Leadership succession and firm performance in an emerging economy: Successor origin, relational embeddedness, and legitimacy

Chi-Nien Chung, Xiaowei Rose Luo
2012 Strategic Management Journal  
We examine how leadership transition affects firm performance in emerging economies. Building upon the social embeddedness and neo-institutional perspectives, we argue for the importance of alignment between successor origin and social context for firm performance. We suggest that as a baseline outside successors enhance firm profitability because of the large-scale and rapid changes in emerging markets. However, this outsider premium is reduced in firms embedded in family and business group
more » ... ationships, where family and inside successors can better access network resources. But the outsider premium is amplified in firms embedded in a mature market-based logic, such as high-tech or foreign-invested firms, because the perceived legitimacy of outsiders facilitates resource acquisition. Our arguments are supported through the analysis of Taiwanese listed firms between 1996 and 2005.
doi:10.1002/smj.2011 fatcat:7izu4ygbgfbzfh4soxqvgiauky