Beyond CEO Tenure: The Effect of CEO Newness on Strategic Changes

Prior research on strategic changes has asserted that long-tenured CEOs are less likely to initiate strategic changes. The authors argue that this assertion may exclude CEOs’ prior experiences since it implicitly assumes that all new CEOs have the same inclination toward change. By viewing CEOs as individuals embedded within experiences and relationships throughout their careers, the authors propose that CEO newness—a concept integrating prior board experience, prior heir apparent experience, and length in the current position—can provide a more complete assessment of a new CEO’s tendency toward change. They further argue that the impact of CEO newness on strategic changes will be moderated by the strategic distance between a focal firm and a CEO’s previous firm, as well as by industry similarity between the two firms. The authors’ analyses of U.S. computer firms from 1994 to 2007 support their arguments, suggesting that it is useful to adopt the concept of CEO newness while considering its boundary conditions in order to better understand strategic changes.