Confidence and coincidences in executive decision-making during periods of crisis Open Access

Periods of crisis put organizations to the test, highlighting strategic and structural weaknesses that may be easy to overlook during times of prosperity (Pattinson and Cunningham, 2022). While the causes and impacts are largely unpredictable, one thing is certain – the next crisis will come. Since early 2020, we have seen the coronavirus outbreak (COVID-19), a crisis of systemic scale, which has forced many businesses to close, leading to unprecedented disruptions and changes in most industry sectors. Due to the COVID-19, companies have experienced and are still experiencing profound transformations that include the need to redesign of business models, and to rethink governance processes, people skills (Xie et al., 2022) and workforce (Piscopo et al., 2022, on new working practices adopted during the health emergency). Therefore, period of crisis such as the COVID-19 pandemic have placed extraordinary demands on executives. New challenges due to the uncertainty of the context have put managerial decision-making capacity, which is increasingly related to dimensions such as speed and effectiveness, at the center of the debate (Foss, 2020). Within this context, managers are called upon to make complex decisions characterized by high levels of ambiguity, in a context where the variables are numerous and, above all, often unknown (Craven et al., 2020). Hence, there is an urgent need to increasingly implement resilient and dynamic leadership in the business environment (Meyer et al., 2022). Consequently, maintaining confidence in decision-making during a crisis is the fastest pathway to recovery. For managers, the first step in dealing with these uncertain times is to manage one’s mindset. Although managers cannot control everything that happens around them, they can control how they react to it (Dildine et al., 2020).

Drawing on Heavey et al. (2022), this study focuses on executive confidence – that is, an executive’s generalized or domain-specific belief in his or her capability to complete tasks, influence events and/or achieve outcomes; the focus on executive confidence helps us to understand how this variable can be effective in managing decision-making in periods of crisis. We also focus on self-confidence because it represents a widespread trait among managers and is often considered a necessity for holding top positions (Banerjee et al., 2014). Studies on confidence have mainly explored its multifaceted nature (Moore and Healy, 2008; Moore and Schatz, 2017; Stajkovic, 2006), focusing on overconfidence rather than executive confidence in general and not distinguishing confidence from related constructs. Moreover, other studies on executive confidence have mainly explored its negative effects on organizational performance (Audia et al., 2000; Bloomfield et al., 1999), stating that overconfident managers deviate from the rational model of decision-making by adopting a narrow framing (Bailey et al., 2011). Nevertheless, recently, some studies have defined a good side of executive confidence in contrast to negative ones (Aktas et al., 2019; Banerjee et al., 2014; Chen et al., 2018).

As suggested by Cristofaro (2020), confidence can be elicited by meaningful coincidences via emotional influences. Among the recent advancements made for understanding irrational behavior in management research and practice, meaningful coincidences represent a phenomenon that has gained academic and practical relevance in the past 60 years (Durant, 2002; Hocoy, 2012), and that has never been investigated in decision-making theories in management. This concept was introduced by analytical psychologist and psychiatrist Carl Jung (1952) to describe circumstances that appear meaningfully related yet lack a causal connection. Specifically, in contemporary research, meaningful coincidence refers to one’s subjective experience that coincidences between events in one’s mind and the outside world may be causally unrelated to each other yet have some other unknown connection (Combs and Holland, 1990). These are events that are not intentionally looked for, to which people assign a symbolic meaning and which differ from luck and chance (Cristofaro, 2020).

Responding to calls in the literature (Heavey et al., 2022), this study aims at investigating if executive confidence led by meaningful coincidences can enable organizations to cope, if only for short periods, with chaotic situations and contexts. Indeed, the literature on executive confidence and meaningful coincidences needs further contributions with reference to non-rational decision-making to highlight its impact on business organizations (Heavey et al., 2022). The occurrence of meaningful coincidences can influence executive confidence and the context in which the manager operates; thus, the literature needs further contributions on this topic (Cristofaro, 2020; Heavey et al., 2022).

