What I See, What I Do: How Executive Hubris Affects Firm Innovation

Abstract

© 2012, © The Author(s) 2012. This study explores the potential benefits of executive hubris to firm innovation. Grounded in the upper echelons theory and the firm innovation literature, hypotheses were developed and tested in two studies with different contexts and methods. Study 1 uses a set of cross-sectional survey data on a large sample of Chinese CEOs in manufacturing industries. Study 2 uses a set of longitudinal archival data on U.S. public firms in high-tech industries. Both studies render robust support to the authors’ main theoretical prediction—that executive hubris is positively related to firm innovation. The authors further found that the main effect varies under certain environmental conditions: The relationship between executive hubris and firm innovation becomes weaker when the environment is more munificent and complex.