CEO Overconfidence and Corporate Ambidextrous Innovation

Abstract

Abstract: Whether CEO's overconfident tendency can promote corporate innovation has attracted wide scholarly attention. However, researches in this regard have not yet reached a consistent conclusion. The possible reason is that previous studies regard innovation as a whole, but few have explored the impact of CEO on specific innovations. Based on ambidextrous perspective, this paper takes the data of knowledge-intensive firms listed in Shanghai and Shenzhen A-share market from 2012 to 2017 and empirically examines how an overconfident CEO influences the exploration and exploitation in ambidextrous innovation through aggressive technology strategies, and the moderating effect of subordinate top management team (TMT) governance on this mechanism. It is found that CEO overconfidence has a heterogeneous effect on different dimensions of ambidextrous innovation, namely it can significantly facilitate exploratory innovation but inhibit exploitative innovation, in which technology aggressiveness plays a partially mediating role. Specifically, a CEO with an overconfident tendency tends to drive more challenging exploratory innovation by promoting aggressive technology strategies, but pay less attention to exploitative innovation. Meanwhile, TMT governance can effectively moderate the relationship between CEO overconfidence and technology strategies as well as ambidextrous innovation. The findings provide theoretical implications for researches on how to combine upper echelon theory with ambidextrous innovation research.

Key words: CEO overconfidence, exploratory innovation, exploitative innovation, technology aggressiveness, TMT governance

Tan Manqing. CEO Overconfidence and Corporate Ambidextrous Innovation[J]. Management Review, 2023, 35(6): 134-145.

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