Abstract
Despite the possibility of burnout resulting from dynamics in firms' upper echelons, little if any work has focused on chief executive officer's (CEO's) burnout and firm performance. Drawing on managerial discretion theory, this article analyzes the influence of CEO burnout on firm performance and the moderating roles of the individual (CEO locus of control), structural power (CEO duality and CEO tenure), and organizational characteristics (size, age, and resource availability) related to managerial discretion. Using a sample of 156 CEOs in Swedish firms, we find a negative association between CEOs who report higher burnout and firm performance. Our results confirm that CEO duality and resource availability ameliorate and firm size exacerbates the negative association between CEO burnout and firm performance. Contrary to our expectations, CEO locus of control, CEO tenure, and firm age do not influence this relationship. We discuss the implications of our research for upper echelons theory and strategic leadership theory.
Highlights
In the face of globalization, increasing competition, progressively complex government regulations, and recurring economic downturns, chief executive officers (CEOs) may be increasingly susceptible to burnout
Related to managerial discretion stemming from structural power, we focus on CEO duality and CEO tenure (Hambrick and Finkelstein, 1987)
We propose that the negative association between CEO burnout and firm performance will be even more negative when organizational forces limit managerial discretion
Summary
In the face of globalization, increasing competition, progressively complex government regulations, and recurring economic downturns, chief executive officers (CEOs) may be increasingly susceptible to burnout. According to the employee burnout literature, burnout is a psychological response to chronic work stress resulting from a combination of emotional exhaustion, depersonalization, reduced personal accomplishment, and reduced professional efficacy (Cordes and Dougherty, 1993; Halbesleben, 2006; Jackson et al, 1986). Burnout—a psychological response to chronic work stress—results in emotional exhaustion, depersonalization, and reduced job performance (Maslach et al, 2001). The upper echelons perspective holds that CEOs take actions based on their cognitive interpretations of events, which are shaped by their experiences, beliefs, and values These actions affect both strategic and performance-based firm-level outcomes (see Busenbark et al, 2016, as well as Carpenter et al, 2004, for a review). The literature on managerial discretion with its focus on whether, when, how, and why executives are able to undertake idiosyncratic firm-level decisions (Crossland, 2008) provides an important boundary condition for the relationship between CEO burnout and firm performance
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