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Researchers have long been interested in how an executive’s self-concept affects his or her behav-
iors, but have lacked a theoretically grounded, validated construct for conducting systematic
inquires. The concept of ‘core self-evaluation’ (CSE), which has been recently validated in the
psychology literature, concisely encompasses and consolidates the common, overlapping portions
of four previously unconnected personality dimensions: self-esteem, self-efficacy, locus of con-
trol, and emotional stability. CSE has great potential to provide substantial leverage for research
on executive self-concept. We review and reconcile prior research on related constructs in exec-
utive settings (including narcissism, hubris, and overconfidence) and argue that CSE should be
adopted as a robust, well-validated umbrella construct for research on executive self-concept.
Indeed, a very high level of CSE, or hyper-CSE, aligns closely with what is often colloquially
called ‘hubris.’ We anticipate that hyper-CSE executives—who possess supreme levels of self-
confidence, self-potency, and conviction that they will prevail—will manifest this trait in their
job behaviors. We develop a set of integrated propositions that describe the implications of CSE
for strategic decision processes, strategic choices, and organizational performance. Finally, we
propose additional avenues for research. Copyright 2005 John Wiley & Sons, Ltd.
All the extraordinary men I have known were self-concept. This tension is especially relevant in
extraordinary in their own estimation. the top executive arena. On the one hand, execu-
Woodrow T. Wilson
tives who have highly positive self-assessments are
thought to be able to create and seize opportunities
The most useful thing I learned was to be humble
... and to motivate their organizations in ways that
Larry Bossidy, Former CEO of Allied Signal less confident executives cannot (Barnard, 1938;
Bass, 1990, Ch. 10; Keegan, 1987). But these
Among the most central, fundamental components same executives may be likely to engage in unin-
of individuals is the basic conviction they have in formed or excessive risk-taking, grandiose initia-
themselves. As the two quotations above indicate, tives, and acts of intimidation (Hayward and Ham-
conflicting views exist about the merits of positive brick, 1997; Kets de Vries, 1994; Van Velsor and
Leslie, 1995).
Although a substantial amount of research on
Keywords: upper echelons; core self-evaluation; hubris;
executive self-perceptions; decision speed; strategic per- top executives has been conducted over the last
sistence 20 years (summarized in Finkelstein and Ham-
*Correspondence to: Donald C. Hambrick, Smeal College of brick, 1996), scholars still only possess a frag-
Business Administration, The Pennsylvania State University,
440 Beam Business Administration Building, University Park, mented understanding of the origins and implica-
PA 16802, U.S.A. E-mail: dch14@psu.edu tions of executive self-potency. A chief obstacle
Copyright 2005 John Wiley & Sons, Ltd. Received 14 January 2004
Final revision received 29 October 2004
298 N. J. Hiller and D. C. Hambrick
has been the absence of any rigorous conceptual primarily on the liabilities of having too lit-
apparatus for conducting such inquiries. The few tle CSE, or on the benefits of having a req-
attempts to explore executive self-potency have uisite, threshold level of CSE. In a variety of
invoked an array of disconnected concepts, includ- samples, those people who evaluated themselves
ing those that address only narrow slices of overall positively were more satisfied with work, per-
self-assessment (notably, locus of control) (Boone, formed better, and dealt with upheaval better
De Brabander, and Hellemans, 2000); colloquial than those lacking such self-assessments (Erez
concepts that, despite intuitive appeal, lack rig- and Judge, 2001; Judge, Erez, and Bono, 1998;
orous psychological and methodological ground- Judge, Locke, Durham, and Kluger, 1998; Judge,
ing (hubris) (Hayward and Hambrick, 1997); psy- Thoresen, Pucik, and Welbourne, 1999). As such,
chopathological concepts that are difficult to oper- Judge and co-authors have not had much spe-
ationalize beyond clinical settings (narcissism) cific interest in the upper end of their scale
(Lubit, 2002); and constructs that describe exec- and, particularly, have not considered the impli-
utive self-concept only on a post hoc basis (over- cations of having an extraordinarily high level
confidence) (Malmendier and Tate, 2003). of CSE.
Recently, psychologists have made considerable Stereotypes aside, there is reason to expect that
progress in identifying and validating a fundamen- many executives have relatively high CSE, and a
tal construct that holds considerable promise for significant proportion may have exceptionally high
advancing theory and research on executive self- CSE, or ‘hyper-CSE.’ As we shall argue, execu-
assessment. Specifically, Timothy Judge and co- tive behaviors at the very upper reaches of the CSE
authors have developed the concept of ‘core self- scale may not conform to Judge’s ‘more is better’
evaluation’ to describe how individuals broadly thesis. For example, we anticipate that hyper-CSE
evaluate themselves and their relationship to their executives are inclined to take grandiose actions
environment across situations (Judge, Locke, and that can easily lead to catastrophic results—as a
Durham, 1997). This concept, which has been result of their personal conviction that they can
extensively validated over the last 5 years with a do no wrong (or fix all wrongs that may turn
wide array of subject samples, has the advantage up). Thus, the high end of the CSE scale aligns
of providing considerable parsimony for theory- very well with what is colloquially called ‘hubris.’
building in the area of self-assessment. Findings Judge and co-authors may have laid the foundation
indicate that the concept of core self-evaluation for rigorous examination of the syndrome that to
(CSE) concisely encompasses and consolidates the ancient Greeks was ‘man’s capital sin’ (Hay-
the common, overlapping portions of four well- ward and Hambrick, 1997).
