CEO proactiveness,innovation, and firm performance

Chief Executive Officers (CEOs) are essential in driving firm innovation. However, despite existing research on CEO personality characteristics and firm innovation and performance, we know relatively little about how personality characteristics reflecting anticipatory action and strong outcome-oriented components, such as proactiveness, shape firm innovation and performance. We explore the relationship between CEO proactiveness and three facets of organizational innovation, as well as its impact on firm performance. We suggest that CEO proactiveness is manifested in different network-building, problem-solving, and feedback-seeking behaviors with different implications for exploratory innovation, exploitative innovation, and organizational ambidexterity, and that its effect on firm performance is partially mediated by organizational ambidexterity. By examining the influence of this important CEO personality characteristic on key firm strategic choices and performance, we extend research on strategic leadership and firm innovation and performance.     

A mixed-methods study of CEO transformational leadership and firm performance

This mixed-methods study explores the relationship between CEO transformational leadership and firm performance relying exclusively on secondary data. We used a random sample comprising of 42 CEOs of publicly-listed US and European companies. We evaluated their transformational leadership drawing upon media sources which were content analyzed to create individual CEO profiles. These profiles were then given to a panel of three judges who rated the CEOs on their transformational leadership style. We obtained the firm performance data from Thomson Datastream. Our results showed significant associations between intellectual stimulation and inspirational motivation respectively, and different financial performance indicators. We also observed a tendency of positive relationships between individualized consideration and firm performance. These findings remained significant after controlling for company baseline performance, firm size, CEO tenure, and company location. Our findings largely support the positive role of CEO transformational leadership in shaping firm performance.     

CEO characteristics and firm valuation: a quantile regression analysis

This study investigates the effects of three highly-visible CEO characteristics on firm valuation. Using a sample of 2702 observations for Australian firms over the period 2001–2011, we find that CEO age is uniformly associated with lower firm valuation. CEO tenure is also associated with lower valuation, but more significantly so in the higher quantiles of firm valuation, that is for firms with high-growth opportunities. In contrast, CEO duality is found to be beneficial only for firms with high-growth opportunities. Overall, the study highlights the contingent relationship between CEO characteristics and firm valuation.     

CEO grandiose narcissism and firm performance: The role of organizational identification

This study reconciles the positive and negative sides of CEO grandiose narcissism by examining the role that CEO organizational identification plays in moderating the effect of CEO grandiose narcissism on top management team (TMT) behavioral integration. We first distinguish between grandiose and vulnerable narcissism and we then draw on upper echelons theory and executive personality research to hypothesize and test a model in which CEO grandiose narcissism is positively related to TMT behavioral integration when CEOs are high in organizational identification. The relationship is expected to be negative when CEOs do not identify strongly with their organizations. TMT behavioral integration, in turn, predicts subsequent firm performance. Findings based on multi-source data from a sample of 97 CEOs and their firms supported the hypotheses. These results highlight the complex nature of CEO grandiose narcissism – namely, that the construct has both positive and negative aspects as it relates to top management team dynamics and firm performance and that the relationship is affected by CEOs' identification with their organizations.     

The impact of CEO turnover on firm performance around interim successions

Prior research reports that financial performance of firms that hire interim CEO successors is worse following interim CEO appointments than those that hire permanent successors. We find that this underperformance occurs only following voluntary turnover interim appointments, which represent a small fraction of all voluntary turnovers and roughly a quarter of all interim appointments. We do not observe poor performance when boards hire interim successors following instances of forced departure. Further analysis shows that poor performance during voluntary turnover interim successions are limited to using operating performance measures; market performance is not significantly worse following interim successions. Our results indicate that many interim appointments should not be viewed as value decreasing endeavors and future research on post-succession financial performance should consider the circumstances surrounding the turnover of the predecessor.     

