This study examines how selecting new top management team members from the pool of mid-level managers rather than those with experience on another top management team affects firms’ growth. Using data from U.S. cellular firms (1983-1998), we compare the impact of promoting internally with hiring senior executives or middle managers from other firms. In addition, we compare outside executives added from within the industry to those added from outside the industry. We find that adding mid-level executives from outside the firm is positively associated with subsequent growth, and this contrasts sharply with the lack effect for senior executives. However, the value of experience from outside the industry declines as time goes on, suggesting an increase in the industryspecific knowledge requirements as the industry ages
Where do you come from? The effect of new executives’ experience and industry on growth
WILLIAMS, FREDERICK CHARLES;
2010
Abstract
This study examines how selecting new top management team members from the pool of mid-level managers rather than those with experience on another top management team affects firms’ growth. Using data from U.S. cellular firms (1983-1998), we compare the impact of promoting internally with hiring senior executives or middle managers from other firms. In addition, we compare outside executives added from within the industry to those added from outside the industry. We find that adding mid-level executives from outside the firm is positively associated with subsequent growth, and this contrasts sharply with the lack effect for senior executives. However, the value of experience from outside the industry declines as time goes on, suggesting an increase in the industryspecific knowledge requirements as the industry ages
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