As corporate elites and core directors, outside CEO directors bring unique strategic value to the focal firm where they serve as directors. Drawing on upper echelon theory, social categorization theory and psychology literature, this study analyzed the effect of outside CEO director on firm’s strategic change: outside CEO director contributes to firm’s strategic change by bringing more strategic knowledge stock to focal firm’s CEO. This study also examined when there are outside CEO directors inside the firm, what boundary conditions influence the effectiveness of outside CEO directors from a CEO-director communication perspective. This study suggests that language style similarity between CEO and outside CEO director facilitates the impact of outside CEO director on firm’s strategic ch...[ Read more ]

As corporate elites and core directors, outside CEO directors bring unique strategic value to the focal firm where they serve as directors. Drawing on upper echelon theory, social categorization theory and psychology literature, this study analyzed the effect of outside CEO director on firm’s strategic change: outside CEO director contributes to firm’s strategic change by bringing more strategic knowledge stock to focal firm’s CEO. This study also examined when there are outside CEO directors inside the firm, what boundary conditions influence the effectiveness of outside CEO directors from a CEO-director communication perspective. This study suggests that language style similarity between CEO and outside CEO director facilitates the impact of outside CEO director on firm’s strategic change by facilitating their communication frequency, while professional experience similarity hinders the impacts of outside CEO director on firm’s strategic change by inhibiting their communication quality. Demographic similarity between CEO and outside CEO director does not significantly influence the effectiveness of outside CEO director.

Keywords: Strategic change; Outside CEO director; Language style similarity; Demographic similarity; Professional experience similarity