Interactive Effects of CEOs’ Firm-Specific Experience and Versatile Experiences on Pursuit of New Growth Opportunity

Abstract

Prior research has opposing views about the merits of firm-specific managerial experience, and empirical findings are mixed. To address this problem, we ask when firm-specific managerial experience is helpful versus harmful in pursuit of new growth opportunities. We propose that when CEOs’ firm-specific experience is combined with versatile managerial experiences, its growth-constraining effect is alleviated due to increased adaptability of CEOs' human capital to support growth in new business domains. We find support for this argument in a sample of U.S. food firms and their pursuit of the organic food opportunity during 1997 to 2007. We also find that CEOs’ versatile experience by itself is not sufficient for the pursuit of new growth, but it is when the two types of experience are combined synergistically that firms can achieve higher rates of opportunity pursuit. In this vein, our research reconciles the alternative theoretical perspectives on firm-specific experience and invites further consideration of experience combinations where both positive and negative synergies drive the ultimate impact of key managerial experiences.