Progression through CEO succession: - Literature review and quantitative study of succession's effect on USOs' human capital and development
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University spin offs (USO) represent an important source for wealth and job creation in our society and have seen a significant growth in the last 10 years. These are companies based on technology with potential to disrupt industries. Still, USOs are known to underperform compared to other independent new ventures, as their environments lack resources needed to develop. Their lack in resources increase the importance of the USOs intangible resources, namely human capital. The USO s CEO has the overall responsibility for opportunity recognition and progression, and the USO depends on his human capital as it greatyly influences the firm s performance. As the firm develops, new tasks and challenges arise, requiring new human capital to handle them. Having a CEO with the right human capital at the right time, therefore becomes crucial for USOs to commercially progress, but as their first CEOs seldom has the needed human capital, a CEO succession could be conducted to acquire the right human capital.Even though the CEO lacking human capital may cause USO s underperformance, and replacement is a viable solution, CEO succession has never been addressed in the USO literature. This master thesis wishes to address CEO succession by gathering literature and conducting a quantitative study, to close the literature gap about USO CEO succession and increase the USOs performance. The study investigates what human capital needs that arise as the USO develop, if CEO succession can fulfill these and how succession affects commercial progression. The thesis is written in two papers. Paper one is a literature review, collecting and discussing theory and former research on CEO successions. Paper two is a quantitative study, producing empirical evidence for how CEO succession affects the USO. In the first paper the goal is to use literature to describe how a CEO succession can fulfill the arising human capital needs and how succession affects the development of USOs.To answer this a literature search was conducted, to get an understanding of the most relevant literature regarding USO development, its human capital needs and the effect of CEO succession. None of the relevant 28 articles directly addressed CEO succession in USOs, confirming a gap in the USO literature. Due to the lack of literature, the study linked emerging needs in a USOs lifecycle to different human capital. This framework was used to investigate how CEO succession can fulfil these needs and enhance progression. The paper showed that CEO succession should be used to fulfil the need to acquire managerial, commercial, industry and entrepreneurial work experience, while also removing unnecessary academic work experience. Paper two is motivated by filling the gap in succession literature found in the first study, and discover how CEO succession affects human capital and the commercial progress. The paper investigates this by revising the propositions from paper one into hypotheses for empirical testing and testing them with data from 201 USOs in a regression model. The acquisition of the recommended work experiences in different development stages are analysed along with the progression of succession firms versus no-succession firms. The regression proved that as USOs evolve, USOs conducting successions proves to progress further commercially than USOs that do not and that CEO succession removes academic experience, while acquiring managerial and commercial experience. These findings are the first contribution to the CEO succession field in USO literature. The research exposes how the experience of their initial CEOs seldom fits the requirements for developing the USO, and should be replaced. The core implications for these parties is to create means for the USOs to access CEOs with the needed work experiences and dare to execute the necessary CEO successions. Earlier research on USOs has been restrained by a lack of quantitative data, resulting in ungeneralizable anecdotal works, and to this date there exists no research addressing CEO successions in USOs. This research resolves the lack of quantitative studies by accessing the FORNY database, comprising practically all research based startups in Norway since 1995, with 417 USOs. The academic contribution is introducing robust quantitative longitudinal research to the mostly anecdotal USO literature, being the first to open the black box of CEO successions in USOs.