CEOs Organizational Commitment and Firm Performance: Malaysian Evidence

Shanthy Rachagan, Jane Lai Yee Tong, Robert Terpstra, Sakthi Sakthi Mahenthiran

Abstract


In developing countries it is important to examine if CEO characteristics directly affects firm performance. Hambrick (2007) suggests that a senior executive’s strong personal desire to deliver performance is an important moderator of the relation between executive characteristics and firm outcome. The sample frame consists of survey responses from 136 Malaysian CEOs, of which 94 belong to publicly listed companies and 42 belong to private companies. Our results find that in Malaysia, CEOs’ education attainment and tenure on their job, as well as their concern for issues affecting the wellbeing of their company and their country positively affects the CEOs’ organizational commitment levels. We also find that CEO’s organizational commitment mediates the relationship between his or her concerns for issues affecting the company and the firm’s performance. Moreover, whether or not a Malaysian company is publicly listed interacts with the CEOs organizational commitment to affect their firms’ performance. The study uses the unique institutional and cultural context in Malaysia to explain these findings.
Key words: Malaysia; CEO survey; Organizational commitment; Upper echelon theory

Keywords


Malaysia; CEO survey; Organizational commitment; Upper echelon theory

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DOI: http://dx.doi.org/10.3968%2F10.3968%2F4793

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