Exploring the Impact of CEO Paranoia on Competitor Orientation and Digital Orientation
Disciplines
Marketing
Abstract (300 words maximum)
Purpose: This study investigates the connection between levels of CEO paranoia and a firm's digital orientation, examining how paranoid leadership influences competitor orientation resulting in digital landscape.
Methods: The study gathered data on 1,243 companies sourced from Wharton Research Data Services. Paranoia scores were assigned to leadership based on a company’s published literature including annual reports, SEC 10-K filings, and shareholder letters. CEO paranoia levels were assessed with dictionary-based text analysis techniques on these shareholder letters. Digital orientation was measured through investment in digital technologies and initiatives along with the text analyses on annual reports. Data processing and statistical analysis were conducted in Stata using regressions. Controls were implemented for firm age, size, and leadership structure, including CEO age and gender.
Findings: Results indicate a significant positive correlation between CEO paranoia and the firm’s digital orientation. This relationship is mediated by the competitor orientation of the firm. Findings suggest that paranoid CEOs are more likely to drive digital transformation efforts.
Conclusion: This research contributes to the growing literature on executive psychology and strategic decision-making in the digital era. Practically, it highlights the need for boards to consider CEO psychological traits when evaluating digital strategies and provides insights for stakeholders to better understand the drivers behind a firm’s digital initiatives.
Academic department under which the project should be listed
CCOB - Marketing & Professional Sales
Primary Investigator (PI) Name
Prachi Gala
Exploring the Impact of CEO Paranoia on Competitor Orientation and Digital Orientation
Purpose: This study investigates the connection between levels of CEO paranoia and a firm's digital orientation, examining how paranoid leadership influences competitor orientation resulting in digital landscape.
Methods: The study gathered data on 1,243 companies sourced from Wharton Research Data Services. Paranoia scores were assigned to leadership based on a company’s published literature including annual reports, SEC 10-K filings, and shareholder letters. CEO paranoia levels were assessed with dictionary-based text analysis techniques on these shareholder letters. Digital orientation was measured through investment in digital technologies and initiatives along with the text analyses on annual reports. Data processing and statistical analysis were conducted in Stata using regressions. Controls were implemented for firm age, size, and leadership structure, including CEO age and gender.
Findings: Results indicate a significant positive correlation between CEO paranoia and the firm’s digital orientation. This relationship is mediated by the competitor orientation of the firm. Findings suggest that paranoid CEOs are more likely to drive digital transformation efforts.
Conclusion: This research contributes to the growing literature on executive psychology and strategic decision-making in the digital era. Practically, it highlights the need for boards to consider CEO psychological traits when evaluating digital strategies and provides insights for stakeholders to better understand the drivers behind a firm’s digital initiatives.