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Key to choosing a CEO? The name matters

29 Sep 2022

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In a study that examined data on CEOs’ given names and 1,172 public firms in the United States over a 19-year period, the researchers found that CEOs with uncommon names tend to pursue more unique strategies than their peers.
Dr Yungu Kang was inspired to start researching the influence of names when he was studying for a doctoral degree in the U.S., where his South Korean name was considered uncommon.

 

If a firm is looking for a leader with an unconventional business approach, it should choose a CEO with an uncommon name. That’s the message from a study co-authored by a HKBU scholar that examined data on CEOs’ given names and 1,172 public firms in the U.S. over a 19-year period.

In the study “Being extraordinary: How CEOs’ uncommon names explain strategic distinctiveness”, which was published in the Strategic Management Journal, the researchers found that CEOs with uncommon names tend to pursue more unique strategies than their peers.

Dr Yungu Kang, Assistant Professor of the Department of Management, who co-authored the paper, says: “CEOs with uncommon names are likely to develop a conception of being different from others, and they express their distinctiveness by adopting strategies that deviate from industry norms.”

The influence of having an uncommon name

Although research has shown how organisational outcomes are associated with the characteristics of top executives, including their personalities, values, experience and demographics, relatively little work has examined CEOs’ names.

A person’s name influences their sense of identity, personality development, cognition and behaviour, according to Dr Kang and his associates. Having an unusual name may reduce a person’s self-esteem, but the situation can improve once people get to know the individual, and now uncommon names are often associated with creativity and popularity.

While the rarity of an individual’s name can influence how others view that person, Dr Kang and the other researchers asked, do the names of a firm’s senior executives shape its business strategy, and if so, how?

To find out the link between CEOs’ uncommon names and businesses’ strategic distinctiveness, the research team integrated the findings of psychological studies on uncommon names and the concept of the relational self, which reflects a person’s self-conception when relating to others, into their paper. Using data from 1998 to 2016, the researchers analysed 1,172 firms’ strategic distinctiveness based on six dimensions which are typically influenced by their CEOs, including advertising expense, inventories/sales, plant and equipment newness, research and development expense, capital expenditure and financial leverage.

The researchers then looked at the commonness of CEOs’ given names by calculating the frequency of their appearance in the U.S. Social Security Administration’s national data between 1880 and 2016. The team also took into account other influencing factors, such as CEO confidence based on how the leaders exercised their stock options, as well as the capacity of the environment to support business growth. Another moderating factor was the CEOs’ power, which was measured by using several indicators including whether the CEOs also served as board chair, how long they had in office relative to their directors and how much company stock they held.

The results showed that the more uncommon a CEO’s name, the greater the firm’s strategic distinctiveness. “CEOs who have uncommon names are motivated to differentiate themselves from other CEOs, and one way of doing so is to pursue more distinctive business strategies,” says Dr Kang. “They also appear to be more open to trying new things, and they are more willing to challenge the status quo when they are more confident, more powerful or operate in a growing business environment.”

New insights into understanding strategic decisions

The study’s findings offer useful insights into strategic leadership research. By identifying the commonness of names as an important characteristic of top executives, the research opens the door for further studies that examine how CEOs’ self-conceptions in relation to their peers can affect their decision-making.

“As CEOs with uncommon names tend to pursue distinctive strategies, boards that are seeking to enhance the distinctiveness of their firms may want to appoint a CEO with an uncommon name,” Dr Kang says.

He adds that the research findings can also help stakeholders analyse or predict a company’s strategies. “Top executives and employees can expect a higher likelihood of implementing distinctive strategies when their CEO has an uncommon name, while competitors can also expect that such a rival firm is more likely to engage in unconventional moves.”

While firms may add “name commonness” to their selection criteria when deciding between a leader who is keen to set a new direction or a CEO who is happy to stay the course, parents may consider how they should name their children to help them climb the corporate ladder!