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One important trend in recent leadership transitions in major U.S. corporations has been the prevalence of outsider succession, where an executive from outside the firm is appointed CEO. Building on and extending the insights from political theories of organizations, this paper explores how the historical shift from managerial to investor capitalism has reshaped firm-level power dynamics over executive succession, contributing to the rise of outsider succession. Three developments were particularly crucial�the growth of institutional ownership, the strengthening of internal monitoring by the board, and the rise of shareholder activism. Using data on the complete histories of CEO succession at 686 large U.S. corporations between 1981 and 2005, this article shows how these new developments have pluralized firm-level power struggles over executive succession and thus have further politicized the process. The importance of firm-level power dynamics in the process suggests that a shift in the dominant institutional logic does not directly translate into a new corporate practice, but that such translation depends on the outcome of firm-level power dynamics
