Indulging in the Centre Stage: CEO Narcissism and Successor Selection in Family Firms

Abstract

Previous research on family business succession indicates that characteristics of the incumbents can influence successor selection. Yet, what and how the incumbents’ personality affects the process has rarely been discussed. In this study, we build on upper echelon theory and narcissistic supply logic to develop and test a model of family business succession as well as the moderating effects of the proportion of independent directors and pre-succession performance, using a dataset of 83 CEOs from family firms in the United States between 1995-2020. To solidify our finding, we use different ways to measure CEOs’ narcissism to check the robustness from the US sample. Furthermore, we explore our main findings in a cross-culture context with 124 Chinese CEO samples. We largely found support for the model in both the US and China context- a positive relationship between CEO narcissism and family member selection. We extend prior theory on family business succession by exploring the relationship between CEO narcissism and successor selection, the moderating effect of independent directors as well as pre-succession performance, and offering a greater understanding of narcissistic supply theory. In this way, our findings shed light on how the CEO’s personality can strongly influence a family firm’s succession decision, which contributes to upper echelon theory, CEO narcissism, and family succession literature.