When Do Nice Guys Finish Last? Prosociality and the Psychological Model of CEO-Firm Matching

Prosocial CEOs increase employee motivation but incur higher costs when implementing layoffs. We present a psychological model of CEO-firm matching wherein negative industry shocks requiring downsizing asymmetrically degrade the match quality for prosocial CEOs. We find that, during periods of increasing Chinese import competition, prosocial CEOs show higher rates of both forced and unforced turnover. They are succeeded by less prosocial CEOs who are less likely to be charity volunteers, externally recruited, use less employee-friendly language, or lean Republican in political orientation. We find no effects on CEO functional background, indicating that boards specifically recruit low-prosocial CEOs. Our study highlights psychological characteristics as a key consideration in the executive labor market and provides a theoretical basis for anecdotal accounts of wartime and peacetime CEOs.