Leader succession is often perceived as a disruptive event that destabilizes team coordination, severs within-team relationships, and diminishes performance. However, this perspective overlooks the potential opportunities leader succession can present, particularly when team dynamics are constrained by pre-existing issues such as excessive hierarchical differentiation. Drawing on hierarchy stability and subgroup theories, we challenge this prevailing narrative and propose that leader succession can weaken rank-based subgroups, especially in teams characterized by high hierarchical differentiation. By signaling the potential mutability of established structures, leader succession fosters cross-rank interactions and reduces silos that hinder team functioning, ultimately enhancing external recognition of the team. Utilizing archival network and document co-editing data (Study 1) from 168 teams that experienced leader changes and 999 matched control teams and an online experiment with 231 participants (Study 2), we found robust support for our hypotheses, demonstrating that leader succession decreases subgroup strength in teams with high hierarchical differentiation, which mediates the relationship between leader succession and enhanced team recognition. Our findings contribute to the leadership and team dynamics literature by challenging the traditional view of leader succession as inherently disruptive. By highlighting its potential to reshape hierarchical subgroup dynamics, we offer novel insights into how rank-based subgroups can be transformed and their implications for team functioning and external recognition.
