The Social Influence of Executive Hubris

Executive hubris—an important psychological bias—affects the strategic decisions of a firm as well as their implementation. Yet executive hubris brought about by social influence in different cultural environments is not well understood. Anchored in the upper echelons theory and the cross-cultural management literature, this study investigated the social influence of executive hubris among peer executives in two different cultural contexts: China and the US. Using a large set of survey data on Chinese firms and a large archive of US firm data, we found that the social influence of executive hubris is stronger in the Chinese context than in the US. The social influence among Chinese executives tends to be moderated by their similarity in categorical factors indigenous to the Chinese context: executives who are managing state-owned firms or were politically appointed are more strongly influenced by each other than by those managing non-state-owned firms or were not politically appointed. We illustrate that cultural contexts give rise to differences in the social influence of executive hubris.