When Does a CEO’s Risk Propensity Drive Exploration in Product Development?

Dovev Lavie () and Patricia Klarner ()
Additional contact information
Dovev Lavie: Department of Management and Technology, Bocconi University, 20136 Milano, Italy
Patricia Klarner: Department of Strategy & Innovation, Vienna University of Economics and Business, 1020 Vienna, Austria

Strategy Science, 2023, vol. 8, issue 1, 1-23

Abstract: We advance research on the managerial antecedents of exploration by studying personal, organizational, and environmental conditions under which a CEO’s risk propensity shapes a firm’s tendency to explore in product development. Our panel data analysis of 219 firms in the prepackaged software industry reveals that, when a CEO is risk-prone, the CEO’s ability to drive exploration increases with the CEO’s power in the firm, which manifests in tenure, duality, and insider origin. Counter to expectations, however, the firm’s accumulated exploration experience does not reinforce, but rather attenuates the effect of the CEO’s risk propensity on exploration. We attribute this to firms’ quest for balance between exploration and exploitation and the need to counter the CEO’s risk propensity when exploration becomes excessive. Finally, we find that competitive pressure in the firm’s product market reinforces the ability of a CEO who is more risk-prone to garner support for further exploration. Our study advances a dynamic perspective that relates the heterogeneity in firms’ exploration tendencies to the behavioral inclinations of their CEOs.

Keywords: organizational learning; technology and innovation management; top management teams (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/stsc.2022.0160 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:8:y:2023:i:1:p:1-23

Access Statistics for this article

More articles in Strategy Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().