A game theory perspective to power acquisition during CEO transition period

Abstract

Purpose

This study examines how CEOs-elect navigate power dynamics with incumbent CEOs during leadership transitions, focusing on their strategic choices – cooperate, defect or disengage – based on perceptions of the incumbent’s behavior.

Design/methodology/approach

Using the game theory framework and insights from 22 interviews with executives from large Canadian organizations, we analyze CEOs-elect’s decision-making from nomination to ascension.

Findings

CEOs-elect cooperate when they anticipate the incumbent to cooperate and defect when they anticipate defection. When faced with uncertainty or signs of disengagement from the incumbent, CEOs-elect strategically choose to disengage, adopting a “No Play” strategy to preserve board trust and organizational stability.

Research limitations/implications

Findings are based on large Canadian organizations, which may limit applicability to smaller firms, family businesses or different cultural contexts. Future research should examine CEO transitions across diverse organizational and cultural settings.

Practical implications

Boards should recognize proactively manage power struggles during transitions, ensuring support for CEOs-elect and promoting cooperation with incumbents. Understanding perceived incumbent strategies can improve transition planning, minimize conflicts and improve organizational outcomes.

Originality/value

This research introduces “No Play” as a novel strategic option in CEO transitions, contributing to game theory and power dynamics literature. It also bridges gaps in understanding by linking strategic choices of CEOs-elect to perceptions of incumbent behavior and stakeholder trust.

Citation

Elias, R. and Farah, B. (2025), "A game theory perspective to power acquisition during CEO transition period", Journal of Strategy and Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JSMA-07-2024-0175