The paradoxical impact of CEOs’ humility and narcissism on absorptive capacity: evidence from small firms

Abstract

PurposeBecause small firms are dependent on external knowledge to overcome various constraints, absorptive capacity (ACAP) is an important capability from a knowledge management perspective. Furthermore, extant research has noted the seemingly contradictory yet potentially complementary interaction of Chief Executive Officer (CEO) traits – humility and narcissism on knowledge management. This study aims to explore the impact of CEO humility and narcissism on ACAP and short-term firm performance.Design/methodology/approachThis paper uses a quantitative approach using multisource data from small Indian firms comprising survey responses from 225 CEOs and 216 general managers of small automotive firms. The data were analyzed using partial least squares – structural equation modeling.FindingsThis paper sheds new light on the process through which small firms build ACAP and the role of CEO leadership traits in this regard. This study finds that in a highly turbulent environment, CEO’s humility and narcissism affect the development of a small firm’s ACAP. This study also discusses important implications for managerial practice and policy making.Originality/valueTo the best of the authors’ knowledge, this is the first study to empirically examine the impact of the paradoxical leadership traits of narcissism and humility on the short-term performance of small firms, from a knowledge-based perspective through the lens of absorptive capacity.