how do ceo emotions matter
DESCRIPTION
Presentation on Strategic Management JournalTRANSCRIPT
HOW DO CEO EMOTIONS MATTER? IMPACT OF CEOAFFECTIVE TRAITS ON STRATEGIC AND
PERFORMANCE CONFORMITY IN THE SPANISHBANKING INDUSTRY
North South University1- March -2012
Presentation on Strategic Management Journal
But largely ignored the role of emotions in shaping
managers’ strategic choices.
There are huge number of researches on How
managers influence firm outcomes & explanations
of differences in organizational strategies & performance within a
given industry
Background
This journal for to analyzes the influence of the affective traits of
CEOs & their long-term tendency to
experience positive or negative moods or emotions
on strategy and performance conformity in a sample of Spanish banks and savings banks.
Objective of the Journal
More conformis
t strategies
More typical
performance
Outcomes
Result Shows that :•Managers’ negative affective traits are related to
Promote outcomes that deviate from the
central tendencies of the industry.
Outcomes
whereas positive affective traits seem to
CEO negative affective traits
Typical performan
ce.
Outcome
Strategic conformity mediates
The relationship between
How does affects influence thinking
1.A : Positive affective traits of CEOs will be
negatively related to firm strategic conformity
1.B. Negative affective traits of CEO will be
positively related to firm strategic conformity
2.A. Positive Affective traits of CEO’s will be
negatively related to typical performance by the firm
2.B. Negative affective traits of CEOs will be
positively related to typical performance.
3.A Strategic conformity mediates the negative relationship between the positive affective
traits of CEOs and typical performance by the firm
3. B Strategic conformity mediates the positive relationship between the negative affective
traits of CEO’s and typical performance by the firm
Research Hypothesis
1.A : Positive affective
traits of CEOs will be negatively related to
firm strategic conformity
1.B. Negative affective
traits of CEO will be positively related to
firm strategic conformity
Hypothesis
2.APositive Affective traits of CEO’s will
be negatively related to typical
performance by the firm
2.BNegative affective
traits of CEOs will be positively related to typical performance.
Hypothesis
3.A Strategic conformity
mediates the negative relationship between the positive affective
traits of CEOs and typical performance by
the firm
3. BStrategic conformity mediates the positive relationship between the negative affective
traits of CEO’s and typical performance by
the firm
Hypothesis
Target Population: Spanish Banking Industries.
Why banking industry?• CEOs a medium latitude of action• Banking industry in Spain experienced strong growth in the period of
analysis.• Low capital intensive industry & allows for product differentiability• This sector underwent deregulation & liberalization
Research Area: Spain .
Sample Size: 44% of the Population .
Methodology
Design and Finalization :
Independent Variable
Research Technique: PANAS ( Positive & Negative Effect Schedule ) .which is
widely used technique. Here all the contents used 5 points scale. Also principle
component analysis. The other methods are Standard Deviation , means,
hierarchical regressions etc.
• Positive Scale (10 Items ) : Interested, Excited, Strong, Enthusiastic, Proud,
Alert, Inspired, Determined , Attentive , Active
• Negative Scale (10 Items): Distressed, Upset, Guilty, Scared, Hostile, Irritable,
Ashamed, Nervous, Jittery, Afraid.
• Reliability , Validity , and test retest Reliability.
Methodology
Control variables (Education , experience & Industry background)
• Long tenured executives exhibited more strategic and performance conformity.
• Education in Management is negatively related to risk taking and extreme performance
and risk taking seems to be associated with non conformist strategic behavior.
Dependent variables (Strategic Conformity & Typical Performance )
• Strategic Conformity : Asset Strategies ( Commercial Loans , Mortgage loans , Leases ,
other long term loans , short term loans to public authorities, non resident loans , cash and
deposits at central banks, securities and fixed assets etc. )
• Typical Performance : ROA ( Standard Return on average assets) , Gross operating
Profit Margins and Net Operating Profit Margins.
Methodology
It is proved by calculation that there must be a relationship between the Predictor (CEO’s Affective Traits) and mediator (Strategic Conformity ). Where as negative affective traits are positively related to strategic conformity . Where as positive affects prompt deviant strategies. It is proved by calculation that there must be a relationship between the Predictor (CEO’s Affective Traits) and the dependent variable(Performance Conformity ). Where the result shows that negative affective traits of CEOs are related to Performance that is ‘typical’ for the industry. It is proved by calculation that there must be a relationship between the mediator (Strategic Conformity) and the dependent variable(Performance Conformity ). ROA=( P=0.59) , Net Operating Profit Margin = (P<0.05) , Gross Operating Profit Margin = (P<0.001)
Finding from the Journal
Positive affects lead to innovative decisions
and negative affects to more careful and
conservative one .
Negative affects leads to the individuals to
adhere data to rely their own mental set until
they found it problematic. Where the
positive effects lead them to abandon their mental sets rather than
to wait for their evidence.
Positive affects increases self
confidence ,so that CEO don’t need others to
validate their actions. Negative affects may lower self confidence.
One interesting finding is , Negative affects
have more influence in performance rather than
positive one.
Some interesting issues observed in this Research
Relationship between affective states and
decision making can be context dependent. It is also interesting issue of
further research.
A strategy should be aligned with the CEOs
characteristics , as negative affective traits should favor for more
conformist strategy ,where as
positive affective traits should favor more
atypical Strategies.
Risk aversion must be considered to measure CEOs affective traits.
The research is based on one specific industry, it must further continue for measuring several
industry CEOs affective traits ,which will allow
genera liability of research.
Recommendations and Further Research Possibilities