Managerial overconfidence: promoter of or obstacle to organizational resilience?

External shocks like the financial crisis of 2007, fast changes of environmental protection regulations, political crises or the Corona pandemic, as discussed in Kraus et al. (2020b), demonstrate the importance for companies to be resilient in order to face such adverse circumstances successfully. When analyzing this resilience, scholars usually focus on organizations as a whole, their processes and their resources (e.g., Buliga et al. 2016; Gittell 2006; Lenknick-Hall and Beck 2005; Lengnick-Hall et al. 2011). But as Hambrick (2007, p. 334) emphasises: “If we want to understand why organizations do the things they do, or why they perform the way they do, we must consider the biases and dispositions of their most powerful actors—their top executives” (Hambrick 2007, p. 334). This quote reflecting the view of the Upper Echelon Theory illustrates the great importance that top-managers’ personality traits exert on companies’ success. Thus, if we want to understand how to foster organizational resilience, we have to learn more about the role that major decision-makers’ personality characteristics play to build a resilient organization.

Self-confidence constitutes one such characteristic, because a certain degree of it helps to run a company successfully (Johnson and Fowler 2011). However, if it switches to overconfidence, the danger of making the wrong decisions increases (Johnson and Fowler 2011), as one’s own abilities are overestimated and risks are underestimated (Johnson and Fowler 2011). This results in corporate crises, scandals, and poor performance (e.g., Ho et al. 2016). Thus, Plous (1993, p. 217) emphasizes in a frequently quoted sentence (e.g. Moore and Healy 2008): “No problem in judgment and decision making is more prevalent and more potentially catastrophic than overconfidence”.

However, one has to distinguish between misjudgments due to a lack of knowledge or ability and a fundamental personality trait. The former also is referred to in literature as overconfidence (Griffin and Varey 1996). Yet, it describes a condition that can be easily remedied, since knowledge deficits can be eliminated and prognostic abilities can be developed. In contrast, overconfidence as a personality trait is anchored in the self-image and thus in the decision-maker’s behavioral patterns. Therefore, it hardly changes and affects many decisions.

The great influence of this personality trait on successful corporate management is reflected in an extensive body of research that deals with self-confidence, its exaggerated manifestations and its consequences (e.g., Billett and Qian 2008; Malmendier and Tate 2015; Dowling et al. 2021). This literature is very broad, divided into different areas, and provides mixed evidence regarding the effects of overconfidence (e.g., Aghazadeh et al. 2018). Moreover, research is not only found in the business context but also in psychology (e.g., Moore and Healy 2008).

While large parts of literature stress the negative impact of managerial overconfidence, other scholars provide a more differentiated perspective. Based on Owen and Davidson (2009), Paulhus and Williams (2002), as well as Taylor and Brown (1988), Tourish (2020) argues that overconfidence also has a beneficial facet. Its relation to a positive perception of own abilities and of the firm’s capabilities provides a path to resilience, as “ ‘positive illusions’ help people cope with adversity, develop resilience in the face of setbacks and show more creativity” (Tourish 2020, p. 91). Thus, deeper insights into the relation between overconfidence and organizational resilience promise paths for a better understanding of both the development of organizational resilience and the effects of managerial overconfidence in companies.

However, due to the research’s fragmentation and the rare explicit discussion between managerial overconfidence and organizational resilience in existing studies, so far literature lacks a comprehensive understanding on the relation between managerial overconfidence and relevant building blocks of organizational resilience. While some researchers identify links between managerial overconfidence and isolated corporate areas, e.g., innovativeness like Galasso and Simcoe (2011), Hirshleifer et al. (2012), Tang et al. (2015a) and Wang et al. (2018), that are important for organizational resilience, literature lacks a study that summarizes the different areas affected by managerial overconfidence and provides a broad perspective on the impact of this personality trait on organizational resilience. Moreover, existing empirical evidence on the effect of managerial overconfidence on different corporate areas rather implicitly contains insights regarding its impact on factors related to organizational resilience. In the present paper, we strive to make these insights more explicit, compile them to a broader perspective and elaborate on relevant paths for future research. To achieve this goal, we first derive a model containing the core resources to foster organizational resilience based on extant literature. Next, we perform a systematic literature review to identify a broad range of empirical evidence regarding the impact of managerial overconfidence in the corporate context. We focus on empirical studies investigating the impact of managers’ overconfidence. Based on this, we analyze the relation between the identified consequences of overconfidence and the derived components of organizational resilience. Finally, we discuss future research paths.

The study provides the following insights: First, we offer a state-of-the-art review on empirical research on managerial overconfidence with a clear focus on studies dealing with managers. Thereby, we advance theory-building in this area. Second, we provide evidence of the resilience-enhancing effects of managerial overconfidence and thereby put this personality trait into another perceptive. Third, we combine research on managerial overconfidence and on organizational resilience, two theory streams which have been separated so far but contain a high potential for a mutual enrichment. Fourth, this comprehensive review of managerial overconfidence as a personality trait contributes to the Upper Echelon Theory (Hambrick and Mason 1984; Hambrick 2007; Shen 2019).

