The order in which someone is born is widely believed to influence how they behave, what their personalities are like, and the extent to which they are risk-takers later in life. Much of this research in the past has been developed in the psychology literature, mostly from an evolutionary lens. In a recent study published in the Academy of Management Journal by a team of researchers including Seung-Hwan Jeong, assistant professor in the Managerial Sciences Department, birth order effects are found to influence strategically important decisions made by CEOs.
The authors find that CEOs who are born later are more likely to take risks in R&D investment, capital expenditures, and acquisition spending. This is consistent with the evolutionary psychology-based explanation that, to outcompete siblings for parental attention and resources, later-borns have a tendency to engage in risky, out-of-the-box behaviors during their childhood. This study shows that these childhood behaviors have a lasting imprinting effect that affects behaviors much later in life, in CEOs’ decision making.
Given that sibling rivalry is a key part of why birth order effects exist, Professor Jeong and his coauthors further predicted that later-born CEOs’ tendency to engage in risky decision-making will be amplified when CEOs experienced stronger sibling rivalry during childhood and in their ongoing roles. Supportive of these predictions, the authors find that later-born CEOs’ risky decision patterns are more pronounced when CEOs’ age gap with other siblings in smaller: a condition that increases sibling rivalry for parental resources during childhood. The study also finds significant support for the idea that CEOs’ birth order effects are amplified when there is another sibling who is also simultaneously serving as a CEO in another company.
In sum, Dr. Jeong and his coauthors Dr. Robert Campbell (University of Nebraska) and Dr. Scott Graffin (University of Georgia) find support for the idea that later born CEOs engage in more risk-taking, and that this is driven by sibling rivalry that existed during childhood and that is ongoing. The original article can be assessed through this link.