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Leader narcissism and outward foreign direct investment: Evidence from Chinese firms

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  • Fung, Hung-Gay
  • Qiao, Penghua
  • Yau, Jot
  • Zeng, Yuping

Abstract

Researchers use the upper echelons theory to establish how leaders’ attributes affect firms’ outward foreign direct investment (OFDI), a proxy for foreign operations. This extant literature has largely ignored the impact of leaders’ psychological attributes, particularly, narcissism. We use a narcissism index of leaders of Chinese listed companies to examine the relationship between leader narcissism and firm-level OFDI for the period 2007-2017. We show that leader narcissism has a positive and significant impact on firm-level OFDI. In addition, we find that firms with state ownership and political connections show a greater positive effect of leader narcissism on the firm’s OFDI. Our results suggest that leader narcissism appears to be a stimulus to corporate OFDI, and thus in recruiting top corporate executives who are responsible for managing the international investments of the corporation, this psychological trait should be given special consideration in addition to other qualifications.

Suggested Citation

  • Fung, Hung-Gay & Qiao, Penghua & Yau, Jot & Zeng, Yuping, 2020. "Leader narcissism and outward foreign direct investment: Evidence from Chinese firms," International Business Review, Elsevier, vol. 29(1).
    • Handle: RePEc:eee:iburev:v:29:y:2020:i:1:s0969593118308369
    DOI: 10.1016/j.ibusrev.2019.101632
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