The Risk-taking Tendency of CEO: The Impact of CEO’s Career Horizon on Internationalization

Abstract

The paper examines the influence of Chief Executive Officer (CEO) career horizon on the firm’s internationalization. Specifically, we suggest that CEOs with longer career horizon will have the tendency of adopting risk-taking strategies in which they will try to expand their businesses into foreign market regions. Whereas, CEOs who have relatively a shorter career horizon tend to be risk averse but may become risk takers under the circumstances in which they possess higher ownership of the firm. From a sample of US-based firms in various industries, our data analysis showed that the longer the CEO career horizon is, the higher the likelihood that firms will pursue the international expansion strategy. In other words, CEOs who have a longer time until their retirement will more likely engage in the process of focusing their businesses overseas. However, the positive moderating effect of CEO ownership was not supported, but that CEO career horizon is negatively related with the firms’ internationalization when they possess high ownership. In sum, the results of analysis provides a meaningful academic and practical implications for understanding firm’s internationalization decision from the upper echelon theory.