CEO succession planning as a strategic asset: A qualitative study on the role and practices of Finnish boards in ensuring sustained competitive advantage

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Volume Title

School of Business | Master's thesis

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Date

2025-03-30

Department

Major/Subject

Mcode

Degree programme

Master's programme in People Management and Organizational Development

Language

en

Pages

102

Series

Abstract

CEO succession planning is an increasingly important part of strategic management, as rapid changes in the business environment force organizations to prepare for unexpected change. A change of CEO is an inevitable but disruptive event for the organization’s processes, for which corporate boards need to prepare through long-term strategic plans. Academic research on CEO succession planning in the Finnish context and from a board perspective is still scarce. The aim of this study is to examine CEO succession planning as a strategic process in the Finnish context and to examine the challenges of implementing succession planning. This study uses a qualitative method, in which semi-structured interviews (n=9) were conducted with board members of Finnish companies. This approach provides an opportunity to examine succession planning practices from the perspective of board members, as they are the main implementers of CEO succession planning. The empirical data was analyzed using thematic analysis to identify key themes and barriers to SP implementation. The results of the study are consistent with the literature reviewed and highlight the paradox between the recognized value of SP and the level of strategic implementation. The empirical evidence confirmed that although succession planning is considered critical, it is often informal or reactive. Furthermore, the results suggest that boards face several barriers to effective succession planning, including lack of commitment, informal practices, limited talent pools, and cultural discomfort with the topic. These barriers are influenced by contextual factors such as the size, structure and governance traditions of the firm. Using Resource-Based Theory (RBV) and Dynamic Capability (DC) theory as a theoretical framework, the study illustrates how SP can be conceptualized as a dynamic, forward-looking capability that enables organizations to renew, retain and leverage their leadership capital to achieve sustainable competitive advantage. Thus, the research contributes to a deeper understanding of how CEO SP can transform from a neglected administrative function into a key pillar of strategic board work.

Description

Supervisor

Diehl, Marjo-Riitta

Keywords

CEO, succession planning, board of directors, RBV, competitive advantage, dynamic capability

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202504223351

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[gradu] Kauppakorkeakoulu / BIZ