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The Social Influence of Executive Hubris

Cross-cultural Comparison and Indigenous Factors

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Abstract

  • Executive hubris—an important psychological bias—affects the strategic decisions of a firm as well as their implementation. Yet executive hubris brought about by social influence in different cultural environments is not well understood.

  • Anchored in the upper echelons theory and the cross-cultural management literature, this study investigated the social influence of executive hubris among peer executives in two different cultural contexts: China and the US.

  • Using a large set of survey data on Chinese firms and a large archive of US firm data, we found that the social influence of executive hubris is stronger in the Chinese context than in the US. The social influence among Chinese executives tends to be moderated by their similarity in categorical factors indigenous to the Chinese context: executives who are managing state-owned firms or were politically appointed are more strongly influenced by each other than by those managing non-state-owned firms or were not politically appointed.

  • We illustrate that cultural contexts give rise to differences in the social influence of executive hubris.

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Notes

  1. We note that in Table 3, state ownership has a negative and significant main effect on executive hubris (p < 0.01). This suggests that simply being an executive of a state-owned firm does not necessarily lead to hubris. In many cases, holding such a position may even reduce the CEO’s hubris level. This does not contradict the moderating effect of state ownership, which implies that the CEO of a state-owned firm is more likely influenced by those CEOs who are also running state-owned firms, leading to a convergence of hubris among this group of CEOs. To further explore the main effect of ownership on executive hubris, in a supplementary analysis, we included a dummy variable indicating whether the CEO is running a private firm, and the coefficient is positive and significant (p < 0.05). This may suggest that in Chinese private businesses, hubris can emerge due to family elements (Forbes 2005).

  2. We thank one anonymous reviewer for this valuable suggestion.

  3. We thank one anonymous reviewer for pointing out this important issue.

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  1. Department of Management, The Hong Kong University of Science and Technology, Hong Kong, China

    Jiatao Li

  2. Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong, China

    Yi Tang

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Li, J., Tang, Y. The Social Influence of Executive Hubris. Manag Int Rev 53, 83–107 (2013). https://doi.org/10.1007/s11575-012-0164-x

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