The Effect of CEO Outsiderness on Firm-Level Attentional Change

Abstract

Despite the plethora of empirical studies on the effects of CEO succession on the organization, we know very little about the mechanism through which the origin of the new CEO impacts the strategic course of actions at the firm-level. Drawing from the attention-based perspective of firms, we argue that the relationship between the origin of a new CEO and organizational attention is influenced by the predecessors performance and status. Our empirical results suggest that firm with new outsider CEOs indeed exhibited more attentional change at the firm-level

however, the level of attentional change actually decreased when the predecessor CEOs performance was high. Moreover, we find that the status of the predecessor moderates this effect of prior performance. Specifically, an outsider CEO would lead to the lowest level of firm-level attentional shift when both predecessors performance and status are high. The results of this study shed light on the interlinkages between CEO turnover and transformation of organizational attention, as well as the role of executive status in the process.