Every industry has a set of unwritten rules. Most companies in a given sector tend to spend similar amounts on advertising, carry similar levels of debt, and invest in research at roughly the same rate. Following the pack feels safe. But some leaders seem determined to chart a different course entirely. Think of executives who consistently push their companies to zig when the rest of the industry zags. What is it about certain leaders that makes them favor a strategy that looks nothing like their competitors’?
A new study published in the journal Strategy & Leadership investigated whether a specific personality trait in chief executives, narcissism, is linked to how much a company’s strategy diverges from the strategies of its industry peers. The research found that companies led by more narcissistic CEOs did, in fact, tend to adopt strategies that were more distinct from those of other firms in their industry. The study also found that a CEO’s gender and age appeared to influence the strength of this connection.
The Gap in What Researchers Already Knew
The study was led by Jing Chen of Lanzhou University in China, along with co-authors Zhe Zhang and Xin Wang of Xi’an Jiaotong University. The team set out to address a specific gap in existing research.
Business scholars have long studied how a CEO’s personality influences corporate strategy. A well-established body of work, rooted in what is known as “upper echelon theory,” holds that the personal characteristics of top executives shape the decisions they make for their companies. Within this field, previous studies had already shown that narcissistic CEOs tend to make frequent and large acquisitions, pursue riskier innovations, and change their strategies more often over time.
However, the researchers noted that nearly all of this prior work focused on what could be called the tempo of strategy: how often and how drastically a company changes its own course. The team identified a different, largely unexplored question. They wanted to know whether narcissism influences a company’s position relative to its competitors. In other words, does a narcissistic CEO lead a company to look fundamentally different from other companies in its industry at any given point in time? This concept is what researchers call “strategic distinctiveness,” a measure of how much a firm’s overall strategy deviates from the average strategy of its peers.
Why Narcissism Might Push Leaders Toward Uniqueness
To build their case, the researchers drew on what psychologists know about narcissism. In this context, narcissism is not a clinical diagnosis. It refers to a personality trait that exists on a spectrum in the general population and is characterized by a grand sense of self-importance, a deep belief in one’s own uniqueness, and a strong need for admiration from others.
The team proposed that these characteristics would make a narcissistic CEO view the standard strategic playbook with disdain. For a leader who craves attention and sees themselves as exceptional, copying what everyone else in the industry does would feel like an admission of ordinariness. A strategy that stands apart from the crowd, on the other hand, would offer a stage for demonstrating superiority and attracting external attention. Based on this reasoning, the team predicted that higher levels of CEO narcissism would be associated with greater strategic distinctiveness.
The Role of Social Expectations Around Gender and Age
The researchers also proposed that not all narcissistic CEOs would express this drive for uniqueness equally. They turned to a framework from sociology known as “social role theory,” which describes how society assigns different behavioral expectations to people based on characteristics like gender and age.
In many societies, leadership is still associated with assertive and dominant qualities that align more closely with stereotypical male roles. Women in leadership positions, the theory suggests, often face pressure to display more collaborative and agreeable behavior. An act of strategic non-conformity, which is essentially a bold declaration that an executive’s vision is better than the industry’s conventional wisdom, could clash with these expectations for female leaders, potentially inviting criticism or resistance.
Similarly, the team argued that society tends to expect older leaders to act as cautious stewards rather than disruptive innovators. A younger CEO who breaks from industry norms might be seen as a dynamic go-getter, while an older CEO making the same move might be perceived as reckless.
Based on this logic, the researchers predicted that the link between narcissism and strategic distinctiveness would be weaker for female CEOs and for older CEOs.
How the Team Tested Its Predictions
The researchers used two separate studies, each with a different method, to test their ideas.
Study 1 relied on a large dataset of publicly available corporate records. The team analyzed 8,080 annual observations from 1,595 unique manufacturing companies listed on the Chinese A-share stock market between 2006 and 2018. To measure strategic distinctiveness, they looked at six financial indicators for each company, including advertising spending, research and development investment, debt levels, and inventory, and then calculated how far each company’s numbers deviated from the average for its industry in a given year.
Measuring narcissism without directly surveying CEOs presented a challenge. Since top executives are generally unwilling to fill out personality questionnaires, the team used a method validated by prior academic work: the physical size of the CEO’s signature. The idea is that a larger signature reflects a more grandiose self-image. The researchers manually collected signatures from company prospectuses and annual reports, drew a rectangle around each one, calculated its area, and then divided that area by the number of characters in the CEO’s name to create a standardized score.
Study 2 took a more direct approach. The team surveyed 285 CEOs who were enrolled in executive MBA programs at top Chinese business schools. Narcissism was measured using a standard 16-item questionnaire, the NPI-16, which asks respondents to rate their agreement with statements like “I like to be the center of attention.” Strategic distinctiveness in this study was measured by asking CEOs to rate the importance of differentiation-related activities in their company’s strategy, such as new product development and brand building.
The researchers used a statistical model called a “fixed-effects” regression in Study 1, which helps account for unmeasured characteristics of individual firms that do not change over time. Both studies also accounted for a range of other factors that could influence the results, including firm size, firm age, profitability, state ownership, CEO pay, and whether the CEO also served as board chairman.
What the Data Showed
Across both studies, the results were consistent.
In Study 1, the large archival dataset, CEO narcissism (as measured by signature size) was positively and statistically significantly linked to strategic distinctiveness. Companies whose CEOs had larger signatures tended to have strategies that deviated more from industry averages.
The patterns for gender and age also held. The positive link between narcissism and strategic distinctiveness was stronger for male CEOs than for female CEOs. And the link was weaker for older CEOs than for younger ones. In statistical terms, both of these effects were significant.
Study 2, the CEO survey, produced results that mirrored these findings. CEO narcissism, measured this time through a self-report questionnaire, was again positively linked to the importance placed on strategic differentiation. The same patterns for gender and age appeared, and in both cases, the effects were statistically significant.
The researchers noted that while their findings were statistically significant, the overall effect size was small. They pointed out that this is expected, since a company’s strategy is shaped by a huge number of factors, and any single personality trait would only account for a small piece of the puzzle.
What This Could Mean for Boards and Investors
The study’s authors offered several observations for corporate governance. They emphasized that their findings should not be read as a recommendation to hire narcissistic CEOs in order to achieve a more distinctive strategy. Previous research has documented significant downsides to narcissistic leadership, including excessive risk-taking and a higher likelihood of ethical misconduct.
Instead, the researchers suggested the findings are most useful as a diagnostic tool. Boards and investors who understand that a narcissistic CEO may be psychologically predisposed to pursue strategies that break from industry norms can put appropriate oversight mechanisms in place. This could include empowering independent board members to challenge strategic proposals, tying executive compensation to long-term performance rather than short-term, attention-grabbing results, and protecting the independence of senior risk officers.
Important Limitations to Keep in Mind
There are several caveats worth noting. The entire study was conducted in a Chinese business context, and the researchers acknowledged that cultural factors could influence both the measurement of narcissism and the expression of strategic behavior. For instance, in a culture that emphasizes humility and collectivism, a large signature might carry a different weight as a signal of personality than it would in a more individualistic society.
Additionally, the study identifies statistical associations, not direct cause-and-effect relationships. The researchers did not directly measure the internal psychological processes they theorized about, such as whether narcissistic CEOs consciously devalue conformity. These remain plausible explanations for the patterns observed, not confirmed facts. Future research using interviews or experiments could help clarify the specific thought processes at work.
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