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

Abstract

Research has been trying to analyze cognitive decision making processes of topexecutive for decades. In particular, economic and organizational research on overconfidence (e.g., the notion that one is better than the average) and narcissism (e.g., exaggerated feeling of self-importance and the need for admiration) among the upper echelons has shown to influence firm strategies and firm level outcomes in similar ways. Yet these approaches appear in distinct research disciplines. Although both constructs are theoretically and empirically linked, and have shown to affect key organizational outcomes, surprisingly little clear empirical consensus exist how these constructs-individually and mutually-affect firm level outcomes. I try explain this puzzle by providing an overview of the leading approaches of executive overconfidence and executive narcissism research. To disentangle both constructs conceptionally and empirically, I review a large sample of articles that are nested in leading economic and business journals. Thus, I identify key operationalization issue and discuss how divergent literature streams in Economics and Organizational Behavior may benefit from each other. The review suggest that paying more attention-theoretically and empirically-to the interaction of overconfidence and narcissism may help to augment knowledge accumulation in the field. Furthermore, greater validation concerns of unobtrusive measures and its endogenous nature may help to rule out alternative explanations. Generally speaking, the results suggest that top-executive overconfidence and narcissism are not mere interesting psychological biases but affect firm-level outcomes in important ways.

Abusive supervision: a systematic literature review

“…Supervisors high in subclinical sadism (Buckels et al 2013 ) might consistently abuse their direct reports for the sake of fun. Narcissistic supervisors are self-absorbed and could dominate their direct reports through abusive supervision (Lin et al 2021 ) (for more details on leaders’ narcissism, please refer to Brunzel ( 2021 ) and Van Scotter ( 2020 )). Pushing future research along these lines could meaningfully contribute to the debate surrounding the sustained nature of abusive supervision.…”

Executives' narcissism and decision making: reviewing 20 years of accounting literature

“…Confidence refers to one's excess certainty about his own knowledge, ability and judgment that is not justified (Merriam-Webster definition [4], as cited in Brunzel, 2020). Another definition of overconfidence by Chen (2010) is that it inflates the subjective probability that a specific outcome will occur.…”

Exploring an inverted U-shaped relationship between top management team task-related faultlines and top executive hubris

“…Therefore, it is necessary to combine the internal factors (team size) and external factors (market complexity) from the perspective of the TMT faultlines. In depth discussion on the antecedents of top executive hubris behavior these studies could elaborate on this and examine on the interplay of personality characteristics of several members of the TMT faultlines (Brunzel, 2021).…”