Question
A senior role is open. You can promote someone you know, or bring in an experienced outsider. Which is the better bet?
Short answer: decide by what the role has to change, not by where the candidate comes from. The studies below do not settle "inside or outside" in general. Two compare inside and outside CEOs after appointment, each on a single outcome; none gives a broad comparison of how inside and outside leaders perform. What they show is narrower and more useful. Insiders are easier to judge, and also easier to rate too kindly. Outsiders brought change when they brought experience of that specific change. And growing leaders from within depends on a succession pipeline that, in the Saudi universities studied, did not exist.
Three of the studies are from the Gulf. Two of them, from the UAE and from Saudi health care, look directly at expatriates and nationals; the third is about succession planning and gender in Saudi universities.
Evidence
Employers know more about their own people than about outsiders. A 2024 study in the Journal of Management starts from that premise: internal labour markets, "with the unique insights they have on current employees, are better equipped to assess workers' managerial potential and competencies", while a firm hiring from outside has to read signals under uncertainty. It uses the complete career histories of 2,079 professionals in the scouting operations of Major League Baseball teams, from 1988 to 2010, to test how signals such as the time to a first management promotion relate to being hired away.
The same familiarity can tilt the scores. In a 2018 study of applications for teaching posts in Spokane Public Schools, in the United States, applicants from outside the district received lower ratings than internal applicants. "This gap in ratings remains significant even after including measures of qualifications and quality such as experience, state licensure scores, or estimated teacher value added." Raters also agreed with one another less when they rated external applicants. (Read in library)
Outsiders brought change when they brought the right experience. A 2024 study of 1,340 US firms outside the digital industries, all in the S&P 1500 (11,238 firm-years, 2006 to 2020), found that outside CEOs who had prior experience of digital transformation drove it forward. Outside CEOs without that experience showed no positive effect; the estimate was negative and marginally significant.
Being new mattered more than being an outsider. A 2018 study of letters to shareholders from large German listed companies found newly appointed CEOs less committed to the status quo than established ones, and more so after a forced change at the top than a voluntary one. Against the common assumption, outside successors were no less committed to the status quo than inside successors. The authors read the forced-turnover result as the influence of a mandate for change.
Growing leaders from within needs a pipeline. A 2024 qualitative study of women's leadership development and succession planning in public and private universities in Saudi Arabia found no formal succession planning: "top powers typically select leaders", and "networking and relationships play a significant role". Only four of the 18 participants could describe what succession planning is. (Read in library)
In the UAE, organisations built a deliberate path for nationals. A 2020 study interviewed the managers who run workforce-localisation programmes in 14 UAE organisations. They used five practices to bring national employees in: thorough orientation; formal training, including supervisor, mentoring and coaching programmes; redesigned jobs and teams; involving expatriates in the process; and networking events. It is a qualitative study: it describes the practices, and does not measure their effect.
Expatriate leaders can develop national ones, at a cost to the mentors. A 2026 study of Saudi Arabia's health-sector transformation, based on interviews with 30 physicians and 23 patients, found expatriate doctors often placed as mentors to Saudi physicians, and the informal knowledge transfer between them "very significant". But expatriate mentoring, "if overused, without recognition and workload adjustment, can be a strain on the mentor and emerging leader". The authors recommend structured pairing of Saudi and expatriate professionals. (Read in library)
Disagreement
The two CEO studies seem to point in different directions. In the US digital study, outsiders drove change when they had the relevant experience; in the German study, outsiders were no more open to change than insiders, while new CEOs appointed after a forced change were. Read together, "outsider" looks like a stand-in for what actually mattered: relevant experience and a mandate to change things.
The same goes for insiders. They are better known, which is the premise of the Journal of Management study, and they are rated more generously than their measured qualifications justify, which is what the Spokane study found. Both can be true at once.
Two of the studies do compare inside and outside CEOs after appointment, but each on one outcome: digital transformation in the US study, commitment to the status quo in the German one. None compares how inside and outside leaders perform more broadly, and none compares expatriate and national leaders in the Gulf. We found no openly licensed study that does.
Peoplense Verdict
Hire from outside for a specific change you cannot grow in time; grow from within for the rest, and build the pipeline before you need it. Write down what the role must change before you look at candidates. An outsider is the better bet only if they have done that change before. An insider deserves the role only if they beat outside candidates on the same written criteria, not on familiarity. In the Gulf the two routes can work together: an experienced expatriate can develop the national who will succeed them, if the mentoring is planned, recognised and given time.
Confidence: moderate on the selection points: insider bias in ratings, and experience mattering more than origin. Low on which route produces better leaders overall: the two studies that compare them after appointment each measure a single outcome.
What to do today
- Write the role's brief before the search. Name the one or two changes this leader must deliver.
- Score everyone against it. Inside and outside candidates face the same written criteria and the same panel, and each panel member scores independently before any discussion. In the Spokane study, raters scored outsiders lower at the same qualifications and agreed with one another less about them.
- Ask outsiders for evidence of the same change done before, not for seniority or famous employers.
- If the role will be localised, plan the handover at the hire. Pair the expatriate with a named national successor, reduce the mentor's other workload, and put the mentoring in their objectives.
- Start a succession list now. For each senior role, name who could step in within a year and what they still lack.
GCC Relevance
Three of the studies are from the Gulf: Saudi universities (18 participants), Saudi health care (53 interviews) and UAE localisation programmes (14 organisations). All three are qualitative. The others come from the United States and Germany.
In the UAE, nationals made up only 3.64% of the private-sector workforce in 2019, the localisation study reports. The Saudi and UAE studies describe how organisations bring nationals in and develop them: orientation, training, mentoring, and expatriates involved in the process. None of them measures whether this produces better leaders.
The Saudi universities study found no formal succession process at all, with leaders chosen from the top and through relationships.
Sources
The seven research sources below are open access, published under CC BY 4.0, with the licence verified per article through Crossref. All are academic journal articles; none was published by a company that sells recruitment, assessment or leadership services.
- Managerial Human Capital and External Mobility: A Signaling Perspective — Journal of Management, 2024 (online; issue 2026)
- Disparities in ratings of internal and external applicants: A case for model-based inter-rater reliability — PLOS ONE, 2018
- Institutional entrepreneurship and digital transformation: The role of outsider CEOs — Strategic Organization, 2024 (online; issue 2025)
- CEO succession and the CEO's commitment to the status quo — Business Research, 2018
- Who is the next leader? Understanding women leadership development and succession planning in Saudi Arabian higher educational institutions — Frontiers in Sociology, 2024
- Workforce Localization in the Arab Gulf Countries: How Do Organizations Socialize the Members of a Powerful Minority? — Sustainability, 2020
- Negotiating reform from within: workforce governance and the expatriate–Saudi interface in the SHSTP era — Frontiers in Public Health, 2026