Jumping Ship: Will Your CEO Leave When Times Get Tough?
April 20, 2017
A study recently published in the Strategic Management Journal found that a CEO's decision to voluntarily leave a company when it starts to fail is driven by the executive's social capital – the personal relationships they have with business colleagues and key external stakeholders.
The researchers found that executives who have strong social capital as well as those who have poor social ties with business colleagues are the least likely to quit when their organizations start to suffer. It's those right in the middle who are the least likely to stick around and ride out the ship when times get rough.
Han Jiang, the study's lead researcher and an assistant professor at the University of Arizona, said a CEO's decision to stay or go is ultimately a cost-benefit dilemma. He said when a company fails, an executive's reputation could suffer dramatically, which could prompt them to leave before things get too bad.
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