Exploring the Optimal Narcissistic Leader

There has been a long-noted link between narcissism and leadership, yet there is still ambiguity with respect to whether or not narcissistic traits in leaders are a good or bad thing. While narcissistic tendencies tend to be viewed negatively by others, some Chief Executive Officers (CEOs) demonstrating narcissistic traits (e.g., Steve Jobs) have achieved notable success. This brings forward a critical question—is there an optimal level of narcissism in leaders?

A recent dissertation from the University of Missouri St. Louis explored this question by investigating the relationship between CEO narcissism and firm financial performance for 180 CEOs. More specifically, researchers examined the relationship between narcissism, using assessment data collected by Colarelli, Meyer, & Associates (CMA), and firm performance, measured by total company stock return, return on assets (ROA), and return on equity (ROE). The researchers also wanted to assess how other factors such as firm lifecycle, industry, and market capitalization influenced the optimal level of CEO narcissism.

The results revealed a curvilinear relationship between narcissistic traits in CEOs and total company stock return and return on assets. In other words, results showed there was an optimal level of CEO narcissism, where CEO narcissism was found to maximize returns. Interestingly, the optimal level of narcissism in CEOs, with respect to maximizing returns, was found to be 6% higher than average levels of narcissism.

Results also showed that other factors can impact the relationship between CEO narcissism and firm financial performance. For instance, it was found that companies with smaller market capitalization benefitted from CEOs with lower levels of narcissism. However, growth companies and companies in decline in the communications service industry were found to have a higher optimal level of CEO narcissism.

Taken together, these findings help clarify some of the ambiguity of narcissism in leaders by providing evidence that illuminates what an optimal level of narcissism in CEOs may look like. These findings may be particularly useful for organizations aiming to select new firm leadership, in that these findings may be leveraged by board members and executive recruiters to select leaders demonstrating optimal levels of narcissism. 

Written By:

Samantha England, M.S.

Source Citation:

Boswell, Scott, “An Examination of Optimal Level of CEO Narcissism: Why, How, and When Narcissism Impacts Firm Performance” (2020). Dissertations. 984.
https://irl.umsl.edu/dissertation/984