In this study, we examine the moderation effect of absorptive capacity on the performance consequences of diversification experiences. We suggest that absorptive capacity positively moderates the performance effects of product and international diversification experiences and those of unrelatedness in product and international diversification experiences. An empirical analysis conducted using a longitudinal dataset of Indian firms, from knowledge-intensive manufacturing sectors, for the period 2008–2018, broadly supports our arguments. Findings imply that firms with superior absorptive capacity can acquire and leverage knowledge from their diversification experiences effectively and mitigate the risks of negative transfer associated with unrelatedness in diversification experiences. Findings contribute to the organizational learning literature by examining the role of absorptive capacity in enabling performance outcomes of diversification experiences.

Why are some newly appointed CEOs dismissed from their positions while others are not? Is it hard for newly appointed CEOs to survive in highly diversified firms? Drawing upon the concepts of executive job demands and information-processing theory, we argue that newly appointed CEOs face entirely different degrees of complexity and challenges in their role, and that firms’ product diversification and international diversification predict dismissals of newly appointed CEOs after controlling for other possible explanatory variables. Additionally, we propose that appointment of a new outsider CEO makes newly appointed CEOs more vulnerable to dismissal and consequently strengthens the predicted relationships. The empirical results support our arguments. These results suggest that the demands faced by a high degree of (product or international) diversification are likely to present challenges that increase the likelihood of corporate disruption through the departures of newly appointed CEOs. Contributions to the CEO dismissal and succession literature are discussed.