EXPRESS: Institutional Entrepreneurship and Digital Transformation: The Role of Outsider CEOs

Abstract

The widespread diffusion of digital technologies forces incumbent firms to drive their digital transformation (DT). DT not only involves a change in strategy but requires new institutional logics for firms helping to operate in digital business environments. Firms increasingly hire outsider CEOs to cope with this development, but the necessary institutional change questions whether outsider CEOs can indeed realize DT. We draw on the institutional entrepreneurship perspective to make sense of the role of outsider CEOs in DT. We theorize that DT awareness stemming from prior experience with DT enables outsider CEOs to act as institutional entrepreneurs and realize DT. We further argue that outsider CEOs with DT awareness particularly benefit firms facing abrupt rather than accumulative DTs. To test our hypotheses, we introduce a novel, machine-learning-based DT measure. Panel data regressions provide support for our predictions. Our findings contribute to a more nuanced understanding of the role of outsider CEOs as change agents.