Succession as A Sociopolitical Process: Internal Impediments to Outsider Selection

Abstract

Although traditional adaptive theory implies that poor organizational performance will directly increase the likelihood that an outsider will be selected to succeed a firm's chief executive, we develop theory to suggest that sociopolitical forces, such as the presence or absence of an heir apparent and the incumbent's ability to influence the selection decision, will decouple the performance-selection relationship. We predict that poor performance will lead to outsider selection only when sociopolitical forces are weak. Further, we consider the effects of both return and risk on outsider selection. Empirical evidence from 472 succession events in large, publicly traded firms supports our hypotheses about moderating sociopolitical forces.