Abstract
In this article we strive to reconcile equivocal findings about the effects of top leader succession and prior leadership experience on postsuccession organizational performance. In doing so, we draw on insights from theories of human capital, learning, and asymmetric information to better understand the conditions under which leaders increase or decrease postsuccession performance. Employing a sample of 119 newly appointed leaders in the English Premier League (1996–2010), we find the following results. First, relating to the succession event, outside leaders that directly move between leadership positions are associated with higher postsuccession performance while the departure of a prior leader to a leadership position in another organization has a negative effect on postsuccession performance. Second, relating to prior leadership experience, leaders with domestic top leader experience are associated with lower postsuccession performance, while leaders with foreign top leader experience are associated with higher postsuccession performance. © 2015 Wiley Periodicals, Inc.
Highlights
Leader succession is a critical issue for organizations, which has important implications for organizational performance (Guthrie & Datta, 1998: Kesner & Sebora, 1994)
To explore our ideas we focus on leaders of soccer organizations that operated in the English premier league (EPL) from 1996 to 2010.1 We suggest that the EPL context is conducive for examining our ideas for two main reasons
We argue that prior top leader experience is a salient human capital attribute, which can affect the speed in which leaders can adapt to their new organization and the risks associated with their appointment
Summary
Leader succession is a critical issue for organizations, which has important implications for organizational performance (Guthrie & Datta, 1998: Kesner & Sebora, 1994). In contrast to the body of scholarship focusing on the relationship between the leader succession event and post-succession performance, research into the effects of prior leadership experience on organizational performance is in its infancy (Hamori & Koyuncu, 2014). The two main studies find an absence of positive performance effects (or even negative performance effects) for the effect of prior leadership experience on post-succession performance (see: Elsaid et al., 2011; Hamori & Koyuncu, 2014). THEORETICAL MODEL Drawing on extant research we argue that there are three main factors that will influence the relationship between leader succession and organizational performance: the knowledge and skills of the leader; the ability for the leader and organization to learn from one another; and the potential for asymmetric information in the hiring decision (Shen & Cannella, 2002b; Zhang & Rajagopalan, 2003)
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