When Confidence Meets Control: How CEO Overconfidence Orchestrates Strategic Exploration And Breakthrough Innovation
Nagwan AlQershi, Ramayah ThurasamyAbstract
Purpose
This study examines how CEO overconfidence influences business model innovation (BMI) through organizational exploration and investigates the governance and managerial conditions under which exploratory initiatives generate sustained innovation outcomes. Specifically, it explores the complementary roles of board expertise, board power, managerial advice-seeking capabilities, and coordination flexibility in transforming strategic risk-taking into adaptive innovation.
Design/methodology/approach
Drawing on upper echelons theory, corporate governance research, organizational exploration, and the dynamic managerial capabilities perspective, this study develops and tests a multi-level conceptual framework. Multi-source survey and archival data were collected from 319 publicly listed and large private firms operating in Malaysia. The proposed relationships were analysed using structural equation modelling.
Findings
The findings indicate that CEO overconfidence positively influences organizational exploration, but its impact on BMI depends on effective governance and managerial capabilities. Board expertise and board power strengthen the positive effects of exploratory initiatives by directing executive risk-taking towards productive opportunities. Furthermore, managerial advice-seeking capabilities enhance exploration breadth, while coordination flexibility facilitates the conversion of exploratory activities into business model innovation. The results demonstrate that alignment among executive cognition, governance structures, and managerial capabilities is essential for sustaining innovation in technologically dynamic environments.
Originality/value
This study contributes to the literature by conceptualizing organizational exploration as a coordinated multilevel governance process linking executive cognition, board oversight, and managerial capabilities. It extends understanding of how governance mechanisms and dynamic managerial capabilities jointly transform strategic exploration into business model innovation, offering a more integrated explanation of adaptive innovation under conditions of environmental uncertainty and technological disruption.