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| The Dual Effect of Successive CEO's Intellectual Traits on Organizational Strategic Change: The Moderating Role of Compensation and Equity Incentives |
| Yu Dengke,Li Jiao |
| (School of Public Policy and Administration,Nanchang University, Nanchang 330031, China) |
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Abstract In the complex and changeable competitive environment, strategic change is the inevitable choice for the sustainable development of enterprise organizations. CEO change is the first step when some troubled companies implement strategic changes. A good successor does usually deliver on the expectations of strategic change.But what traits do CEOs have to be good successors?This is the realistic question that this study hopes to answer.#br#Under the guidance of upper echelons theory, researchers have published a large number of research results to explore the path of organizational strategic changefrom the perspective of CEO characteristics. However, there is no dominant theoretical framework to include and interpret the multi-perspective and multi-dimensional characteristics of CEO. Moreover the effect mechanism of CEO traits on organizational strategy change is complex and diverse. At present, relatively scattered empirical research literature lacks the theoretical statement of this contradictory mechanism. Therefore, this study introduces the viewpoints of intellectual management and organization duality theory from enterprise into individual level to explain the diversification of CEO characteristics and contradictions of the organization's strategic transformation mechanism. After the discussion of the role of CEO's compensation and equity incentive policy, a theoretical framework is built to explore the system of strategic change mechanism from perspective of CEO's intellectual characteristics.#br#Intellectual management theory is a localized theory independently developed by Chinese scholars. It emphasizes that knowledge and personality are the core intangible resources of an organization or an individual, and the cooperative governance of the two leads and drives the operation and growth of an organization or an individual, and makes contributions to ability formation, performance realization and sustainable development. The concept of intellectual characteristic originates from the theory of intellectual management and it is the comprehensive expression of knowledge and personality. With the help of this concept, this study proposes that there is a relationship between the intellectual characteristics of succeeding CEOs and their organizational strategy change behavior, which is consistent with the basic logic of behavioral psychology.#br#Aiming at the shortcomings of existing studies, this study constructs a new theoretical framework based on the integration and development of duality theory and intellectual management theory, and systematically discusses the duality effect of the intellectual characteristics of succeeding CEOs on organizational strategic change and the moderating effect of compensation and equity incentive. Based on a sample of 86 listed companies in China, the hypotheses of direct effect and moderating effect are tested by multivariate logistic regression analysis.#br#The results show that the educational knowledge and openness of succeeding CEOs positively promote strategic change, while the experience of external executives and conscientiousness of CEOs significantly inhibit organizational strategic change, and the experience of internal executives and agreeableness of CEOs have no significant effect. In addition, compensation incentive and equity incentive can induce organizational strategic change behavior, and reinforce the influence of some intellectual characteristics of CEO on organizational strategic change behavior.Comparatively speaking, equity incentive is more effective than compensation incentive.#br#According to the research conclusions, the following four management implications are presented. First, Only the appointment of CEO with qualified intellectual characteristics can help enterprises to make strategic change in the future. Therefore it is vital to formulate a scientific selection plan for CEO candidates. Second, in view of the goal of organizational strategic change, enterprises should give priority to CEO candidates with high education and open personality. Third, the conscientiousness of CEO may help enterprises control operational risks, but since organizational strategic change requires courage and boldness, CEO candidates with too strong conscientiousness are not the best choices in this case. This research puts forward the concept of CEO intellectual characteristics, enriches the theory of intellectual management, and develops the theory of organizational strategic change, which has academic contributions. In addition, this study provides inspiration for Chinese enterprises to select succeeding CEO and improve executive incentive policies, which has practical value. This study still has deficiencies in the mediating path, data series, external reliability and validity tests, waiting for further improvement in the context of organizational strategic change.#br#
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Received: 23 November 2021
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