infonet-economy

This dissertation including three distinct papers investigates what roles personal characteristics and abilities of chief executive officers (CEOs) play in the exploration, exploitation, and performance of small and medium-sized enterprises (SMEs). The dissertation thereby focuses on one aspect of CEOs’ characteristics, namely, their regulatory focus (promotion focus and prevention focus), and one interpersonal ability of CEOs, namely, their empathy.
The first paper investigated how CEOs’ promotion and prevention focus affect their firm’s exploration and exploitation. The analysis of 152 survey responses from CEOs in Switzerland revealed that CEOs’ promotion focus positively affects the firm’s exploration and exploitation, while CEOs’ prevention focus is negatively associated with the firm’s exploration but not significantly related to its exploitation. The positive relationships between CEOs’ promotion focus and the firm’s exploration/exploitation activities are enhanced when competition is intense.
The second paper developed a research agenda on CEOs’ empathy with customers based on a systematic review of 36 empirical journal articles on salesperson empathy. Amongst others, the paper encourages scholars to analyze whether CEOs’ empathy mediates the link between their regulatory focus and the firm’s performance, which was addressed by the third paper of this dissertation.
The third paper analyzed how CEOs’ regulatory focus relates to firm performance through empathy. The analysis of 133 survey responses from CEOs in Switzerland revealed that CEOs’ empathy mediates the positive relationship between their promotion focus and the firm’s performance. CEOs’ prevention focus is negatively related to empathy, and CEOs’ empathy does not mediate the negative relationship between their prevention focus and the firm’s performance.
Summing up, the dissertation shows that CEOs’ regulatory focus, especially their promotion focus, influences the firm’s exploration and exploitation. In addition, the dissertation reveals that CEOs’ promotion focus affects the firm’s performance, and that this effect is mediated by their empathy for customers. As such, CEOs’ personal characteristics and abilities play an important role in the exploration, exploitation, and performance of SMEs. In other words, CEOs’ personality and abilities matter and influence SMEs’ behavior and performance.