The CEO as a key microfoundation of global strategy: Task demands, CEO origin, and the CEO's international background
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Copyright 2017 Strategic Management Society Research Summary: We explore the selection of new CEOs with international backgrounds as a key microfoundation of global strategy. Building on executive succession, upper echelons, and international business research, we argue that firms choose CEOs with international backgrounds to match their task demands. We further argue that depending on the CEO's origin from inside or outside the firm, different task demands matter. Specifically, we propose that the relationship between internal (firm-level) task demands and the new CEO's international background is more pronounced for inside successions, whereas the relationship between external (industry-level) task demands and the new CEO's international background is more pronounced for outside successions. An analysis of a sample of 363 CEO successions in S&P 500 firms supports our reasoning. Managerial Summary: Choosing a CEO with the right experience is a crucial concern for many large firms. While firms increasing seem to select new CEOs with international backgrounds, not all firms do so. In this article, we explore several factors that might influence this choice. Our results reveal that the predecessor's international background, the firm's level of internationalization, and the level of internationalization of the firm's industry influence whether a CEO with an international background is selected. Moreover, while for inside successions, the firm's level of internationalization is particularly important, for outside successions, the level of internationalization of the firm's industry is particularly important. Our findings inform those who search, select, and appoint new CEOs, including boards of directors and (executive search) consultants.
