Abstract
This study examines how a top management team (TMT) influence the strategic renewal process of Hollywood franchises. Specifically, in the context of motion picture industry where the revenue cycle is short, we explore how changes in TMT can motivate cognition-based renewal via narrative transformation, which in turn can affect movie franchises' financial performance. Such renewal is based on the TMT's cognition of the contemporary social demographic and market environment, and the depth and breadth of prior knowledge, experience, and vision about the franchise's trajectory. We tested our longitudinal data for franchises' financial performance using a sample of 1,120 movies nested among 337 franchises produced from 1948 through 2019 (over 71 years). Our results show that sequels or prequels made by updated TMTs motivate narrative transformation and attract audiences, generating superior revenue. We contribute to the literature on change in the upper echelon, specifically TMT and cognition-based strategic renewal. A critical theoretical and practical implication is that TMT changes at regular intervals can strategically renew a franchise by bringing fresh and unique perspectives.
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