Executive Succession

by

Donald Schepker

• LAST MODIFIED: 21 June 2024
• DOI: 10.1093/obo/9780199846740-0223

Introduction

Executive succession is the process by which organizational leadership among the executive ranks of an organization changes between individuals. All organizations must experience executive succession at some point in their life cycle if they are to continue operations. Ensuring effective continuity in executive leadership can be critical to future organizational success. The most oft-studied position in executive succession research is the organization’s Chief Executive Officer (CEO) who has ultimate organizational responsibility, while some research explores succession among other executive leaders primarily in the top management team (TMT). The TMT is typically the CEO’s direct subordinates, who often occupy C-Suite or C-level positions (e.g., Chief Financial Officer). Existing research largely employs theoretical explanations related to agency theory, sociopolitical dynamics, group decision-making processes, and information processing. For instance, research relying on agency theory highlights the role of performance influencing when and whether CEO succession will occur. Research using theory on group decision making and information processing illustrates the role of external information sources in influencing decision processes and the role of biases in altering how information is processed. Succession research has largely focused on four topics. First, researchers consider the circumstances under which executive succession will occur. This includes both voluntary (e.g., unforced) turnover, such as CEO retirement, and forced turnover (e.g., CEO dismissal). Second, some literature considers how succession will occur. This includes research on executive succession planning, which is the process organizations employ to identify, assess, and develop candidates as executive successors. Third, scholars consider who will be selected. This stream of research largely focuses on identifying the characteristics that organizations seek when selecting new executive leaders. Finally, much research focuses on what the consequences of succession events are. This stream identifies impacts on organizational behaviors, performance, and other impacts due to changes in executive leadership. Executive succession research crosses the boundaries of management, psychology, sociology, economics, finance, and accounting because of its many antecedents and broad, far-reaching implications. As such, the resultant literature in this bibliography reflects a wide variety of theoretical and empirical traditions. This bibliography first introduces key overviews of research on executive succession, which is followed by articles examining research on executive succession planning and executive selection as key facets of understanding the process by which organizations prepare for succession and select the next leader. The overview then examines the antecedents of CEO turnover and dismissal and TMT turnover. The final section explores the consequences of executive succession for organizational behaviors (e.g., strategic change); subsequent organizational performance; and the impacts of non-CEO executive turnover on organizations. Theoretically, this section illustrates tension between scapegoating and disruption as means by which executive succession can influence subsequent organizational outcomes.

Overviews and Reviews of Executive Succession Research

Earlier reviews on executive succession, such as Berns and Klarner 2017; Cragun, et al. 2016; Finkelstein, et al. 2009; Giambatista, et al. 2005; and Hutzschenreuter, et al. 2012 provide an excellent overview of theoretical foundations, empirical findings, and scholarly traditions. More recent reviews such as Nyberg, et al. 2021 seek to explore new avenues for research, while Gentry, et al. 2021 introduces a published database of CEO succession events for scholars to use moving forward. Finally, books on this topic utilizing case studies and other insights gleaned from access to a wide variety of succession events provide important behind the scenes perspectives that can be useful for scholars, such as Ciampa and Dotlich 2015, Sonnenfeld 1991, and Vancil 1987.

• Berns, Kristin V. D., and Patricia Klarner. “A Review of the CEO Succession Literature and a Future Research Program.” Academy of Management Perspectives 31.2 (2017): 83–108.

  DOI: 10.5465/amp.2015.0183

  Berns and Klarner provide an overview of more than five decades of CEO succession research across multiple scholarly traditions organized across predictors of succession, contingencies in succession, and outcomes of the event. They conclude with recommendations for future research identifying problems that arise throughout CEO succession when examining succession as a process.

• Ciampa, Dan, and David L. Dotlich. Transitions at the Top: What Organizations Must Do To Make Sure New Leaders Succeed. Hoboken, NJ: John Wiley & Sons, 2015.

  DOI: 10.1002/9781119153825

  A practitioner-oriented book that draws on the authors’ wealth of experience in working with companies experiencing executive succession events to outline how organizations can experience more success in such events. Identifies the broad roles and responsibilities that a variety of organizational actors can take to help ensure success during transitions.

• Cragun, Ormonde R., Anthony J. Nyberg, and Pat M. Wright. “CEO Succession: What We Know and Where To Go?” Journal of Organizational Effectiveness: People and Performance 3.3 (2016): 222–264.

