Taming the beast: how family businesses mitigate CEO narcissism
Michael is Professor of Strategic Management at the University of Bath, School of Management where he previously was Head of the Strategy and Organisation Division and Associate Dean for Postgraduate Programmes. He has held appointments at the Universities of Glasgow and Edinburgh and has worked with various Universities internationally. His main research focus is on understanding how strategies and managerial practices interact with contextual factors, such as institutions and individual level characteristics. His work has been published in both leading academic journals such as the Strategic Management Journal, and with practitioner publications such as the Financial Times and the Harvard Business Review. He has worked with both private and public sector organisations on issues of strategic development.
We explore the impact of CEO narcissism on family firms’ product diversification strategy. In addition, we investigate how this relationship is shaped by family influence using a dataset of publicly traded German firms from 2005 to 2009. Our results show that more narcissistic CEOs have a negative impact on diversification. We suggest that belief in their own capabilities and skills to successfully manage a focused business and their desire for recognition override motivations to reduce risk and stabilize earnings which are typically associated with CEOs and are normally assumed to lead to higher levels of diversification. Overall, we find that family influence can restrict the narcissistic tendencies of CEOs. Our findings thereby extend the research on the impact of CEO narcissism on strategic decisions by adding a family firm perspective.