Presentation on Strategic Management Journal

1. North South University
1- March -2012
Presentation on Strategic Management Journal
HOW DO CEO EMOTIONS MATTER? IMPACT OF CEO
AFFECTIVE TRAITS ON STRATEGIC AND
PERFORMANCE CONFORMITY IN THE SPANISH
BANKING INDUSTRY

2. Background
But largely ignored the role
of emotions in shaping
managers’ strategic choices.
There are huge number of
researches on How managers
influence firm outcomes &
explanations of differences in
organizational strategies &
performance within a given
industry

3. Objective of the Journal
 This journal for to analyzes
 the influence of the affective traits of CEOs
 & their long-term tendency to experience
positive or negative moods or emotions
 on strategy and performance conformity in a
sample of Spanish banks and savings banks.

4. Outcomes
Result Shows that :
•Managers’ negative affective traits are related to
More More typical
conformist performance
strategies

5. Outcomes
whereas positive affective traits seem to
Promote outcomes that
deviate from the
central tendencies of the industry.

6. Outcome
Strategic conformity mediates
The relationship between
CEO negative Typical
affective traits performance.

7. How does affects influence thinking

8. Research Hypothesis
3.A 3. B
2.A. Strategic Strategic
1.A : 1.B. 2.B. conformity conformity
Positive
mediates the mediates the
Positive Negative Affective Negative
negative positive
affective traits affective traits traits of affective traits
relationship relationship
of CEOs will of CEO will CEO’s will be of CEOs will
between the between the
be negatively be positively negatively be positively
positive negative
related to firm related to firm related to related to
affective traits affective traits
strategic strategic typical typical
of CEOs and of CEO’s and
conformity conformity performance performance.
typical typical
by the firm
performance performance
by the firm by the firm

9. Hypothesis
1.A : 1.B.
Positive affective traits Negative affective traits
of CEOs will be of CEO will be positively
negatively related to related to firm strategic
firm strategic conformity conformity

10. Hypothesis
2.A 2.B
Positive Affective traits of Negative affective traits
CEO’s will be negatively of CEOs will be positively
related to typical related to typical
performance by the firm performance.

11. Hypothesis
3. B
3.A
Strategic conformity mediates
Strategic conformity mediates
the positive relationship
the negative relationship
between the negative
between the positive affective
affective traits of CEO’s and
traits of CEOs and typical
typical performance by the
performance by the firm
firm

12. Methodology
Target Population: Spanish Banking Industries.
Why banking industry?
• CEOs a medium latitude of action
• Banking industry in Spain experienced strong growth in the period of
analysis.
• Low capital intensive industry & allows for product differentiability
• This sector underwent deregulation & liberalization
Research Area: Spain .
Sample Size: 44% of the Population .

13. Methodology
Design and Finalization :
Independent Variable
Research Technique: PANAS ( Positive & Negative Effect Schedule ) .which is
widely used technique. Here all the contents used 5 points scale. Also principle
component analysis. The other methods are Standard Deviation , means,
hierarchical regressions etc.
• Positive Scale (10 Items ) : Interested, Excited, Strong, Enthusiastic, Proud,
Alert, Inspired, Determined , Attentive , Active
• Negative Scale (10 Items): Distressed, Upset, Guilty, Scared, Hostile, Irritable,
Ashamed, Nervous, Jittery, Afraid.
• Reliability , Validity , and test retest Reliability.

14. Methodology
Control variables (Education , experience & Industry background)
• Long tenured executives exhibited more strategic and performance conformity.
• Education in Management is negatively related to risk taking and extreme performance
and risk taking seems to be associated with non conformist strategic behavior.
Dependent variables (Strategic Conformity & Typical Performance )
• Strategic Conformity : Asset Strategies ( Commercial Loans , Mortgage loans , Leases ,
other long term loans , short term loans to public authorities, non resident loans , cash and
deposits at central banks, securities and fixed assets etc. )
• Typical Performance : ROA ( Standard Return on average assets) , Gross operating
Profit Margins and Net Operating Profit Margins.

15. Finding from the Journal
It is proved by calculation that there must be a relationship
between the Predictor (CEO’s Affective Traits) and mediator
(Strategic Conformity ). Where as negative affective traits
are positively related to strategic conformity . Where as
positive affects prompt deviant strategies.
It is proved by calculation that there must be a relationship
between the Predictor (CEO’s Affective Traits) and the
dependent variable(Performance Conformity ). Where the
result shows that negative affective traits of CEOs are
related to Performance that is ‘typical’ for the industry.
It is proved by calculation that there must be a relationship
between the mediator (Strategic Conformity) and the
dependent variable(Performance Conformity ). ROA=(
P=0.59) , Net Operating Profit Margin = (P<0.05) , Gross
Operating Profit Margin = (P<0.001)

16. Some interesting issues observed in this Research
Negative affects leads to
the individuals to adhere
data to rely their own
Positive affects lead to
mental set until they
innovative decisions and
found it problematic.
negative affects to more
Where the positive
careful and conservative
effects lead them to
one .
abandon their mental
sets rather than to wait
for their evidence.
Positive affects
increases self One interesting finding is
confidence ,so that CEO , Negative affects have
don’t need others to more influence in
validate their actions. performance rather than
Negative affects may positive one.
lower self confidence.

17. Recommendations and Further
Research Possibilities
A strategy should be
aligned with the CEOs
Relationship between characteristics , as
affective states and negative affective traits
decision making can be should favor for more
context dependent. It is conformist strategy
also interesting issue of ,where as positive
further research. affective traits should
favor more atypical
Strategies.
The research is based
on one specific
industry, it must further
Risk aversion must be
continue for measuring
considered to measure
several industry CEOs
CEOs affective traits.
affective traits ,which will
allow genera liability of
research.