The Relationship Among New CEO Characteristics, Strategic Change And Firm Performance In Listed Companies Of Declining Performance

Generally, when facing with performance declining, non-diversified corporations willreplace their CEOs to transform their business patterns and improve their performance.Whatkind of CEOs will these companies need to promote strategic change and save the companiesfrom performance declining? How to adjust the senior management team so that the new CEOwill fit top management team? Can transformational strategy effectively improve thecompanies‘performance? These problems will be continually concerned by thoseperformance-declining companies. Based on upper echelons theory, this research will focuson those non-diversified corporations with performance declining that we chose175of that toanalyze the relationships of job characteristics of new CEOs (such as industrial experiencesand source of succession), strategic change (including strategic variation and strategicdeviation) and performance.Considered the influence of top management team on strategicchange decision and implementation, our research chose the heterogeneity of top managementteam as regulated variable. This research will verify the influence of job-related heterogeneityand non-job-related heterogeneity on both processes of strategic change decision andimplementation. Our results will show some implications for CEOs in performance-decliningcompanies to choose to adjust the top management team and improve the companies‘performance.This research comes from the project of National Natural Science Foundation of China,NO.71172073, which is the research of influence of characteristics of new CEOs andheterogeneity of top management team on process of strategic decision and implementation ofthe performance-declining companies. With theoretical research and empirical research, wechose the companies from China’s listed companies, of which performance is declining in2006to2008and replaced their CEOs and we also focus on non-diversified corporations ofthese companies.This paper will measure the strategic change through a single industrybusiness level strategic adjustment. We chose the job characteristics related to CEOs‘cognition and work experiences as CEOs‘characteristics.We employed SPSS19.0to test the hypotheses and the results showed below. Industrialexperiences of new CEOs will have a significant negative impact on strategic variation andstrategic deviation. Strategic variation will have no significant impact on enterpriseperformance changes while strategic deviation have a significant negative impact on it. Whenwe explored the direction of strategic change, we discovered that no matter the companiesincrease or decrease the input on key businesses, the companies‘performance will be positively affected. If the strategies were remained as usual, the performances would not beimproved. Besides, heterogeneity of TMT tenure will moderate the relationship betweenstrategic decision and implementation, while education backgrounds heterogeneity of TMThaven‘t got that kind of effect.