studied, but heretofore unconnected, concepts: self- Our paper is organized as follows. In the next
esteem, self-efficacy, locus of control, and emo- section we provide an overview of the CSE
tional stability (Judge, Bono, Erez, Locke and construct, including discussion of its conceptual
Thoresen, 2002; Judge, Erez, Bono, and Thore- underpinnings and validity. Next, we introduce the
sen, 2002; Judge, Erez and Bono, 1998). These idea of applying CSE to the study of executives;
four concepts are not identical, but they do share we address research that has dealt with related con-
significant conceptual similarities, and it is this structs, including hubris, narcissism, locus of con-
area of similarity that constitutes the basic, fun- trol, and overconfidence. We then develop proposi-
damental assessment an individual makes of one- tions regarding the strategic decision-making pro-
self. As we shall discuss below, Judge and col- cesses, strategic choices, and performance conse-
leagues have found that CSE leads to more potent quences that follow from high-CSE executives. We
and parsimonious predictions of individual behav- limit our propositions only to those dealing with
iors and outcomes than do the individual vari- strategic decision-making and performance, omit-
ables. ting for now consideration of the potentially impor-
Although several papers have identified, vali- tant effect of CSE on executives’ leadership behav-
dated, and applied the CSE concept, its relevance iors and interactions with others. Next, we discuss
for the study of top executives and their behav- the issues associated with measurement of CSE
ior has not been considered. Applying CSE to in executives, suggesting some refinements and
the executive arena does not involve an obvi- accompaniments to existing measures. We close
ous, linear transposition. Judge’s work has focused with a brief inventory of research opportunities.
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 299
Self-esteem — 0.92
Generalized self-efficacy 0.85 — 0.93
Emotional stability 0.64 0.62 — 0.68
Locus of control 0.52 0.56 0.40 0.59
Values for the correlation table are taken from Judge, Erez, Bono, and Thoresen’s (2002) meta-analysis of
studies reporting correlations between at least two of the CSE component traits. The population estimates for
the correlations are based on a total of 127 primary-study correlations, representing 33,854 individuals. Factor
loadings of each trait on the CSE construct were computed using LISREL 8.5 and are based on the meta-analytic
correlation matrix; harmonic mean N = 3362.
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
300 N. J. Hiller and D. C. Hambrick
this figure is not meant to represent the quanti- not encompass the entirety of all four constructs.
tative relationships involved, but rather is a qual- Rather, CSE represents a significant and common
itative aid to help explain the CSE construct. As core of the four component traits.
Figure 1 portrays (and as follows from Table 1), Beyond evidence that all four component traits
the four component variables overlap considerably, load highly on the CSE construct, research has
and CSE is at the core, or center, of their over- shown that this higher-order factor is more predic-
lap. This schematic also allows us to point out tive of a variety of job behaviors and outcomes
that there are aspects of the four component vari- than are the four component traits. For exam-
ables that fall outside of, and do not contribute ple, CSE has been shown to be more consistently
to, CSE. For example, locus of control (LOC) and strongly related to job performance and sat-
gauges the degree to which a person feels that life’s isfaction, motivation, stress, and other personality
events are within his or her control. LOC is not measures (such as conscientiousness and extrover-
meant to capture the degree to which the person sion) than are the four individual traits (Erez and
believes that his or her actions will generate pos- Judge, 2001; Judge, Erez, Bono, and Thoresen,
itive outcomes. Still, there is probably some part 2002; Judge et al., 2003). Whether CSE is entered
of LOC that captures that belief; after all, those into regression models before or after the compo-
most inclined to believe that their actions will mat- nent traits, its effects generally dominate the four
ter also tend to believe that their actions will lead individual dimensions. These results suggest that
to salutary results. It is that part of LOC, then, the higher-order CSE construct is a better predic-
that conceptually loads onto CSE. Thus, CSE does tor than the component traits used in isolation; both
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 301
parsimony and explanatory power are greatly aided (Wanberg and Banas, 2000), and positive job atti-
by its use. tude following promotion (Lam and Schaubroeck,
2000). There is a significant literature investigat-
ing locus of control among executives, which we
Four component traits
will discuss below.
Because CSE is at the core, or captures the overlap, With origins in psychopathology, emotional sta-
of four human traits, it is important to review those bility has been identified as one of the ‘Big Five’
component concepts in order to better understand personality traits (Costa and McCrae, 1992) and
CSE. Self-esteem, conceptually the most central is sometimes known by its converse, neuroticism.
component of CSE (Judge et al., 1997), is an indi- Because these labels can lead to various inter-
vidual’s global evaluation of self-worth (Baumeis- pretations, it is essential to understand that it is
ter, Smart, and Boden, 1996). Self-esteem refers anxiety that is at the heart of most measures of
to an individual’s overall self-acceptance, self- this construct (Judge et al., 2003). Individuals who
liking, and self-respect (Harter, 1990), and it has score low on emotional stability (high on neuroti-
been related to various outcomes in non-executive cism) are prone to worry, fear, stress, and feelings
samples, including: successful handling of jobs of helplessness (Costa and McCrae, 1992); those
with ambiguous roles (Jex and Elacqua, 1999); who score high have an absence of these qualities.
acceptance of change (Wanberg and Banas, 2000); It is understandable, then, that emotional stabil-
motivation and organizational commitment (Hui ity covaries significantly with the other elements
and Lee, 2000); resistance to influence (Brockner, of CSE. Individuals who have high self-esteem,
1988); and restricted information search and policy high self-efficacy, and an internal locus of con-
experimentation (Knight and Nadel, 1986). trol—those who are highly confident in their abil-
Self-efficacy refers to one’s belief in his or ities and who feel in control of their fate—have lit-
her capability to successfully execute and per- tle to worry or be anxious about. In organizational
form tasks (Gist and Mitchell, 1992). Although research, emotional stability has been found to be
assessments of self-competence can vary some- positively related to job performance (Ployhart,
what depending on the task being performed (task- Lim, and Chan, 2001), extrinsic career success
specific self-efficacy), individuals possess a gener- (Judge, Higgins, Thoresen, and Barrick, 1999), and
alized self-efficacy that is stable across domains leadership emergence (Judge, Bono, Ilies, and Ger-
(Bandura, 1977). Most organizational research has hardt, 2002).
