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Frequent CEO Turnover and Firm Performance: The Resilience Effect of Workforce Diversity

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Listed:
  • Youngsang Kim

    (Sungkyunkwan University)

  • Sophia Soyoung Jeong

    (Zayed University)

  • Daphne W. Yiu

    (The Chinese University of Hong Kong)

  • Jinhee Moon

    (Sungkyunkwan University)

Abstract

CEO turnover (or succession) is a critical event in an organization that influences organizational processes and performance. The objective of this study is to investigate whether workforce diversity (i.e., age, gender, and education-level diversity) might have a resilience effect on firm performance under the frequency of CEO turnover. Based on a sample of 409 Korean firms from 2010 to 2015, our results show that firms with more frequent CEO turnover have a lower firm performance. However, firms with more gender and education-level diversity could buffer the disruptive effect of frequent CEO turnover on firm performance to offer a benefit to the organization. Our theory and findings suggest that effectively managing diverse workforce can be a resilience factor in an uncertain organizational environment because diverse workforce has complementary skills and behaviors that can cope better with uncertainty and signals social inclusion of an organization, thus fostering a long-term exchange relationship. These findings contribute to the literature on CEO turnover (or succession) and diversity.

Suggested Citation

  • Youngsang Kim & Sophia Soyoung Jeong & Daphne W. Yiu & Jinhee Moon, 2021. "Frequent CEO Turnover and Firm Performance: The Resilience Effect of Workforce Diversity," Journal of Business Ethics, Springer, vol. 173(1), pages 185-203, September.
    • Handle: RePEc:kap:jbuset:v:173:y:2021:i:1:d:10.1007_s10551-020-04534-0
    DOI: 10.1007/s10551-020-04534-0
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    References listed on IDEAS

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    5. Luiz Eduardo Gaio & Angela Christina Lucas & Johan Hendrik Poker Junior & Marcio Marcelo Belli, 2024. "Gender diversity in management and corporate financial performance: A systematic literature review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4047-4067, September.

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