Therefore, the research question guiding this study is as follow: How does executive confidence led by meaningful coincidences influences management decision-making during periods of crisis? To answer this question, this study aims to investigate whether the occurrence of meaningful coincidences can positively influence executive confidence, allowing hospitality industry organizations to cope, if only for short periods, in chaotic and uncertain contexts and settings, such as the COVID-19 pandemic. Furthermore, this study contributes to the body of knowledge on decision-making by responding to the demands for qualitative approaches, such as interviews, required to fully understand the impact of irrational forces on management decisions (Cristofaro, 2017). In particular, manager’s subordinates of Italian hospitality facilities were interviewed to try to fully investigate the phenomenon and explore perceptions of executives’ decision-making in the real work context (Cristofaro and Giardino, 2020). Implications for theory and practice are discussed.

Within the decision-making theory (see also Loia, 2022, on the organization of the decision-making system), while some studies on irrational behavior have mainly explored its negative effect on organizational performance (Audia et al., 2000; Bloomfield et al., 1999), others have investigated affective states that determine the success of management decisions (Cristofaro, 2020). Further studies have instead focused on the criteria and processes in decision-making that are not based solely on rationality (Cristofaro, 2019), and the personality traits that affect managers’ actions (Abatecola and Cristofaro, 2019; Loia et al., 2022). Specifically, the concept of executive confidence has recently gained attention (Heavey et al., 2022).

In the business context, executive confidence has been defined as an executive’s generalized or domain-specific conviction in his or her capability to complete tasks, influence events and/or achieve outcomes (Heavey et al., 2022). This definition recognizes that executive confidence beliefs may have different forms (estimation, precision, placement) and purposes (generalized versus domain-specific). Executive confidence is based on individual dispositions and external cues, and it directly affects decision-making processes (Schumacher et al., 2020). Indeed, a confident manager is genuinely interested in improving the organization’s well-being while simultaneously enhancing its status (Hribar and Yang, 2016). This attitude reveals why a confident leader has a natural propensity and desire to embark on ambitious, massive and even risky strategic projects, regardless of the risk of failure (Witkower et al., 2021).

Notably, three forms of executive confidence were identified by Moore and Healy (2008): overestimation, overprecision and overplacement. Overestimation is observed when chief executive officers (CEOs) “generally think they are better than they are in terms of skill and judgment or in gauging the prospects of a successful outcome” (Hribar and Yang, 2016, p. 195). Overprecision occurs when managers/leaders exhibit excessive certainty regarding the accuracy of beliefs (Moore and Healy, 2008) and provide probability distributions of future events with narrow confidence intervals (Hackbarth, 2009; Hayward and Fitza, 2017; Hilary et al., 2016; Levi et al., 2014). Finally, overplacement is a belief that erroneously rates someone as better than others; it occurs when people believe themselves to be better than others or “better than the average” (Thaler and Sunstein, 2008).

Executive confidence differs conceptually from other notions like narcissism, core self-evaluations, optimism (Heavey et al., 2022) and self-immanent pride (Bachkirov, 2022). Although narcissism is a powerful personality feature, there is no evidence for believing that narcissists are more confident than others. By contrast, the narcissist’s need to constantly reaffirm him- or herself may in fact indicate the absence of an innate confidence (Chatterjee and Pollock, 2017). Likewise, high core self-evaluations appear similar to executive confidence in capturing positive evaluations of competence, but Heavey et al. (2022) add that confidence has more varied origins, may be less enduring and does not necessarily imply high self-worth or emotional stability. Meanwhile, optimism does not focus on the fact that an individual can influence a positive outcome by applying his or her abilities and influence. Instead, it is a more generalized expectation of positive outcomes (Zuckerman, 2001). Finally, executive confidence differs from the concept of self-immanent pride, which is conceived as a source of destructive managerial anger (Bachkirov, 2022).

