CEOs who search for exciting yet risky experiences – such as flying small aircraft – embrace diverse and high-impact innovation projects in business.
The researchers examined the performances of 88 CEOs who were also pilots and 1,123 non-pilot CEOs in US firms from 1993 – 2003. This revealed that firms with a pilot CEO are able to increase their number of patented products or services by 66.7% and the number of citations of these patents by 43.9%.
Zhang (pictured below) says: “Our research demonstrates that companies led by ‘sensation seekers’, who display the same thrill-seeking tendencies as pilots, are able to generate more patents with greater market impact than their peers. This is because CEOs with this particular personality typically improve innovation effectiveness and pursue more diverse and original projects.”
The research suggests that businesses employing a ‘sensation seeker’ as a CEO are likely to be far more innovative.
Zhang says: “Managers with an inclination for creativity in corporate settings are far more successful when innovating. An openness to new ideas, and a willingness to pursue new methods of working overrides their desire to maintain structured and repetitive situations. They are also likely to be more innovative consumers, unafraid to try new products and always aware of alternatives. Having this personality type at the helm of a business in an industry requiring high levels of innovation is likely to be a stepping stone to success.”
These findings are in contrast with the results of firms that provide risk-taking incentives to CEOs through compensation. “We find that extrinsic motivation through compensation contracts makes CEOs invest more in research and development (R&D). However, once we control for R&D spending, we do not find the incremental effect of CEO compensation on innovation performance. These differential results demonstrate the limits of using financial incentives to motivate innovation and highlight the value of intrinsic motivation in achieving innovation success.”
Picture of pilot of a small airplane: depositphotos.com/ ©georgeburba