Overconfident executives: do they wreak havoc or inspire the troops?

Abstract

Purpose

This study aims to explain the cognitive bias of overconfidence and portray the different ways in which overconfident top managers may affect firm outcomes. This paper outlines their opportunities and risks and how these managers are surrounded by contextual factors.

Design/methodology/approach

This study draws on a systematic overview of the current literature on senior executives' overconfidence and empirical studies investigating its impact on strategic outcomes.

Findings

This study identifies the opportunities and risks of overconfident top managers in firms and considers the contextual factors that influence firm outcomes. The results provide three important managerial implications for interactions with overly confident top managers.

Practical implications

These findings help us understand top managers' overconfidence. Organizations receive guidance on how to constrain inappropriately confident top managers who are detrimental to their businesses.

Originality/value

This study contributes to a better understanding of overconfidence among top managers, illustrates associated opportunities and risks and provides recommendations for controlling and dealing with top managers characterized by this cognitive bias.

Citation

Schneck, S. and Hautz, J. (2024), "Overconfident executives: do they wreak havoc or inspire the troops?", Journal of Business Strategy, Vol. 45 No. 2, pp. 115-123. https://doi.org/10.1108/JBS-11-2022-0193