The Effects of Managerial Succession on Organizational Performance

Boyne and Dahya (2002) posit that the means, motives, and opportunities available to top managers will affect their ability to impact organizational performance. In this analysis, I test the theory posited by Boyne and Dahya and expand the model by exploring whether the performance effects of executive succession differ between an internal promotion and an external hire. Using Texas school superintendents as the managers in question, I use pooled, time-series data to test both the immediate and the long-term effects of managerial succession on performance. The findings reveal that an immediate, negative effect of executive succession is present only in the case of an externally hired replacement and that the long-term effect of managerial change on organizational performance is positive. These findings suggest that public managerial succession does influence organizational performance. The influence of public managers on organizational performance has persistently been of interest in the field of public administration (Barnard 1939; Brudney, O'Toole, and Rainey 2000; Nicholson-Crotty and O'Toole 2004; Rainey 2003). Case studies of specific managers or a single organization have been extremely valuable as foundations for understanding the complex interrelations between managers and performance. Building on these case studies, a more rigorous attempt at empirical, quantitative studies is starting to permeate the study of public administration. For example, studies have now examined how performance is influenced by networks (Meier and O'Toole 2003; Milward and Provan 1998; O'Toole and Meier 1999; Provan and Milward 1995), strategy (Boyne and Walker 2004), and governance (Lynn, Heinrich, and Hill 2000). Despite the recent surge in quantitative studies of public management, one issue that has not been explored is the extent to which organizational performance is affected when top management is changed. Studying the effect of managerial succession on organizational performance from a large N perspective will assist in building the growing body of public management scholarship by allowing for more generalizability and by contextualizing evidence on single organizations. This article will apply a theoretical model developed by Boyne and Dahya (2002) to an organizational type of high public salience: public school districts. Through testing this theoretical model, it is possible to explore the shortand long-term effects of Special thanks to Ken Meier, George Boyne, and the anonymous reviewers for their comments and suggestions. Address correspondence to the author at ghill@politics.tamu.edu. doi:1 0.1 093/jopart/mui034 Advance Access publication on February 18, 2005 ? The Author 2005. Published by Oxford University Press on behalf of the Journal of Public Administration Research and Theory, Inc. All rights reserved. For permissions, please e-mail: journals.permissions@oupjournals.org. This content downloaded from 207.46.13.127 on Fri, 14 Oct 2016 04:30:23 UTC All use subject to http://about.jstor.org/terms 586 Journal of Public Administration Research and Theory managerial succession on organizational performance. I will present the Boyne/Dahya theory of managerial succession and test it on the impact of school superintendents on performance. Finally, I will discuss the results and derive implications for theories of managerial succession and the effects of succession on organizational performance. THEORY OF MANAGERIAL SUCCESSION There is little public administration literature that looks specifically at how managerial succession affects organizational performance. Numerous scholars have addressed managerial change in some form, however. McGregor (1974) studies the issue of mobility of career bureaucrats through the civil service organization. Goodman (1982) views managerial change as elusive, something that cannot be clearly or accurately tested. O'Toole and Meier (2002) look at organizational stability, but they do not explicitly address the impact of managerial change. They argue that organizational stability leads to more efficient functioning. In short, the research questions in this article have not been expressly addressed in any of these bodies of literature. The primary work available on the effects of managerial succession on organizational performance is Boyne and Dahya (2002). The premise of the theoretical model they develop is that "the motives of chief executives, the means at their disposal, and the opportunities available" (Boyne and Dahya 2002, 179) are the primary independent variables that affect performance when management is changed. It is this view of executive succession that I wish to test. Furthermore, I expand the Boyne/Dahya model by exploring whether performance effects differ between internal promotion and an external hire when a top manager is replaced. The assumption most often associated with managerial change is that it occurs because the previous manager was ineffective or inefficient, and that a new manager is assigned to transform the organization. Furthermore, managers of long tenure can ossify, becoming rigid and unadaptable to either the environment or the changing needs of the organization, in which case change is necessary. Others assert that change strategies are industry specific. Lieberson and O'Connor (1972) show that environmental factors, the organization's place within the industry, as well as the industry itself have a greater effect on performance than does leadership. Some studies seem to contradict Lieberson and O'Connor's findings. Weiner and Mahoney (1981) examine manufacturing companies and find that leadership explained 44 percent of the variance in profit. Others have found similar effects of leadership. For example, Thomas (1988) looks at retail and finds that leadership explained 51 percent of the profit variance. If leaders or managers make up such a substantial portion of the variance in performance indicators, then changing those leaders ought to have an effect on this variance.