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Study Finds CEOs with Uncommon Names More Likely to Adopt Unusual Business Strategies

By:
Chris Gaetano
Published Date:
Sep 10, 2020
A recent study that looked at 19 years of data on 1,172 public firms found that the ones led by someone with a less common first name were more likely to pursue strategies that deviate from those of their peer firms.

The researchers determined how common a CEO's name is (e.g. Elon vs Warren) based on data from the Social Security Administration's name database.

Meanwhile, strategic distinctiveness was measured along six angles: (1) advertising intensity (advertising expense/sales), (2) inventory level (inventories/sales), (3) plant and equipment newness (net plant and equipment/gross plant and equipment), (4) research and development (R&D) intensity (R&D expense/sales), (5) non-production overhead (selling, general, and administrative expense/sales), and (6) financial leverage (total debt/equity).

Along each dimension, the researchers calculated the absolute difference between a firm and the average of all other firms in the same industry in each year to obtain an indicator of strategic distinctiveness in that dimension. They then created the standardized score of each indicator of strategic distinctiveness by industry and year, and used the sum of these standardized scores as our composite measure of strategic distinctiveness.

They found, after controlling for a number of factors including age, gender, ethnicity and career diversity, that the more uncommon a CEO’s name, the greater the firm’s strategic distinctiveness. An increase in a CEO’s name uncommonness from one standard deviation below the mean to one standard deviation above the mean will increase an average firm’s strategic distinctiveness by about 4.2 percent.

As for why, the researchers hypothesized that CEOs with unusual names are more likely to think of themselves as different from their peers and so will actively seek to differentiate themselves from them. They pointed to existing literature that indicates that this behavior applies to people in general when they have an unusual name, and this strategic distinctiveness effect is just how this mindset manifests when held by a corporate CEO.

"Research 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 perceive a person with an uncommon name as an unusual person ... because children’s activities predominantly occur in the presence of peers, those with uncommon names tend to develop a self-knowledge of being different from peers through repeated experiences with such a relational self," said the paper.