High-Narcissism CEOs Are More Likely to Push Acquisitions When Companies Are Already Doing Well
A new academic study has taken a closer look at how CEO personality traits, especially narcissism, influence major business decisions—and the findings help explain why some companies make bold, risky moves even when they are already performing better than expected.
The research, published in the Strategic Management Journal, focuses on how CEOs respond when their firms achieve above-aspiration performance, meaning results that exceed internal goals or expectations. While traditional management thinking often assumes that strong performance leads companies to play it safe, this study shows that the reality is more complex—and far more personal.
At the center of the findings is a clear pattern: CEOs with higher narcissistic tendencies are significantly more likely to pursue acquisitions after strong performance, while less narcissistic CEOs tend to avoid acquisitions under the same conditions.
Why Strong Performance Doesn’t Always Mean Playing It Safe
For decades, management scholars have debated how companies respond to success. One school of thought argues that when things are going well, firms are less likely to change course. After all, why fix something that isn’t broken? Another perspective suggests the opposite: strong performance gives companies more resources, confidence, and managerial freedom, making big strategic moves more feasible.
Both views have been supported by past research, creating a puzzle. Why do some firms double down on change when performance is high, while others pull back?
This new study suggests the missing factor is who is in charge.
The researchers argue that firm-level outcomes cannot be fully understood without considering the personal motivations and psychological traits of top executives, particularly CEOs, who wield immense influence over strategic decisions.
The Role of CEO Narcissism in Strategic Decisions
Narcissism, in a leadership context, is often associated with strong ambition, desire for recognition, confidence in one’s own abilities, and a preference for high-visibility actions. These traits can sometimes drive innovation and bold vision—but they can also encourage excessive risk-taking.
According to the study, narcissistic CEOs are especially inclined to pursue acquisitions, which are among the most visible and risky strategic moves a firm can make. Acquisitions often attract media attention, reshape corporate identity, and place CEOs firmly in the spotlight.
When firm performance is already strong, narcissistic leaders appear to see this as an opportunity rather than a signal to slow down. High performance gives them the discretion, credibility, and resources needed to justify major deals—and the confidence to believe those deals will succeed.
On the other hand, CEOs with lower levels of narcissism tend to interpret strong performance differently. Rather than seeing it as a green light for bold expansion, they are more likely to protect existing success, avoiding acquisitions that could disrupt operations or dilute value.
How the Study Was Conducted
To test their ideas, the researchers analyzed data from publicly listed U.S. manufacturing firms included in the S&P 1500 index. This large and diverse sample allowed them to examine patterns across industries and over time.
The study combined several types of data:
- Acquisition activity, tracking when and how often firms pursued mergers or acquisitions
- Firm performance, measured relative to internally defined aspiration levels rather than absolute benchmarks
- CEO narcissism indicators, based on established proxies used in prior management research
By linking these datasets, the researchers were able to isolate how CEO narcissism interacts with performance to influence acquisition behavior.
Their statistical analysis consistently showed that high-narcissism CEOs increased acquisition activity following above-aspiration performance, while low-narcissism CEOs did the opposite.
Why Acquisitions Matter So Much
Acquisitions are often framed as strategic tools to gain new resources, enter new markets, expand capabilities, or accelerate growth. However, research has repeatedly shown that many acquisitions fail to deliver their promised benefits.
Poor integration, cultural clashes, overpayment, and unrealistic expectations can all erode shareholder value. In some cases, acquisitions that look impressive on paper end up weakening the acquiring firm.
This is why the study’s findings are particularly important. If acquisition decisions are influenced not only by strategic logic but also by executive personality, then stakeholders may be underestimating the human element behind corporate risk-taking.
What This Means for Boards and Investors
One of the study’s most practical implications is for corporate boards, investors, and governance professionals.
Boards are often responsible for approving or overseeing major acquisitions. Understanding that a CEO’s personal ambition may shape their appetite for deals—especially during periods of strong performance—can help boards ask better questions and apply more rigorous scrutiny.
Investors, too, may benefit from paying closer attention to leadership traits, not just financial metrics. A company led by a highly narcissistic CEO might be more likely to pursue aggressive growth strategies after a good year, increasing both potential upside and downside risk.
CEO Personality and the Bigger Picture of Management Research
This study fits within a broader stream of research known as upper echelons theory, which argues that organizational outcomes reflect the characteristics of top executives. Over the years, scholars have linked CEO traits such as overconfidence, hubris, and narcissism to decisions involving risk-taking, innovation, financial reporting, and mergers and acquisitions.
What makes this research stand out is its focus on performance context. Rather than asking whether narcissistic CEOs are always more aggressive, the study shows that their behavior changes depending on how well the firm is doing relative to expectations.
This helps reconcile earlier conflicting findings and adds nuance to how we think about leadership behavior.
Is Narcissism Always Bad for Companies?
It’s important to note that narcissism is not inherently negative. In some situations, narcissistic leaders may be more willing to challenge the status quo, pursue transformative ideas, or make decisive moves when others hesitate.
However, the study highlights a key risk: when personal ambition outweighs organizational need, strategic decisions may drift away from what is best for the firm.
Acquisitions driven by ego rather than fit can be costly, especially when companies are already performing well and may have more to lose.
Final Thoughts
This research offers a valuable reminder that business decisions are made by people, not spreadsheets. Even in large, data-driven organizations, the personality of a single individual—especially the CEO—can shape the strategic direction of an entire firm.
By showing how CEO narcissism influences acquisition behavior during periods of strong performance, the study provides clearer insight into why companies sometimes take big risks when they seemingly have no reason to.
For anyone interested in leadership, corporate strategy, or executive decision-making, the findings add an important layer to understanding how success can sometimes encourage bold—and potentially dangerous—choices.
Research paper link: https://doi.org/10.1002/smj.70009
