CEO tenure: An integrative review and pathways for future research

• Published date: 01 November 2021
• Author: Aïda Darouichi,Sven Kunisch,Markus Menz,Albert A. Cannella
• Date: 01 November 2021
• DOI: http://doi.org/10.1111/corg.12396

REVIEW ARTICLE

CEO tenure: An integrative review and pathways for future

research

Aïda Darouichi

1

| Sven Kunisch

2

| Markus Menz

1

| Albert A. Cannella Jr

3

1

Geneva School of Economics and

Management, University of Geneva, Geneva,

Switzerland

2

Department of Business Development and

Technology, Aarhus University, Herning,

Denmark

3

Mays Business School, Texas A&M

University, College Station, Texas, USA

Correspondence

Aïda Darouichi, Geneva School of Economics

and Management, University of Geneva,

Boulevard du Pont D'Arve 40, 1211 Geneva,

Switzerland.

Email: aida.darouichi@unige.ch

The copyright line for this article was changed

on 6 December 2021 after original online

publication.

Abstract

Research Question/Issue: Chief executive officer (CEO) tenure—the time a person

spends in the CEO position—is a key observable characteristic of the CEO that has

attracted considerable attention in the fields of management and accounting/finance.

Yet, the research has evolved in parallel streams, and scholars have used CEO tenure

as a proxy for various aspects of CEO givens and behaviors. The purpose of this

paper is to consolidate, assess, and integrate the extant knowledge about CEO tenure

from the fields of management and accounting/finance and, on that basis, stimulate

future research.

Research Findings/Insights: Our review reveals five key themes in CEO tenure

research that have been studied across the management and accounting/finance

fields: (1) CEO tenure and motivations; (2) CEO tenure and power; (3) CEO tenure

and social capital; (4) CEO tenure and human capital; and (5) CEO tenure and

stakeholder perceptions. We review the extant research along these research

themes, highlighting the collective insights, contributions, and shortcomings within

and between these themes.

Theoretical/Academic Implications: Our review suggests that CEO tenure is a multi-

faceted, complex construct. To advance extant knowledge, we propose three

pathways for future research: (1) substantiating knowledge within themes;

(2) expanding knowledge across themes; and (3) advancing knowledge about temporal

dynamics. We hope that research along those lines will help foster a richer and

deeper understanding of the dynamic and complex nature of CEO tenure, which will

also advance our understanding about CEOs in general.

Practitioner/Policy Implications: Our study offers a comprehensive understanding of

the nature of CEO tenure and its implications. Such an understanding can be

leveraged to define appropriate policies and governance decisions that account for

the dynamic nature of the CEO position.

KEYWORDS

corporate governance, CEO tenure, chief executive officer, strategic leadership

Received: 30 August 2019 Revised: 28 May 2021 Accepted: 1 June 2021

DOI: 10.1111/corg.12396

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reprodu ction in any medium,

provided the original work is properly cited.

© 2021 The Authors. Corporate Governance: An International Review published by John Wiley & Sons Ltd.

Corp Govern Int Rev. 2021;29:661–683. wileyonlinelibrary.com/journal/corg 661

1|INTRODUCTION

Chief executive officer (CEO) tenure

1

—the time a person spends in

the CEO position—plays a central role in CEO research (Finkelstein

et al., 2009; Hambrick & Fukutomi, 1991). In their seminal paper,

Hambrick and Mason (1984) identified “CEO tenure”as a key

observable characteristic that predicts both the “givens and

behaviors”of CEOs during their time in office. While serving in the

position, CEOs make decisions and, thereby, affect the fates and for-

tunes of their firms (Hambrick & Fukutomi, 1991; Miller, 1991). A

profound understanding of CEO tenure is thus important for under-

standing the roles and behaviors of CEOs in general.

It is therefore no surprise that CEO tenure has attracted consider-

able scholarly attention in the fields of management and accounting/

finance. Early conceptual and process works focused on the phases of

CEO tenure (e.g., Gabarro, 1987; Hambrick & Fukutomi, 1991;

Mintzberg, 1973; Vancil, 1987). Building on these works, scholars in

both fields have examined a variety of topics in relation to CEO

tenure, including CEO-related factors, such as motivation and commit-

ment (e.g., Hambrick et al., 1993; McClelland et al., 2010); compensa-

tion (e.g., Hill & Phan, 1991; Singh & Harianto, 1989; Taylor, 2013;

Wowak et al., 2011); CEO–board relations (e.g., Graham et al., 2020;

Hou et al., 2017); CEO–top management team (TMT) dynamics

(e.g., Dikolli et al., 2021; Ocasio, 1994); and CEO decision-making

(e.g., Ali & Zhang, 2015; Marinovic & Varas, 2019). Scholars have also

examined the relations between CEO tenure and various outcomes at

individual and firm levels, such as innovation (e.g., Wu et al., 2005),

strategic change (e.g., Boeker, 1997), and performance

(e.g., Miller, 1991; Miller & Shamsie, 2001; Simsek, 2007). Yet, to the

best of our knowledge, no review of the existing research exists.

