CEO turnover and the new leader propensity to open innovation

Anna Maria Biscotti (Department of Economics, University of Foggia, Foggia, Italy)
Elisabetta Mafrolla (Department of Economics, University of Foggia, Foggia, Italy)
Manlio Del Giudice (University of Rome “Link Campus”, Rome, Italy) (National Research University – Higher School of Economics, Moscow, Russia)
Eugenio D’Amico (Department of Political Science, University of Roma Tre, Rome, Italy)

Management Decision

ISSN: 0025-1747

Publication date: 11 June 2018

Abstract

Purpose

In an increasingly turbulent and competitive environment, open innovation could be critical for a firm’s success, favoring organizational flexibility and accelerating innovation processes. However, sharing innovation projects with external partners often requires changes in traditional organizational behavior and visions of CEOs. The purpose of this paper is to theorize and empirically verify how the CEO turnover and some socially relevant characteristics of the old and the new CEO may impact firms’ propensity toward open innovation under an integrated agency-resource dependence view and social identity perspective.

Design/methodology/approach

The empirical analysis was carried out on 264 companies drawn from 16 developed European markets included in the S&P Europe 350 Dow Jones index over the years 2006-2015. To test the predictions, the authors adopted regression analysis by employing the panel two-stages least squares model and the ordinary least squares econometric model.

Findings

Consistently with the predictions, the authors found that CEO turnover stimulates open innovation. Particularly, the results suggest that the organizational identity rationale may motivate a divergent propensity between insider and outsider new CEOs, with outsiders more prone to open innovation. The higher tendency of new outsider CEOs to undertake innovation projects jointly with external organizations prevails also within firms that experienced a long tenure of the former CEO, thereby suggesting that a new outsider CEO appears able to renovate corporate strategic directions also in highly orthodox organizational cultures.

Originality/value

To the best of the authors’ knowledge, this is the first study that theorizes why CEO turnover might impact the propensity of the firm toward open innovation. The authors use an integrated agency-resource dependence perspective, and the results from the empirical analysis mostly support the predictions. Moreover, the authors adopt the social identity theory to show that the organizational identification of the CEO matters in the decision of engaging in open innovation.

Keywords

Acknowledgements

The paper was prepared within the framework of the Basic Research Program at the National Research University – Higher School of Economics (HSE) and supported within the framework of the subsidy granted to the HSE by the Government of the Russian Federation for the implementation of the Global Competitiveness Program.

Citation

Biscotti, A., Mafrolla, E., Giudice, M. and D’Amico, E. (2018), "CEO turnover and the new leader propensity to open innovation", Management Decision, Vol. 56 No. 6, pp. 1348-1364. https://doi.org/10.1108/MD-04-2017-0392

Download as .RIS

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.