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Seeking distinctiveness through divestments: CEO succession and the effect of demographic similarity on the divestment of predecessor's investments
Author(s) -
Hutzschenreuter Thomas,
Kleindienst Ingo,
Greger Claas
Publication year - 2018
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2918
Subject(s) - optimal distinctiveness theory , divestment , similarity (geometry) , psychology , social psychology , successor cardinal , positive economics , business , political science , economics , law , artificial intelligence , computer science , image (mathematics) , mathematical analysis , mathematics
Why do successor CEOs divest those organizational units that they divest shortly after taking office? In order to contribute to this question, we take a behavioral perspective and develop a theoretical framework that draws on pioneering work in social psychology, in particular, research on individuals' need for distinctiveness and argue that demographic similarity to their CEO predecessors may evoke negative affect as it threatens CEO successors' need for distinctiveness. Assuming that CEOs are high need for distinctiveness individuals, we argue that negative emotions associated with similarity to their CEO predecessors are likely to force CEO successors to engage in behavioral coping strategies aimed at restoring a sense of distinctiveness. In particular, we predict and empirically observe that demographic similarity increases the likelihood that in their pursuit of distinctiveness, CEO successors deliberately divest specific organizational units, namely, those that their CEO predecessors had invested in.