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Does CEO Power Backfire? The Impact of CEO Power on Corporate Strategic Change

Author

Listed:
  • Yu Zhou

    (Department of Organization and Human Resources, School of Business, Renmin University of China, Beijing 100872, China)

  • Hongzhang Zhu

    (Department of Organization and Human Resources, School of Business, Renmin University of China, Beijing 100872, China)

  • Jun Yang

    (Department of Management, Bryan School of Business and Economics, University of North Carolina, Greensboro, NC 27412, USA)

  • Yunqing Zou

    (Department of Organization and Human Resources, School of Business, Renmin University of China, Beijing 100872, China)

Abstract

In today’s dynamic economic environment, enterprises must maintain sensitivity and flexibility when responding to the market through continuous strategic change. Anchored in the approach–inhibition theory of power, this study explores the relationship between CEO power and corporate strategic change and examines the moderating effects of company underperformance and product market competition. The study uses data from all A-share listed companies in China during 2006–2017. The results indicate that first, there is an inverted U-shaped relationship between CEO power and corporate strategic change. Appropriate centralization of CEO power helps promote corporate strategic change, whereas excessive centralization hinders strategic change. Second, low underperformance strengthens the inverted U-shaped relationship between CEO power and strategic change. Finally, high product market competition strengthens the inverted U-shaped relationship between CEO power and strategic change.

Suggested Citation

  • Yu Zhou & Hongzhang Zhu & Jun Yang & Yunqing Zou, 2021. "Does CEO Power Backfire? The Impact of CEO Power on Corporate Strategic Change," Sustainability, MDPI, vol. 13(16), pages 1-19, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:8847-:d:610430
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