Back to School: CEOs' Pre-Career Exposure to Religion, Firm's Risk-Taking, and Innovation

Recent research has shown that a CEO's personal experiences in his or her early days have an influence on his or her decision-making as an executive later on. Our study extends this emerging stream of research by examining how CEOs' pre-career exposure to religion affects their firms' risk-taking and subsequent innovation performance. Drawing upon developmental psychology research and imprinting theory, we argue that CEOs who have attended a religious college are more likely to develop or reinforce their risk-averse mentality. This carries over to their professional life when they are in a top management position, and it leads to less risk-taking behavior in their firms and ultimately a lower level of firm innovation. Using a large sample of U.S. publicly listed companies, we find strong support on our hypotheses: Firms managed by CEOs who attended a religious college tend to be less risk-taking; this effect is stronger when the firm has more board members with pre-career exposure to religion; in addition, the firm's risk-taking behavior mediates the negative relationship between CEO pre-career religious exposure and firm innovation. We discuss the implications of our study for the strategic leadership literature, firm's risk-taking, and innovation research.