Executive succession as a strategic change mechanism occupies a central place in management research. In this paper, we examine whether two CEO succession contingencies, planning and frequency, are associated with changes in strategic scope, that is, with changes in a firms’ corporate diversification strategy. Drawing upon upper echelons and institutional theoretical arguments, we propose that succession planning will be associated with postsuccession strategic continuity and alignment, albeit non-planned successions will be associated with strategic change towards decreased scope and alignment. We also propose there is an inverse relationship between succession frequency and corporate strategic scope.
Furthermore, we reflect on the role of CEOs’ characteristics as moderators of the previous “planning-scope” association: We expect outside corporate origin to be associated with postsuccession strategic change towards a decreased scope and strategic alignment; output or throughput past functional experience and elite educational background with post-succession non-increase in strategic scope and strategic alignment. On the contrary, inside corporate origin, peripheral past functional experience and non-elite educational background are expected to be associated with post-succession strategic change towards increased scope and strategic divergence. Moreover, we propose there is a positive relationship between the number of a CEOs board memberships and the firms’ strategic alignment (that means, increasing CEOs mutual board memberships should lead to a higher degree of strategic isomorphism among firms). In addition, we argue that, within a defined institutional field, socio-demographic similarity among CEOs (based on the criteria of corporate origin, past functional experience, educational background) and CEOs board memberships accurately assess the degree of social homogeneity among firms and that that the varying density of firms’ connexions, due to different degrees of participation of CEOs to other firms’ boards, should create clusters of firms within which strategic resemblance should be higher than the fields’ average. In this paper, change is defined as the percentage of annual variation in a firms’ diversification strategy over a given period. Divergence is defined as the absolute difference between a firms’ score and, first, the average score for all population firms, second, the average score of every observed cluster of firms, at every year for the same given period.
Strategic change and divergence are operationalized with the entropy measure of diversification.