I Did It My Way: CEO Core Self-Evaluations and the Environmental Contingencies on Firm Risk-Taking Strategies

This study presents an environmentally contingent view of CEO core self-evaluations (CSE) and their effects on strategic risk taking. Drawing on upper echelons theory and approach-avoidance theory, we propose that high CSE CEOs are responsive to rather than disregard environmental cues and pursue strategic risks that enable their firms to capitalize on competitive opportunities while refraining from risks not suited to the external environment. Focusing on two forms of strategic risk - resource allocation risk taking and strategic non-conformity - we develop hypotheses examining the contingencies across levels of environmental concentration, dynamism, and munificence. We test our hypotheses on a panel of 106 CEOs from publicly traded US companies over a period from 1998 to 2004 using historiometric analyses. Supporting our hypotheses, findings indicate that the effects of CEO CSE on resource allocation risk taking and strategic non-conformity are contingent on industry concentration and environmental dynamism. Findings advance the understanding of CEOs' positive self-regard.