skip to navigation skip to content

Cambridge Network: Survival versus aspiration – CEOs and foreign adventure


Mauro Guillén, Dean of Cambridge Judge Business School, speaks about CEOs who also serve as board chair being more risk-averse in foreign expansion.

“CEOs of firms that fail to meet performance targets have long sought to expand abroad to lift their fortunes, because these foreign markets can lift revenues through a wider customer base, boost returns due to economies of scale, and access new resources and capabilities. Prior research has shown an inverted U-shaped curve: slight underperformance sharply boosts entry into foreign markets, but this slows if firms significantly underperform as they seek instead to reduce risks (which include lack of local knowledge and networks). It’s a question of whether aspirations prevail over survival, or vice versa, depending on the degree of performance shortfall,” Mauro says.

“Yet our new study of Spanish firms over a quarter-century shows that such overseas adventures are far less prevalent when the CEO is also chair of the board of directors (known as ‘CEO duality’). This is because such dual CEOs take a more conservative, risk-averse approach when shortfalls arise.” He says.

Read the full article []