Exploring the Dark Side of Integrity: Impact of CEO Integrity on Firms' Innovativeness, Risk-Taking, and Proactiveness Prachi Gala and Saim Kashmiri
European Journal of Marketing, Vol. 56, No. 7 (June 2022), pp.2052-2102
OVERVIEW
This paper examines the effect of chief executive officer (CEO) integrity on the firm’s strategic orientation. The authors propose that CEOs with strong integrity tend to be unimaginative, negatively influencing their firms’ entrepreneurial dimensions, including innovativeness, risk-taking, and proactiveness. They argue that this negative effect is likely to be stronger for overconfident CEOs with significant power and weaker when the firm has a strong customer orientation and CEO compensation has a high equity-to-pay ratio. An analysis of 741 observations of publicly traded US firms from 2014 to 2017 broadly supports these claims. Results add to prior work on CEO integrity by highlighting some hitherto unexplored negative outcomes. They have valuable implications for board members, investors, managers, compensation committee members, and researchers interested in understanding the antecedents of innovation, risk-taking, and proactiveness
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