SHAPING THE FUTURE: STRATEGIC CHANGE UNDER NEW CEO

Abstract

CEO succession is an unavoidable event for organizations and is frequently seen as a critical milestone. Although extensive research has been conducted on CEO succession, relatively few studies have explored the impact of newly appointed CEOs’ psychological traits on their organizations. This study focuses particularly on CEOs’ future focus, examining how the future focus of newly appointed CEOs affects strategic changes following their appointment. Furthermore, this study posits that the positive relationship between a newly appointed CEO’s future orientation and strategic change may not always be consistent. Specifically, it is expected that this relationship will vary depending on whether the new CEO is appointed from outside the firm and whether the firm has abundant slack resources. To test these hypotheses, this study uses secondary data from the U.S. S&P 1,500 manufacturing firms. Specifically, the sample consists of firms within the S&P 1,500 manufacturing sector that experiences CEO turnover between 2005 and 2016. Results show that newly appointed CEOs with a strong future focus are more likely to implement strategic change, and such relationship is stronger when newly appointed CEOs are outsiders and when the firm has sufficient slack resources.