How Does CEO Regulatory Focus Matter? The Impacts of CEO Promotion and Prevention Focus on Firm Strategic Change

Abstract

Based on upper echelons theory, this study focuses on chief executive officers’ (CEOs) regulatory focus and delineates how CEO promotion and prevention focus differentially affect the magnitude of strategic change undertaken by a firm. Applying the person–situation interaction perspective, this study also theorizes how these relationships are moderated by the firm’s prior performance and environmental dynamism. These hypothesized relationships are then empirically tested using a sample of 1,318 observations covering a 10-year period. The analytical results support the hypotheses. This study concludes with a discussion of its theoretical and practical implications.