Explorative and exploitative innovation: A perspective on CEO humility, narcissism, and market dynamism

Organizational innovation is characterized by exploration and exploitation. A firm can benefit from the qualities of its chief executive officer (CEO) if it understands to what extent those qualities are related to the organizational innovation. For context, Chinese culture embraces the belief of unity of opposites. Accordingly, CEO humility and CEO narcissism are not absolute opposites but are in fact complementary; therefore, they can coexist. Based on a sample of 239 manufacturing firms in China, we find that CEO humility promotes both exploitative and explorative innovation, while CEO narcissism weakens exploitative innovation. Additionally, the interaction between the two traits of the CEO strengthens both exploitative and explorative innovation. Contingency analysis further reveals that high-level market dynamism strengthens the positive interaction effect between CEO humility and CEO narcissism on both exploitative and explorative innovation. These findings contribute to the research on exploitative and explorative innovation.