When it’s time to select a CEO, boards often struggle with whether to select an insider who already knows the company well or an outsider who can shake things up.
A new working paper suggests the best option might be a candidate who is a bit of both. For example, an executive who runs one of the firm’s subsidiaries but isn’t in a leadership role at the parent company might be the top choice, The Wall Street Journal reports.
The paper’s author, Tingyu Du, a Ph.D. student at UCLA Anderson School of Business, describes CEOs promoted from subsidiaries as “hybrid CEOs.” Du’s research suggests these types of leaders seem to be especially effective during times of economic and/or industry turbulence.
“Hybrid CEOs perform better than insiders or outsiders because, on the one hand, they are knowledgeable about the company culture and capabilities, and on the other hand, they have an outsider mindset, being more open to new ideas, and they haven’t been part of the head office,” she tells WSJ. Read the full story.