Connected to the theme of executive confidence, the influence of irrational forces on managerial decisions has received increasing attention in recent years. Focusing on irrational behavioral, Ariely (2008) states that people are far less rational than standard economic theory assumes and refutes the common assumption that people behave in fundamentally rational ways.

Kahneman (2011) illustrates the two ways in which the human mind works: the primitive and emotional system (System 1) characterized by “fast thinking” and representing the real protagonist of people’s decisions, and the rational system (System 2) characterized by “slow thinking” and judgments made with caution and careful analysis. According to this study, System 1 is the most used during people’s daily activities; even when people believe they are coldly pursuing their economic interests, they are actually governed by emotions and blinded by cognitive biases (i.e. the systematic errors of judgment people incur when applying heuristics). Another study on irrational forces asserts that the use of the right levers on a psychological level can positively influence people’s choices without their being aware of it. These levers are called “nudges,” and their aim is to try to improve people’s well-being by guiding their decisions while maintaining freedom of choice. By leveraging cognitive biases, nudges are designed to induce and persuade individuals to change their behavior in a predictable and non-coercive manner (Thaler and Sunstein, 2008).

Among the recent advancements made in understanding the impact of irrational forces in decision-making in management, in recent years, some authors (Durant, 2002; Hocoy, 2012; Merry, 2022) have begun investigating the concept of “synchronicity,” which was developed by psychologist Carl Jung to describe a perceived meaningful coincidence – that is, the “surprising concurrence of events, perceived as meaningfully related, with no apparent causal connection” (Diaconis and Mosteller, 1989, p. 853). These events have the following characteristics: they must provoke an intense emotion in the subject, they must not be linked by a cause–effect relationship and they must have a symbolic meaning (Hand, 2014). Meaningful coincidences can alter the course of lives (Brown, 1980) and are the basis of many scientific discoveries (Griffiths and Tenenbaum, 2007) and business foundations (Görling and Rehn, 2008), especially because individuals sometimes rely on them to make important decisions (including business ones) (Govier, 2003; Beitman, 2016). This is well explained in Cristofaro (2020), who investigated the impact of meaningful coincidences and, more generally, irrational forces on managerial decisions. In fact, this contribution explored the interplay between the synchronicity concept of Jung and cognitive studies. However, this topic remains little explored in relation to decision-making in management theories.

Thus, the present study focuses on the bright side of executive confidence led by meaningful coincidences for decision-making (Heavey et al., 2022) during periods of crisis, such as the COVID-19 pandemic. In other ways, this work contributes to the literature by increasing our understanding of the positive decision-making theories of executive confidence led by meaningful coincidences in turbulent and uncertain scenarios.

To reach the goal of this study, a qualitative methodology was adopted. In line with other similar works (Loia et al., 2022), a qualitative study consisting of interviews was implemented aimed at collecting direct observations about the decision-making process during a period of crisis. Therefore, a qualitative study with 24 interviews in hospitality facilities has been considered as the most suitable research design.

This study was conducted in Italian hospitality businesses in the Campania Region of southern Italy, notably in the Sorrento Peninsula and the Amalfi Coast. These locations were chosen because they are among the most popular tourist destinations in the world. One of the most immediate economic effects of the crisis associated with COVID-19 pandemic was the blocking of tourist flows. Indeed, the health emergency had a strongly negative impact on the hospitality industry, resulting in unprecedented consequences (Baum et al., 2020; Kang et al., 2021). Italy was the first European epicenter of the virus and therefore the most vulnerable, most likely due to a geographical, logistical and meteorological situation that was particularly favorable to the spread of the virus. Therefore, the country had little time to prepare for the pandemic’s consequences, increasing subsequent organizational and managerial problems. The Italian tourism industry was profoundly affected by the restrictive measures due to the interpretation of tourism as a volatile and non-essential activity. According to ISTAT data [¹], during the first ten months of 2020, overnight stays decreased by 51.4% compared to the same period of the previous year, with the loss of 207 million tourist visits. Indeed, following the COVID-19 shock, the hospitality sector required a redesign of its business models, including the need to rethink governance processes and operating modes. Thus, this period of crisis can help us to analyze how executive confidence led by meaningful coincidences can positively influences managerial decision-making in the specific context of the Italian tourism industry. Indeed, the top management of hospitality facilities has been faced with the need to make decisions during a most unusual and complex period in order to ensure proper performance and survival of their organization.

