Effects of an Advancing Tenure on CEO Cognitive Complexity

Abstract

We study how the cognitive complexity of chief executive officers (CEOs) changes during their tenures. Drawing from prior theory and research, we argue that CEOs attain gradually greater role-specific knowledge, or expertise, as their tenures advance, which yields more complex thinking. Beyond examining the main effect of CEO tenure on cognitive complexity, we consider three moderators of this relationship, each of which is expected to influence the accumulation of expertise over a CEO’s time in office: industry dynamism, industry jolts, and CEO positional power. We conduct our tests on a sample of 684 CEOs of public corporations. The analytic centerpiece of our study is a novel index of CEO cognitive complexity based on CEOs’ language patterns in the question-and-answer portions of quarterly conference calls. As part of our extensive theory of measurement, we provide evidence of the reliability and validity of our index. Our results indicate that CEOs, in general, experience substantial increases in cognitive complexity over their time in office. Examined moderators somewhat, but modestly, alter this general trajectory, and nonlinearities are not observed. We discuss the implications of our findings.

The Curvilinear Relationships Between Top Decision Maker Goal Orientations and Firm Ambidexterity: Moderating Effect of Role Experience

“…Interestingly, this finding at the individual level is consistent with existing research on ambidexterity at the firm level, which emphasizes that balance between explorative and exploitative activities is preferable to too strong an emphasis on either one (e.g., March, 1991;Cao et al, 2010). Additionally, we propose that goal orientations' effects may be contingent upon top decision makers' experience, which has been associated with improved managerial competency and cognitive ability (Haynie et al, 2010;Graf-Vlachy et al, 2020). More experienced top decision makers, through greater awareness and cognitive processing, may be able to mitigate the effects that their learning and/or performance goal orientations can have on firm-level behaviors.…”

“…We also argue that top decision makers' performance goal orientation, defined as the preferences to demonstrate existing competencies to others (VandeWalle, 1997), is associated with reduced firm' ambidexterity up to a point, past which it is positively related to firm ambidexterity (i.e., U-shaped relationship). Furthermore, we contend that top decision makers' abilities and cognitive processes can improve with higher role experience (e.g., Graf-Vlachy et al, 2020), and we argue that greater role experience will flatten both the relationship between learning goal orientation and firm ambidexterity, and performance goal orientation and firm ambidexterity. We draw on a sample of 274 top decision makers of firms in the United States to test our hypotheses.…”

Opportunity/Threat Perception and Inertia in Response to Discontinuous Change: Replicating and Extending Gilbert (2005)

“…Beyond further qualitative research, experimental approaches seem suitable for investigating the precise interplay of relevance perception, framing direction, and perceived control (Croson, Anand, & Agarwal, 2007). In addition, large-sample studies could use discursive vehicles, such as conference calls and other publicly available material (e.g., Graf-Vlachy, Bundy, & Hambrick, 2020), to gauge cognitive frames within and across companies.…”

By the Book or Out of the Box? Top Decision Maker Cognitive Style, Gender, and Firm Absorptive Capacity

“…At the same time, management research has explored gender differences in terms of leadership (e.g., Burke and Collins, 2001 ), compensation (e.g., Gupta et al, 2015 ), board interactions (e.g., Post and Byron, 2015 ), and career advancement (e.g., Bonet et al, 2020 ). However, little research has focused on the cognitive attributes that can differ across genders and how these differences influence firm outcomes, which is an important topic to consider, given the influence top decision makers’ cognitions wield as they lead their firms ( Graf-Vlachy et al, 2020 ). Our empirical findings suggest that women seem to be better able to leverage both adaptive and innovative cognitive styles to foster AC.…”