examined task-specific self-efficacy (e.g., Audia,
Locke, and Smith, 2000; Brown, Ganesan, and
Challagalla, 2001), but the limited literature on
generalized self-efficacy in non-executive sam- CSE IN EXECUTIVES
ples has generally found relationships with overall
job performance and organizational commitment Over the last 20 years, researchers have devoted
(Gardner and Pierce, 1998), self-serving bias after great effort to understanding how the character-
failure (Silver, Mitchell, and Gist, 1995), and cop- istics of executives are manifested in the strate-
ing with career-related events (Stumpf, Brief, and gic choices they make and the performance they
Hartman, 1987). deliver. The underlying premise of this research
Locus of control is the belief one holds about has been that senior executives confront so many
who or what controls the occurrence of life events stimuli, laden with so much ambiguity, that their
(Rotter, 1954). Individuals with an internal locus of personal schemas—their values, experiences, per-
control believe that their fate is determined by their sonalities, and other human factors—greatly enter
actions, whereas those with an external locus of into their interpretations of situations and the
control believe that what happens to them is deter- choices they make. This stream of research, often
mined by factors outside of their control. In empir- termed ‘the upper-echelons perspective,’ has relied
ical studies of general populations, internal locus on a combination of executive demographic char-
of control has been found to be positively related to acteristics (e.g., functional background and tenure
variables such as skill acquisition, transfer of train- in the company; Bantel and Jackson, 1989) and
ing and job performance (Colquitt, Lepine, and psychological constructs (e.g., tolerance for ambi-
Noe, 2000), acceptance of organizational change guity and risk aversion; Gupta and Govindarajan,
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
302 N. J. Hiller and D. C. Hambrick
(continued overleaf )
303
Wally & Baum (1994) Mainly self-report. Decision pace 151 manufacturing sector CEOs in LOC not related to pace of
assessed through response to York County, Pennsylvania decision-making, cognitive complexity,
hypothetical business scenario centralization, or experience. Internal
LOC related to increased formalization,
risk propensity, and use of intuition
Roth (1995) Self-report questionnaire survey. 74 CEOs of medium-sized firms in Internal LOC positively related to 5-year
Archival performance measures nine industries income growth for firms with high
a
Domain-specific variables (such as role breadth self-efficacy, organization-based self-esteem, and specific measures of locus of control) are not included in this table, as they are not
considered to be components of the broad psychological trait of CSE.
Hubris Hayward and Hambrick Hubris measured indirectly by CEOs of American publicly traded All 3 measures of CEO hubris (as
(1997) proxies of media praise, firms engaging in well as a proposed underlying
CEO—TMT pay differential, >$100 million acquisitions in ‘hubris factor’) were significantly
and recent organizational 1989 and 1992 (N = 106) related to overpayment when
performance acquiring another company
Overconfidence Malmendier and Tate Overconfidence measured as 477 firms from the Forbes 500 list The investment decisions of
(2003) failure to exercise highly ‘in the for the years 1980–1994 overconfident CEOs are more
money’ options and habitually responsive to available cash flow
acquiring stock of their own
company
Simon and Houghton Overconfidence measured through 55 CEOs and direct reports of Overconfidence and extreme certainty
(2003) interview and survey as extreme small computer companies in predicted the extent to which a
certainty in projected Georgia product launch was pioneering
product-launch success, (risky). Pioneering negatively
followed by subsequent failure related to achieved success
Narcissism No empirical research
Core Self-Evaluations in Strategic Decision-Making
305
who examined the relationship between CEO over- Hayward and Hambrick’s study highlights dual
confidence and corporate investment. They identi- merits of launching a research stream on executive
fied overconfident CEOs as those who fail to exer- core self-evaluations. First, their results strongly
cise stock options that are highly ‘in the money’ suggest that executives make decisions on the basis
and who habitually acquire stock of their own com- of how full they are of themselves; thus it appears
pany. They found that these overconfident CEOs that the essence of CSE matters in the execu-
invested a higher percentage of the company’s cash tive arena. Second, Hayward and Hambrick’s use
flow in investment projects (rather than releasing of proxy indicators of hubris, which captured a
it as dividends) than did CEOs who were not over- mixture of presumed situational and dispositional
confident. As a result, overconfident CEOs whose factors, indicates the pressing need for a psycho-
companies had significant amounts of available metrically grounded and validated construct for
cash ended up investing in many projects that they studying extreme self-confidence in executives. We
shouldn’t have, presumably because the CEOs had believe hyper-CSE is exactly that construct. That
inflated estimations of their personal abilities to is, the upper reaches of CSE may be thought of as
produce success. a scientifically validated ‘hubris factor.’
In sum, prior research on the conceptually sim-
ilar notions of executive narcissism, overconfi-
Hubris
dence, and hubris helps to inform our understand-
Like narcissism, hubris has its origins in Greek ing of high-CSE executives. Most notably, a very
mythology; it refers to exaggerated self-confidence high level of CSE may exactly correspond to what
or pride (often with the connotation that retribu- is colloquially referred to as hubris.
tion will follow) (Hayward and Hambrick, 1997).
The first prominent mention of hubris in the lit- Expected distribution of CSE among
erature on top executives was by Richard Roll executives
(1986), who was otherwise at a loss for explain-
ing why CEOs make large corporate acquisitions Research in the upper-echelons tradition is based
despite well-known evidence that such deals gener- on the premise that executives vary enough in their
ally do not deliver the hoped-for results. Hayward characteristics so as to yield differences in their
and Hambrick (1997) extended and tested Roll’s behaviors (Hambrick and Mason, 1984). Accord-
‘hubris hypothesis,’ not by examining whether ingly, in order for CSE to be a useful addition to
CEOs make acquisitions or not, but by examin- research on top executives, there must be mean-
ing how much above pre-bid market prices that ingful variance. In this section, we describe what
CEOs pay for acquisitions. This measure of ‘acqui- we anticipate the CSE distribution to be among top
sition premium’ (which averaged 47% and ranged executives. We argue that executives, on average,
as high as 100%) directly reflected the acquiring have higher CSEs than the general population, but
CEO’s assessment of how much more valuable that they also exhibit sufficient variability to allow
the acquired company would be if it were under research on their differences.
his/her management. Lacking any direct measure Although central personality traits are largely
of CEO hubris, Hayward and Hambrick relied on stable over time in adulthood (Costa et al., 2000;
three indicators, or proxies, of ‘sources of hubris.’ McCrae and Costa, 2003), there is compelling evi-
The first two measures, the company’s recent per- dence that some aspects of personality and identity
formance under the CEO and recent media praise can change as a result of life circumstances (Franz,
for the CEO, were situational conditions that were 1994; Miller and C’deBaca, 1994; Trzesniewski,
thought to generate hubris. The third measure, the Donnellan, and Robins, 2003; Weinberger, 1994).