To answer our research question, we used a qualitative approach consisting of interviews in hospitality facilities, conducted both in person and via Microsoft Teams. The study was conducted in early 2021, at the end of the first period of reorganization and consolidation of new working practices for the hospitality sector due to the COVID-19. In particular, based on a ranking compiled by a hotel trade association in 2021, ten hotels with the highest tourist flow and revenue during the pandemic crisis were selected. To understand the connection between confidence and coincidences, we chose to interview manager’s subordinates as the main observers of all organizational choices and dynamics implemented during the pandemic period, avoiding interviewing managers themselves and thus avoiding biased judgments about their own choices.

Example questions included:

After completing each interview, the research team asked the subordinate to suggest another one involved in the decision-making dynamics of the organization, thereby using the snowball sampling technique to find out more about the decision-making process. Data saturation (i.e. repetition of the same themes) was used to calculate the size of the final sample. As a result, 24 manager’s subordinates of the ten hotels were interviewed. Table 1 reports the socio-demographic characteristics of the sample.

All interviews were recorded and then transcribed for further examination within 24 h of conducting the interview.

To answer our research question, we followed an inductive approach, basing our data analysis on a variety of sources to get a more comprehensive understanding of the phenomena under analysis. In fact, using several sources of information is necessary for qualitative research to minimize the effects of any potential biases that could arise when using only one source (Bowen, 2009). Accordingly, we asked interviewees and informed actors to provide us with archival and written data of any kind (e.g. websites of the hospitality facilities, open-source materials, company brochures, etc.) to give us a thorough grasp of how the organization works and the labor conditions that characterized the company under study.

The study’s approach was based on the critical incident technique (Flanagan, 1954) to collect episodes, narratives and sense-making linked to executive confidence during a turbulent time. This method refers to a set of procedures for collecting direct observations of human behavior in such a way as to facilitate their potential usefulness in solving practical problems and developing broad psychological principles (Flanagan, 1954). Through this method, a sequence of procedures is followed to collect firsthand observations of human behavior to generate new hypotheses. Accordingly, during the interviews, we talked in general to the interviewees to direct the flow of the discussion in the desired direction – that is identifying confidence behaviors of managers led by meaningful coincidences – but we did so without mentioning either of these concepts to avoid influencing the sample. Interviews were conducted by two interviewers as informal conversations and lasted an average of 40 min.

Following the deductive coding for qualitative analysis (Fereday and Muir-Cochrane, 2006), the study’s approach depended on a generic research statement: “We aim at investigating how executive confidence led by meaningful coincidences can positively influence managerial decisions during turbulent and crisis periods.” The analysis process involved three phases.

In the first phase, we tried to identify recurrent themes in the interviews based on the respondents’ answers. Subsequently, the transcripts from the interviews were uploaded into Dedoose, an online software program for qualitative data analysis. Next, two of the researchers independently reviewed the data, allowing for exploratory data analysis (Saldaña, 2021). Later, Cohen’s coefficient κ – a statistic for qualitative categorical analysis that represents the degree of accuracy and reliability – was used to estimate the level of agreement between the coders, following an iterative approach (Locke, 2001). By comparing codes and discussing themes when disagreements emerged, the final consensus reached a value of κ = 0.81, reflecting high agreement between the raters. Table 2 reported some quotes with the associated respondent and code, and the No/% for that code.

In the second phase, we translated the previously identified concepts and themes into theoretically relevant terms, fitting them into already existing categories. Finally, in the third phase, we integrated the first-order codes and second-order concepts into a data structure, as shown in Figure 1.

