The role that a CEO’s personality plays in corporate outcomes is a topic of considerable interest, particularly the relation between narcissistic CEOs and performance. Common perception is that CEO narcissism is highly prevalent, and considerable research suggests that narcissism is associated with worse outcomes. The majority of studies, however, are based on “unobtrusive” methods that do not directly measure the CEO’s personality through a validated questionnaire but instead on indirect evidence thought to be indicative of narcissism.
In this Closer Look, we test some basic assumptions about the relation between narcissism and corporate outcomes using a sample of CEOs whose personality is formally assessed by long-time directors who know and have worked closely with that CEO. While most of the research into narcissism and outcomes is negative, we find unexpected associations.
We ask:
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Would the results of existing literature be replicated if CEOs were subject to a valid personality evaluation?
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What contribution does a CEO’s personality have to outcomes, and how does it manifest itself through strategy, risk, and culture?
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How much discussion does the board have about the personality of their CEO? What actions do they take when they identify personal tendencies that might be of concern?
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Are narcissists better at corporate “window dressing” than their less narcissistic peers?