Is the military CEO aggressive or conservative? Differences in legal and cultural factors around the world

Abstract

We address the puzzle of why military CEOs do not uniformly undertake riskier corporate policies to enhance the competitive advantage of firms. We argue that understanding the military CEOs’ risk taking behaviour is incomplete without accounting for institutional setting across countries. Grounding on institutional theory, we test the moderating role of formal and informal institutions by using a sample of 90 countries around the world. We find that military imprint influences military CEOs to undertake riskier corporate policies. We further find that countries with higher quality of formal institutions and individualistic culture strengthen risk taking propensity, while eastern religion countries weaken the risky behaviour. Findings of this paper yields implication for firms and policymakers seeking to encourage risk taking behaviour for enhancement of competitive advantage.