An extraordinary being: CEOs with uncommon names choose uncommon strategies
Adventurous new research concludes that CEOs with uncommon names are more likely to make unique strategic choices
"He that is ambitious for his son, should give him untried names."
One of the most enduring ideas in Western thought is the connection between a person and their name. In the Roman play Persa, a slave convinces his owner to buy an expensive slave-girl named Lucris (“Profits”) by saying: “The name and the omen are worth any price.” In Laurence Stern's great (and very funny) 18th Century novel Tristam Shandy, the main character is convinced that all the troubles in his life result from his (accidentally given) name, which is derived from the Latin word for sadness. More recently, the philosopher Carl Jung wondered whether people are drawn to their professions by their name, noting that Sigmund Freud, who studied pleasure, had a last name that means "joy" in German.
There is, in fact, a long stream of research about names in psychology, and there is some agreement that names do have an impact on a person's identity and personality. Unusual names are especially interesting to researchers, many of whom have found connections between rare names and specific aspects of personality.
Surprisingly, a team of business researchers recently added a new dimension to this ancient debate. A new paper from Yungu Kang (Arizona State), Yan Anthea Zhang (Rice), and David H. Zhu (Arizona State) asks whether a CEO's given name has any impact on the strategies she chooses for her companies — a question no one had previously thought to ask or answer.
Perhaps anticipating a skeptical future reader, the authors start by presenting their justification for taking up this project. They note that many researchers have long "considered name a key determinant of personality development" and that studies "across multiple disciplines, including education, psychology, and sociology, have subsequently examined the impacts of having uncommon or unusual names." The authors also note that studies "on the long-term consequences of having an uncommon name also highlight that uncommon names were associated with more desirable outcomes such as creativity and popularity, especially among relatively successful individuals."
The authors assume that CEOs have generally found success in their careers and that those with unusual names have probably taken a slightly different psychological path than CEOs with common names. Did this different journey, the authors wonder, lead the former group to manage differently once they moved to the C-suite?
The idea that people with uncommon names would make unique choices as a CEO is not without foundation. Research, note the authors, "shows that individuals with uncommon names are frequently identified from childhood by others as being different from their peers — people strongly associate a person's name with the person, and think of a person with an uncommon name as an unusual person." Moreover, children with uncommon names are "likely to develop a self-conception of being different from others because their parents believe in their uniqueness and reinforce such a conception by giving children unconventional experiences."
Moreover, if one accepts that even CEOs with common names are generally confident individuals, then a CEO with an unusual name who has perhaps underdone unique and unconventional life experiences, could be more inclined to pursue unusual strategies with a high degree of confidence. The authors note:
To the extent that CEOs with uncommon names may have developed a confident self-conception of being different from peers, they tend to believe that they can achieve favorable business outcomes by being different from peers. Past experiences of dealing with the challenges associated with being different have allowed them to develop strong abilities to overcome the adversaries of being different. This is consistent with findings from psychological research that successful professionals who have uncommon names tend to view themselves as more special, unique, interesting, and creative.
To test their hypotheses, the authors collected information from 1,172 companies in the Execucomp database from 1998 to 2016. CEO names were scored for frequency against all given names in the United States Social Security Administration's (SSA) national data on given names. They also collected data on Board composition, equity performance, and a variety of other factors from various sources.
A couple of their design decisions are worth noting. First, they "excluded the first year of each CEO's appointment because prior research shows that organizational outcomes in the first year of a CEO's tenure may be substantially influenced by the previous CEO and the succession process." Second, in their primary analysis the authors "measured a CEO's name uncommonness since the birth year [emphasis mine] of the oldest CEO in our sample." This approach captured "a name's uncommonness in the population in which the CEO lived as a child." (In case you're wondering, the most uncommon CEO names included "Phaneesh, Frits, & Jure" and the most common names were "James, John, & Robert.")
CEO confidence was measured "based on how a CEO exercises stock options," since prior research "suggests that a CEO who retains more unexercised exercisable options is more confident about the future of the firm." Following previous studies, the authors "measured CEO confidence by the annual value of the CEO's holdings of vested, in-the-money options divided by the CEO's total salary and bonus." The authors also calculated CEO confidence by comparing CEO predictions about their company's future performance against external analysts’, as well as by comparing CEO compensation with that of peers. In addition, the authors developed a "power" indicator for the CEO list related to various factors such as whether the CEO led the company Board and how much equity a CEO held during his tenure.
As expected, the authors took factors such as gender, ethnicity, age, firm size, and even career variety into account when tabulating their results.
The uniqueness of a company's strategy was analyzed along six dimensions: (a) advertising intensity (advertising expense/sales), (b) inventory level (inventories/sales), (c) plant and equipment newness (net plant and equipment/gross plant and equipment), (d) research and development (R&D) intensity ( R&D expense/sales ), (e) nonproduction overhead (selling, general, and administrative expense/sales), and (f) financial leverage (total debt/equity). These six factors, note the authors, "are likely to be controllable by CEOs, have great influence on firm performance, represent important and specific aspects of firm strategy, and are comparable across firms."
