Consequences of other relevant concepts related to narcissism

Psychopathic leaders

Prevalence of psychopathic leaders

According to many commentators, some of the qualities that characterise psychopathic individuals, such as boldness, may enable people to ascend into leadership positions. If this argument is correct, at least some facets of psychopathy should be positively associated with the inclination or capacity of individuals to become leaders, called leadership emergence.

A variety of studies have explored whether psychopathy is positively or negatively related to leadership emergence. These studies, however, have uncovered some conflicting results. For example

according to some research, the facets of psychopathy that revolves around interpersonal manipulation and callous affect, such as social influence, stress immunity, and fearlessness, are positively related to annual income and rank or position in the organisation (Howe et al., 2014),
similarly, antisocial personality disorder is positively associated with the number of subordinates (Wille et al., 2013),
yet, other research has revealed that psychopathy, as defined in measures of the dark triad, are not significantly associated with salary or position in the corporate hierarchy (e.g., Spurk et al., 2016)—whereas narcissism is positively associated with salary (Spurk et al., 2016)

To reconcile these differences, Landay et al. (2019) conducted a meta-analysis. This study uncovered 46 samples in which the researchers collected information about psychopathy and leadership emergence, such as rank or position, the duration before this person was promoted to a leadership position, number of leadership positions, or peer ratings of whether this person demonstrated leadership. To analyse these data, the researchers utilised the interactive meta-analytic method, recommended by Schmidt and Hunter (2004), that utilises a random-effects model. This analysis revealed that

psychopathic tendencies were positively related to most facets of leadership emergence, except the peer ratings,
the strength of these relationships, however, were only modest rather than pronounced,
these results imply that individuals who demonstrate psychopathy are more likely to become corporate leaders than are the average person but only to a limited extent.

Effectiveness of psychopathic leaders

Commentators often assume that psychopathic leaders are not only prevalent but also ineffective. Several publications have indeed revealed that psychopathic leaders can provoke a range of complications in organisations. For example

staff who rate their leaders as psychopathic, as measured by the B-Scan 360 (Babiak & Hare, 2012; see Mathieu et al., 2013), were more likely to be dissatisfied with their job, to withhold their effort at work, to feel unmotivated, and to consider leaving the organisation (Mathieu & Babiak, 2015),
staff who rate their leaders as psychopathic were more likely to perpetrate counterproductive work behaviours (Boddy, 2014), such as waste resources or disobey instructions (for items, see Spector & Jex, 1998) as well as engage in conflicts.

Yet, some of these complications may not necessarily compromise job performance. Similarly, some research has revealed that psychopathic leaders are sometimes evaluated favourably. For example, as Babiak et al. (2010) revealed, leaders who exhibited high levels of psychopathy were also perceived as more charismatic, manifesting excellent communication skills and strategic thinking.

To uncover more definitive conclusions on this relationship between psychopathy and the effectiveness of leaders, Landay et al. (2019) conducted a meta-analysis on 42 samples in which the researchers collected information about psychopathy and leadership effectiveness—including ratings from supervisors or staff on job performance. The findings revealed that

psychopathic leaders were evaluated as lower on job performance—as evaluated by their supervisors— but these associations were modest rather than pronounced,
yet, psychopathic leaders were not as inclined to adopt leadership styles that tend to be beneficial, such as transformational leadership. unnecessary possessions to symbolise this rank.

Effect of psychopathic leaders on abusive supervision

As a variety of studies have demonstrated, when supervisors, managers, or other leaders show the signs of psychopathy, they are more likely to be abusive to their staff, epitomised by bullying and intimidation. These studies include both qualitative research (e.g., Boddy et al, 2015) and quantitative research (e.g., Boddy, 2011; Lyons et al., 2019).

For example, in one study, conducted by Laurijssen et al. (2024), 100 leaders evaluated the degree to which they exhibit the signs of primary psychopathy—defined as callous interpersonal behaviour and limited empathy or affect. That is, they indicated the degree to which they agree with items like “I enjoy manipulating other people’s feelings” (for the Dutch version that was used, see Barelds et al., 2018). In addition, to evaluate the degree to which this person demonstrates abusive behaviour, a subordinate of each leader completed the Abusive Supervision Scale (Tepper, 2000). Specifically, these subordinates indicated the extent to which their supervisor perpetrates 15 abusive behaviours including

ridicules me,
tells me my thoughts or feelings are stupid,
gives me the silent treatment,
expresses negative comments about me to other people,
does not allow me to interact with my coworkers,
tells me that I am incompetent.

In general, leaders who reported psychopathy were more likely to behave abusively. This result is significant because a variety of problems can be ascribed to abusive supervisors. For example, when supervisors are abusive

their staff are more likely to experience depression, anxiety, exhaustion, dissatisfaction with life, and other unpleasant states (Tepper, 2000),
consequently, these staff are inclined to develop unfavourable attitudes towards their job, such as job dissatisfaction and diminished commitment to their organisation (Tepper, 2000),
in addition, these staff do not perform as efficiently, generating fewer products or outputs (e.g., Walter et al., 2015).

