CEO Turnover and Strategic Alliances: The Critical Role of Social Network Disruptions

초록

The role of CEOs extends beyond managing individual companies and involves influencing strategic decision-making and inter-firm collaborations. This study investigates CEO turnover's economic impact on strategic alliance formation, focusing on the disruption and reconfiguration of social networks. Using a dataset of 4101 firm-year observations from U.S. S&P 1500 high-tech firms (2000-2015), we find that CEO turnover results in a temporary but significant decline in new strategic alliances, driven by the loss of trust-based relationships embedded in the outgoing CEO's social network. Over time, firms rebuild these alliances as the incoming CEO establishes novel social connections. The impact varies according to the succession type as follows: while firms appointing outside CEOs experience an approximately 50% decline in alliance formation relative to the sample mean, internal promotions largely offset this disruption-resulting in a net increase of about 25%-by preserving established networks and relational capital. Our findings highlight social capital's crucial role in shaping corporate strategy and provide empirical evidence regarding how leadership transitions influence firms' ability to maintain external collaborations. These insights contribute to the research on CEO succession, strategic alliances, and the economic consequences of managerial social networks.

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