Abstract
Grounded in upper echelons theory and regulatory focus theory, this empirical study develops a theoretical model aiming to explicate the effect of CEO hubris, a prominent managerial bias, on market exploration and exploitation, as well as its boundary conditions. We predict that CEO hubris is positively related to market exploration while negatively related to market exploitation. Moreover, this study shows that those factors that affect a CEO’s information processing capacity can effectively moderate the hubris bias: the CEO’s industry experience weakens, whereas a high level of market uncertainty strengthens, the hubris effects. We test our hypotheses using a two- wave, multi-respondent original survey data set of Chinese trading companies. As a balance between market exploration and exploitation can enhance firm market performance, this study highlights the double-edged nature of CEO hubris. The results provide important implications for firms: it is possible to achieve superior market performance by b...
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