A founder’s departure can have a positive, negative or neutral effect on organizational performance. New research helps to predict the impact of founder succession on a particular organization.
Founder succession in one company rejuvenates and revitalizes the organization: growth rates and financial returns increase, improving the organization’s overall performance and odds of survival. Founder succession in another company leads to organizational crisis, diminishing performance, disrupting routines and interrupting command. Founder succession in a third company has no visible impact on financial or organizational performance. What explains these disparate outcomes?
Scholars have long sought to understand how founders shape their ventures and how a founder’s departure affects an organization’s fate. But previous research on managerial succession in general and founder succession in particular has been inconclusive. Dozens of studies support each of the three possible outcomes of managerial succession: it can have a positive, negative or neutral impact on organizational performance. What factors affect each outcome? And can you predict the impact of a founder’s departure on a given organization?
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