ratio of the CEO’s pay relative to the second- Adopting this integrative view, we consider a per-
highest paid executive, was thought to capture the son’s CSE to be largely shaped by genetic factors
CEO’s sense of ‘self-importance,’ which is per- and during formative years, then reinforced (or
haps more of a stable individual trait. All three diminished) by long-term feedback processes, and,
measures were highly related to the size of acquisi- finally, subject to further adjustments in the face of
tion premiums, and the three formed an underlying recent life events (Weinberger, 1994). That is, indi-
hubris factor that was a stronger predictor of pre- viduals are prone to a given level of CSE, which
miums than were any of the individual indicators. can change moderately as a result of long-term
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 307
conditioning and can change still more (but to a 1979). Those who are at the top of their orga-
lesser extent) as a result of recent occurrences. The nizations, and who have committed themselves
idea that CSE is somewhat malleable is especially to job and career performance, may especially
apt, we believe, for senior executives. experience rises and falls in self-evaluations par-
We anticipate that it will be those who have rel- alleling their work outcomes. Thus, an execu-
atively high intrinsic CSE at the outset of their tive’s CSE might rise or fall somewhat, depending
careers who will advance. Among the qualities on recent or—especially—sustained performance.
known to be valuable in managerial settings is self- Those who have experienced a long run of suc-
confidence. Not only is self-confidence thought to cesses may show an increased CSE; those who
be substantively valuable, because it allows the have experienced several recent setbacks may have
manager to create and seize opportunities, as well a somewhat diminished CSE (Hayward and Ham-
as overcome obstacles; but the external appearance brick, 1997).
of self-confidence is also valuable, for its moti- Despite our assumption that executive CSE
vational power and its potential to reassure con- tends to be somewhat higher than in the gen-
stituents that the organization is in capable hands eral population, it would be a mistake to conclude
(Barnard, 1938; Bass, 1990; Keegan, 1987). In this that executives have uniformly high CSEs. Indeed,
vein, self-ratings of CSE are found to relate to locus of control (a CSE component), for example,
managerial performance ratings and achievement has been shown to have meaningful variance in
of objective performance criteria (Erez and Judge, numerous samples of top executives, with stan-
2001; Judge and Bono, 2001). dard deviations only slightly smaller than in non-
In addition to having had higher CSEs from the executive populations (e.g., Blau, 1993; Govin-
outset, we expect that many executives will expe- darajan, 1989; Miller, 1983; Miller et al., 1982).
There also has been evidence found for variance in
rience an enhancement of their CSEs during their
measures of task-specific self-efficacy, overconfi-
rise through their organizations. Most senior exec-
dence, and hubris at the executive level (Hodgkin-
utives, particularly those in large organizations,
son, 1992; Hayward and Hambrick, 1997; Mal-
have achieved their positions by winning a long
mendier and Tate, 2003). Further supporting the
series of rigorous promotion tournaments (Lazear
idea that variance exists, it is important to note
and Rosen, 1981). Relative to their peers along the
that not every executive has risen through a series
way, these tournament winners have been repeat-
of demanding tournaments in lustrous compa-
edly deemed to have superior skill, intelligence, nies. Some executives head small or medium-
motivation, persistence, and other valuable qual- sized companies; some have arrived at their posi-
ities. Although defective advancement processes tions through family connections or politicized
are possible, we can assume that top executives processes; some are in their positions precisely
are generally, or at least disproportionately, potent; because they are not self-assured or confident, hav-
and they have had their potency reaffirmed and ing been selected for their pliancy or timidity,
reinforced with each promotion. As partial support possibly by domineering CEOs or owners (e.g.,
for our portrayal of executives as having higher Collins and Moore, 1970). In short, not every
CSEs, on average, than the general population, executive is at the very high end of the CSE
research that has found that executives tend to scale.
score disproportionately as ‘internals’ on the locus Figure 2 displays the distributions of CSE we
of control construct, one of the components of CSE would expect from a sample of executives, as com-
(Govindarajan, 1989; Miller, 1983; Miller et al., pared to the general population. (Both of these
1982). curves are stylized, inasmuch as Judge and col-
Finally, once they reach the top, executives’ leagues have not reported the actual shape of CSE
CSEs can still change within a range. There may distributions for any of their samples.) As shown,
be a general tendency for enhancement of exec- we anticipate that executives exhibit significant
utive CSE, due to the flattery and bolstering range in their CSEs, but tend to score higher than
top executives often receive from those around the general population. Notably, we expect that
them (Doyle, 1994; Bedeian, 2002). Moreover, a significant proportion of executives have CSEs
work roles are central to many individuals’ defini- toward the upper end of the scale, or what might
tions of self-concept (Brockner, 1988; Tharenou, be called ‘hyper-CSE.’
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
308 N. J. Hiller and D. C. Hambrick
Figure 2. The proposed distribution of core self-evaluation levels in the general population and executive population
We use the term hyper-CSE only for ease of IMPLICATIONS FOR STRATEGIC
exposition, not to suggest that executives who are DECISION-MAKING
at the very upper end of the continuum differ qual-
itatively, or in a step function fashion, from those Upper-echelons researchers have examined associ-
whose CSEs are only slightly lower (or simply ations between executive characteristics and a wide
‘high’). At this early stage of theory development array of outcome variables, including elements
about executive CSE, we see the construct as a of organizational strategy, structure, and perfor-
continuum, and executives as differing incremen- mance (summarized in Finkelstein and Hambrick,
tally, but meaningfully, along it. 1996). We believe that CSE provides a conceptual
lever for understanding strategic outcomes which
Summary portrayal of the hyper-CSE have so far been under- or unexamined by exist-
executive ing executive personality research. Following from
the work of Judge and co-authors (e.g., Judge,
At this point, it is useful to develop a compos- Erez, Bono, and Thoresen, 2002), we anticipate
ite portrayal of the executive who has very high that CSE will yield stronger predictions of these
CSE, or hyper-CSE, based upon our understand- outcomes than any of the four component traits.
