Only I can do it : CEOs' level of confidence and marketing outcomes

Abstract

PURPOSE : This study aims to examine how chief executive officer (CEO) overconfidence shapes strategic marketing decisions, with a focus on advertising and research and development (R&D) investments under short-term performance pressure. Drawing on upper echelons theory, it tests whether overconfident CEOs engage in myopic marketing management and whether this relationship changes over time. The study also assesses the moderating role of internal organizational factors in this process. DESIGN/METHODOLOGY/APPROACH : The study uses a longitudinal panel covering two periods, 2011–2015 and 2017–2022. The sample includes 485 firm-year observations in the first period and 741 in the second, drawn from publicly traded US firms across multiple industries based on one-digit standard industrial classification codes. Key variables include CEO overconfidence, advertising intensity and R&D intensity. Fixed effects models control for unobserved firm heterogeneity. Additional tests address endogeneity and sample selection bias. This design allows direct comparison of CEO behavior across periods. FINDINGS : CEO overconfidence significantly affects marketing investments. In 2011–2015, overconfident CEOs were associated with higher advertising intensity. In 2017–2022, the association turns negative, indicating a shift away from advertising under newer market conditions. R&D intensity shows no stable relationship with CEO overconfidence. The marketing department’s power weakens the negative advertising effect in the later period. ORIGINALITY/VALUE : The study links executive psychology to marketing resource allocation across time. It shows that the strategic impact of CEO overconfidence is context-dependent and changes with the environment. The findings inform research on executive cognition and guide boards and investors in evaluating marketing strategy risk.