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In this subsection, the literature is reviewed to highlight the impact of context-related factors on the succession process. Specifically, the review highlights six contingencies at organisational level, namely, organisational age, size, strategy, performance, structure and culture, whilst at macro level, the review highlights two contingencies: the characteristics of the organisation’s industry and the trends in the industry.

4.4.2.1 Organisational Age

Organisational age refers to the maturity of the organisation measured in years from the date of incorporation or reorganisation. Helmich (1975b) explored the interactive effects of succession rate, successor type and organisational age; and found that older organisations are associated with lower succession rates and higher incidence of insider succession than younger organisations. Moreover, Helmich found that successors in mature organisations are more likely to have personal growth and career development needs than those in growing organisations. Furthermore, Ocasio (1999) provided empirical evidence for the moderating effects of organisational age on the reliance on rules of CEO succession. The author explained, “The moderator effect of firm age on the reliance on rules of insider succession indicates that as the firm grows older, its commitment to

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insider succession increases” (p. 408). In addition, Kesner and Sebora (1994) highlighted organisational age as one of the contingencies in their succession model.

4.4.2.2 Organisational Size

Another contingency highlighted by early succession studies is organisational size. The findings of Grusky (1961) suggested that organisational size is positively associated with succession rate, size being measured by net sales and total number of employees. Accordingly, the larger the organisation, the higher is its rate of succession. As an explanation, Grusky argued that large organisational size is associated with higher bureaucratization, which in turn facilitates transformation of succession to a more routine process with fewer disturbing consequences. In addition, according to Grusky, increases in bureaucracy necessitate frequent successions at the top in order to adapt to the external environment. This positive relationship between organisational size and succession rate was also supported by other researchers, such as Trow (1961), Kriesberg (1962), Grusky (1964), and Pfeffer and Moore (1980).

However, in replicating Grusky’s study, Gordon and Becker (1964) indicated that the relationship between the two constructs is neither simple nor direct. Moreover, Perrucci and Mannweiler (1968) findings revoked Grusky’s explanation. According to the authors, Grusky’s explanation is based on hypothesizing the association between organisational size and bureaucracy; however, when bureaucracy was measured as complexity, the findings showed no significance for complexity- succession rate hypothesis and only the previous positive association between organisational size and succession rate was supported (Perrucci and Mannweiler, 1968). In addition, Pfeffer and Salancik (1977) argued that organisational size does not reflect the degree of formalization. The authors found no statistically significant relationship between the two constructs, organisational size and succession rate; neither did Salancik and Pfeffer (1980) or Boeker (1992).

In addition to the link between organisational size and succession rate, Helmich and Brown (1972) highlighted the relation between organisational size and successor origin (insider/outsider). The authors indicated that organisational size is associated with insider successors. Pfeffer and Leblebici’s (1977) findings affirmed this positive relationship between organisational size and

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insider successors. The authors explained that large organisations have a greater number of administrative positions, which encourages the emergence of internal candidates with the needed organisational expertise. In addition, they argued that abundance of administrative positions provides more power bases for insider contenders. Dalton and Kesner (1983) and Lauterbach et al. (1999) provided supporting empirical evidence for the positive relationship between organisational size and insider successors. In general, studies emphasised the impact of organisational size on succession; however, there was little consistency in explaining how and why this relationship existed (Kesner and Sebora, 1994).

4.4.2.3 Organisational Strategy

The link between strategy and succession has been stressed by many succession studies. For example, the successor origin line of studies has emphasised such links in explaining insider/outsider successor appointments. The general assumption has been that insider successors are selected to maintain current organisational strategies while outsider successors are selected to initiate change (Gursky 1963; Helmich, 1974a; Pfeffer and Salancik, 1978). Chaganti and Sambharya (1987) findings suggest that the higher proportions of outsiders in the upper echelons are associated with prospector organisations that are actively seeking new product and market opportunities. However, Zhang and Rajagopalan (2003) found marginal support for the proposition that prior strategic persistence of the firm is positively related to the likelihood of intra-firm succession.