ing of the construct developed by Judge and col- In this section, we develop an integrated set of
leagues, as well as its four component traits. At propositions that describe the effects of executive
their core—extending beyond, but including their CSE on decision-making, specifically on strategic
work lives—hyper-CSE executives are exceed- decision processes, strategic choices, and organi-
ingly confident and full of self-regard and self- zational performance (summarized in Figure 3).
worth. They are sure of their abilities, and they In a later discussion of future research opportuni-
believe deeply that the application of their abili- ties, we will briefly note additional implications of
ties will bring positive outcomes. They are free of executive CSE for such domains as interpersonal
anxiety and have little concern about negative out- relations and top management team composition
comes because they possess a core conviction that and processes.
they can surmount adversity and repair all prob- Because executives must have considerable
lems. In short, hyper-CSE executives are sure they authority and discretion in order for their biases to
will prevail. be reflected in organizational outcomes (Hambrick
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 309
Figure 3. Effects of executive CSE on strategic processes, strategic choices, and organizational performance
and Finkelstein, 1987), we refer in all our propo- the degree to which strategic decision-making is
sitions to chief executive officers (CEOs), the top- (non-)comprehensive, fast, and centralized.
most officials of organizations. We do not rule out Fredrickson and Mitchell (1984) established the
the influence that CSE may hold in other execu- construct of ‘comprehensiveness’ as a way to
tive positions, nor do we mean to discount the role study a then-lively debate about the merits of
of the entire top management team in generating careful, systematic, ‘synoptic’ decision-making vs.
organizational outcomes (Hambrick and Mason, best-guess, trial-and-error approaches. In further
1984). Following from a number of prior stud- work, Fredrickson (1984) observed that compre-
ies that have found CEO characteristics (including hensiveness could occur at four stages in an orga-
personality variables) to be reflected in organiza- nization’s decision process: situation diagnosis,
tional outcomes (summarized in Finkelstein and generation of alternatives, evaluation of alterna-
Hambrick, 1996), we formally focus on CEOs, tives, and decision integration. In his empirical
who are typically in the strongest position to research, Fredrickson found that organizations tend
influence and shape what occurs in the organi- to adopt a characteristic degree of comprehen-
zation. Yet, it should also be noted that not all siveness across all four stages (such that overall
CEOs have equal discretion (Hambrick and Finkel- decision comprehensiveness is a valid concept),
stein, 1987). Therefore, executive discretion, or and that there is a negative association between
latitude of action, should be considered to be a decision comprehensiveness and performance in
latent, unspecified moderator of the associations highly dynamic, uncertain industries (and a pos-
we propose. itive association in stable industries) (Fredrickson
and Mitchell, 1984; Fredrickson, 1986).
We can expect that hyper-CSE executives will
Strategic decision processes
not be inclined toward decision comprehensive-
Researchers have long been interested in the pro- ness. Filled with confidence, these executives be-
cesses that organizations employ in making major, lieve they possess valuable personal insights or
strategic decisions, or what Barnard (1938) termed understanding of their strategic situations and
‘the technique of decision’ (Mintzberg, 1978; available alternatives, such that they will not feel
Quinn, 1980). Research has found that a given the need to exhaustively gather, analyze, and dis-
organization tends to adopt a distinctive, recurring cuss data. We can expect that high-CSE executives
approach to decision-making, which it applies time will form their strategic conclusions on the basis
after time, across an array of decision types (Weick, of fewer pieces of information than will moderate-
1979; Fredrickson and Mitchell, 1984). Moreover, CSE executives. Adding to the hyper-CSE execu-
there is evidence that the CEO’s style and prefer- tive’s propensity to act instinctively is his/her deep
ences affect the nature of the organization’s deci- belief that any unforeseen problems that might
sion processes (Miller et al., 1982). We anticipate arise because of the decision can be successfully
that a CEO’s core self-evaluation will influence overcome. Thus:
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
310 N. J. Hiller and D. C. Hambrick
Proposition 1: The greater a CEO’s core self- self-evaluation, the overall combination of self-
evaluation, the less comprehensive will be the confidence and self-potency will lead high-CSE
organization’s strategic decision-processes. executives to make fast decisions:
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 311
executives would embrace the idea that others in be relatively prone to undertake large-scale ini-
the organization can make a given decision as well tiatives. These executives are sure of themselves,
as they can; nor would they want to defy their highly confident. They are not only sure of the
conviction that effort equals reward.3 High-CSE wisdom of their decisions per se, but also sure
executives will tend not to delegate and will prefer of their abilities to successfully implement their
to act unilaterally. Thus: decisions. High-CSE executives may be more will-
ing to undertake large-stakes, quantum initiatives
Proposition 3: The greater a CEO’s core self- (which are, in an objective sense, riskier) because
evaluation, the more centralized will be the they perceive less risk (see Wiseman and Gomez-
organization’s strategic decision-making. Mejia, 1998). Moreover, they believe they can suc-
cessfully overcome any problems that may arise
Strategic choices after the large up-front outlays are made. In con-
trast, CEOs who have only moderate levels of CSE
In addition to its effects on decision processes, harbor some amount of self-doubt, and they have
executive CSE is expected to influence the orga- some concerns about unforeseen external forces
nization’s actual strategic choices, or resource ruining their investments. As such, moderate-CSE
deployments. Some of the effects of CSE on strate- executives will tend to favor more incremental ini-
gic choices may be mediated by the decision pro- tiatives.4
cesses described above, while some of its effects
may be direct. We discuss how a CEO’s level of Proposition 4: The greater a CEO’s core self-
CSE will shape the degree to which the organi- evaluation, the greater the number and scale of
zation undertakes quantum (as opposed to incre- quantum, large-stakes initiatives undertaken by
mental) initiatives, pursues deviant (as opposed to the organization.
conformist) strategies, and persists with initiatives
launched by the CEO.