CEO duality and firm performance: The moderating roles of other executives and blockholding outside directors

This study examines how the effect of CEO duality on firm performance is affected by two internal governance forces – namely other executives in the top management team and blockholding outside directors. Results based on a longitudinal dataset from the U.S. computer industry were consistent with my hypotheses. Specifically, I found that the effect of CEO duality was negative when the CEO had dominant power relative to other executives and when the board had a blockholding outside director, but was nonsignificant otherwise. This study enriches our understanding of the effect of CEO duality, and helps reinforce the call for the nonduality structure as the default choice and put the burden of proof on those who wish to justify otherwise on special grounds.     

CEO humility,narcissism and firm innovation: A paradox perspective on CEO traits

We examine how two seemingly contradictory yet potentially complementary CEO traits—humility and narcissism—interact to affect firm innovation. We adopt a paradox perspective and propose that individuals can have paradoxical traits and that, in particular, humility and narcissism can coexist harmoniously, especially among the Chinese, whose philosophical tradition embraces paradoxical thinking and behaving. CEOs that are both humble and narcissistic are hypothesized to be more likely to have socialized charisma, to cultivate an innovative culture, and to deliver innovative performance. Two studies using multisource data involving 63 CEOs, 328 top managers, and 645 middle managers in Study 1 and 143 CEOs and 190 top managers in Study 2 support the hypotheses and point to new directions for studying CEO traits and their effects on firm outcomes.     

CEO burnout,managerial discretion,and firm performance: The role of CEO locus of control,structural power,and organizational factors

Despite the possibility of burnout resulting from dynamics in firms' upper echelons, little if any work has focused on chief executive officer's (CEO's) burnout and firm performance. Drawing on managerial discretion theory, this article analyzes the influence of CEO burnout on firm performance and the moderating roles of the individual (CEO locus of control), structural power (CEO duality and CEO tenure), and organizational characteristics (size, age, and resource availability) related to managerial discretion. Using a sample of 156 CEOs in Swedish firms, we find a negative association between CEOs who report higher burnout and firm performance. Our results confirm that CEO duality and resource availability ameliorate and firm size exacerbates the negative association between CEO burnout and firm performance. Contrary to our expectations, CEO locus of control, CEO tenure, and firm age do not influence this relationship. We discuss the implications of our research for upper echelons theory and strategic leadership theory.     

A juggling act: CEO polychronicity and firm innovation

This study examines a unique CEO temporal characteristic—polychronicity (the extent to which CEOs prefer to engage in multiple projects simultaneously and believe that this is the best way of doing things). I propose that CEO polychronicity is a double-edged sword for firm innovation and that this relationship is contingent on the environmental and organizational contexts. Specifically, CEO polychronicity is positively related to firm innovation when firms operate in more dynamic environments, are relatively large and have poor past performance, but is negatively related to firm innovation when firms operate in less dynamic environments, are relatively small and have good past performance. Results based on survey data from 111 Chinese small and medium-sized enterprises (SMEs) largely support my hypotheses. This study makes contributions by being an initial attempt to examine CEO polychronicity and by identifying essential boundary conditions of the effect of CEO polychronicity on firm innovation.     

Ownership concentration,board characteristics and firm performance among Shariah-compliant companies

Journal of Management and Governance - This paper aims to enhance the understanding of the relationship between corporate governance mechanism and firm performance among Shariah-compliant firms...     

Dynamic capabilities and firm performance

This paper juxtaposes conflicting claims about the relationship between codified dynamic capabilities and firm performance at different levels of environmental dynamism. Furthermore, it argues that the contradictory propositions and findings in prior research are due to said relationship being contingent on key, yet thus far overlooked and unaccounted for, factors internal to the firm such as dynamism exposure and asset base complexity. Empirical tests in the context of the mutual funds industry provide evidence that the performance contribution of codified dynamic capabilities does decline as environmental dynamism increases, yet for any given level of environmental dynamism the magnitude and even the sign of the performance contribution of codified dynamic capabilities are significantly influenced by firms’ dynamism exposure and asset base complexity. Going beyond received wisdom, this study advances a more nuanced contingency approach to dynamic capabilities which contributes to a better understanding of how the value of dynamic capabilities is shaped by a complex interplay of environmental and internal factors.     