  DOI: 10.1108/JOEPP-02-2016-0015

  Organizes the CEO succession literature into a multidimensional typology based on the four key questions proposed in Finkelstein, et al. 2009. Those learning about executive succession may find Figure 1 on page 225 thought provoking as it breaks down the literature into a variety of areas that have been explored and may yet be explored in the future. This is an excellent complement to Berns and Klarner 2017.

• Finkelstein, Sydney, Donald C. Hambrick, and Albert A. Cannella. Strategic Leadership: Theory and Research on Executives, Top Management Teams, and Boards. Strategic Management Series. Oxford, UK: Oxford University Press, 2009.

  The leading handbook on strategic leadership research. Chapters 6 and 7 specifically focus on the antecedents and consequences of executive succession by providing a review of the literature and questions for future consideration. The authors identify four key considerations: when will succession occur, how will it occur, who will be selected, and what are the outcomes of executive succession.

• Gentry, Richard J., Joseph S Harrison, Timothy J. Quigley, and Steven Boivie. “A Database of CEO Turnover and Dismissal in S&P 1500 Firms, 2000–2018.” Strategic Management Journal 42.5 (2021): 968–991.

  DOI: 10.1002/smj.3278

  This paper creates the first publicly available database of CEO succession events—along with peer-reviewed classifications of reasons for turnover—using CEO successions identified from Execucomp. The study illustrates how differences in coding of reasons for turnover can create potential issues across studies and why a common database can be useful for the field.

• Giambatista, Robert C., W. Glenn Rowe, and Suhaib Riaz. “Nothing Succeeds like Succession: A Critical Review of Leader Succession Literature Since 1994.” The Leadership Quarterly 16.6 (2005): 963–991.

  DOI: 10.1016/j.leaqua.2005.09.005

  Critically explores CEO succession research from 1994 to 2004 examining the antecedents and consequences of succession. The review notes that both theory and empirical rigor can be improved and provides suggestions for how to move beyond main effects–based research into understanding the important contingencies in CEO succession research.

• Hutzschenreuter, Thomas, Ingo Kleindienst, and Claas Greger. “How New Leaders Affect Strategic Change Following a Succession Event: A Critical Review of the Literature.” The Leadership Quarterly 23.5 (2012): 729–755.

  DOI: 10.1016/j.leaqua.2012.06.005

  This review specifically explores how new leadership enables strategic change following a transition. The authors consider the theoretical arguments as to why new leaders impact strategic change, the means by which change occurs, the contingencies of what enables change, and the timing of when new leaders can implement change. They also focus on a variety of different types of changes that research has explored in the context of executive transitions.

• Nyberg, Anthony J., Ormonde R. Cragun, and Donald J. Schepker. “Chief Executive Officer Succession and Board Decision Making: Review and Suggestions for Advancing Industrial and Organizational Psychology, Human Resources Management, and Organizational Behavior Research.” Annual Review of Organizational Psychology and Organizational Behavior 8 (2021): 173–198.

  DOI: 10.1146/annurev-orgpsych-012420-061800

  This review creates an agenda for future researchers to consider when examining how boards of directors make executive succession decisions, particularly related to CEOs. In particular, the authors note the wide variety of decision-making biases to which the CEO succession-planning process may be prone. This is an excellent complement to Berns and Klarner 2017.

• Sonnenfeld, Jeffrey. The Hero’s Farewell: What Happens when CEOs Retire. Oxford: Oxford University Press, 1991.

  DOI: 10.1093/acprof:oso/9780195065831.001.0001

  This book provides an overview of the author’s experience in working with CEOs as they move toward their own succession events. A number of issues related to CEO identity, organizational identification, CEO personality, and power all play into problems that might prolong the CEO’s farewell and consequences that organizations face as the CEO prepares for life after office.

• Vancil, Richard F. Passing the Baton: Managing the Process of CEO Succession. Cambridge, MA: Harvard Business School, 1987.

  One of the first academic books on CEO succession that identifies a variety of processes organizations use to prepare for CEO succession. Identifies the process of the relay succession that spurs related research (e.g., Zhang and Rajagopalan 2004). This book is good for graduate students who are beginning to learn about executive succession research.