Journal Article10.1002/SMJ.524
How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance
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TL;DR: In this article, the authors argue that the opportunities for adaptive learning are limited because a CEO assumes office with a relatively fixed paradigm that changes little thereafter; inertia limits the speed at which an organization can align itself with a new CEO's paradigm; and for any within-paradigm learning to occur, the external environment must be stable enough so that the cause-effect relationships that CEOs glean today remain relevant tomorrow.
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Abstract: Scholars have characterized CEO tenures as life cycles in which executives learn rapidly during their initial time in office, but then grow stale as they lose touch with the external environment. We argue, however, that the opportunities for adaptive learning are limited because (1) a CEO assumes office with a relatively fixed paradigm that changes little thereafter; (2) inertia limits the speed at which an organization can align itself with a new CEO's paradigm; and (3) for any within-paradigm learning to occur, the external environment must be stable enough so that the cause–effect relationships that CEOs glean today remain relevant tomorrow. In a longitudinal study of 98 CEOs in the relatively stable branded foods industry and 228 CEOs in the highly dynamic computer industry, we found results that strongly supported our hypotheses. In the stable food industry, firm-level performance improved steadily with tenure, with downturns occurring only among the few CEOs who served more than 10–15 years. In contrast, in the dynamic computer industry, CEOs were at their best when they started their jobs, and firm performance declined steadily across their tenures, presumably as their paradigms grew obsolete more quickly than they could learn. Copyright © 2006 John Wiley & Sons, Ltd.
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TL;DR: Wang et al. as mentioned in this paper examined the effects of three highly-visible CEO characteristics on a valuation of the organization using a sample for Chinese firms over the period of 2007-2016 and found that CEO age is consistently related with lower organizations' valuation.
Causas del fracaso de un CEO: mapa de un debate (y II)
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- 01 Jan 2010
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