The role of CEO emotional stability and team heterogeneity in shaping the top management team affective tone and firm performance relationship

In this paper, we aim to bridge the micro-macro divide by addressing continued calls from strategic leadership and affect researchers to examine the black box to consider how CEO characteristics relate to top management team (TMT) affective experiences, and, in turn firm outcomes. We further consider the role of one key contextual factor in this relationship: TMT heterogeneity. We predict that CEO personality, specifically, emotional stability, is positively associated with TMT affective tone. Moreover, we posit that the relationship between TMT affective tone and firm performance depends on TMT task-related heterogeneity, such that positive affective tone benefits firm performance in heterogeneous TMTs, whereas negative affective tone benefits firm performance in homogeneous TMTs. Using a novel methodology that measures key psychological aspects of the CEO and TMT, we examined 50 TMTs from publicly-traded companies to test our predictions. Our findings offer theoretical contributions to the strategic leadership, affect and diversity literatures as well as managerial applications for CEO selection and management and managing diversity in upper echelons.     

Women on boards and firm performance

This study investigates the financial performance of Dutch companies both with and without women on their boards. The analysis extends earlier methods used in research by Catalyst (The bottom line: corporate performance and women’s representation on boards, 2007) and McKinsey (Women matter. Gender diversity, a corporate performance driver. McKinsey & Company, USA, 2007), two studies that are often cited in the literature, although, each has a number of methodological shortcomings. This article adds to the international debate, which is often normative, through examining 99 listed companies in the Dutch Female Board Index. Our results show that firms with women directors perform better than those without women on their boards.     

Nonlinearity between CEO power and firm leverage: evidence from the threshold model

This paper examines the non-linearity between Chief Executive Officer (CEO) power and firm leverage using a sample of 295 selected small and medium-sized enterprises listed on China Shenzhen Stock Exchange SMEs Board during the period 2009–2013. Specifically, a threshold estimation technique developed by Hansen (J Econ 93(2):345–368, 1999) is applied to investigate whether firms with powerful CEO use a sub-optimal leverage. The results confirm that there is a double-threshold effect exist and suggest an inverted U-shaped relationship between CEO power and firm book value-based leverage. Thus, these findings reveal that the distribution of decision-making power within firms can affect financing decision are made and CEOs with higher ability to exercise decision-making power tend to use lower leverage to pursue their own benefits.     

Technological alliance portfolio configuration and firm performance

Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today’s business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables—number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge sword—it positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.     

Board of director efficacy and firm performance variability

While academic researchers continue to debate the effect of board independence in increasing performance, its efficacy could also be reflected in whether firm performance is made more stable. Board governance activities are a constellation of actions aimed at managing agency costs and ensuring the viability of a company over time. The efficacy of such actions would, therefore, be reflected in a distal outcome, specifically, in lower firm performance variability. Boards that can control agency costs and limit both underinvestment and overinvestment would reduce a firm's deviation from its mean performance trajectory. Using a longitudinal sample of publicly traded companies in the United States, we find that board stability, board resource provision, and CEO influence are negatively associated with performance variability. Board independence is not associated with performance variability. With increasing board independence, greater board stability and greater CEO influence are negatively associated with performance variability, however, greater board resource provision is not associated with performance variability.     

CEO compensation and firm competitive behavior: Empirical evidence from the U.S. pharmaceutical industry

Executive compensation is one of the most critically evaluated aspects of a firm. Driving this attention is the debate into what exactly are the consequences of executive pay. Since a majority of prior compensation research has aggregated industries into a single omnibus sample, it has been difficult to detect compensation effects that are likely industry specific. Accordingly, we focus on a high technology industry and examine how CEO incentive compensation affects firm competitive behavior. Utilizing a sample of U.S. pharmaceutical firms, we find that both short- and long-term incentives of a CEO are positively related to firm competitive aggressiveness. Moreover, our results show a positive relationship between long-term incentives of the top executive and the diversity of competitive moves undertaken by the firm. This study contributes to technology management, compensation, and strategy literatures and generates interesting possibilities for future research.     

Gender diversity in boardroom and its impact on firm performance

Journal of Management and Governance - The study investigates the relationship between gender diversity within the board of directors and firm’s financial performance. The selected sample is...