Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
Home Business Overly self-confident CEOs avoid change in organisations, finds new research

Overly self-confident CEOs avoid change in organisations, finds new research

by Staff GBAF Publications Ltd

CEOs with exaggerated self-confidence show a preference for steadiness within organisations, finds new research from the University of Mannheim Business School.

Marc Kowalzick, Post-Doctoral researcher at the University of Mannheim Business School, and Moritz Appels, former University of Mannheim PhD student and now Assistant Professor at Rotterdam School of Management, Erasmus University, address a central dilemma in our understanding of CEO hubris: Are these CEOs particularly inclined to change their firms’ trajectories or not?

To do so, they utilised a panel dataset of around 1200 S&P CEOs, measuring their levels of hubris and assessing well-established indicators for strategic change: change in resource diversification, business segment change, corporate restructuring, and top management team (TMT) membership additions and deletions. The TMT refers to CEOs’ closest executive peers.

They found that CEO hubris leads to less strategic change and TMT membership change within the organisation. Considering previous research suggests more hubristic CEOs are attracted to challenging strategic activities, this indicates that CEOs with inflated self-confidence regulate the impact of strategic activities on larger changes for the organisation, preferring steadiness.

Kowalzick says, “Higher levels of hubris in CEOs might lead them to see little reason for scrutinising and adapting existing organisational trajectories under their leadership. They consider themselves capable and bound in mastering the established ways of doing things.”

Therefore, although more hubristic CEOs might pursue challenging strategic activities for their inflated payoffs, they do refrain from the pursuit of big organisational changes, such as corporate reorganisations, resource deployment to business units, or the firm’s TMT composition.

These findings were first published in Journal of Management.