CEO Narcissism and the Impact of Prior Board Experience on Corporate Strategy

Administrative Science Quarterly, Vol. 60, No. 1, pp. 31-65, 2015.

55 Pages Posted: 4 May 2014 Last revised: 15 Aug 2015

David H. Zhu

Arizona State University (ASU) - W. P. Carey School of Business

Guoli Chen

INSEAD - Singapore

Date Written: 2014

Abstract

We examine how chief executive officer (CEO) narcissism influences the interorganizational imitation of corporate strategy. We theorize that narcissistic CEOs are influenced more by the corporate strategies they experienced on other boards and less by the corporate strategies experienced by other directors. These effects are strengthened if the other firms to which the CEO has interlock ties have high status and if the CEO is powerful. Through longitudinal analyses of Fortune 500 companies’ decisions (from 1997 to 2006) related to the acquisition emphasis of a firm’s growth strategy and the firm’s level of international diversification, we show that narcissistic CEOs are influenced by corporate strategies that they witnessed at other firms much more than other CEOs. In addition, relatively narcissistic CEOs not only strongly resist the influence of other directors’ prior experience but also tend to demonstrate their superiority by adopting corporate strategies that are the opposite of what fellow directors’ prior experience would suggest. Our theory and results highlight how CEO narcissism limits directors’ influence over corporate strategy and influences CEOs’ learning and information processing in making strategic decisions.

Keywords: CEO, narcissism, network, diffusion, imitation, director, interlock, personality, psychology, acquisition, international, corporate governance, board

Suggested Citation

Zhu, David H. and Chen, Guoli, CEO Narcissism and the Impact of Prior Board Experience on Corporate Strategy (2014). Administrative Science Quarterly, Vol. 60, No. 1, pp. 31-65, 2015.. Available at SSRN: https://ssrn.com/abstract=2429586

David Hongquan Zhu (Contact Author)

Arizona State University (ASU) - W. P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States
4807278737 (Phone)

HOME PAGE: http://my.wpcarey.asu.edu/directory/people/profile.cfm?person=2227202

Guoli Chen

INSEAD - Singapore ( email )

Singapore

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