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- Title
A Duopolistic Analysis of CEO Competitive Aggressiveness with R&D Investment.
- Authors
Gao, Xing; Zhang, Yanfang; Zhong, Boyuan; Wang, Xifan; Wang, Ying
- Abstract
While chief executive officer (CEO) competitive aggressiveness can be frequently observed in competitive industries with heavy R&D (research and development) investment, studies on its impact on R&D strategies and hiring strategies for competing firms are rare. This article builds a Cournot-based game model to examine this issue and obtain many novel findings in a competitive duopolistic market. In particular, compared with two firms hiring noncompetitive CEOs, hiring competitive CEOs may hinder rather than stimulate R&D investment when the aggressiveness of competitive CEOs remains relatively weak. Our analysis reveals that despite conflicting interests, firms may choose to hire competitive CEOs. Specifically, when competitive CEOs' aggressiveness is rather low, both firms hire competitive CEOs to gain an output advantage; otherwise, they hire different types of CEOs to avoid head-to-head competition. A prisoner dilemma occurs when two firms choose competitive CEOs because they would be better off when hiring noncompetitive CEOs. Then, although the presence of competitive CEOs always improves total industry output, bilateral competition brings about the lowest total industry profit because fierce output competition substantially reduces prices. Interestingly, unilateral competition enhances total industry profit when the aggressiveness of competitive CEOs remains rather strong. Finally, this study shows that the endogenous aggressive nature of competitive CEOs does not qualitatively alter these main results.
- Subjects
CHIEF executive officers
- Publication
Production & Operations Management, 2024, Vol 33, Issue 5, p1083
- ISSN
1059-1478
- Publication type
Article
- DOI
10.1177/10591478241238971