CEOs' regulatory foci and firm-level product innovativeness in competitive environments

Abstract

Purpose: Using arguments from the regulatory focus and upper echelons theories, this paper aims to examine the impact of a chief executive officer’s (CEO’s) regulatory foci (i.e. promotion and prevention focus) on small- and medium-sized enterprises’ (SMEs’) level of innovativeness and how these relationships are jointly moderated by intense competition.

Design/methodology/approach: The empirical analysis draws on survey data gathered from 257 SMEs in Ghana.

Findings: The study findings indicate that a CEO’s level of promotion focus positively affects the firm’s engagement in innovation, while a CEO’s prevention focus is negatively associated with the firm’s innovativeness. The positive association between a CEO’s promotion focus and a firm’s innovativeness is enhanced under conditions of intense competition. Additionally, the negative relationship between prevention focus and firm-level innovativeness is attenuated under intense competition.

Research limitations/implications: This study relied on a single informant and also used subjective measures for the dependent variable. As such, individual respondents might have biased perspectives on firm-level product innovativeness. Future studies may use multiple informants to examine the causal links of the variables.

Practical implications: The study’s findings provide managers with a deeper understanding of how to achieve superior firm-level product innovation. The understanding of this issue can promote the development and maintenance of further entrepreneurial ventures in emerging economies.

Originality/value: The paper has a strong theoretical value as it pioneers research on the effect of CEOs’ regulatory foci on firm-level innovativeness in competitive environments.