Strategic initiatives may be either incremental In recent years, strategy scholars have become
or quantum in nature (Quinn, 1980). Incremen- interested in the concept of strategic conformity,
tal strategies involve relatively modest outlays, a or the degree to which a focal firm looks and
step-at-a-time philosophy, and typically allow con- behaves like the modal (or typical) firm in its
siderable reversibility (Ghemawat, 1991; Chen and industry (Deephouse, 1999; Rindova, Pollock, and
MacMillan, 1992). In contrast, quantum initiatives Hayward, in press). On the one hand, imitation
abruptly place more of the organization’s resources provides legitimacy (DiMaggio and Powell, 1983);
at risk, and, by their very nature, are difficult to but on the other hand, it rules out differentia-
reverse. Examples of quantum strategic initiatives tion in a competitive market space (Noda and
include large-scale R&D spending, large capital Collis, 2001). Although the literature on strate-
outlays for specialized assets, and large acquisi- gic imitation has focused primarily on the role
tions. of uncertainty in causing isomorphic behavior
Roll’s (1986) ‘hubris hypothesis’ for explain- (DiMaggio and Powell, 1983; Haveman, 1993),
ing why CEOs make large-scale acquisitions envi- researchers also have considered how the charac-
sioned that highly confident CEOs are willing to teristics of corporate decision-makers can prompt
engage in large-stakes, quantum initiatives because conformity or imitation. In this vein, for example,
they are sure they will recoup their investment. Davis (1991) found that the adoption of poison
We similarly anticipate that hyper-CSE CEOs will pill anti-takeover provisions diffused from com-
pany to company through interlocked directors;
3
Finkelstein and Hambrick (1990) found that long-
It is interesting to consider the possibility that some high-
CSE executives—especially those who are politically or socially tenured top management teams (TMTs) exhibited
astute—will engage in centralized, unilateral decision-making,
but still allow others in the organization to have the impression
4
that they have a voice or input to the decision. By manipulating Judge and co-authors have not formally considered the relation-
the process, the CEO can create the appearance of decentralized ship between CSE and risk propensity. In one study, however,
and comprehensive decision-making, even though he or she they found a correlation of 0.50 between CSE and a measure of
simply seeks an elaborate ratification of a top-down choice. We risk tolerance (Judge, Thoresen, Pucik, and Welbourne, 1999).
are indebted to an anonymous reviewer for raising this intriguing Thus, although risk propensity is not an element of CSE, it is
possibility. likely to be an accompaniment or outgrowth of CSE.
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
312 N. J. Hiller and D. C. Hambrick
more strategic conformity to the central tenden- Some signals indicate that the organization is on
cies of their industries than did newer TMTs; the right path and that future success hinges on a
and Geletkanycz and Hambrick (1997) found that continuation of current strategy, while other sig-
TMTs whose members were well connected to nals indicate that the current strategy is leading
other firms in the focal industry tended to pursue to trouble (or to less success than another strat-
strategies that conformed more to industry central egy might bring). Because these conflicting data
tendencies than did those whose members lacked are often noisy and ambiguous, and they emanate
such ties. from sources that vary in their familiarity and
What has not yet been considered is the pos- reliability, they are subject to a great deal of per-
sibility that executive personality influences con- sonalized selective perception and interpretation by
formist, or nonconformist, behavior. The concept the decision-maker (Mischel, 1977; Hambrick and
of core self-evaluation, however, presents just such Mason, 1984). As a result, there is a tendency for
a possibility. Possessing a high level of self- individuals to become committed to their own prior
confidence, the hyper-CSE executive does not need actions and resist changing their behavior, even
for others to validate a course of action. Strategic when the chosen course is not yielding success
ideas emanate from his/her own valuable insights, (Staw and Fox, 1977; Fox and Staw, 1979; Staw
and those ideas are tested against an internal men- and Ross, 1987).
tal model that possesses its own reliability. Inso- Strategic persistence has been found to be a
far as uncertainty prompts imitation, the hyper- function of executive tenure (Finkelstein and Ham-
CSE executive—who possesses little doubt or brick, 1990), as well as of executive personality.
uncertainty—will not feel the need to conform For example, Kisfalvi (2000) related strategic per-
to the strategies of others. While others may see sistence to an executive’s needs for autonomy,
deviance from industry conventions as risky, the success, and recognition. In a simulation study,
ultra-confident, high-CSE executive is not likely Audia et al. (2000) found that confidence and self-
to perceive as much risk in such actions. efficacy were significant predictors of dysfunc-
Support for this line of thought also comes from tional persistence in the face of environmental
behavioral modeling theory (e.g., Bandura, 1977), changes. Similarly, Whyte, Saks, and Hook (1997),
which suggests that individuals are more likely to in a study of undergraduates, found that high task-
imitate the behavior of a model when they are specific self-efficacy was a significant contribu-
uncertain about how to act themselves. Individuals tor to economically irrational escalation of com-
with low self-esteem (a component of CSE) tend mitment to a losing course of action. Extending
to be relatively uncertain about the appropriateness the argument to CSE, we expect that high-CSE
of their behavior, and thus may be more heavily executives are relatively likely to persist in their
influenced by the actions of a model (Brockner, chosen strategies, because of their extreme con-
1988). In a related vein, studies by Miller and fidence in their decisions, in their ability to suc-
colleagues (Miller et al, 1982; Miller, 1983; Miller cessfully implement their decisions, and in their
and Toulouse, 1986a) have shown that executive ability to overcome any post-decision challenges.
locus of control (a component trait of CSE) is We expect high-CSE executives to persist in their
related to strategic innovation, which is usually chosen strategies even in the face of disconfirming
nonconformist behavior. Thus: evidence.
Proposition 5: The greater a CEO’s core self- Proposition 6: The greater a CEO’s core self-
evaluation, the more the organization’s strategy evaluation, the greater the organization’s per-
will deviate from the central tendencies of the sistence in pursuing strategies that were launch-
industry. ed by the CEO.
