Does CEO optimism affect strategic process?

James R. Langabeer II (Division of Management and Policy Sciences, University of Texas at Houston, Houston, Texas, USA)
Jami DelliFraine (Division of Management and Policy Sciences, University of Texas at Houston, Houston, Texas, USA)

Management Research Review

ISSN: 2040-8269

Publication date: 19 July 2011

Abstract

Purpose

Although management researchers have long recognized that cognitive and behavioral constructs can influence strategic process, there have been surprisingly few empirical studies exploring their actual influence. More specifically, there have been no reported findings examining how an executive's general tendency to expect positive outcomes (i.e. optimism) shapes their strategic process. The purpose of this paper is to examine if optimism serves as a cognitive bias that short‐circuits the strategic process, or more specifically results in a greater use of incrementalism versus a comprehensive rational process.

Design/methodology/approach

This is an initial study to explore the relationships between optimism and strategic process. The authors opted for a large cross‐sectional sample of chief executive officers (CEOs) in the for‐profit sector of the US healthcare industry, distributed 810 surveys, and received a 21 percent response rate. The authors' methods incorporated the well‐established Life Orientation Test for optimism, and interaction effect regression models, correlations, and ANOVAs were used to test relationships.

Findings

It was found that at the time of the study, executives were more optimistic than average. It was further found that higher optimism is associated with less rational (and more incremental) strategic decision‐making processes. Organizational size also had an interaction effect on the optimism‐strategic process relationship.

Research limitations/implications

The authors operationalized only a few variables in this initial study. A more comprehensive study, utilizing many more variables and exploring optimism for the top management team (beyond just the CEO) is being incorporated into subsequent studies.

Practical implications

If disposition (e.g. optimism) is associated with strategic processes, then a better understanding of executive's dispositions could be used to better align CEOs with organizational types and stage of life cycle.

Originality/value

This is the first study of its kind to begin to explore the association between dispositional optimism and strategic processes.

Keywords

Citation

Langabeer, J. and DelliFraine, J. (2011), "Does CEO optimism affect strategic process?", Management Research Review, Vol. 34 No. 8, pp. 857-868. https://doi.org/10.1108/01409171111152484

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.