CEO Overconfidence and Ambidextrous Innovation

Ying Jiuan Wong, Cheng Yu Lee, Shao Chi Chang

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

While prior research has focused on the effect of CEO overconfidence on innovation, few studies have been conducted to reveal how and whether an overconfident CEO affects ambidextrous innovation, which means the simultaneous and balanced pursuit of both exploratory and exploitative innovation. By observing firms’ patenting behavior, we investigate the effect of CEOs’ psychological attribute of overconfidence on innovation ambidexterity. In addition, we examine how a firm’s governance system moderates the relationship between CEO overconfidence and ambidextrous innovation. The results show that overconfident CEOs are more apt to create or magnify an imbalance in innovation ambidexterity. Furthermore, the results regarding the moderating effects of governance and monitoring mechanisms indicate that an independent board and dedicated institutional ownership mitigate the positive relationship between CEO overconfidence and a firm’s ambidextrous imbalance, while transient institutional ownership enhances this relationship. We also find that analyst following does not effectively monitor an overconfident CEO’s tendency toward an ambidextrous imbalance.

Original languageEnglish
Pages (from-to)414-430
Number of pages17
JournalJournal of Leadership and Organizational Studies
Volume24
Issue number3
DOIs
Publication statusPublished - 2017 Aug 1

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Sociology and Political Science
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management Science and Operations Research

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