The Effects of CEO Overconfidence on Speed of Internationalization and Extreme MNE Performance

Yu-Kai Wang

Abstract


This study examines how overconfident CEOs impact the speed of internationalization and extreme MNE performance. According to the CEO overconfidence literature, it proposes that overconfident CEOs tend to pursue a rapid pace of international expansion, thereby achieving extreme MNE performance. It also argues that vigilant boards weaken not only the relationship between overconfident CEOs and the speed of internationalization but also the relationship between overconfident CEOs and extreme MNE performance. The empirical results support the notion that CEO overconfidence is positively related not only to the speed of internationalization but also to the extreme performance of MNEs. However, this study does not find that board vigilance plays a moderating role in affecting the above relationships. To summarize, this study contributes to the field of international business by highlighting the importance of microfoundations. The implications of this study also facilitate our understanding of the impacts of cognitive bias in general, CEO overconfidence in particular, on the internationalization process, or the speed of internationalization, and MNE performance.


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DOI: https://doi.org/10.5296/ber.v15i4.23094

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Business and Economic Research  ISSN 2162-4860

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