Strategic persistence, the degree to which the In sum, then, we anticipate that a CEO’s self-
firm’s strategy remains unchanged over time, is concept, as gauged by his or her core self-evalu-
another important component of strategic choice ation, will significantly influence the way in which
(Finkelstein and Hambrick, 1990). Organizational an organization makes its strategic decisions, as
decision-makers are steadily confronted with con- well as the nature of the choices made. In par-
flicting signals (Starbuck and Milliken, 1988). ticular, the high degree of self-confidence and
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 313
self-potency of the hyper-CSE chief executive will extreme outcomes, than will hyper-CSE executives
lead to non-comprehensive, fast, and centralized (who will deliver extreme, volatile performance).
decision-making, and also to quantum, noncon- Our depiction of the dangers of hyper-CSE is
formist strategic initiatives that the organization clearly at odds with the current wave of writings
will pursue with persistence. that depict managerial confidence in only the lofti-
est and most positive of terms (Kanter, 2004; Hol-
lenbeck and Hall, 2004). We agree that—up to a
Organizational performance point—managerial confidence, and its fuller vari-
If CSE affects strategic decision processes and ant, CSE, are exceedingly beneficial for propelling
choices, it can also be expected to affect organiza- action and motivating others; but we believe that
tional performance. Departing from Judge’s ‘more beyond that point, or at the extreme, managerial
CSE is better’ thesis, we anticipate that hyper-CSE confidence and hyper-CSE can bring about naı̈ve,
executives are associated with extreme perfor- even foolish behaviors.
mance—either big wins or big losses. On the one In a similar vein, one might ask, how can ‘emo-
hand, the outcomes of hyper-CSE—speed, non- tional stability,’ a component of CSE, ever be a
comprehensiveness, boldness, and deviance from bad thing? Isn’t emotional stability always benefi-
industry norms—can lead to extraordinary success cial? Here we must recall that emotional stability,
(D’Aveni, 1994; Porter, 1980; Eisenhardt, 1989). as measured by Judge and others, primarily gauges
On the other hand, these same strategic behav- a person’s freedom from anxiety or worry; thus, it
iors can lead to catastrophe. To the extent that does not capture every aspect of emotional well-
high-CSE executives engage in large-scale, risky being that the label might imply. (The obverse
strategic initiatives and make decisions quickly and label, ‘neuroticism,’ is often used to describe the
with little analysis, the results could be grave. construct.) What we are asserting, then, is that
Whereas Erez and Judge (2001) found that CSE executives who are completely free of anxiety or
was positively associated with performance on an worry (and who additionally manifest the other
anagram completion task (among undergraduate elements of hyper-CSE) are highly susceptible to
students) and in selling insurance policies (among flawed decision-making. Namely, we believe that
insurance agents), we are very doubtful that this Andy Grove, the legendary CEO of Intel, was on
pattern will carry over to CEOs—many of whom the right track when he said: ‘Only the paranoid
are at the very upper reaches of the CSE scale. survive’ (Grove, 1999).
Indeed, the picture of an executive who has the
authority and discretion to spend millions or bil-
lions of dollars and who has a belief that he or MEASUREMENT
she can do no wrong (or can fix all wrongs) is
not necessarily a pretty one. If the executive has In order to explore the implications of CSE for
calculated or guessed correctly, the results could executive behavior, the construct must be amenable
be outstanding. However, the chances are also rel- to reliable measurement. Although collecting psy-
atively great that such impulsive, outsized moves chometric measures directly from executives
will lead to dire consequences. Thus we anticipate (either through self- or other-reports) is difficult,
the following: it is possible, and the resulting data can hold great
explanatory power (e.g., Boone, De Brabander,
Proposition 7: The greater a CEO’s core self- and van Witteloostuijn, 1996; Miller et al., 1982).
evaluation, the more extreme the organization’s In cases where direct measurement is impractical,
performance. indirect, or proxy measures of CSE may be help-
ful in enabling empirical research (Hambrick and
Although it is tempting to think that moderate- Mason, 1984). Indeed, the use of readily accessible
CSE executives will perform better than hyper- proxies for psychological variables is widespread
CSE executives, we favor the line of thought and has been successful (e.g., Barr, Stimpert, and
that moderate- or moderately high CSE execu- Huff, 1992; Hayward and Hambrick, 1997). In
tives—those who carry some amount of self- this section, we outline some suggestions for both
doubt—will perform more reliably, or have less direct and indirect measures.
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
314 N. J. Hiller and D. C. Hambrick
Almost all prior research on CSE has used an this approach, which has been borne out in valid-
aggregated instrument, consisting of validated full- ity tests, is that participants will rate much more
length measures of each of the four component quickly those descriptors that are central to their
traits (self-esteem, generalized self-efficacy, locus self-concept than they will descriptors that are not
of control, and emotional stability). Advocated part of their self-concept.
by Judge, Locke, Durham, and Kluger (1998), Given the difficulty in obtaining cooperation
this full-measure approach was important in the from senior executives in completing self-
early phases of establishing the CSE construct, evaluations, alternative assessments of CSE also
but resulted in CSE measures as long as 54 items, need to be considered. One possible method would
which are too cumbersome for an executive sam- be to receive social reports of executive CSE from
ple. Recent work (Judge et al., 2003) has resulted others who are close to the executive. Sources
in the development of a 12-item measure that opti- could include administrative assistants, profes-
mally taps the central CSE construct. This newly sional direct reports, or other colleagues. While
created scale appears to have adequate psychomet- others’ ratings of focal subjects’ CSE have limi-
ric properties and to be less susceptible to range tations (Judge, Erez, Bono, and Thoresen, 2002),
restriction than the previous measure. Still, it may they may not be as vulnerable to positive self-
require additional modification for use with execu- presentation biases that can occur in self-ratings
tives, in order to ensure that range restriction does (e.g., Harris and Schaubroeck, 1988). Social re-
not obscure real differences at the high end of the ports, in and of themselves, as well as differences
CSE scale. For research on executives, we must be between other-ratings and self-ratings, may be rich
sure that we are reliably distinguishing between ground for investigation.
