New CEO Openness to Change and Strategic Persistence: The Moderating Role of Industry Characteristics

14 Pages Posted: 21 Sep 2003

See all articles by Deepak K. Datta

Deepak K. Datta

University of Kansas - School of Business

Nandini Rajagopalan

University of Southern California - Management and Organization Department

Yan Zhang

Rice University - Jesse H. Jones Graduate School of Business

Abstract

Drawing on the upper echelons, managerial discretion and strategic contingency perspectives we examine the relationships between newly chosen CEOs' openness to change and firm strategic persistence in the post-succession phase. This study is different from prior studies on the consequences of CEO succession in that it focuses on specific characteristics of the new CEO (that reflect his/her knowledge-base and cognitive orientations) and the industry context rather than purely on the event of succession. Based on a sample of 132 successions in 118 firms in the US manufacturing sector, and after controlling for industry concentration, board power, firm size and pre-succession performance, we find a negative relationship between CEOs' openness to change and post-succession strategic persistence. Interestingly, our findings indicate that this relationship is moderated by industry characteristics in that the negative association between CEO openness to change and strategic persistence is significant in high-discretion but not in low-discretion industries. Contributions of the paper to the CEO succession and strategic change literatures along with the managerial implications of our findings are discussed in the concluding section of the paper.

Suggested Citation

Datta, Deepak K. and Rajagopalan, Nandini and Zhang, Yan Anthea, New CEO Openness to Change and Strategic Persistence: The Moderating Role of Industry Characteristics. British Journal of Management, Vol. 14, pp. 101-114, June 2003. Available at SSRN: https://ssrn.com/abstract=416321

Deepak K. Datta

University of Kansas - School of Business ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States

Nandini Rajagopalan (Contact Author)

University of Southern California - Management and Organization Department ( email )

Marshall School of Business
Los Angeles, CA 90089-1427
United States

Yan Anthea Zhang

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

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