"What’s the difference between God and Larry Ellison" asks an old software industry joke. Answer: God doesn’t think he’s Larry Ellison. The boss of Oracle is hardly alone among corporate chiefs in having a reputation for being rather keen on himself. Indeed, until the bubble burst and the public turned nasty at the start of the decade, the worship of the celebrity chief executive seemed to demand bossly narcissism, as evidence that a firm was being led by an all-conquering hero.
Narcissus met a nasty end, of course. And in recent years, boss-worship has come to be seen as bad for business. In his management bestseller, "Good to Great", Jim Collins argued that the truly successful bosses were not the serf-proclaimed stars who adorn the covers of Forbes and Fortune, but instead self-effacing, thoughtful sorts who lead by inspiring example.
A statistical answer may be at hand. For the first time, a new study, "It’s All About Me", to be presented next week at the annual gathering of the American Academy of Management, offers a systematic, empirical analysis of what effect narcissistic bosses have on the firms they run. The authors, Arijit Chatterjee and Donald Hambrick, of Pennsylvania State University, examined narcissism in the upper rank of 105 firms in the computer and software industries.
To do this, they had to solve a practical problem: studies of narcissism have relied on surveying individuals personally, something for which few chief executives are likely to have time or inclination. So the authors devised an index of narcissism using six publicly available indicators obtainable without the co-operation of the boss. These are: the prominence of the boss’s photo in the annual report; his prominence in company press releases; the length of his "Who’s who" entry; the frequency of his use of the first person singular in interviews; and the ratios of his cash and non-cash compensation to those of the firm’s second-highest paid executive.
Narcissism naturally drives people to seek positions of power and influence, and because great selfesteem helps your professional advance, say the authors, chief executives will tend on average to be more narcissistic than the general population. Messrs Chatterjee and Hambrick found that highly narcissistic bosses tended to make bigger changes in the use of important resources, such as research and development, or in spending; they carried out more and bigger mergers and acquisitions; and their results were both more extreme (more big wins or big losses) and more unstable than those of firms run by their humbler peers. Larry Ellison is mentioned in the first paragraph to show that