Global strategic context and CEO appointments: The importance of a global mind‐set

Abstract

Research Summary: The appointment of a new CEO is among the most pivotal and visible decisions made by a board of directors. While prior research has surveyed the impact of performance and governance‐related factors on CEO selection decisions, our understanding of the implications of a firm's global context is limited. This article explores the influence of home country globalization, international diversification, and the undertaking of major cross‐border acquisitions on the appointment of a CEO with a global mind‐set. Using a sample of European and U.S. firms from the Global 500 ranking from 2005 to 2010, we find that companies are likely to match the characteristics of new CEOs with their global strategic contexts.Managerial Summary: In this article, we highlight the interplay between a firm's global context and CEO selection. Our findings indicate that executives aspiring to reach the C‐suite should be highly attuned to the imperatives of aligning their knowledge bases, mind‐sets, and perspectives to grasp the challenges faced by companies operating within a global context. From the board's perspective, the selection of a new CEO provides the opportunity to assess a firm's future strategic direction and enables the board to select an executive with the managerial capabilities required to address the challenges of globalization.