This is surprising, and we believe that a review of CEO tenure

research is needed. First, CEO tenure research in the management and

accounting/finance fields has largely evolved in parallel. Despite the

common interest in CEO tenure, both streamsexplore different aspects

of CEO tenure and, in so doing, build on diverseassumptions, theories,

and methods. Even within the same field, research on CEO tenure

covers a range of topics. For example, while strategy scholars focus on

CEO tenure outcomes (e.g., Boeker, 1997; Miller, 1991; Miller &

Shamsie,2001; Stephan et al.,2003), leadershipscholars focus on career

topics (e.g., Glass & Cook, 2016; Simmonds, 1999), and corporate gover-

nance scholars focus on agency and incentives (e.g., Allen &

Panian, 1982; Hill & Phan, 1991; Mallette & Fowler, 1992). Although

each of the studies offers valuable insights, the dispersion of research

hampersthe integration and accumulation of knowledge.

Second, the conceptualizations and measurements of CEO tenure

are diverse, both within and across the two research fields, and

scholars have repeatedly lamented a lack of construct validity. For

example, Finkelstein et al. (2009) noted that CEO tenure has been

used as a proxy for the CEO's human capital (e.g., Agrawal &

Knoeber, 1996; Bergh, 2001), CEO conservatism and rigidity

(e.g., Finkelstein & Hambrick, 1990; Miller, 1991), and CEO power

(e.g., Barkema & Pennings, 1998; Ocasio, 1994). Thus, CEO tenure

has been used in relation to a plethora of features of the CEO. As a

consequence of the “potentially different meanings, it places an onus

on researchers to demonstrate construct validity, or at least try to

control for alternative meanings”(Finkelstein et al., 2009, p. 90). A

review that fosters a comprehensive and shared understanding of the

CEO tenure construct provides researchers with such a guidance on

its application and alternative explanations that should be considered

in their studies.

Third, despite the wealth of insights in the fields of management

and accounting/finance, the extant knowledge is inconclusive and

sometimes contradictory. For example, studies on the relationship

between CEO tenure and firm performance have revealed positive

(e.g., Salancik & Pfeffer, 1980), negative (e.g., Miller, 1991), and curvi-

linear relationships (e.g., Miller & Shamsie, 2001). These inconclusive

findings may be due to different assumptions and empirical

approaches. For example, while the vast majority of empirical studies

rely on linear time conceptions to measure CEO tenure, some works

rely on nonlinear conceptions of time such as life cycles. A review

that makes such implicit assumptions and approaches explicit helps

resolve inconclusive findings and identify underexplored areas of

research.

While the importance of CEO tenure and the wealth of research

in the two research fields are in themselves good reasons to assess

the extant knowledge, such a review also informs CEO research in

general.

2

CEO tenure is the central position feature that captures the

effect of time in CEO research (Hambrick & Fukutomi, 1991;

Miller, 1991). Thus, the study of CEO tenure can provide a fine-

grained understanding of when and how CEOs influence organiza-

tions (Bertrand, 2009). To this end, Hambrick and Fukutomi (1991,

p. 734) argued that a profound understanding of CEO tenure has

“major implications for the validity of upper-echelons theory.”

Against this backdrop, the aims of our research endeavor are to

assess and consolidate the extant knowledge about CEO tenure and

to provide guidance for future research. Building on the insights from

our review, we argue that an overarching theme for future research

on CEO tenure should be to develop a richer and deeper understand-

ing of how CEOs behave over time, why they behave as they do, and

the implications of their behavior.

2|FOUNDATIONS AND REVIEW

APPROACH

CEO tenure research is rooted in a long tradition of CEO research in

general. CEO research rests on the fundamental premise that CEOs

matter in organizations (Quigley & Hambrick, 2015).

3

Arguably,

“perhaps no single group of individuals has received more attention

than chief executive officers (CEOs). Much of this attention surely

comes from the fact these individuals are perceived as the key

decision-makers in corporations that account for most of the

economic activity in modern economies”(Bertrand, 2009, p. 2). As

noted above, CEO tenure is the central position feature that captures

the effect of time in CEO research (Hambrick & Fukutomi, 1991;

Miller, 1991).

662 DAROUICHI ET AL.