Successor characteristics, organisational slack, and change in the degree of firm internationalisation

In this paper, we use chief executive officer (CEO) succession events to explore the effects of successor characteristics, including outside succession and differences between a new CEO/existing chairman on changes in the degree of firm internationalisation. In addition, we examine the moderating effect of organisational slack on the relationship between successor characteristics and change in the degree of firm internationalisation. We test our hypotheses using a sample of 2000–2005 data from 160 successive observations of listed companies in Taiwan. The results show that a firm will opt for higher levels of change on an international scale when it is characterized by the following: (1) outside succession and (2) differences between the CEO successor and the existing chairman. Further, we find that organisational slack will positively moderate the relationship between successor characteristics and the change in the degree of firm internationalisation.

Research highlights
► Rapid globalisation processes and technological development have made changes an inseparable part of the existence of contemporary enterprises. For example, many firms in Asian, such as Taiwan, South Korea, and Singapore, change the patterns of operating strategy due to rapid economic development. It is not denied that CEO is crucial person for firm's international development when the firms in these high growth emerging markets because he/she must respond the rapid economic growth by changing firm's strategy. This study shed light on how the successor characteristics affect the change in a firm's degree of internationalisation. Moreover, we examined how organisational slack moderates the relationship between successor characteristics and the change in a firm's degree of internationalisation. Our study makes a contribution to the business leaders in emerging markets in Asia must pass the CEO's baton to right successor to deal with the environmental change, increasing globalisation and an openness to international competition.