Leadership for quick recovery: CEO tenure, risk-taking and corporate resilience
Maria Angela Manzi, Carlotta Benedetti, Alessandro Cirillo, Salvatore SciasciaPurpose
When adversity hits, CEO's leadership is determinant in interpreting, responding to and recovering from shocks. Yet, despite extensive research on corporate resilience across macro-, meso- and micro-levels, little is known about the individual-level drivers through which CEOs shape the firm's ability to recover quickly. Building on upper echelons theory, we examine how CEO tenure functions as a double-edged sword, balancing accumulated experience against risks of rigidity, and whether CEOs' risk-taking moderates this relationship.
Design/methodology/approach
We draw on a panel of non-financial firms listed on Euronext Milan from 2013 to 2023. Corporate resilience is operationalized as the time needed to recover from episodes of financial distress, estimated through a Cox Proportional Hazards model.
Findings
Our results reveal a U-shaped relationship between CEO tenure and corporate resilience in terms of time to recovery. Recovery time decreases, thus increasing corporate resilience, during the mid-phase of a CEO's tenure when experiential learning and organizational knowledge are at their peak, thereby enhancing resilience. Additionally, CEO risk-taking negatively moderates this relationship: a higher risk propensity increases the likelihood that CEOs pursue rapid actions to overcome distress, further boosting resilience.
Originality/value
By framing resilience as time to recovery, our study shows that CEO tenure and risk-taking orientation are key factors in corporate resilience, bridging two largely separate research domains: leadership studies and resilience research.