Research On The Influence Mechanism Of CEO Overconfidence On Firm's Innovation Performance

The rapid change of global competition and technology make innovation the “must”rather than “optional” for the survival and development of firms.Firm innovation has become the micro-foundation of innovation-driven development strategy in China.The characteristics and decision-making behaviors of CEO with higher power in the process of firm innovation are crucial to innovation performance.Overconfidence as a cognitive bias commonly existing in CEO,there is still no unified conclusion between CEO overconfidence and firm innovation performance,and the most of the studies are based on developed markets,while emerging economies is relatively insufficient.Therefore,in the condition of China's transitional economy,the internal mechanism and external conditions of the influence of CEO overconfidence on firm innovation performance are worth a further research.This study is based on a combination of theoretical research and empirical analysis,and delve into(1)the impact of CEO overconfidence on firm innovation performance,(2)the impact path of CEO overconfidence on firm innovation performance,and(3)the impact of political ties on the relationship between CEO overconfidence and innovation performance.Findings got as follows:(1)The effect of CEO overconfidence on firm innovation performance was not significant in the regression analysis of the whole sample,but under the condition of ensuring the CEO's managerial discretion(Duality),it was found that the effect of CEO overconfidence should be positive.It shows that the effect of CEO's overconfidence on the innovation performance of the enterprise needs to be guaranteed by the degree of management freedom.(2)Strategic orientation is not a necessary path for overconfident CEO to achieve innovative performance.As follows: CEO overconfidence can trigger higher market orientation and technical orientation,which can promote innovation performance,but the impact of CEO overconfidence on firm innovation performance is in significant,so there is no mediating effect.(3)Market orientation has a positive effect on innovation performance rather than a inverted u-shaped relationship,while technology orientation has an inverted u-shaped relationship with innovation performance.It may be that China is still in the development stage of transformation and upgrading,the market is not mature,and most enterprises are not market-oriented enough at present.(4)The relationship between firm market orientation and innovation performance becomes stronger,the relationship between CEO overconfidence and market orientation,CEO overconfidence and technology orientation,technology orientation and innovation performance all become weaker with political ties.It may be that whether political association ties can bring more innovative resources to firm depends on whether the core decision-makers of the firm will take the initiative to use political ties,while the serious internal control tendency of overconfident CEO may ignore or even exclude the political ties,thus leading to the negative result of moderating effect test.