Font Size: a A A

An Empirical Research On The Causes And Contingencies Of Strategic Change Initiated By CEO Successor

Posted on:2015-12-30Degree:DoctorType:Dissertation
Country:ChinaCandidate:X LiuFull Text:PDF
GTID:1109330467465661Subject:Corporate governance
Abstract/Summary:PDF Full Text Request
In such a dynamic changing environment fraught with ambiguity and complexity, it is necessary for each firm to adjust and change its strategy in bid to match the changing environment, where CEO as the firm’s strategic leader plays a pivotal role.Along with the globalization of economy as well as internationalization of managerial administration, a growing number of Chinese listed firms have set its leadership as CEO who takes the responsibility to initiate the strategic change and guide the strategic orientation. Due to his key role in firm’s strategy, CEO succession has drawn so great attention since its introduction in1970s that it has become a worth-noticing research area, in which the impact of CEO succession on strategic change has turned to be a central theme in strategic leadership and corporate governance research.Under the background mentioned above, the paper integrates classic theories in strategic management, corporate governance and cognitive psychology in hope of developing a theoretical framework analyzing the following two issues,(1) the cause of strategic change undertaken by CEO successor;(2) the contingency-reliant mechanism of CEO successor’s strategic change.In order to analyze the cause strategic change undertaken by CEO successor, the paper firstly claims the point that strategy is the method employed by a firm to match the changing environment after which the paper clarifies the relationship between firm’s performance,CEO succession and strategic change.By arguing the viewpoint that it is CEO successor’s duty to initiate strategic change to make firm perfectly match the environment, the paper develops the CEO successor’s strategic change causal model of matching dynamic environment to explain why CEO successor would initiate strategic change.Secondly, based on the viewpoint that firm’s strategy reflects the cognitive characteristics of firm’s top leaders, the paper contend that it is the differences in cognition between former CEO and CEO successor that lead CEO successor to initiate strategic change.According to the analysis, the paper develop a CEO successor’s strategic change causal model of cognitive and psychological difference. Last but not the least, taking the threat of forced turnover from CEO position into consideration, the paper develops the CEO successor’s strategic change causal model of forced turnover threat.Aiming to analyze the contingency-reliant mechanism of CEO’s strategic change, the paper bases on the resources dependence theory to explain the resource-reliant mechanism of strategic change initiated by CEO successor. With the theory of upper echelons and that of information processing, the paper analyzes the cognition-reliant mechanism of the CEO successor’s strategic change. According to the CEO power theory, the paper illustrates the power-reliant mechanism of CEO successor’s strategic change. In the light of the three mechanisms demonstrated above, the paper untangles the implication of such contingencies as performance, board, top management team,former CEO and industry condition on CEO successor’s strategic change.With Chinese list companies from2000to2009in Shenzhen and Shanghai stock market as samples, by utilizing ANOVA test,PSM model and multiple regress models we test the theoretical hypotheses built on the basis of theoretical analysis and draw the following conclusions according to the results provided by empirical tests.1.CEO successor has endogenous cause to initiate strategic change. The empirical test results indicate that CEO successor would still undertake strategic change though the performance is excellent or former CEO turnover is voluntary. It means the cause of CEO successor’s strategic stems from not only the pressure to pursue matching condition but also the endogenous factors like cognitive difference comparing to the former leader. Also, it is supported that CEO successor’s origin affects his or her strategic change, which means the cognitive and psychological factors would generate implications on cause of CEO successor’s strategic change.2.The threat confronting CEO successor depends on how board of directors set reference to evaluate CEO successor’s performance. It is the deviation between the condition faced by CEO succor and expectation of board that decide the intensity of threat of turnover and the motivation of CEO successor to initiate strategic change. The empirical tests provide results that in the firms witnessing CEO succession, the deviation of performance from the average performance level of the industry is positively related to strategic change, while the deviation of performance from the firm’s prior performance level is negatively related to the strategic change.3.The strategic change undertaken by CEO successors is constrained by contingencies on the level of resources, cognition and power. The results of empirical tests indicate that the focal performance and predecessor’s tenure negatively moderate the effect of CEO succession on strategic change, while turbulence of industry positively moderates the effect of CEO succession on strategic change. Besides, it is also proved that in those firms witnessing CEO succession, the number of the independent outside directors and the interlock directors are positively related to strategic change; the average tenure of top management team(TMT) is negatively realted to strategic change; the heterogenity of TMT in tenure and age is positively related to strategic change.In the context where CEO has played increasingly significant role in strategic change in Chinese companies, the research paper focuses on the cause and the contingencies of strategic change initiated by CEO successor. The main innovation of the thesis are three causal models of CEO successor’s strategic change and three level of contingency-reliant mechanism affecting the strategic change. Besides, the conclusion drawn in the thesis bear realistic significance for firms to choose a qualified CEO successor and ensure the correct strategic orientation after CEO succession. To be specific, the conclusions of the thesis help firms choose and raise CEO successors according to firms actual need for strategic change,provide the method of controlling contingencies to support resources to CEO successor’s strategic change, and aid firm to optimize the structure of board of directors and top management team in bid to ensure the scientific decision-making of strategies and correctness of strategic orientation.
Keywords/Search Tags:CEO sucession, CEO successor, strategic change, cause, contingency-reliant
PDF Full Text Request
Related items