Betting the farm and playing it safe? Hyper-core self-evaluation in decisions when managers are winning and losing
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Betting the farm and playing it safe? Hyper-core selfevaluation in decisions when managers are winning and losing Andreas Ho¨nl1 • Philip Meissner2 • Torsten Wulf1
Received: 29 May 2019 / Accepted: 1 November 2020 Ó The Author(s) 2020
Abstract Core self-evaluation summarizes a decision maker’s self-worth. This key personality trait has been shown to lead to extreme performance consequences of either winning or losing big. We suggest that these extreme performance outcomes may partly rest in how core self-evaluation affects executive’s perception and evaluation of risk in choices under uncertainty. We conducted a choice experiment building on the original prospect theory experiments with 97 executives, in which we measured the effect of core self-evaluation on risk behavior. As a robustness test, we replicated and validated our findings with a larger sample of 111 executives. Building on the tenets of prospect theory, we show that decision makers with high levels of core self-evaluation are less loss averse. Surprisingly, this effect differs depending on whether gains or losses are highlighted in the decision. For gains, higher levels of core self-evaluation are associated with behaviors that are closer to risk neutrality. For losses, however, we find that higher levels of core self-evaluation further enhance the risk-seeking behavior of decision makers. These findings contribute towards understanding the effects of core self-evaluation in the work environment as well as in the decision process and provide an additional lens for studying how the personality of executives affects choices under uncertainty. Keywords Core self-evaluation Management Decision making
& Philip Meissner [email protected] 1
Philipps-University Marburg, Universita¨tsstr. 24, 35037 Marburg, Germany
2
ESCP Business School Berlin, Heubnerweg 8-10, 14059 Berlin, Germany
123
Business Research
1 Introduction Behavioral research in the management domain has embraced the concept of core self-evaluation (CSE) that captures executives’ self-esteem, generalized selfefficacy, neuroticism, and locus of control as four core traits describing their individual personality structure (Hiller and Hambrick 2005; Judge et al. 2003; Simsek et al. 2010). In a management context, CSE has been shown to impact individual factors such as job satisfaction and job performance (Judge and Bono 2001), interpersonal factors such as leadership perception (Hu et al. 2012) as well as entrepreneurial orientation (Simsek et al. 2010) and performance (Hiller and Hambrick 2005). While most studies in the field have argued for a positive effect of CSE in the organization (Erez and Judge 2001; Judge and Bono 2001; Tierney and Farmer 2002), other researchers suggest that very high levels of CSE, or so called hyperCSE, might reduce decision quality by inducing overconfidence and hubris, which is a state of extreme confidence triggered by internal and external stimuli (Hayward and Hambrick 1997). Such hyper-CSE has also been linked to extreme performance outcomes of either
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