Another line of succession research highlighted that the link between organisational strategy and succession is related to the match between the successor’s characteristics and organisational strategy. This line of studies held that successors were selected to best match the strategic needs of the organisations. For example, McCanna and Comte (1986) proposed that organisations need new capabilities in each strategic stage, which in turn triggers succession processes. Moreover, Smith and White (1987) found a positive relationship between the organisation’s previous strategy and the successor’s career specialisation and institutional experience; and thus, the authors considered organisational strategy a predictor of career specialisation among successors, with single-business and vertically integrated organisations more likely to have core specialist successors. Ocasio and

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Kim (1999) supported this proposition by affirming that organisational strategy determines the new CEO’s functional background. Nevertheless, White et al. (1997) findings suggested that organisational strategy is a poor predictor of career specialisation among CEO successors.

4.4.2.4 Organisational Performance

As illustrated earlier, organisational performance was one of the first contextual issues investigated in succession literature. For instance, the proposition of the Vicious Cycle theory of succession emphasised organisational performance as a stimulant for succession events. However, according to Rowe et al. (2005), relatively few studies have backed up this proposition. In addition, Fredrickson et al. (1988) and Ocasio (1994), among other scholars, affirmed that the link between organisational performance and the dismissal of executives is mediated by the office incumbent’s power. Moreover, Kesner and Sebora (1994) highlighted organisational performance as one of the contingencies that must be considered in studying succession. Delery and Doty (1996) flagged the need for additional theoretical and empirical work to explore the relationship between internal career opportunities, strategy and performance. In addition, Karaevli (2007) argued that the link between organisational performance and succession cannot be understood in isolation from the “the turbulence and the munificence of the external environment”, advocating the consideration of “pre- and post-succession” contextual factors to grasp such linkage.

4.4.2.5 Organisational Structure

Organisational structure was another of the first factors considered by early studies on the succession phenomenon. While some researchers, such as Gouldner (1954) and Guest (1962), investigated how organisational structure mediates the effect of succession on organisational performance, others, such as Meyer (1975), addressed the impact of succession on the organisational structure itself. Helmich (1978) found a significant positive relation between succession rate and merger activity involving structural changes. The author stated:

“Because of the association of succession rate with merger activity, one may infer that the frequency of executive transfers in key organisational positions is more linked to environmental contingencies than to such organisational dimensions reflecting changes in

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either size, plant locations, or, of course, indicators of performance” (Helmich, 1978; p. 472).

However, focusing on how organisational structure influences succession processes, Vancil (1987) pointed out how the structure of the top management determines the type of succession process adopted. The author identified three common modes for the structure of top management: Solo, Duo and Team. In each mode, the number of executives holding the top five titles (Chairman, President, CEO, COO and Vice Chairman) varies. In the solo mode, only one executive holds one or more of these titles, while, as the labels indicate, in the duo mode there are two executives and in the team mode there are more than two executives, with each holding one or more of these five top titles. Focusing only on the duo and team modes, Vancil highlighted the relay and horse race succession processes. According to the author, a relay succession process is adopted in a duo mode structure, while a horse-race process is adopted in the case of team mode structure (Vancil, 1987). Moreover, Fligstein (1987) found that in the years between 1919 and 1979 shifts in organisational structure from functional and unitary to multidivisional structures were accompanied by changes in executives’ functional backgrounds. The findings demonstrated that executives with marketing and finance backgrounds were favoured in multidivisional organisations, but not in unitary organisations. The author justified these results by explaining how organisational structures are important resources in the power struggle within the organisation as they provide information and authority. Thornton and Ocasio (1999) argued that changes in institutional logic moderate the effects of economic and structural forces on succession. Through investigation of the shift in institutional logic in the higher education publishing industry from an editorial logic to a market logic in the period between 1958 and 1990, the authors illustrated how the effects of organisational size and structure on succession are moderated by editorial logic which emphasises author–editor relationships and internal growth.

