Me, myself, and I: influence of CEO narcissism on firms’ innovation strategy and the likelihood of product-harm crises

Abstract

This research examines the relationship between narcissistic personality characteristics in Chief Executive Officers (CEOs) and firms' innovation outcomes. The authors argue that firms led by narcissistic CEOs are likely to exhibit a higher rate of new product introductions and a greater proportion of radical innovations in their new product portfolios, but they are also more likely to encounter product-harm crises. The impact of CEO narcissism on these innovation outcomes is partially mediated by firms' higher competitive aggressiveness. High power of the marketing department in the top management team, however, increases firms' customer orientation, which in turn weakens the relationship between CEO narcissism and product-harm crises. A longitudinal analysis of a sample of 395 publicly listed U.S. firms in the period 2006-2010 provides considerable support for the authors' hypotheses. This research underscores the importance of studying CEOs' personality traits as antecedents of firms' innovation outcomes, highlights the positive and negative impact of CEO narcissism on firms' innovation-related behavior, and delineates the process through which this impact takes place.

Does CEO Traits Influence Innovation? Evidence from the Kenya Banking Sector

“…Further, the findings indicate that CEO narcissism is crucial trait that significantly influences firm innovation. These results are in agreement with Kashmiri et al (2017) that CEOs who are narcissistic are able to decisively come up with new innovations. We attribute this positive results to be resulting from the fact that CEOs who are narcissistic tend to be result oriented, have the desire to achieve better results and protect their reputation (Bass & Steidlmeier, 1999).…”

“…However, with regard to innovation, few studies have been studied and the results are inconclusive. For example, (Zhang et al, 2017) found no association between CEO narcissism and firm innovation whereas (Kashmiri, Nicol, & Arora, 2017) find that companies led by narcissistic CEOs are likely to unveil a higher rate of new product introductions and a higher proportion of radical innovations in their new product portfolios, but are also more likely to face product-harm crises. According to upper echelons theory, narcissism is an important personality aspect of CEOs that influences strategic decisions of the firm such as innovation (Chatterjee & Hambrick, 2011); (Gerstner et al, 2013).…”

Overconfidence and narcissism among the upper echelons: a systematic literature review

“…For instance, overconfidence may affect M&A outcomes (e.g., Malmendier and Tate 2005), capital structure (Ben-David et al 2013), or innovational behavior (e.g., Hirshleifer et al 2012), while narcissism has shown to affect a variety of key organizational outcomes such as sales variance (Chatterjee and Hambrick 2007) or corporate fraud (Rijsenbilt and Commandeur 2013). Although many studies elaborate on detrimental effects of CEO overconfidence and narcissism, theoretical (Campbell et al 2010;Maccoby 2000;Smith et al 2017) and empirical approaches argue that overconfidence and narcissism may be beneficial in certain contexts (e.g., Hirshleifer et al 2012;Kashmiri et al 2017). By studying how top-executives and particularly CEOs exhibit these traits rather than other members of the Top-Management-Team (TMT), I draw on the assumption of the literature that CEOs shape the fate of companies (Finkelstein et al 2009).…”

“…However, contractionary finding of both overconfidence and narcissism make both constructs, independently and in conjunction, hard to understand. For instance, narcissistic CEOs may be conducive for firm level innovation (e.g., Kashmiri et al 2017) while increasing the likelihood to be involved in corporate fraud (e.g., Rijsenbilt and Commandeur 2013), thereby providing arguments for "bad" as well as "good" outcomes of CEO narcissism. Similarly, overconfident CEOs may be also conducive for firm level innovation (Hirshleifer et al 2012) while increasing the likelihood to undertake value-destroying M&As (Malmendier and Tate 2005), thereby providing similar arguments for "bad" as well as "good" outcomes of CEO overconfidence.…”

The Multistakeholder Model of Internet Governance, ICANN, and Business Stakeholders - Practices of Hegemonic Power

“…They conclude that the US president's charisma levels were responsive to two significant crises under consideration in the study, Hurricane Katrina and the terrorist attacks, widely known as 9/11. Another interesting study using DICTION was conducted by Kashmiri et al (2017) where they examined the relationship between CEO narcissism and firm innovation. Using characteristics identified in social psychology and public administration literatures, they constructed variable narcissism using alternative sources of data: the prominence of the CEO's photograph in annual reports, CEO prominence in company press releases, CEO's relative cash compensation, and CEO's relative noncash compensation (Kashmiri et al, 2017, p. 642).…”