Political Dynamics and the Circulation of Power: CEO Succession in U.S. Industrial Corporations, 1960-1990

This paper is based on my doctoral dissertation research at Stanford University. An earlier version appeared in the Academy of Management Best Papers Proceedings 1993. I would like to thank my dissertation committee, Jeff Pfeffer, Bill Barnett, Jim March, and Joel Podolny, as well as Deborah Ancona, Mauro Guillen, Marshall Meyer, Paul Osterman, Maureen Scully, John Van Maanen, Marc Ventresca, Jim Walsh, and three anonymous ASO reviewers for invaluable advice, suggestions, and encouragement. Any remaining errors are my own. To explain patterns of political dynamics, this paper develops a model of the circulation of power and compares it with an alternative model, the institutionalization of power, in an event history analysis of CEO succession. The circulation of power emphasizes the internal contests for control and opposition to the CEO that emerge with increased executive tenure and under conditions of economic adversity. The study finds support for an increasing rate of CEO succession during the first decade of tenure, consistent with the model of circulation, followed by a slow decline afterward, consistent with institutionalization. The effects of economic adversity were found to trigger circulation when combined with long prior board tenure and large board size. Also, contrary to conventional views, under economic adversity, more inside board members increase CEO succession.'