Stressful exit of B2B executives and their impact on firm performance: Contingent effects of erosion of status, diminished social support and cohesiveness

Being fired is stressful. While unpleasant for all concerned, what if the person being sacked is a high-level B2B executive and a poor performer? What kind of impact does this exit have on co-workers, customers-and ultimately on a firm's performance? This research examines all these aspects, and introduces three moderators of Csuite dynamics in one framework. These are erosion of status, diminished social support, and group cohesiveness. And by applying job demands-resources theory, we are able to explain organizational stress. Our results show that when poor-performing executives are permanently let go, companies actually see a sacking sales bump of up to 6.3%. Results also show that upper echelon firings improve Tobin's Q, conditional on erosion in status (decreased by -5.9%), and cohesiveness (increased by +3.8%). To substantiate, we undertake over two dozen robustness checks. We also compare the implications when an executive's departure is forced or voluntary.