The digitization wage has amplified the need for enterprises to pursue digital transformation, placing CEOs at the forefront of this strategic process. This study examines whether and how CEO narcissism drives enterprise digital transformation and focuses on the mechanisms and boundary conditions through the lens of bounded rationality.
Using data from Chinese A-share listed firms on the Shanghai and Shenzhen Exchanges from 2011 to 2021, this study hand-collects CEO narcissism data and derives all other variables from the annual reports of the companies. Empirical analyses are conducted to test the proposed hypotheses.
The results show that CEO narcissism significantly promotes digital transformation of enterprises by raising CEOs’ wealth expectations and alleviating firms’ financial constraints. Furthermore, the effect is more pronounced in non-state-owned companies and when the CEO holds greater power, underscoring the contingency role of ownership and CEO authority.
(1) The measurement of variables needs further exploration. (2) The research perspective on CEO narcissism can be further enriched. (3) The discussion of heterogeneity still requires further exploration. Firstly, it adds to the existing body of research by including CEO narcissism, a personality trait associated with bounded rationality, to the discussion of the motivation behind enterprise digital transformation. Secondly, the study broadens the conceptual framework of the association between CEO narcissism and enterprise digital transformation by introducing CEO’s wealth expectations and financial constraints of the enterprise as mediating mechanisms. Thirdly, the study acknowledges that corporations exhibit heterogeneity based on factors such as ownership and CEO power.
Digital transformation has become an imperative for enterprises seeking competitive advantages. This study suggests that CEO narcissism can serve as a catalyst, helping firms secure resources and overcome financing barriers. Consequently, firms should account for CEO personality traits when making executive appointments to enhance digital transformation outcomes.
The research findings of this paper have certain enlightening significance for corporate strategic transformation and management decision-making in the digital age, specifically in the following aspects: (1) Governments should formulate policies to alleviate the practical difficulties faced by enterprises during the transformation process. (2) Enterprises should pay attention to the personality traits of CEOs when selecting them. (3) Enterprises should correctly view the impact brought about by narcissistic traits.
By integrating the bounded rationality perspective, this study provides fresh insights into the effects, mechanisms and conditions of CEO narcissism on the digital transformation of enterprises. These findings expand the existing literature and offer a new lens for understanding the interplay between executive psychology and strategic change in the digital era.
