Executive Succession Strategy of an Emerging-Market Company: An Investigation into the Spillover Effect

ABSTRACT

The purpose of this articleis to investigate the executive selection strategy of an emerging-market (EM) company. The articlebroadens spillover literature by examining corporate capabilities and consumer-perceived brand-evaluations of an EM company who recruits executives from developed-country (DC) incumbents. Three experiments are designed to test the spillover effects in CEO/CTO appointment scenarios. Results show that an EM company’s brand evaluation would be boosted when consumers perceive that corporate capabilities are strengthened, and that spillover strength varies from the brand image of the DC company. Selecting an executive from a DC incumbent can trigger consumer reevaluation on the corporate capabilities and the brand of the EM company. On the contrary, such selection decisions in emerging markets not only contribute to firm performance but also serve as market promotion strategies. Finally, it is found that as a performance indicator, consumers’ attitudes toward executive appointments indeed correspond to the reality of markets.