How in a World that Emphasizes Harmony, Less Harmonious CEOs Shape Firms and Markets

Culture and personality have an ambiguous relation. On the one hand, psychological anthropologists view personality as the outcome of an enculturation process – the cultural norms and values someone shares with others become manifest in someone’s own personality. On the other hand, not all people conform to the culture around them, and nonconformity to cultural norms and values can also become manifest in someone’s personality. Building on the stream of work that reveals that CEO personalities shape corporate strategies, we argue conforming versus nonconforming personalities of CEOs reflect in norm-following versus norm-breaking corporate strategies. Specifically, we focus on harmony, a personality trait that is a manifestation of the indigenous Chinese cultural dimension that reflects an individual’s tendency to value and uphold peaceful relationships with others. Building on cultural psychology, we consider how a CEO’s personality deviating from the cultural norm of harmony affects their firms and markets. Specifically, we argue that less harmonious CEOs are less likely to follow harmonious norms in decision making. Supporting this view, in a sample of 253 Chinese CEOs, we find that less harmonious CEOs are more likely to make acquisitions even if doing so will be seen as intrusive in a culture that values harmonious relations. We find that the effect weakens in more competitive markets, in which acquisitions tend to be more accepted as the norm, and in regions in which the culture of harmony is so strong that the repercussions for norm-breaking are too severe.