The authors’ first major finding is that there is a positive relationship between the rarity of a CEO's name and the uniqueness of their preferred strategies. In other words, "the more uncommon a CEO's name, the greater the firm's strategic distinctiveness." Indeed, if one holds "moderating variables at their means and other variables constant, an increase in a CEO's name uncommonness from one standard deviation (SD) below the mean to one SD above the mean will increase an average firm's strategic distinctiveness by about 4.2%"
This positive relationship between name rarity and strategic uniqueness is magnified by the CEO's personal confidence to a significant degree. In other words, the more confident a CEO with an unusual name is, the more likely she is to pursue strategic directions different from her peers. As one would expect, the same is true about power to an even greater degree. If one holds other moderating variables at their means, "an increase in a CEO's power from one SD below the mean to one SD above the mean will increase the magnitude of the main effect of CEO name uncommonness by about 144%" versus about 48% for confidence.
Unsurprisingly, the authors found that confidence also increases what researchers call environmental munificence, i.e., the degree to which a company’s external environment supports business growth. In other words, the more a company operates in a high-growth industry, the more CEOs with unusual names are more able and/or willing to make the distinctive strategic choices to which they seem to be naturally inclined.
An interesting footnote to the findings is that a foreign-born CEO with an uncommon name in the U.S. (but common in their home country) still shows the same relationship but to a lesser degree. The authors do not explore whether the level of decrease varies with the age at which the CEO arrived in the U.S., but it seems logical that this would be a factor. The researchers did conduct a preliminary analysis of the effect of uncommon last names (hindered by the fact that the U.S. updates its surname database only once a decade) and concluded the results "provided support for our hypothesized effects."
In 1994 the editor of the British magazine New Scientist noted to its readers a new book about the earth's polar regions written by a man named Daniel Snowman and another about London's underground written by Richard Trench and wondered aloud whether names can influence careers. In response to the editor, a reader offered the term nominative determinism to describe the belief that people chose careers because of their names. Over the years, readers who support the theory have highlighted a U.S. Navy spokesman for the Guantanamo Bay detention camp named Mike Kafka; the authors of the book The Imperial Animal, Lionel Tiger and Robin Fox; as well as the spokesman for the UK Association of Chief Police Officers, Alfred Hitchcock.
In the spirit of the New Scientist, one could propose the term strategic nominative management (SNM) to describe the phenomenon discovered by this paper's authors. SNM theory would suggest that the strategic choices made by certain CEOs are connected, consciously or unconsciously, to their names. As the authors themselves argue:
We propose that CEOs with more uncommon names will pursue more distinctive strategies, and that CEO confidence, CEO power, and environmental munificence will strengthen the positive relationship between CEO name uncommonness and strategic distinctiveness. Our findings, based on analyses of firms over an almost 20-year period, provided strong support for our theoretical predictions. Overall, these findings supported our prediction that a CEO's unique name is a very useful indicator of his or her relational self, and explains strategic decisions made by the CEO.
Perhaps as a challenge, the authors rightly note that "theoretical perspectives about how top executives' observable characteristics influence their decision making have not yet considered the role of their self-conceptions relative to peers." Furthermore, "identifying name uncommonness is an important and unstudied characteristic of top executives that may reflect their relational selves and explain variations in strategic distinctiveness (and possibly a wide range of other major organizational outcomes)."
There are real-world implications of this research, the authors argue. Because CEOs with uncommon names tend to pursue distinctive strategies, “boards that seek to enhance the distinctiveness of their firms' strategies may want to hire CEOs with uncommon names.” The research findings also suggest that "top executives, middle-level managers, and employees can also expect a higher likelihood of implementing distinctive strategies when their CEOs have more uncommon names." As for competitors, they "can expect a firm to engage in unusual competitive moves when the CEO has an uncommon name.”
Yet a more material implication might be that very distinctive strategies are also riskier. As one of the authors noted in the latest Harvard Business Review, “existing research shows that departing too much from peers’ strategies can be harmful, as can pursuing a strategy that is too similar. You want your strategy to be moderately different.”
It would be easy to think of this paper as a research team's interesting detour from the normal subjects of academic business scholarship, but doing so might be ill-advised. Below are the first ten U.S. companies listed in the latest edition of Boston Consulting Groups’ list of the world’s most innovative companies, along with the first names of their CEOs.
One could reasonably conclude that at least six of the twenty names on this list would qualify as uncommon in the U.S., including three of the top five names. Perhaps in the future, more attention will be paid to a leader with a distinctive name. After all, if the authors of this paper are correct, then in many C-suite offices, the new CEO's name may well turn out to be the company's destiny.
Kang, Y, Zhu, DH, Zhang, YA. Being extraordinary: How CEOS' uncommon names explain strategic distinctiveness. Strategic Management Journal. 2021; 42: 462– 488. https://doi.org/10.1002/smj.3231