it. We then offer a novel stakeholder-centric perspective, conjecturing that stakeholders’ negative sentiment toward the CEO appointment undermines post-succession performance. We further conjecture that outside CEOs are less effective in leveraging their executive experience and suffer more from negative transfer and negative sentiment compared to inside CEOs, who can leverage their familiarity and social embeddedness in the firm, which explains why outside CEOs may underperform. Analyzing the appointments of CEOs in US public firms, we find that counter to expectations, the length and breadth of their executive experience do not explain post-succession performance nor the performance differences between outside CEOs and inside CEOs. Rather, the misfit between the CEOs’ corporate background and their firms’ characteristics and the negative sentiment surrounding their appointments explain performance differences and the underperformance of outside CEOs. Accordingly, our study directs attention to the important yet previously understudied reactions of stakeholders to CEO appointments.
Related URLs
Digital Object Identifier 10.5465/amj.2018.1087
Other Identification Number merlin-id:21236
PDF File Download from ZORA
Export BibTeX
EP3 XML (ZORA)