Before financial crisis, insiders were preferred as executives. However, the paradigm is changing towards outsider executives, partly because so many insider executives crashed and partly because firms are looking for ways to restart growth. Previous literature on the executive selection has largely emphasized importance of executive to organizational success. However, process of executive selection decision making has not been clearly explained. Outsider executive candidates’ qualities are less known compared to insiders, thereby causing uncertainty associated with competency. I have speculated candidate’s characteristics such as type of social tie to selector, and education level which can provide biased information to selection decision maker as means to reduce candidate’s competency uncertainty. Additionally, candidate’s gender was considered as a significant factor in executive selection process. This study explores the role of outsider executive candidate’s competency uncertainty, social tie to selection decision maker, prestige of education and gender in selection making process. Using policy capturing approach with participants with previous executive selection experiences, this study showed significant relationship between candidate’s characteristics and selection likelihood. But effect competency uncertainty on selection chance was not influenced by candidate’s social tie and education. Based on the current empirical research, it is indicated that prejudice, although illogical, is prevalent in outsider executive selection decision making process.
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The Effects of Candidate’s Characteristics and Competency Uncertainty on Outsider Executive Selection Decision
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