CEO change and the perception of enhanced product: an implicit theory perspective

Abstract

Purpose This paper aims to investigate the influence of implicit self-theories and the change in CEO of a firm after product failure on consumers’ preference of the enhanced product. Design/methodology/approach Three experiments were conducted involving product failure and CEO change scenarios. Findings Studies demonstrate that incremental theorists prefer the enhanced product after the CEO change (vs no change), whereas entity theorists do not prefer the enhanced product after the CEO change. This effect is mediated by consumers’ perception of the likelihood of success of the firm after the CEO change. Furthermore, entity theorists prefer the enhanced product only when the CEO change is external (vs internal). Research limitations/implications Future research could investigate if the impact of CEO change on product perception depends on the severity of the situation, and identify boundary conditions under which the CEO change is not beneficial. Practical implications The results suggest that organizations can take advantage of the leadership change by introducing new products strategically around the period of leadership change. Marketers can induce incremental mindset in their advertisement material during the period of leadership change to ensure that all consumers have a positive perception of the enhanced products. Originality/value This is the first research to investigate how consumers respond to leadership changes made by organizations. The findings show that different signals (internal vs external CEO change) can generate different reactions across different receivers (incremental vs entity theorists).