CEO childhood trauma, social networks, and strategic risk taking

Childhood trauma has been recognized as an important aspect of an individual’s early life experiences. However, in research on the upper echelons of organizations, the impact of childhood trauma exposure on CEOs’ strategic decision-making is not well understood. By integrating child trauma theory and upper echelons theory, we develop a framework for exploring how CEO childhood trauma influences strategic risk taking. We suggest that CEO childhood trauma has a negative exponential association with strategic risk taking because of the long-term effects of post-traumatic stress (PTS). In addition, we propose that moderating effects of social networks on the effects of PTS arising from CEO childhood trauma are driven by the two competing functions of social networks: social support and social pressure. We use data on China’s Great Famine to test our theory. By examining CEO childhood trauma and strategic risk taking, our study has important implications for child trauma theory and upper echelons theory.