The Impact Of CEO Turnover On The Corporate Strategic Transformation

The economic globalization and the economic integration make the economic transformation become a global trend in the form of integrating global resources and developing new industries. China is also facing the problems of the economic transformation with the quick development of economy, which shows the form of transformation from emphasizing on the investment of resources to focusing on the efficiency of resource use. With this background, the competition between enterprises becomes more and more fiercer. In order to struggle for survival and development, domestic and foreign enterprises begin to implement strategic transformation. However, the implementation of the strategic transformation is not easy, it is influenced by many factors, such as operational risks and resistance from organization. For example, the existing managers stick to the previous strategy because of the organizational inertia and avoid the risk of implementing strategic transformation in order to search for their career security.What are the mechanisms that CEO Turnover can promote the corporate strategic transformation? Is the phenomenon of CEO Turnover or the selecting process of CEO Turnover by the board that promote the corporate strategic transformation? These are big problems for the strategic transformation practice of enterprises. Previous scholars had done the research on the the positive influence of CEO Turnover to corporate strategic transformation, with the view that CEO Turnover helps to break the organizational inertia. The board plays an important role in making decisions of corporate strategic transformation and making plans of CEO Turnover. Therefore, this paper discusses the effect of the independence of board of directors takes on the influence of CEO Turnover to corporate strategic transformation. And this paper specifically discusses the effect from perspectives of the leaving categories of CEO, the sources of the successor and the traits of the successor.On the basis of the theoretical analysis, this paper empirically analyzes the samples. And this paper selects listed manufacturing companies in China from2007to2010as the research samples. The research results show that the independence of board of directors weakens the positive influence of CEO Turnover to corporate strategic transformation. And to promote the corporate strategic transformation, the board will force the inefficient CEO to leave and select outsiders and people more younger than the former CEO as the successor. But the hypothesis that the board will select people having higher education than the former CEO to promote the corporate strategic transformation is not verified in this paper. This research will enrich relative theories about CEO Turnover and driving factors of the strategic transformation. And the conclusions will be useful to guide the strategic transformation practice and corporate governance practice of Chinese enterprises.