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4.4.2.6 Organisational Culture

The impact of the organisational culture on the succession process is a rarely investigated issue in the succession literature. Fancher (2007) stated that, despite the call for investigation of such issues by Kesner and Sebora (1994), “no known empirical progress has been made to study the link of organisational culture and succession although most authors allude to its importance for a successful outcome” (Fancher, 2007; p. 31). One of the very few studies to investigate the impact of organisational culture on the succession process is the work of Miller et al. (2003). In this study of family owned businesses, the authors distinguished between three succession patterns: conservative, rebellious and wavering. According to the authors, succession patterns are influenced by the organisational culture, and conservative patterns of succession are more likely in a tradition- bound, bureaucratic, centralized and stable culture; rebellious patterns are more likely in problem- ridden or turbulent situations; and wavering patterns are more common in confused, politicized and fragmented organisations (Miller et al., 2003).

Another researcher who linked organisational culture to succession was Fancher (2007). Fancher explored the effects of organisational culture on succession planning and found that it is an important contextual factor in the implementation of succession planning. Neville and Murray (2008), meanwhile, showed how the culture of non-profit organisations can affect succession processes in cases where it is part of the culture to help people grow and move on.

4.4.2.7 Characteristics of the Industry

As stated earlier, in the literature there is a dearth of succession studies addressing the impact of the organisation’s external context on the succession process. Nevertheless, some of these few studies highlighted industry characteristics as one of the factors that influence the succession process. For example, Pfeffer and Moore (1980), Fredrikson et al. (1988) and Finkelstein et al. (2009) highlighted the industry’s stage of development. According to these studies, due to the high level of uncertainty in growing industries in comparison to more mature industries, dismissals during episodes of poor organisational performance are more common in the growing industries as leaders are more likely to be blamed for such performance (Pfeffer and Moore, 1980; Fredrikson et al, 1988; Finkelstein et al, 2009).

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Another characteristic that has been highlighted is size of the industry in terms of the total number of organisations within the industry. Fredrikson et al. (1988) argued that large industries are more capable of providing appropriate candidates to replace the office incumbent. In addition, the authors highlighted performance variation in the industry as one of the determinants of the expectations of the succession decision-makers of the new CEO. Furthermore, the impact of the homogeneity of the industry on the succession process was explored by Parrino (1997). According to the author, poorly performing CEOs are easier to identify and less costly to replace in homogeneous industries than in heterogeneous industries. Thus, the probability of forced turnover and intra-industry succession is greater in homogeneous industries (Parrino, 1997).

4.4.2.8 Trends in the Industry

Lamb (1987) identified two general trends in the organisational context that affect the succession phenomenon. The first trend relates to the successor’s functional background. According to the author, there are times when certain skills and functional backgrounds are more appreciated and desired in successors than others. This remark was echoed in other studies, such as Fligstein (1987) and Ocasio and Kim (1999). The second trend highlighted by Lamb (1987) relates to executive tenure. Lamb noted that executive tenure is shortening and “job hopping” is becoming a crucial aspect of career promotion among executives. Finkelstein et al. (2009) also highlighted the effect of “fads and fashions” on the succession process by pointing to the large increase in the rates of CEO dismissal and outside succession, which, according to the authors, is a trend that emerged in the late 1990s and continues to this day.

In addition, Dawley et al. (2004) asserted that more female executives have reached middle management and top leadership positions in the last two decades as women leadership has become more culturally accepted. It is noteworthy that the ramifications of the gender issue on the succession process have been explored more extensively in the family owned business context than in any other organisational context. Early studies in this line suggested that women were excluded as potential candidates unless no other family members were available and hence the succession of a female family member was the only way to keep the business in the family (Vicente et al., 2009). However, a new trend is emerging whereby gender discrimination is no longer a factor in

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succession issues in family owned businesses. According to Vicente et al. (2009), the most influential factors in choosing a successor are primogeniture, followed by skills, experience in business, and compliance with the requirements established by the family. The authors affirmed, “However, gender is not perceived, in general, as an important factor to become a successor for the respondents” (Vicente et al., 2009; p. 18).

4.5 THE CONCEPTUAL MODEL FOR THE INFLUENTIAL FACTORS ACTING

UPON THE SUCCESSION PROCESS

Based on the review of the research context in Chapter 2 and the literature review in Chapters 3 and 4, this section presents a conceptual model for the influential factors acting upon the succession process. Initially, a summary of the current chapter is provided; then, the conceptual model is presented in the following subsection.