Driving change for self-aggrandisement

By Alistair Jones

SMU Office of Research Governance & Administration – Consider the case of a firm that has suddenly done much better than expected, achieving what is known as above-aspiration performance. How would we expect the organisation to respond to this windfall? 

Existing research on performance feedback presents conflicting views. On the one hand, behavioural theory suggests that above-aspiration performance constrains change efforts because there is no organisational motivation to deviate from existing routines and operations that are unproblematic. 

But other research, drawing on the concept of organisational slack, suggests that above-aspiration performance enables organisational change because the additional resources that accrue from increased performance provide managers with greater discretion to pursue change initiatives. For some, it's an opportunity to risk a bold strategic move, such as an acquisition.

New research co-authored by Daniel Mack, an Assistant Professor of Strategy and Entrepreneurship at Singapore Management University (SMU), aims to reconcile and integrate these divergent views using corporate acquisitions as a context.

The novel factor the team introduces is the effect that the personality of the CEO, specifically their narcissism, can have on corporate decisions. So, who are these narcissists?

"Narcissistic CEOs are typically top managers of organisations who have a strong sense of superiority, self-admiration and entitlement," Professor Mack says.

"Because of their psychological preferences, they like to be in the centre of attention and seek the admiration of others. The CEO role is perfect for narcissists since the role is the central figure in the company and comes with high visibility and opportunity to showcase him/herself."

Underlying motivations

How should we view business mavericks, such as Steve Jobs at Apple? Jobs was highly visible, always at the centre of attention. Are mavericks just successful narcissists?

"Mavericks and narcissistic leaders may appear very similar in their actions. For example, both types of leaders typically have grandiose visions and often make bold, norm-defying decisions on behalf of their organisations," Professor Mack says. 

"However, their underlying motivations might be different. For narcissistic CEOs, their bold actions are often driven by their personal motivations and desire for acclaim and to dominate decision-making. They may be more exploitative and less cooperative than a leader who is a maverick with the organisation’s interest in mind."

And what about Elon Musk, arguably a maverick who has been described as a classic productive narcissist? 

"While Elon Musk is indeed productive, whether he is truly narcissistic is still open to debate. But this is an interesting question. Many times organisations appoint leaders for not who they are, but for their ability to enact change or execute certain strategies," Professor Mack says. 

"To the extent that they are able to create value for stakeholders which non-narcissistic leaders cannot, certain firms or industries may be more welcoming and accepting of such leaders."

It appears that narcissism in a CEO is not necessarily a bad thing as long as success is involved.

"Overall, narcissism is not a bad thing. A narcissistic CEO may take risky actions and bold decisions that a typical leader may not take, and these actions may in fact be necessary for new breakthroughs and innovations that benefit others or society," Professor Mack says. 

"The question is whether the board or stakeholders are able to recognise the dark side of such narcissistic leaders, and whether there are governance processes in place to ensure the personal motivations of narcissistic leaders are not in conflict with the shareholders or stakeholders."

Acquisition activity

Using corporate acquisitions as a proxy for organisational change, the researchers argue and find that firms led by highly narcissistic CEOs respond to above-aspiration performance by increasing their acquisition activity. 

"Acquisitions are naturally a good proxy for narcissists, as these decisions reflect not only the risks that CEOs are willing to take but also how confident they are with their decisions," Professor Mack says. 

"Moreover, larger acquisitions tend to receive coverage by the press, which is in line with the narcissistic CEO preference for adulation and admiration from others."

For their data set, the researchers examined 415 corporate acquisitions made by 74 publicly listed US manufacturing firms from the S&P1500 index during the period 2002 through 2018. The dependent variable was the number of acquisitions made by a firm in a given year.

To identify and compute a measure of CEO narcissism, the researchers used four non-obtrusive indicators of narcissistic tendencies.

First, they coded the prominence of CEOs' photographs in annual reports. Narcissists are concerned with how they are seen. Second, they coded for the CEO's prominence in company press releases by counting the number of times the CEO was mentioned by name divided by the total number of press releases in a year. 

Third, they measured the CEO's relative compensation because narcissistic CEOs may prefer a larger difference in their compensation relative to the next highest paid executive in the focal firm. Finally, they measured the CEO's relative non-cash pay as the sum of the CEO's deferred income, stock grants and stock options, divided by the sum of these same items for the second highest paid executive. 

As expected, indicators of CEO narcissism were positively correlated with one another.

Managerial behaviours

How is narcissism different from CEO overconfidence or promotion focus?

"Narcissism is different from overconfidence or promotion focus in terms of the underlying motivation of the leader. Overconfidence is a bias relating to the overestimation or overly optimistic view of one’s abilities, whereas promotion focus is a form of motivation where the leader is oriented towards growth and opportunities," Professor Mack says. 

"Thus, leaders may exhibit overconfidence or adopt a high promotion focus, but may not be considered narcissistic if their actions related to overconfidence or promotion focus are not driven by their need for adulation."

How is the research impactful, even important?

"Our research highlights situations when leaders are more likely to react to evaluations of firm performance with greater risk-taking. Our findings reveal that while high firm performance may increase the discretion of managers, narcissistic leaders are more likely to be the ones who take advantage of the greater discretion to promote their own personal agenda or goals," Professor Mack says.

And he notes that stakeholders can benefit from a better understanding of managerial behaviours under different firm conditions.

"For example, board members may be better informed to tailor governance policies or improve their oversight of CEOs who exhibit narcissistic tendencies," Professor Mack says.

Back to Research@SMU February 2026 Issue