ABSTRACT
This chapter describes the study that examines the important relationship between CEO insiderness and subsequent firm performance. Some experts argues that executives groomed exclusively from inside the firm lack the necessary skills to effectively manage a large, modern corporation. As the business environment becomes more global, competitive and complex firms tend to look for CEOs who have worked in different firms across industries. These changes in the demand for outsider CEOs suggest that there is a negative relationship between CEO insiderness and post-turnover firm performance. Insiders perform better than outsiders if pre-turnover firm performance is good, but outsiders perform better than insiders if pre-turnover performance is poor. Overall, the results not only provides additional support for the differential roles of insiders versus outsiders; they also demonstrates that the value of succession origin is context dependent. The findings show that as the business environment becomes more complex and firms require fundamental restructuring, outsiders become more valuable.
