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The joint influence of CEO succession types and CEO-TMT faultline on firm’s strategic change

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  • Zhang, Yue
  • Ayoko, Oluremi B.
  • Liang, Qiaozhuan

Abstract

Scholars have long debated the merits of hiring contender and outsider CEOs for achieving strategic change. To further the debate, we propose that whether a contender or outsider CEO generates a greater degree of post-succession strategic change likely depends on his/her fit with the existing members of the top management team (TMT). Drawing on the person–group fit literature and the faultline-based approach, we introduce the concept of the CEO–TMT faultline to assess the CEO’s fit with the TMT. We test our research model using a sample of Chinese firms that experienced CEO succession events between 2006 and 2016. We find that the identity-based CEO–TMT faultline impedes contender and outsider successors’ generation of strategic change. Additionally, the knowledge-based CEO–TMT faultline helps contenders generate strategic change, while it hinders outsiders from doing so. Finally, the resource-based CEO–TMT faultline is beneficial for outsider successors to make strategic change.

Suggested Citation

  • Zhang, Yue & Ayoko, Oluremi B. & Liang, Qiaozhuan, 2021. "The joint influence of CEO succession types and CEO-TMT faultline on firm’s strategic change," Journal of Business Research, Elsevier, vol. 126(C), pages 137-152.
    • Handle: RePEc:eee:jbrese:v:126:y:2021:i:c:p:137-152
    DOI: 10.1016/j.jbusres.2020.12.055
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    Cited by:

    1. Yun Song & Hongqu He & Caiyu Yan, 2022. "Impacts of top management team fault‐line on firm's innovation—Financial slack over‐investment and underinvestment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3348-3360, December.
    2. Tong Sheng & Bingquan Fang & Xiaoqian Lu & Xingheng Shi & Chaohai Shen & Xiaolan Zhou, 2022. "The Relationship between Corporate Social Responsibility, Global Investment, and Equity Incentives," Sustainability, MDPI, vol. 14(23), pages 1-27, December.

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