Essays on CEO narcissism and managerial decision-makings

Chief executive officer (CEO) narcissism has emerged as a key predictor of a firm’s strategic decision-making. Burgeoning literature rooted in psychology suggests that CEO narcissism, as a ‘dark side’ personality trait, displays contradictory influences for a firm’s strategic outcomes. The current literature suggests that CEO narcissism can be either beneficial or harmful to a firm, depending on various conditions. This highlights many challenges and opportunities for further research. This thesis takes up the challenges and opportunities to examine how and why CEO narcissism matters in strategic decision-making and under what conditions. Specifically, the thesis aims to investigate the microfoundations of narcissistic owner CEOs’ influences on a firm’s internal decision-making process and decisions on its’ external (international) expansion strategies. To explore the influences of CEO narcissism on a firm’s internationalisation decisions, the thesis builds on the theoretical perspective of upper echelons theory. To examine how CEO narcissism influences a firm’s internal decision-making process, the thesis uses leadership theory to focus on the impact of CEO narcissism on middle managers’ divergent strategic behaviour. Four independent studies were carried out to fulfil these thesis aims. Study 1 draws on upper echelons theory and trait activation theory to propose that exporting small-to-medium enterprises (SMEs) with narcissistic owner CEOs are more likely to choose the strategy of market spreading over market concentration, depending on firm-level asset-specific investments and exporting experience. Quantitative data from 248 exporting SMEs in China, accompanied by qualitative data from five case studies, show a significant relationship between owner CEO narcissism and the choice of a market spreading strategy. It also reveals the significant moderating effect of asset-specific investments and firms’ exporting experience, supporting the proposed three-way interaction model. Study 2 builds on upper echelons theory and literature on entrepreneurial orientation to examine how owner CEO narcissism may influence SMEs’ post-entry speed of internationalisation directly and indirectly through the firms’ international entrepreneurial orientation (IEO) mechanism. Data from a two-step questionnaire and archival export data from 291 Chinese exporting SMEs show a significant relationship between owner CEO narcissism and exporting SMEs’ decisions on the post-entry speed of internationalisation, and a significant mediating effect on firm-level IEO. Study 3 and Study 4 conduct scenario-based experiments to explore how CEO narcissism affects middle managers’ divergent strategic behaviour based on leadership theory. Study 3 integrates upper echelons theory with social identity theory to test the relations between CEO narcissism, middle managers’ organisational identification, and their divergent strategic behaviour. Results across two scenario-based experiments show that CEO narcissism relates negatively to middle managers’ organisational identification, which in turn affects middle managers’ divergent strategic behaviour. Study 4 introduces organisational performance feedback as a moderator and further investigates its moderated mediation effect on middle managers’ divergent strategic behaviour. Results based on a between-subject experiment with six conditions of 2 (high narcissistic CEO vs. low narcissistic CEO) × 3 (positive organisational performance vs. low organisational performance vs. neutral performance feedback) provide support for the moderating effect of performance feedback between CEO narcissism and middle managers’ organisational identification. Together, these four independent but interrelated essays make a number of original contributions to the emerging research on the influence of CEO narcissism on firms’ managerial decision-making. Study 1 and Study 2 demonstrate the role of CEO narcissism in firms’ internationalisation decisions and offer new insights into what drives exporting SMEs’ international decision-making from a microfoundations’ perspective. The results reveal that both theoretical models are supported, suggesting each model provides valuable insights to explain the impact of CEO narcissism in an international business context. Study 3 and Study 4 look inside the firm to advance the understanding of middle managers’ strategic behaviour from an overlooked perspective of CEO narcissism. The two studies also shed new light on how narcissistic CEOs’ social exchange interactions with middle managers shape the firms’ internal decision-making process, contributing to new knowledge of contextual conditions that mitigate the negative impact of narcissistic leadership.