[Research Summary:Research on necessity entrepreneurship has generated important insights, yet it views necessity entrepreneurs in developed countries as one encompassing group of unemployed individuals—ignoring that the level of need is not uniform but instead increases with time spent in unemployment. We begin to unpack the role of unemployment duration in necessity entrepreneurship by asking how it affects one of the most fundamental decisions in start-ups: “what business should I be in?” Analyzing primary data on 576 necessity entrepreneurs combined with three secondary data sets, we find that unemployment duration affects whether ventures are launched in “home” or in external industries, and moderates the extent to which founders' industry experience and the attractiveness of external opportunities relative to those in the “home” industry shape industry choice. Managerial Summary:Necessity entrepreneurs—individuals who create new firms because they have no other options for work—represent a substantial proportion of world-wide entrepreneurial activity, and, in developed countries, often come from the ranks of the unemployed. We analyze these entrepreneurs by answering the question “what business should I be in?,” a fundamental strategic decision that founders make. Our findings reveal that duration in unemployment is a key, hitherto unexamined factor that systematically affects the industry-choice decision in startups. Moreover, we find that duration of unemployment moderates the founder's industry experience and the attractiveness of external opportunities relative to those in the “home” industry, with a markedly different picture for the long-term unemployed—suggesting the need for customized government policies for formerly unemployed entrepreneurs.]

[Research Summary: Why do top executives leave their firms? Research on executive turnover has either focused on CEO dismissal or on group-level top management team (TMT) departure rates, mostly ignoring individual-level factors that would predict why non-CEO executives exit. Here, we extend the shock perspective of the unfolding model of turnover used in organizational behavior research to show how relational and reputational shocks influence turnover at the executive level. Our sample includes over 4,000 executives from S&P 1500 firms over 11 years. We hypothesize and find that relational and reputational shocks increase the likelihood of top executive exit. We also consider the moderating influence of pay disparity on these relationships, which impacts how each type of shock influences executive turnover. Managerial Summary: Replacing top executives can be extremely costly for firms. Consequently, understanding the reasons behind top executive exit are important. We examine the effect of different types of shock on the likelihood a top executive will exit their firm. We find that both relational shocks (e.g., other members of the TMT leaving), as well as reputational shocks (e.g., litigation or shareholder activism against the firm), increase turnover. However, we find that higher status executives experience these shocks differently than lower status executives.]

Abstract Research Summary Our paper sheds new light on the performance implications associated with insider versus outsider CEOs. We frame CEO selection as risk‐taking, in which outsiders are relatively risky hires, with a greater tendency to generate extreme performance outcomes—either positive or negative—as compared to insiders. We base this expectation on two complementary theoretical perspectives: human capital and information asymmetry. We conduct multiple tests on large samples of CEO successions, with controls for endogeneity, and find that outsiders are indeed associated with more extreme performance outcomes than are insiders. Managerial Summary We shed new light on the performance implications associated with outsider CEOs. Instead of asking the customary question, “Do outsider CEOs, on average, perform better or worse than insider CEOs?,” we frame CEO selection as risk‐taking. Under this view, outsiders are relatively risky hires, with a greater likelihood of generating extreme performance outcomes—either positive or negative—as compared to insiders. We conduct multiple tests on large samples of CEO successions and find that outsiders are indeed associated with more extreme performance outcomes than are insiders.

[Research Summary:Our paper sheds new light on the performance implications associated with insider versus outsider CEOs. We frame CEO selection as risk-taking, in which outsiders are relatively risky hires, with a greater tendency to generate extreme performance outcomes—either positive or negative—as compared to insiders. We base this expectation on two complementary theoretical perspectives: human capital and information asymmetry. We conduct multiple tests on large samples of CEO successions, with controls for endogeneity, and find that outsiders are indeed associated with more extreme performance outcomes than are insiders. Managerial Summary:We shed new light on the performance implications associated with outsider CEOs. Instead of asking the customary question, “Do outsider CEOs, on average, perform better or worse than insider CEOs?,” we frame CEO selection as risk-taking. Under this view, outsiders are relatively risky hires, with a greater likelihood of generating extreme performance outcomes—either positive or negative—as compared to insiders. We conduct multiple tests on large samples of CEO successions and find that outsiders are indeed associated with more extreme performance outcomes than are insiders.]