Accordingly, some research has explored the conditions or practices that may diminish the association between leader psychopathy and abusive behaviour. For example, in their study of the relationship between leader psychopathy and abusive behaviour, Laurijssen et al. showed that rule clarity moderated this relationship. That is, when organisations disseminated unambiguous rules about how staff should conduct themselves, the positive association between the primary psychopathy of leaders and their abusive behaviour declined and even reversed. Psychopathic leaders, in these circumstances, were not as abusive. Arguably,

leaders who report primary psychopathy are sometimes unsure of which behaviours are deemed as acceptable,
indeed, according to Raine (2019), the neural regions that underpin moral decisions—such as regions that include the superior temporal gyrus, angular gyrus, anterior cingulate, amygdala, and cortical regions—may be impaired in antisocial personality disorder and thus psychopathy,
therefore, unambiguous rules can be informative to these individuals and improve their behaviour.

CEO hubris

Many CEOs exhibit hubris or unwarranted overconfidence. In some instances, this hubris can be beneficial, such as occasionally foster innovation. But, usually, this hubris is detrimental. Nevertheless, many studies have explored the conditions or circumstances that diminish the adverse impact of hubris in CEOs or other executives.

The moderating role of governance

In some organisations, boards tend to be vigilant. For example, boards are typically vigilant—and inclined to temper the risky choices of overconfident CEOs—when a high proportion of members do not work at the organisation and the chair is not the CEO. In these instances, these CEOs are not as likely to reach inappropriate decisions, such as pay an inordinate fee to acquire another business.

Hayward and Hambrick, two academics at Columbia University, first unearthed this possibility in 1997. In this study, the researchers examined 106 instances in which a firm had acquired another company. Specifically, the researchers

calculated the difference between the price the company had paid to acquire the company—relative to the estimated value of this other company, derived from the stock price a month earlier,
collated various measures of the stock price of the merged firm over time,
distilled several measures of CEO hubris—such as the remuneration the CEO receive compared to the next highest earner at the company as well as the extent to which the CEO had attracted favourable comments in the media.

After controlling a range of measures, such as potential of synergy between the two firms, when CEOs exhibited the signs of hubris, they were more likely to pay excessively to acquire the other company (Hayward & Hambrick, 1997). For example, if CEOs earned significantly more than other executives, they paid more to acquire the other company than perhaps the organisation was worth. In these instances, the stock price of the merged firm tended to drop and hence the wealth of shareholders tended to decline.

However, when a high proportion of board members did not work at the organisation and the chair was not the CEO, the association between hubris and these overpayments of acquisitions was not as pronounced. As this finding implies, effective government may curb the risky investments that often coincide with hubris (Hayward & Hambrick, 1997).

Other studies have also unearthed similar findings. Park et al. (2018), for example, explored whether CEO hubris is associated with the performance of firms. To measure hubris, the researchers assessed the degree to which CEOs express words that are synonymous with confidence rather than caution in annual reports as well as the number of times these CEOs were praised in the media or received prizes. To measure firm performance, the researchers measured the return on assets relative to the industry median. In a sample of 654 Korean firms, CEO hubris was inversely associated with firm performance. This detrimental effect of hubris, however, was most pronounced when

the CEO or family owned more than 5% of shares—a measure of CEO power,
the CEO was also a chair,
most board members were also staff, potentially impeding governance, because too many members report to the CEO (Park et al., 2018).

The moderating role of managerial discretion

The discretion that CEOs are granted does not depend only on the governance of boards. To illustrate, this discretion partly depends on characteristics of the market or industry. Specifically

when the sales figures in an industry are growing, called market munificence (Keats & Hitt, 1988), organisations are granted more opportunities to thrive and thus grant CEOs more discretion to pursue these opportunities,
when an industry is replete with many competitors, called market complexity (Palmer & Wiseman, 1999), organisations tend to explore various collaborations and opportunities rather than adhere to existing practices—enabling CEOs to utilise their discretion more often.

The discretion that CEOs are granted also depends on various characteristics of the organisation. To illustrate,

when organisations are older and larger, they are more inert, offering CEOs fewer opportunities to initiate change and to utilise their discretion,
when organisations have developed intangible resources, such as patents, and expend a significant portion of their sales to research and development, they are granted more opportunities to explore various strategies, granting the CEO more discretion.

As Li and Tang (2010) proposed and demonstrated, these determinants of discretion tend to amplify the impact of CEO hubris on risky decisions. This study was conducted on 2790 Chinese firms. The researchers assessed

hubris—defined as CEOs who indicated the firm was very profitable even when the return on sales was limited,
risk taking—and specifically whether the firm had invested in novel technologies recently,
other characteristics of the market that affect the discretion that CEOs are granted.

As the researchers demonstrated, CEO hubris was positively associated with investment in risky technologies. This relationship, however, was especially pronounced when CEOs were granted discretion (Li & Tang, 2010). That is, when the sales figures in this industry were growing, the number of competitors was high, the organisation was not old, and research and development expenditure was high relative to sales, CEO hubris was more likely to translate into risky investments (Li & Tang, 2010). In these circumstances, board governance becomes especially vital.