CEO tenure and strategic change : the moderating role of CEO regulatory focus and resource constraints

Purpose: This study aims to investigate whether CEO tenure influences a firm's strategic decision. Although there has been extensive research on the relationship between CEO tenure and strategic change, little research addresses whether long-tenured CEOs have the same propensity for strategic choices. In addition, there is still untapped research topics that the extent to which long-tenured CEOs' actions are contingent upon the CEO characteristics and resources. This study proposes that not all long-tenured CEOs have the same attitude to strategic persistence, and we argue that this relationship varies under different contingencies of CEOs' psychological characteristics and firm resources. Design/methodology/approach: The sample of this study includes 906 (firm-year) observations from 172 publicly traded U.S. manufacturing firms between 2005 and 2011. This study conducts generalized estimating equations (GEE) model to test our hypotheses. Findings: The finding shows that long-tenured CEOs are more likely to hesitate to make radical strategic change. The results also show that various boundary conditions shape the positive relationship between CEO tenure and strategic persistence. Specifically, results show that the positive relationship between CEO tenure and strategic persistence is amplified when the CEO has a strong prevention focus, and there is a strong level of resource constraints. Research limitations/implications: This study has limitations related to the measurement of regulatory focus. Although we use CEO letters to shareholders to measure CEO regulatory focus by following existing studies, this measurement could not fully capture CEOs' internal characteristics. In addition, this study does not consider the impact of TMT members. Future studies need to consider the interaction effect of TMT members. Originality/value: This study extends CEO tenure literature by adopting the concept of the CEO paradigm. Although there is acknowledged importance of CEO tenure in existing research, there has been limited exploration of the direct link between CEO tenure and strategic change. This study adds depth to theoretical insights by delving into various interactions such as CEO psychological traits and firm resources.