CEOs: Research Shows Personality Matters

Story Highlights

  • Personality affects CEOs' decisions.

  • Researcher says these research findings will be especially beneficial for hiring decisions.

Depending on their personalities, CEOs facing identical strategic situations will make different decisions when managing strategic change. That’s according to the paper “Managing Strategic Change: The Duality of CEO Personality,” co-authored by Sucheta Nadkarni, Ph.D., assistant professor of management at LeBow, forthcoming in the Strategic Management Journal.

“The reason I wanted to look at this topic is that traditionally, strategy scholars had the notion that strategy is an objective and rational process where executives will just do the ‘right thing,’ Nadkarni says. “Strategy scholars are increasingly pushing back on the notion that executives act similarly when faced with identical situations. CEOs are humans and their personalities, values, and biases greatly enter the decisions.”

“According to our findings, strategy is not a clear-cut, objectively-driven process,” Nadkarni says. “CEOs have their own biases, perceptions and different points-of-view that they bring to their decision-making. CEOs with different personalities act very differently when faced with similar strategic change situations.”

After conducting surveys of 120 CEOs of small and medium sized companies in Ecuador, the research found that CEOs who are extraverts and open minded, will be especially effective in initiating a strategy, but perhaps not as effective in implementing it. However, those CEOs who exhibited traits like conscientiousness are less likely to initiate change, but are better implementers when it came time to work through a new strategic direction.

“We thought it was important to look outside the U.S.,” she says. “Management is a global phenomenon, however most studies take place in North America which really isn’t a fair assessment. We chose Ecuador because it is an emerging country in Latin America, and we know little about the management practices in this country.”

Nadkarni says that these research findings will be especially beneficial for CEO hiring decisions. Companies undergoing strategic change can use our findings to choose CEOs who successfully carry out different phases of strategic change. “It’s a great tool to use for change management.”