When Do Outsider CEOs Generate Strategic Change? The Enabling Role of Corporate Stability

When academic researchers, business commentators, and boards of directors havedebated the merits of hiring new CEOs from outside the firm, the implicit or explicitassumption typically made is that outsider CEOs will provide an advantage in achievingstrategic change. In this study, we challenge this assumption by employing a dualityperspective on stability/change, and we provide an original conceptual framework to posit thatit is the presence of corporate stability (ordinary succession, a long-tenured predecessor CEO,and good firm performance) that allows outsider CEOs to generate a greater degree ofpost-succession strategic change. We use extensive longitudinal data from US airline andchemical industries between 1972 and 2010 to test our hypotheses, and we discuss how oursupportive findings challenge long-standing assumptions regarding the outsider succession–strategic change relationship, and we advocate embracing the non-intiutive notion that stable(unstable) conditions can be enablers (barriers) of strategic change for outsider CEOs.

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