TOP MANAGEMENT TURNOVER AND CORPORATE RESOURCES REALLOCATION.
Keywords:
team management turnover, resource reallocation, decision making bias, inertia trapAbstract
The effective management of organizational knowledge plays a crucial role in maintaining and expanding companies’ relevant practices and their goals in the market place. This study examines the close relationship between organizational forgetting and top management turnover in operating companies. It tries to comprehend how organizational forgetting which includes not being able to retain and transfer valuable lessons from the past experience affects companies’ operation. By examining the disruptions caused by turnover of an entire generation retiring from workforce and challenges of knowledge retention when organizations have access to large quantity of information and sophisticated data analysis tools, this research offers a framework for understanding the key elements influencing organizational forgetting and top management turnover. Research employs dynamic threshold method using S&P 500 data over 2000 companies. The results indicate that forgetting is likely to take place during TMT turnover, especially when the rate of turnover is beyond high. These findings emphasis the significance of team members' tenure length in triggering significant shifts in resource allocation patterns. This research enriches strategic decision-making practices, thereby contributing to both organizational theory and practical applications. The paper concludes with a policy recommendation that aims to guide organizations in navigating these dynamics effectively.
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