Interestingly, in all of the hospitality facilities in the sample, which were selected on the basis of their excellent tourist flow and revenue during the COVID-19 crisis, certain subordinates’ perceptions emerged related to executive confidence and meaningful coincidences.

After collecting and analyzing data, we identified several trends related to the characteristics of executive confidence suggested by Moore and Healy’s (2008) classification. In particular, the findings highlight the process through which meaningful coincidences lead to the three different characteristics of executive confidence during a decision-making process – that is, overestimation, overprecision and overplacement. While these characteristics are typically considered negative (Moores and Chang, 2009), subordinates’ perceptions suggest a number of positive and beneficial aspects for decision-making in a crisis such as the COVID-19 pandemic.

The first recurring aspect in interviews with subordinates concerning managers’ decisions in dealing with a turbulent environment is overestimation. This concept refers to the tendency to overestimate one’s own abilities, level of control or chances of success in seeking to achieve certain outcomes (Drobetz et al., 2020). An interviewee reported: “the hotel manager is fully aware of his capabilities, and during the COVID-19 emergency, he demonstrated determination and perseverance in his efforts” (Example of huge ego; Respondent #5, male administrative employee). In the next passage, one can observe another example of this manager’s tendency:

Thus, through overestimation in his abilities, this hotel manager has promoted a turnaround that has generated positive outcomes during a turbulent period.

Interviews with manager’s subordinates suggest that executives’ inclination to overestimate their skills and capacities allowed them to face chaotic and turbulent contexts, and that very often, this attitude stems from a series of meaningful coincidences experienced by the executive. The following excerpt is an example:

Consequently, due to his experience, this hotel manager made a decision that produced good results in a very unpredictable environment.

A second theme emerging from the interviews is that of overprecision. This is the most ubiquitous form of overconfidence, referring to a situation wherein executives provide specific point estimates with narrow confidence intervals in their forecasts or predictions of outcomes (Hackbarth, 2009; Hayward and Fitza, 2017).

According to Minson and Mueller (2012), overprecision can make people reluctant to consider others’ points of view, listen to suggestions or seek compromise to resolve conflicts. As one interviewee stated, “our hotel manager doesn’t look down his nose at anyone. If he has decided that a direction must be followed, he will not be satisfied until he has reached it” (Example of illusion of certainty; Respondent #19, female receptionist). Another example of a reluctance toward the others’ opinions is given in the following excerpt:

This prejudice subsequently impacts the decision-making process, but the responses of the interviewees showed that the tendency to be overconfident in their own beliefs caused executives to behave in the best way possible during the COVID-19 pandemic, and that this attitude is frequently driven by the occurrence of meaningful coincidences. For example, the following excerpt from interviews illustrates this perspective in detail:

The last recurring aspect in interviews with subordinates concerning managers’ decisions in dealing with a crisis is overplacement. This refers to a belief that one’s knowledge, predictions or abilities are superior to those of one’s peers (Navis and Ozbek, 2016). This explains why many people expose themselves to risk, even when doing so puts their health and lives at risk (Thaler and Sunstein, 2008):

An interviewee reported. Subordinates’ perceptions suggest that executive overplacement allowed them to cope with uncertain and turbulent contexts, and that very often, this attitude stems from a series of meaningful coincidences experienced by the executive. Another example is given in the following excerpt:

As mentioned above, the executive’s feeling made him sure that he had sufficient information to make the best choices, making risky decisions with unpredictable outcomes, such as disbursing substantial financial resources during a turbulent and uncertain period.

This work aimed at answering the following research question:

The occurrence of meaningful coincidences associated with executive confidence have been underestimated in the literature, but these elements provide insight into how managers make decisions that are not based on rationality (Cristofaro, 2020). In particular, the framework provides empirical proofs about the connection by coincidences and confidence in hospitality industry, emphasizing the process through which meaningful coincidences can positively influence executive confidence and managerial decision-making during turbulent times.