Overall, findings indicate a potentially positive impact of overconfidence on firms’ adaptability through risk-taking, innovation activities and the capability to build social resources, if the overconfident manager is monitored by a strong controlling committee and conservative accounting procedures. Yet, as overconfident managers tend to make inefficient investment decisions and cause negative investor reactions, if they are not limited by controlling instances, they also reduce the material resources and thereby weaken the basis to build up resilience. Additionally, they exert detrimental effects on procedural resources. Finally, the identified literature in large parts provides evidence regarding material resources, while social and procedural resources are covered to a lesser extent, indicating a need for further research.

Literature reviews can pursue different goals. The present study focuses on the identification of studies in the field of managerial overconfidence with relevance to organizational resilience. It is not intended to provide a complete overview of the research on managerial overconfidence, but to identify a sample of papers which allows to derive a perspective on this relation. Thus, following the differentiation by Breslin and Gatrell (2020), the present study can be located on the prospector side, i.e., it seeks to broaden the perspective of research on managerial overconfidence by making more explicit the insights which this field provides for research on organizational resilience and which so far have not yet been discussed explicitly in the analyzed studies. In this sense, the present literature review also can be categorized as qualitative, as we do not apply statistical methods to condense the empirical findings, and as integrative as defined by Dwertmann and van Knippenberg (2021). Also, Elsbach and van Knippenberg (2020, p. 2) state that “integrative reviews result in novel takeaways, such as a new conceptual framework or theory that defines the field reviewed”. Exactly this is the aim of the present study. However, in some sense we have to deviate from the core idea of integrated reviews as discussed by these authors: They state that integrative reviews should not be guided by “authors’ a priori perspectives“ (Elsbach and van Knippenberg 2020, p. 3). As we aim to identify results regarding managerial overconfidence which can be related to organizational resilience, but which have not yet been discussed explicitly, we have to predefine our perspective on organizational resilience and thereby provide some guidance. However, the results obtained from the literature of managerial overconfidence in relation to organizational resilience form novel takeaways.

The search comprised a database-supported and a backward search (Aromataris and Riitano 2014; Brunton et al. 2017; Dundar and Fleeman 2017). To conduct the main search as comprehensive as possible while keeping it manageable, we first executed a preliminary search phase, in which we identified the relevant keywords and databases. As previously discussed, overconfidence can be defined at least in two ways, where we focus on the personality trait. As indicated in Sect. 2.2, terms related to this trait are overconfidence, better-than-average, overplacement and hubris. Therefore, these terms were applied as keywords and introduced in the search as follows: overconfi*, better-than-average, overplace* and hubris. During the preliminary search it became apparent that a narrowing down to the field of management was necessary to obtain a manageable amount of hits. Thus, in the main search we combined these keywords with manage* and CEO, leading to the following search string: ((overconfi* OR overplace* OR better-than-average OR hubris) AND (ceo OR manage*)). We applied this search string to the title and the abstract. While overconfidence as such is a field of research which crosses disciplinary boundaries, we focus on the business context. Therefore, we only used business-related databases. During the preliminary search phase, we checked Business Source Premier, EconLit, ABI/INFORM Complete and EconBiz. For the main search we dropped EconBiz, as in the preliminary search it did not provide further relevant articles beyond the three other databases. Search date, number of hits and duplicates are indicated in Table 1. It has to be mentioned that we did not use Scopus, as we did not have access to it. During this identification phase we used the following non-content-related inclusion and exclusion criteria (Hiebl 2021): The papers should be written in English. Moreover, following the recommendation by Kraus et al. (2020a, p. 1034) we concentrated on peer-reviewed journal articles “to ensure the highest standards of transparency”.

In addition to this database-based search, we performed a search in Google Scholar applying the keywords in the title indicated in Table 2, to cross check, whether we overlooked parts of the literature by concentrating on the mentioned databases. As this search in the end provided us with only four further articles, which met all our criteria for inclusion in the final sample, we are confident that the identified body of research is comprehensive.

The articles identified via this search process were analyzed in the screening phase regarding their fit to the present research topic based on the following six content-related inclusion and exclusion criteria (Hiebl 2021): As previously mentioned, we focus on (1) empirical research that (2) uses managers as test subjects and that focuses (3) on overconfidence as personality trait. Moreover, we concentrate on the (4) effect of managerial overconfidence on different corporate areas, but we are not interested in the development of managerial overconfidence dependent on antecedents, like learning processes and experience. Additionally, (5) the journal ratings of VHB-JOURQUAL 3 and Academic Journal Guide 2018 were used to assess journal quality. Articles were included that were either classified at least C in the first ranking or/and at least 2 in the second ranking. Thus, we excluded articles indicated in the databases as peer-reviewed that are published in journals with a mainly business-practical focus. Finally, to cover the complete research (6) we did not set any time frame. Applying these criteria, we were able to identify 106 articles. These articles were subject to a backward search, applying the same inclusion/exclusion criteria, that yielded further 10 articles. Thus, in total we identified 116 articles.

