CEO-Board Political Alignment and Firm Performance: An Examination of Declines from Homogeneity that are Mitigated by CEO Psychological Traits

Document Type

Article

Publication Date

11-2025

Publisher

SAGE Publications

Source Publication

Journal of General Management

Source ISSN

0306-3070

Original Item ID

DOI: 10.1177/03063070251399248

Abstract

As people group themselves by their political ideologies, ideological alignment is likely to occur in workgroups—including boards of directors. While some research highlights positive outcomes from shared group characteristics, homogeneity can also hinder decision-making due to fewer perspectives being considered, limited sharing of non-conforming information, and narrowed problem solving. Building from prior research, we contend that substantial political alignment between a CEO and board members aligns them toward a common cognition, which fosters negative effects associated with homogeneity and subsequently reduces firm performance. We further contend that these performance reductions can be mitigated by psychological traits associated with managerial discretion. An analysis using surveys from CEOs and political donation data finds support for the hypothesized negative effects from political alignment, and also finds that performance declines from political alignment are mitigated when CEOs have a more internal locus of control. We discuss implications from these findings.

Comments

Journal of General Management, (November 2025). DOI.

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