CEOs’ regulatory foci and firm-level product innovativeness in competitive environments

Using arguments from the regulatory focus and upper echelons theories, this paper aims to examine the impact of a chief executive officer’s (CEO’s) regulatory foci (i.e. promotion and prevention focus) on small- and medium-sized enterprises’ (SMEs’) level of innovativeness and how these relationships are jointly moderated by intense competition.

The empirical analysis draws on survey data gathered from 257 SMEs in Ghana.

The study findings indicate that a CEO’s level of promotion focus positively affects the firm’s engagement in innovation, while a CEO’s prevention focus is negatively associated with the firm’s innovativeness. The positive association between a CEO’s promotion focus and a firm’s innovativeness is enhanced under conditions of intense competition. Additionally, the negative relationship between prevention focus and firm-level innovativeness is attenuated under intense competition.

This study relied on a single informant and also used subjective measures for the dependent variable. As such, individual respondents might have biased perspectives on firm-level product innovativeness. Future studies may use multiple informants to examine the causal links of the variables.

The study’s findings provide managers with a deeper understanding of how to achieve superior firm-level product innovation. The understanding of this issue can promote the development and maintenance of further entrepreneurial ventures in emerging economies.

The paper has a strong theoretical value as it pioneers research on the effect of CEOs’ regulatory foci on firm-level innovativeness in competitive environments.