Global strategic context and CEO appointments: The importance of a global mind‐set

• Published date: 01 November 2020
• DOI: http://doi.org/10.1002/gsj.1313
• Author: Yannick Thams,Aya Chacar,Margarethe Wiersema
• Date: 01 November 2020

RESEARCH ARTICLE

Global strategic context and CEO appointments:

The importance of a global mind-set

Yannick Thams

1

| Aya Chacar

2

| Margarethe Wiersema

3

1

Strategy and International Business Department,

Sawyer Business School, Suffolk University,

Boston, Massachusetts

2

Department of Management and International

Business, College of Business Administration,

Florida International University, Miami, Florida

3

The Paul Merage School of Business, University

of California, Irvine, California

Correspondence

Yannick Thams, Assistant Professor Strategy and

International Business Department Sawyer

Business School Suffolk University Boston, MA

02108.

Email: ythams@suffolk.edu

Research Summary: The appointment of a new CEO is

among the most pivotal and visible decisions made by a

board of directors. While prior research has surveyed the

impact of performance and governance-related factors on

CEO selection decisions, our understanding of the impli-

cations of a firm's global context is limited. This article

explores the influence of home country globalization,

international diversification, and the undertaking of major

cross-border acquisitions on the appointment of a CEO

with a global mind-set. Using a sample of European and

U.S. firms from the Global 500 ranking from 2005 to

2010, we find that companies are likely to match the

characteristics of new CEOs with their global strategic

contexts.

Managerial Summary: In this article, we highlight the

interplay between a firm's global context and CEO selec-

tion. Our findings indicate that executives aspiring to

reach the C-suite should be highly attuned to the impera-

tives of aligning their knowledge bases, mind-sets, and

perspectives to grasp the challenges faced by companies

operating within a global context. From the board's per-

spective, the selection of a new CEO provides the oppor-

tunity to assess a firm's future strategic direction and

enables the board to select an executive with the manage-

rial capabilities required to address the challenges of

globalization.

KEYWORDS

CEO appointments, executive succession, global mind-

set, global strategic context, globalization

Received: 25 January 2017 Revised: 7 April 2018 Accepted: 9 April 2018

DOI: 10.1002/gsj.1313

676 © 2018 Strategic Management Society Global Strategy Journal. 2020;10:676–699.wileyonlinelibrary.com/journal/gsj

1|INTRODUCTION

During the past few decades, research from several fields has investigated chief executive officer

(CEO) succession and its bearings on firm strategy and success (Bigley & Wiersema, 2002; Georga-

kakis & Ruigrok, 2017; Kesner & Sebora, 1994). This literature holds upon the premise that execu-

tive successions constitute “critical turning points”as they may not only cause internal disruption,

but also present the opportunity for firms to adapt their strategies to current or evolving environmen-

tal demands (Berns & Klarner, 2017). Researchers have also proposed that a new CEO's capabilities,

when aligned with a firm's strategic context, can help organizations achieve superior performance

(Beck & Wiersema, 2013; Giambatista, Rowe, & Riaz, 2005; Kor & Mesko, 2013).

Despite the belief and expectation that a firm's strategic context may play a key role in a board's

choice of a new CEO (Finkelstein, Hambrick, & Cannella, 2009), whether or not boards do indeed

select a CEO to achieve such a desired fit is an empirical question that has received scant attention.

Instead, research on the antecedents of executive succession has predominantly explored performance

and governance-related predictors (Boeker & Goodstein, 1993; Cannella & Lubatkin, 1993; Can-

nellla & Shen, 2001; Zhang & Rajagopalan, 2003). In this study, we turn our attention to the influ-

ence of a firm's strategic context on CEO selection, focusing on globalization, a significant facet of a

firm's strategic context. Indeed, the globalization of markets has significantly transformed the com-

petitive landscape, with firms increasingly exposed to global competition domestically and when

operating abroad and to a plethora of institutional environments (Wiersema & Bowen, 2008).

Research has indicated that a critical determinant of a firm's ability to successfully deal with such

complexity resides in the global capabilities and perspective of its top executives, especially its CEO

(Sanders & Carpenter, 1998). Managing multifaceted contexts requires a complex cognitive orienta-

tion “that guides attention and interpretation of information,”facilitating the ability to acquire knowl-

edge about foreign institutional environments and to manage a culturally diverse workforce (Levy,

Beechler, Taylor, & Boyacigiller,2007, p. 233; Gupta & Govindarajan, 2002). It also necessitates a

managerial cognitive orientation that enhances the capacity of firms to integrate geographically

dispersed operations while simultaneously being locally responsive (Bartlett & Ghoshal, 1989;

Gupta & Govindarajan, 2002; Kim, Pathak, & Werner, 2015).

We propose that globalization places demands on a firm's managerial cognitive capabilities that

motivate the board t o appoint a CEO with a gl obal perspective. W e investigate the c oncept of CEO

global mind-set, defined as a set of cognitive abilities characterized by “an openness to and a rticula-

tion of multiple cultural and strategic realities on both global and local levels, and the cognitive

ability to mediate and integrate across this multiplicity”(Levy et al., 2007 : 244). Moreover, a glo bal

mind-set involves several competencies such as “cultural self-awareness, open ness to and under-

standing of other cultures, and selective incorporation of foreign values”(Levy et al., 2007, p. 233 ).

Drawing on global mind-set (Levy et al., 2007) and managerial cognition research (Fiske & Taylor,

1984), we propose th at such a perspectiv e is likely to be deriv ed from the extent of one 's interna-

tional exposure gained from being born and raised in a foreign country (Hambrick, Davison,

Snell, & Snow, 1998; Nielsen & Nielsen, 2013), foreign higher education (Byram & Feng, 2006),

and/or via the diversity of one's international work experience (Godart, Maddux, Shipilov, &

Galinsky, 2015).

We examine in particular three facets of a firm's global strategic context that may shape the

demands for a CEO with a global mind-set: home country globalization, firm international diversifi-

cation, and major cross-border mergers and acquisitions (M&As). A highly globalized home country

means that a company is likely to face increased levels of foreign competition within its domestic

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