Executive Succession and Strategic Change in Japan

Scholars studying upper echelons have found that executive succession can serve as an important adaptation mechanism. The bulk of these findings, however, derive from market-based governance settings, which raises an issue of contextual robustness. This study examines this issue by investigating the link between executive succession and strategic change in Japan, a context noted for relatively weak market-based corporate governance and lack of board independence. We find a greater likelihood of strategic change after non-routine executive succession, with the extent of change unaffected by firm performance. Routine succession in the case of a powerful prior president leads to less post-succession strategic change