Our work offers several contributions to theory and research. First, we address the call from Heavey et al. (2022) to provide new insights into the bright side of executive confidence – which has previously been studied mainly from a negative perspective – and identify some managerial attitudes that represent critical variables in relation to positive executive confidence in uncertain times. Moreover, we respond to Hussain and Khan’s (2020) request for studies on the experiences of hospitality facilities in uncertain and turbulent situations, by offering valuable information into how a hotel manager should act during crisis periods. By answering the call for studies on business situations in which rationality must give way to affective states (Cristofaro, 2019), this contribution suggests that the occurrence of meaningful coincidences can positively influence executive confidence, allowing hotel managers to respond to the needs of chaotic and turbulent settings. Finally, in response to calls from the literature on the effects of meaningful coincidences on decision-making (Cristofaro, 2020), this research highlights the process through which meaningful coincidences lead to the three different characteristics of executive confidence during the decision-making process – that is, overestimation, overprecision and overplacement (Figure 2).

According to subordinates’ perceptions, executive confidence led by meaningful coincidences can positively influence managerial decision-making by implementing efficient tactics to promote change while establishing an overall vision, setting ambitious priorities and motivating people to work. The illusion of certainty and the occurrence of meaningful coincidences made the hotel manager believe that he or she had enough information to make risky decisions, which brought unpredictable and favorable outcomes, such as investing huge financial resources without knowing exactly what scenarios would arise. Subordinates’ perceptions revealed that confident managers whose choices are led by meaningful coincidences are not very satisfied with what they have, so it is possible for them to implement ambitious strategies to respond quickly to the surrounding environment. According to our findings, these aspects constitute an essential attitude for management because they direct executives and keep them moving forward to achieve goals in the face of uncertainty. Guided by these traits, a manager may be able to lead staff and deal with specific situations, such as the uncertain environment of the hospitality industry during a period of crisis. Through meaningful coincidences, the manager may be also able to make decisions by going beyond the traditional boundaries of rationality, providing a solution to crisis situations. Thus, the results, which are consistent with several studies on the decision-making process of confident managers (Banerjee et al., 2014), and on the occurrence of meaningful coincidences (Cristofaro, 2020), indicate that they positively influence decision-making process.

This study found that manager’s subordinates showed overall positive evaluations of managers’ behavior guided by meaningful coincidences in high-performing Italian hospitality facilities during periods of crisis. Through interviews with 24 participants, the subordinates’ perceptions demonstrated that when an organization faces uncertain and turbulent times such as the COVID-19 pandemic, the occurrence of meaningful coincidences increases executive confidence, enabling managers to deal effectively with the obstacles and ambiguities of the context in which they operate.

The results also have important practical implications. Our findings indicate that managers should consider the occurrence of meaningful coincidences, as these increase their confidence and allow them to perform well, even when faced with a turbulent context. In addition, another practical implication of this study concerns the new idea of skills required for management. After a period of crisis such as the COVID-19 pandemic, new skills must be considered, such as capacities for rapid adaptation to changes and unpredictable conditions, and to deal with abrupt changes without taking into account the viewpoints of all staff members. Moreover, thinking beyond the traditional boundaries of rationality can be critical to surviving the post-COVID-19 pandemic business environment, as confident managers whose decision-making is guided by meaningful coincidences can find themselves one step ahead of the competition during uncertain periods.

This study is not without limitations, including the choice to focus on a particular historical period such as COVID-19. In fact, it should be noted that the study was conducted when the world was experiencing one of the worst global pandemics in the recent history. Notably, the majority of the respondents had never experienced a crisis of this magnitude. Therefore, the subordinates’ perception on managers’ behavior could be biased based on the situation at hand. Accordingly, this study suggests the need for post-COVID-19 qualitative studies on the issue, to bring more rigor and value to these exploratory insights. Furthermore, although this study followed qualitative research methods conducted with rigor, the data are limited by the inherent subjectivity of the participants’ opinions. Similar research questions could be tested in the future on a larger sample through surveys or other methods of quantitative research. Further research may also help to better distinguish between positive and negative executive confidence led by meaningful coincidences.