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New Firm Performance and the Replacement of Founder‐ CEOs
Author(s) -
Chen Jing,
Thompson Peter
Publication year - 2015
Publication title -
strategic entrepreneurship journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 5.061
H-Index - 46
eISSN - 1932-443X
pISSN - 1932-4391
DOI - 10.1002/sej.1203
Subject(s) - danish , sample (material) , business , founder effect , marketing , quality (philosophy) , strategic management , industrial organization , accounting , biology , genetics , philosophy , linguistics , chemistry , epistemology , chromatography , genotype , haplotype , gene
We study the causes and consequences of the replacement of founder‐ CEOs in a sample of 4,172 Danish start‐ups. We propose that founder‐ CEO replacement is driven in part by mismatches between business quality and founder ability. Our framework suggests that replacements are more likely among the worst‐ and best‐performing firms, with low (high)‐ability founders replaced by manager with higher (lower) ability. Replacement is not unambiguously associated with better subsequent performance. Firms that replaced the founder were much more likely to fail, but the surviving firms among them grew considerably faster. Our empirical results are consistent with these proposed predictions. Copyright © 2015 Strategic Management Society