Associate Professor of Strategy
Corporate Governance ; Top Management ; Social Influence ; Strategic Change ; Overconfidence ; Self-enhancement ;
This study considers the potentially negative consequences for corporate leaders of being subjected to high levels of ingratiation in the form of flattery and opinion conformity from other managers and board members. Chief executive officers (CEOs) who have acquired positions of relatively high social status in the corporate elite tend to be attractive targets of flattery and opinion conformity from colleagues, which can have potentially negative consequences for CEOs and their firms.This theory suggests how high levels of flattery and opinion conformity can increase CEOs’ overconfidence in their strategic judgment and leadership capability, which results in biased strategic decision making. Specifically, the authors contend that heightened overconfidence from receiving high levels of such ingratiatory behavior reduces the likelihood that CEOs will initiate needed strategic change in response to poor firm performance.The authors tested and confirmed our hypotheses with a dataset that includes original survey data from a large sample of U.S. CEOs, other top managers, and board members in the period 2001–2007.Further analyses suggest that strategic persistence that results from high levels of flattery and opinion conformity directed at the CEO can result in the persistence of low firm performance and may ultimately increase the likelihood of the CEO’s dismissal.Implications for theory and research on social influence, sources of overconfidence in decision making, and the dynamics of executive careers are discussed.