those who have high CSE and those who have In addition to direct measures of CSE, the cre-
very high CSE. One option for potentially allevi- ative use of indirect measures may enable addi-
ating range restriction would be to use a 7-point tional understanding of the effects of CSE. Poten-
(instead of 5-point) scale, with Very strongly dis- tial indicators of CSE (some of which have been
agree, and Very strongly agree at the ends of the previously used by Hayward and Hambrick, 1997,
continuum. Another possible solution may involve and Malmendier and Tate, 2003) include: promi-
rewording some of the items to enhance variance. nence of the CEO in the company’s annual report
For example, the item, ‘When I try, I generally suc- and press releases; content analysis of the CEO’s
ceed’ might be reworded as, ‘When I try, I almost speeches or press releases; the pay differential
always succeed.’5 between the CEO and other TMT members; and
Another way that CSE might be assessed is the CEO’s behavior in exercising (or not exercis-
through non-transparent psychological measures. ing) stock options. Admittedly, each of these will
Given that individuals often attempt to manage be a noisy, imprecise measure, and each will vary
others’ impressions of themselves (Day et al., as to whether it gauges CSE as an enduring trait
2002), executives may be unwilling (or even vs. as an emergent condition. Perhaps some of the
unable) to accurately respond to transparent CSE initial research on executive CSE should focus on
items. The Implicit Association Test (IAT; Green- establishing the associations between pencil and
wald, McGhee, and Schwartz, 1998), which could paper measures of the construct and some of these
be adapted to measure CSE, is relatively imper- indirect measures, in order to establish which of
vious to self-presentation biases, and could pro- the latter may be used reliably as proxies.
vide a useful alternate perspective on executive
self-concept. The existing version of this test,
which assesses self-esteem, requires participants at FUTURE RESEARCH AND SUMMARY
a computer to categorize a set of descriptors, as
quickly as possible, as being relevant to the self, The propositions we have presented regarding
and as being positive or negative (for a review of the implications of executive CSE for strategic
IAT, see Fazio and Olson, 2003). The basic idea of decision-making are among the most promising
avenues for future research. However, we see the
5
need and opportunity for inquiries on other aspects
We acknowledge that such modifications of Judge’s items
would yield a somewhat different measure—perhaps ‘hyper- of this important construct. In this section, we
CSE’ rather than regular CSE. present a brief overview of four such possibilities.
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
Core Self-Evaluations in Strategic Decision-Making 315
First, it will be important to understand the Fourth, CSE may be an important considera-
origins of CSE in executives. As a fundamen- tion in understanding executive pay. Wade, Porac,
tal, enduring personality trait, a person’s level of and Pollock (2004) found that ‘star’ CEOs (who
CSE should be largely established by early adult- were winners in Financial World’s CEO of the
hood (Costa and McCrae, 1994). But, just as with Year competition) were relatively likely to accept
other personality dimensions, it is possible—as a tight linkage between pay and performance, pre-
we have argued—that life experiences may exert sumably because their star status injected them
additional influences (Weinberger, 1994). It may with confidence in their own abilities. CSE may
be, for instance, that individuals who are selected be a useful construct for further exploring this
for early managerial posts have higher CSEs than conjecture; indeed such findings may have sig-
their age-peers who do not qualify for manage- nificant implications for the role of individual
ment. Then, those who receive promotions will differences in reducing agency problems (Fama,
experience an elevation of their CSE; with each 1980).
additional hierarchical advance, their sense of self- Researchers have long been interested in the
esteem and potency will be further reinforced. influence of executive self-concept on executive
Those who eventually rise to the highest lev- behavior but have lacked a well-developed, vali-
els—particularly those who do so without serious dated construct for conducting systematic inquires.
stumbles—may end up with CSEs well above their The recent work of Judge and co-authors in estab-
earlier levels. Then, recent job performance might lishing and validating the concept of CSE may
have even more of an effect; CEOs whose com- provide substantial leverage for research on exec-
panies have performed very well for several con- utive self-concept. CSE, which unifies the four
secutive years may have their self-concept further previously separate concepts of self-esteem, self-
bolstered (which may partially account for Miller’s efficacy, locus of control, and emotional stability,
Icarus Paradox, 1990). Likewise, those who have has been found in non-executive populations to
encountered serious performance problems may provide greater power in explaining outcome mea-
experience a reduction of their CSE. Examining sures than do the component traits. Moreover, CSE
these possibilities is important to our understand- has substantially more theoretical foundation (and
ing of executive psychology. measurement sophistication) than do the concepts
Second, there is an opportunity to study how that have previously been invoked in the litera-
executive CSE affects interactions among exec- ture on executive self-assessment—notably hubris,
utives and the composition and processes of top narcissism, and overconfidence.
management teams (Hambrick and Mason, 1984). We anticipate that high-CSE CEOs—who pos-
It would be useful to learn, for example, whether sess supreme levels of self-confidence, self-
hyper-CSE CEOs tend to attract and retain other potency, and conviction that they will prevail—
high-CSE executives to their teams, or conversely will manifest this trait in their behaviors. We have
whether CSE is an attribute for which likes do developed several propositions that describe the
not match. Similarly, it would be useful to exam- implications of CSE for strategic decision pro-
ine how the extreme confidence and sense of cesses and strategic choices. We envision, how-
self-potency of the hyper-CSE CEO affects team ever, that executive CSE might be reflected in a
dynamics, including such attributes as social cohe- wide array of executive behaviors and organiza-
sion and communication patterns (e.g., Smith et al., tional attributes (including interpersonal relations,
1994). incentive arrangements, and organizational struc-
Third, given that executives tend to be attracted ture), making it a promising construct for research
to (and retained in) industries and organizations on many fronts.
that fit with their dispositions (e.g., Gupta and
Govindarajan, 1984; Finkelstein and Hambrick,
1996), it would be interesting to investigate the
extent to which industry and organizational charac- ACKNOWLEDGEMENTS
teristics attract executives according to their CSEs.
It may be, for instance, that high-CSE executives We gratefully acknowledge helpful comments from
are attracted to industries that confer high levels Trevis Certo, David Day, Jim Detert, Dan New-
of discretion (Hambrick and Finkelstein, 1987). man, Tim Pollock, and Linda Trevino.
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)
316 N. J. Hiller and D. C. Hambrick
Copyright 2005 John Wiley & Sons, Ltd. Strat. Mgmt. J., 26: 297–319 (2005)