Leadership Succession and Firm Performance in an Emerging Economy: Successor Origin, Relational Embeddedness, and Legitimacy

Strategic Management Journal, Forthcoming

INSEAD Working Paper No. 2012/21/EFE

42 Pages Posted: 16 Feb 2012

See all articles by Chi-Nien Chung

Chi-Nien Chung

National University of Singapore (NUS)

Xiaowei Rose Luo

INSEAD - Entrepreneurship and Family Enterprise

Date Written: February 15, 2012

Abstract

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 relationships, 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.

Keywords: emerging economies, leadership succession, firm performance, relational embeddedness, legitimacy

Suggested Citation

Chung, Chi-Nien and Luo, Xiaowei Rose, Leadership Succession and Firm Performance in an Emerging Economy: Successor Origin, Relational Embeddedness, and Legitimacy (February 15, 2012). Strategic Management Journal, Forthcoming, INSEAD Working Paper No. 2012/21/EFE, Available at SSRN: https://ssrn.com/abstract=2005685

Chi-Nien Chung

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Xiaowei Rose Luo (Contact Author)

INSEAD - Entrepreneurship and Family Enterprise ( email )

F-77305 Fontainebleau Cedex
France

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
165
Abstract Views
1,563
Rank
325,881
PlumX Metrics