Executive Confidence: A Multidisciplinary Review, Synthesis, and Agenda for Future Research

Abstract

Over the past two decades, scholars of management, finance, accounting, economics, and entrepreneurship have studied the concept and implications of executive confidence in diverse settings. Despite sustained scholarly attention, numerous definitions, interpretations, and operationalizations of executive confidence present a problem for understanding past research and informing future progress. Equally problematic is that past research remains scattered across multiple disciplines, lacking a cohesive and comprehensive integration. Based on an in-depth review of 118 executive confidence studies and 268 studies in the wider confidence literature, we marshal the literature into four overarching themes for an encompassing understanding: (i) conceptualization of executive confidence, (ii) governance mechanisms and pathways of influence, (iii) implications and outcomes, and (iv) origins and antecedents. We leverage the insights of our review to discuss a richer conceptualization of executive confidence and chart an agenda for future research across each of the four themes of our review.

Nothing Ventured, Nothing Gained: A Meta-Analysis of CEO Overconfidence, Strategic Risk Taking, and Performance

“…These findings offer strong empirical evidence for the well-established but rarely empirically tested process perspective of UET (Liu et al, 2018; Neely et al, 2020). Our identification of strategic risk taking as a mediator is also a response to recent calls to identify explanatory mechanisms through which CEO overconfidence is linked to firm outcomes—a topic that has been largely neglected in past research (Heavey et al, 2022).…”

“…CEO overconfidence is one attribute that has received substantial scholarly attention (Heavey, Simsek, Fox, & Hersel, 2022). CEO overconfidence is the tendency of a CEO to have an inaccurate, overly positive perception of his or her abilities or knowledge (Anderson, Brion, Moore, & Kennedy, 2012).…”

“…The underlying assumption is that the proximal outcomes of overconfidence influence the distal outcomes (e.g., Li & Tang, 2010). However, research has neglected to consider the full pathway through which CEO overconfidence influences firm outcomes (Heavey et al, 2022), which has likely limited our ability to understand how and why CEO overconfidence is related to firm performance. Indeed, upper echelons research has paid insufficient attention to the process perspective that links CEO attributes to firm performance (Liu, Fisher, & Chen, 2018; Neely, Lovelace, Cowen, & Hiller, 2020).…”

“…These findings are important as they provide strong empirical evidence supporting the well-established theoretical predictions of UET—namely, that CEO effects take place through strategic actions and are stronger in high-discretion environments. This study additionally offers a timely response to the call for more research on the explanatory mechanisms through which CEO overconfidence is linked to firm outcomes (Heavey et al, 2022). The road map that we provide will guide future research, refining and extending the field's understanding of how this ubiquitous and vital construct is linked to performance.…”

Are Inventors Better CEOs? Evidence from China

“…Specifically, companies with younger CEOs and a higher percentage of CEO holdings tend to invest more in R&D. Additionally, if the CEO has a science-related degree, the firm's R&D investment tends to be higher. Heavey et al (2022) used the execution of CEO stock options to construct indicator variables for measuring CEO overconfidence and discovered that overconfident CEOs are more inclined to engage in technological innovation and more likely to lead their companies in new technological directions. This finding was also observed by Hirshleifer et al (2012).…”