Let’s Get Personal: How CEO Personality Effects Organizational Innovation via Corporate Venturing

Abstract

We develop theory to explain the relationship between CEO personality and inter- and intraorganizational learning mechanisms with a focus on corporate venture capital (CVC). We provide an integrated perspective and consider CVC investments as individual innovation practice and relative to research and development (R&D) efforts. Using a novel linguistic tool to measure the personality traits of 1,360 CEOs of S&P 500 firms, we find that CEO consciousness and CEO neuroticism are negatively, and CEO openness positively associated with CVC engagement. Regarding the trade-off decision between inter- and intraorganizational learning mechanisms, we find that CEO consciousness and CEO openness each have a positive effect on CVC relative to R&D. Our results extend upper echelons research by not only highlighting the importance of CEO personality in driving organizational innovation, but also indicating how CEO personality either enhances or inhibits interorganizational learning in both absolute and relative terms.