CEO early‐life disaster experience and corporate social performance

Don O'Sullivan, Leon Zolotoy and Qingliang Fan

Strategic Management Journal, 2021, vol. 42, issue 11, 2137-2161

Abstract: Research Summary Despite an extensive upper echelons literature on how CEOs' prior experiences influence firm behavior, we know little about the influence of traumatic experiences early in CEOs' lives. Drawing on post‐traumatic growth theory, we describe how traumatic experiences early in CEOs' lives influence corporate social performance. Our theory points to the asymmetric impact of CEO early‐life trauma on responsible and irresponsible corporate social performance and to two boundary conditions: CEO age at the time of the traumatic event and the severity of the event. We develop and test our arguments in the context of large‐scale disasters experienced early in the CEO's life. Our findings advance strategic management research on the relationship between CEO experiences and firm outcomes. Managerial Summary We consider how traumatic experiences in childhood shape CEO cognition and values and, therefore, firm behavior. Our findings suggest that CEOs who have had to deal with traumatic early‐life events may gain psychological strength from such experiences and that their psychological growth informs firm conduct. Specifically, our findings indicate that experience of trauma early in the CEO's life is positively associated with corporate social performance. The implication is that boards aspiring to enhance this aspect of corporate performance may wish to consider the early‐life experiences of prospective CEOs. While early‐life experiences are unlikely to feature on a prospective CEO's résumé, the typical selection process for senior executive appointments is well placed to unearth executives' life histories.

Date: 2021
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