Economic analysis of human capital leads to a somewhat different question than that addressed by other management research on external succession: do differences between external successors in the transferability of their human capital affect firm performance, and if so, how? By comparing external successors that have within‐industry and related‐industry skills, we find that successors with less transferable (related‐industry) skills have greater variance of firm performance. Our analysis provides an example of the benefits of integrating economic concepts with empirical research in competitive strategy, on a topic of central concern in the traditional strategic management literature, namely, top executives.
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Bailey et al. (2003) studied this question.
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