Temporal Focus, CEO Succession and Firm Performance During an Industry Discontinuity

The replacement of the chief executive starts a new chapter in the history of a firm. To offer a more nuanced understanding of the succession-performance relationship, we introduce CEO temporal focus as an important individual-level contingency. Acknowledging the temporal heterogeneity of outgoing and incoming CEOs, we argue that a shift in CEO temporal focus towards a present-oriented successor promotes adaptation, while keeping disruption at moderate levels. A shift towards a future-oriented successor, however, strengthens disruption, preventing the successor from reaping potential adaptation benefits. Based on a unique sample of private banks in Switzerland and Liechtenstein, we find that a shift towards present focus enhances, whereas a shift towards future focus decreases post-succession performance. Our findings extend the multi-level contingency framework of CEO succession and provide novel insights into the role of subjective temporality during a major industry-level discontinuity.