Effects of industry evolution on corporate executive: evidence from Chinese listed companies

Abstract

PurposeThe real estate industry has experienced frequent changes in corporate executives in recent years. A total of 147 A-share listed firms witnessed a total of 191 corporate executives' departure. This wave of corporate executive departures is significantly different from previous waves. This study aims to examine whether industry evolution influence the characteristics of corporate executives? If so, then how?Design/methodology/approachDrawing on upper echelons theory, this study analyzed the effects of industry life cycle on the characteristics of corporate executives. The data of A-share listed companies in the textile, real estate and computer industries in China from 1992 to 2014 were collected.FindingsThere are significant differences in the characteristics of corporate executives that match the life cycles of different industries. Companies at the growth stage in the life cycle of an industry were more likely to select and appoint younger corporate executives with political capital, peripheral functions and output functions, whereas companies at the maturity stage were more likely to select and appoint older corporate executives with throughput functions.Originality/valueBy using the upper echelons theory as a starting point, this study analyzed the effects of industry life cycle on corporate executive's characteristics. The research findings offer theoretical implications for the upper echelons theory and provide managerial implications.