A recent study published in the Strategic Management Journal suggests that CEOs with narcissistic tendencies may be inclined to take greater risks, potentially benefiting their companies. Inspired by the Greek myth of Narcissus, whose self-absorption led to his downfall, the study examines how narcissistic CEOs might allocate resources towards riskier strategies.
Researchers from multiple universities analyzed board meeting transcripts spanning two decades across 88 public firms and 197 CEOs. They measured CEO narcissism based on public image and compensation.
The study identifies two strategies narcissistic CEOs might employ to advance their agendas. First, they may adopt a “stacking the deck” approach by selecting like-minded directors who are likely to support their initiatives unanimously. Alternatively, they might leverage a “demagogue” style, using emotional appeals akin to politicians to garner enthusiastic support.
However, the study also cautions against the potential pitfalls of narcissistic leadership, including misuse of power and manipulation.
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“Boards should carefully consider the implications of CEO duality, particularly whether the CEO also serves as board chair,” noted Cameron J. Borgholthaus of the University of Wyoming, USA.
This research suggests that while narcissism can drive bold decision-making and innovation, boards must balance its potential benefits with its inherent risks to ensure responsible corporate governance.
