Does CEO overconfidence influence a firm's ambidextrous balance of innovation?

While prior research has focused on the effect of CEO overconfidence on innovation, few studies have been conducted to reveal how and whether an overconfident CEO affects the ambidextrous balance of a firm's innovation strategies. This study complements upper echelons theory by further disentangling innovation strategies into the categories of exploration and exploitation. Using patent citations, we investigate the effect of CEOs' psychological attribute of overconfidence on innovation ambidexterity. In addition, we examine how a firm's governance system moderates the relationship between CEO overconfidence and an ambidextrous imbalance. The results show that overconfident CEOs are more apt to create or magnify an imbalance in innovation ambidexterity. Furthermore, the results regarding the monitoring mechanisms indicate that an independent board and dedicated institutional ownership mitigate the positive relationship between CEO overconfidence and a firm's ambidextrous imbalance while transient instituti...