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This theoretical article introduces the construct of CEO celebrity in order to explain how the tendency of journalists to attribute a firm's actions and outcomes to the volition of its CEO affects such firm. In the model developed here, journalists celebrate a CEO whose firm takes strategic actions that are distinctive and consistent by attributing such actions and performance to the firm's CEO. In so doing, journalists over-attribute a firm's actions and outcomes to the disposition of its CEO rather than to broader situational factors. A CEO who internalizes such celebrity will also tend to believe this over-attribution and become overconfident about the efficacy of her past actions and future abilities. Hubris arises when CEO overconfidence results in problematic firm decisions, including undue persistence with actions that produce celebrity. Copyright © 2004 John Wiley & Sons, Ltd.
Key words: celebrity; CEO hubris; media; strategic decision making; over-confidence
Welch has delivered extraordinary growth, increasing the market value of GE from just $12 billion in 1981 to about $280 billion today. No one, not Microsoft's William H. Gates III or Intel's Andrew S. Grove, not Walt Disney's Michael D. Eisner or Berkshire Hathaway's Warren E. Buffett, not even the late Coca-Cola chieftain Roberto C. Goizueta or the late Wal-Mart founder Sam Walton has created more shareholder value than Jack Welch. (Business Week, 1998)
The above quote exemplifies journalists' propensity to attribute a firm's outcomes, including its performance, to the actions of its CEO (Gitlin, 1981; Meindl, Ehrlich, and Dukerich, 1985; Tuchman, 1977). In addition to explaining General Electric's performance, this quote also highlights the manner in which journalists inform the public about the legitimacy and effectiveness of firms and their leaders (Baum and Powell, 1995; Lamertz and Baum, 1998; Pollock and Rindova, 2003). In this context, research on the media shows that journalists play a powerful role in shaping the public's perceptions of issues and entities, effectively 'setting the agenda' for public discourse (Herman and Chomsky, 1988; McCombs and Shaw, 1972; Rogers, Dearing, and Bregman, 1993; Weaver et al., 1981). Consistent with this view, the attributions that journalists make regarding firms' actions and outcomes can materially impact how these actions are perceived by firm managers and stakeholders. As a result, journalists' attributions may indirectly affect...