Prior Peak Attainments of New CEOs: How Task-specific Human Capital Affects Executive Performance

Abstract

We introduce a novel construct for considering the qualifications of new CEOs. This construct, a CEO’s prior peak attainment, refers to the highest level of executive responsibility the individual has previously held, particularly the degree to which that highest responsibility approximated the role-set of the focal CEO position. By conceptualizing prior peak attainment as a key element of a new CEO’s task-specific human capital, we argue that higher prior peak attainments are associated with better post-succession performance. At one extreme, for instance, we anticipate that CEOs whose prior peak attainments were as functional area heads, but without experience in general management positions, will perform least well as new CEOs; at the other extreme, we expect that those who had previously been CEOs of comparably-sized firms will perform best. We further argue that this relationship between a new CEO’s prior peak attainment and post-succession performance is moderated by multiple forms of managerial discretion, in line with the premise that managerial attributes matter only in proportion to managerial leeway. Results from a large-scale empirical study provide strong support for our expectations. We discuss the theoretical and practical implications.