Summary
The use of intraindustry executive succession as an organizational learning mechanism is explored. Drawing from the knowledge management, executive succession, and competitive dynamics literatures, a conceptual model is developed that suggests organizations use this form of succession to access tacit, architectural knowledge held by rivals in order to implement rapid competitive responses. This phenomenon may also lead to reduced long-term performance by promoting imitation and intense rivalry among industry incumbents. However, a more unique response may result from power dynamics associated with the executive integration process that blend the knowledge of the new executive with existing organizational routines and capabilities.
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Intraindustry Executive Succession, Competitive Dynamics, and Firm Performance: Through the Knowledge Transfer Lens
A substantial body of research has documented the role of human resource flows in the diffusion of innovation across organizations (Almeida and Kogut, 1999; Baty et al., 1971 Boeker, 1997; Ettlie, 1980, 1985; Pfeffer and Leblebici, 1973; Rogers, 1995 Rosenkopf and Almeida, 2003; Sax onhouse, 1991; Song et al., 2003 Young et al, 2001). To the extent they carry relevant knowledge, employees who move between firms facilitate the adoption of an innovation or technology by a particular organization. Although the primary focus of this research has been on determining why and how innovations are spread across firms, from an organizational perspective, personnel flows can also be construed as an organizational learning mechanism. That is, hiring rivals' employees can potentially serve as a means by which a firm both absorbs new knowledge from its external environment and adapts to changing contexts.
With certain exceptions (e.g., Baty et al, 1971; Boeker, 1997; Young et al., 2001), research examining the effect of employee mobility and the diffusion of innovation has focused on the acquisition of technical managers, particularly scientific and engineering talent. There has been little emphasis on the possible effect of changes to the executive ranks of a firm on knowledge flows, rivalry, and competitive strategy. Yet as the following quotation indicates, organizations operating in dynamic, technology-intense environments may be under pressure to hire senior executives from rivals in order to acquire new technologies, or enter new markets rapidly:In [Silicon] Valley and tech in general, employees are bought and sold like commodities. If you have trouble with the competition, simply raid its talent. Just last Fall, German software maker SAP sued Siebel Systems Inc. after more than a dozen executives jumped ship for its Silicon Valley rival (Kerstetter, 2000: 43).Additionally, this phenomenon does not seem to be limited to technical talent. For example,SAP, AG, the world's largest maker of business-application software, has hired a number of executives away from Oracle Corp and other major rivals as competition in the industry intensifies. . . .The software industry has a tradition of poaching talent from competitors, particularly sales people. What makes the recent hires by SAP noteworthy, however, is the number and that it includes development and marketing executives (Bryan-Low, 2005: B2).Widel...See the full content of this document
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