Quest for Status: TMT Status Hierarchy, Status Inequality, and Executive Turnovers

Abstract

This study proposes and tests a theory of how TMT status hierarchies affect executive turnovers. The status hierarchy in a TMT channels peer respect towards high-status executives and away from low-status executives. As status inequality increases, high- status executives garner more peer respect and get boosts in their self-esteem, whereas low-status executives receive less peer respect and experience drops in self-esteem. Boosts in self-esteem may motivate high-status executives to pursue higher career goals in other firms, whereas drops in self-esteem may motivate low-status executives to join other firms to avoid disrespect by peers. This rationale suggests a positive effect of status inequality on executive turnovers. Further, the status-induced motivations for high- and low- status executives are more likely to result in their turnovers (1) when executives are more likely to secure new jobs in other firms or (2) when their current firms are less likely to facilitate high-status executives¡¯ pursuing higher career goals or low-status executives¡¯ protecting and enhancing their self-esteem. The analysis based on a sample of Chinese firms provides strong support for the theory. This study makes important contributions to executive turnover research in particular and turnover research in general.