Does CEO Power Backfire? The Impact of CEO Power on Corporate Strategic Change

Yu Zhou, Hongzhang Zhu, Jun Yang and Yunqing Zou
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Yu Zhou: Department of Organization and Human Resources, School of Business, Renmin University of China, Beijing 100872, China
Hongzhang Zhu: Department of Organization and Human Resources, School of Business, Renmin University of China, Beijing 100872, China
Jun Yang: Department of Management, Bryan School of Business and Economics, University of North Carolina, Greensboro, NC 27412, USA
Yunqing Zou: Department of Organization and Human Resources, School of Business, Renmin University of China, Beijing 100872, China

Sustainability, 2021, vol. 13, issue 16, 1-19

Abstract: In today’s dynamic economic environment, enterprises must maintain sensitivity and flexibility when responding to the market through continuous strategic change. Anchored in the approach–inhibition theory of power, this study explores the relationship between CEO power and corporate strategic change and examines the moderating effects of company underperformance and product market competition. The study uses data from all A-share listed companies in China during 2006–2017. The results indicate that first, there is an inverted U-shaped relationship between CEO power and corporate strategic change. Appropriate centralization of CEO power helps promote corporate strategic change, whereas excessive centralization hinders strategic change. Second, low underperformance strengthens the inverted U-shaped relationship between CEO power and strategic change. Finally, high product market competition strengthens the inverted U-shaped relationship between CEO power and strategic change.

Keywords: corporate strategic change; CEO power; underperformance; product market competition (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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