In an industry defined by rapid change and relentless competition, leadership transitions can determine whether a hospitality firm adapts or falls behind. This article unpacks how CEO turnover can become a lever for innovation, exploring who drives the boldest transformations, which organizational structures amplify or constrain them, and what these dynamics mean for boards shaping the next generation of leaders.
The hospitality industry faces an unprecedented convergence of pressures from digital transformation and shifting consumer expectations to sustainability imperatives and talent retention. In such a challenging environment, innovation has become both a differentiator and a survival strategy. Understanding how leadership renewal shapes a firm’s ability to adapt and reinvent itself is thus crucial for resilience in the industry.
Leadership Transitions: A Turning Point for Strategy
Leadership transitions often mark a strategic inflection point. In hospitality, where innovation hinges on nuanced changes in service models, guest experience and digital processes, pinpointing the drivers of change is complex. This article sheds light on the results of a study carried out at EHL Hospitality Business School on the association between CEO turnover and innovation.
The study covered 70 publicly listed hospitality firms in the US and UK over a decade. By applying an econometric approach isolating the effect of CEO transitions on strategic orientation (i.e., a staggered difference-in-differences approach), it revealed when and how leadership changes influence innovation. We develop and explain the results below.
Fresh Perspectives: Outsider CEOs Drive Strategic Renewal
Research shows that the impact of CEO turnover on innovation is closely linked to the background of the incoming leader. Firms experience a stronger shift in strategy when the new CEO is brought in from outside the organization. Outsider CEOs, unbound by established norms and practices, are often more willing to challenge the status quo and introduce transformative ideas (Biscotti et al., 2018). In contrast, internal successors tend to prioritize continuity, which can limit the scope for meaningful strategic change.
Experience Matters: Rethinking Age and Innovation
It is generally assumed that younger CEOs are more inclined to take risks and pursue bold strategic shifts (Carpenter et al., 2004). However, findings from the hospitality sector suggest otherwise. Older CEOs, armed with deep industry experience and operational insight, are more likely to steer firms toward innovation-oriented strategies after a leadership transition. This challenges the notion that age hinders innovation, highlighting instead the value of seasoned leadership in navigating complex, service-driven environments (Elsaid & Ursel, 2012).
Who Owns the Ship? Ownership Structures Shape Innovation Trajectories
The effect of a CEO change doesn’t just depend on who steps in; it’s also shaped by who owns the company. Family-owned hospitality firms are notably more inclined to embrace innovation after leadership transitions. Their governance, rooted in long-term vision and strategic flexibility, gives new CEOs the latitude to chart fresh courses (Chrisman & Patel, 2012). On the other hand, firms dominated by institutional investors often see weaker post-turnover innovation, as tighter governance favors stability over experimentation (Block, 2012; Linuesa-Langreo et al., 2025).
Gender: Representation Challenges Overshadow Innovation Impact
While gender is often seen as a key differentiator in leadership style and risk appetite (Faccio et al., 2016), this analysis finds that CEO gender does not significantly influence the relationship between turnover and innovation. However, the data reveals a deeper issue: women remain vastly underrepresented in top executive roles in hospitality. Out of 620 firm-year observations, only 37 involved female CEOs, and just 9 of 70 firms ever appointed a woman to the top spot. This gap raises important questions about diversity and inclusion in leadership—issues that extend beyond innovation outcomes to the broader health of the industry.
Action Points for Boards and Stakeholders
For hospitality and service managers, these findings offer clear takeaways. CEO turnover can be a powerful catalyst for strategic renewal, especially when boards favor external appointments and create governance conditions that empower change. Family-owned firms, in particular, stand to benefit from their flexible, long-term approach. Importantly, experience and sector knowledge emerge as more reliable drivers of innovation than age alone. Meanwhile, while gender diversity is critical for equity, it does not appear to predict innovation outcomes in isolation.
Ultimately, leadership transitions should be viewed not just as potential risks but as key opportunities for strategic recalibration and growth. For boards and stakeholders prepared to align succession planning with the firm’s readiness for transformation, the appointment of a new CEO can unlock new pathways to innovation and competitive advantage.
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