Don't Stand By Me

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Executive Summary

When business leaders leave organizations following poor decisions, constituents often find comfort in replacing them with insiders - others familiar with the problem and original choices. But new research by Kellogg faculty members suggests that such decisions are best left to a completely unrelated, outside party, contrary to the natural inclination to go to an insider - someone with personal connections to the old boss. The researchers found that when new decision makers share a psychological connection with an initial decision maker, they may invest further in the failing programs of the first - even to their own financial detriment.

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