CEOs, Discretion, and Change: Narcissists versus Chameleons

Keywords: narcissism, self-monitoring, CEO, managerial discretion, national culture, institutions, strategic change

Abstract: Do CEOs perceive different benefits depending on their personality? If yes, how does their perception affect their comfort with change in organizations? We investigate how CEOs’ narcissism and self-monitoring influence strategic change and propose that narcissism fuels change while self-monitoring impedes change. To what extent are these effects buffered by the nation-level managerial discretion? We claim that the national culture lowers the extremism of CEOs’ personality on strategic change decisions such that narcissistic CEOs are more reserved in decisions while high self-monitors are less reticent in decisions. Our theorizing contributes to upper echelons theory by bridging most recent developments in managerial discretion literature with CEO’s personality characteristics. We better define theory’s boundaries by highlighting how the mechanism of perceived benefits explains CEOs’ actions. The use of self-monitoring in this context further extends theory’s applicability in the social psychology research.