In the present section we organize the insights gained from the identified literature into a framework, illustrated in Fig. 3, to pinpoint the major takeaways and to discuss promising paths for future research.

As indicated in Fig. 3 by the signs on the arrows from overconfidence to the examined corporate areas we can condense the previous discussion in many cases to an overall positive or negative relation, which in turn exerts a positive or negative effect, respectively, on material, social or procedural resources, which in turn build organizational resilience. From these insights we can derive the following core takeaways.

Managerial overconfidence exerts a detrimental effect on material resources particularly through an unfavorable effect on the following areas: On a broad basis, the identified literature indicates that overconfident CEOs’ takeover activities consume a company’s material resources in an imprudent way (e.g., Hayward and Hambrick 1997; Malmendier and Tate 2008), as they are less successful than those of rational decision-makers, while at the same time overconfidence fosters their realization. Additionally, research mainly indicates that managerial overconfidence results in overinvestment and cash-flow sensitive investment behavior (e.g., Bukalska 2020; Huang et al. 2011; Malmendier and Tate 2005), which deviates from rational decision-making and thereby consumes resources in an ineffective way which deprives companies of important material resources for building resilient structures. Moreover, managerial overconfidence exerts a negative effect on investors’ allocation decisions (e.g., Kim et al. 2016), i.e., investors are, in general, more reluctant to invest their money in companies led by overconfident managers, which reduces their financial leeway and has a negative impact on material resources and thus organizational resilience. A similar negative effect can be observed with creditors (Iyer et al., 2017). Yet, in other corporate areas managerial overconfidence results in the strengthening of material resources: As discussed in Sect. 4.2.3 no clear results can be derived from the literature regarding the relation between overconfidence and financing preferences. Some studies tend to indicate a preference for short-term debt, which entails a liquidity risk, while others point to long-term debt. The fundamental preference for equity versus debt is also not clearly documented. However, a preference for cash deposits can be observed. This last finding indicates a positive effect of overconfidence on organizational resilience through the deployment of material resources: Holding this kind of financial resources (as part of material resources), which can be accessed at short notice in times of crises, strengthens organizational resilience. Additionally, overconfident CEOs’ tendency to follow an aggressive tax policy can be interpreted as trying to retain as much financial resources in the short run within the company as possible, which in turn positively affects the availability of relevant material resources. Thus, contrary to what is often noted in the literature, managerial overconfidence not only has negative effects, but in some areas has a positive impact on material resources. Accordingly, the question is whether it is possible to harness these positive effects while mitigating negative impacts. As the discussion in Sect. 4.7 shows, there is indeed evidence that control instances, particularly strong boards that are independent from the overconfident CEO, can attenuate detrimental takeover activities and unfavorable investment behavior. Thus, the insights gained from the identified literature lead to the following proposition:

The identified findings indicate a positive impact of managerial overconfidence on social resources. Particularly, Phua et al. (2018) observe a positive effect of managerial overconfidence on the establishment of supplier networks and employee commitment. Supplier networks are related to organizational robustness, as stable supplier relationships can cushion the imponderables in a difficult business environment, as they help to secure the supply of relevant raw materials even in difficult market situations. The reduction of employee turnover by overconfident managers indicates on the one hand, that they are able to retain employees even in difficult situations and thus stabilize the organization. On the other hand, this increased employee commitment also indicates the willingness of employees to support organizational transformation and thereby fosters adaptability. This observation is put into a broader perspective by Campbell et al. (2011). They do not focus on the same relationships as Phua et al. (2018), but they show that a medium degree of overconfidence results in the lowest probability of early dismissals, which indicates that a medium level of overconfidence seems to be optimal in the context of relationships, as moderately overconfident managers have the highest ability to win others over. Overall, these findings can be condensed to the following proposition:

In terms of accounting and auditing, two important procedural resources, managerial overconfidence exerts in large parts negative effects. Except for Chu et al. (2019), findings indicate that overconfidence seems to increase the propensity for misconduct in the context of corporate reporting. This behavior weakens the effectiveness of these organizational procedures to foster organizational resilience. On the one hand, the denial or manipulation of information results in a decreasing capability to adapt to a changing environment as the situation cannot be judged in a realistic manner. On the other hand, the acceptance of manipulations weakens the perception of the reporting as an objective and as accurate as possible information system and thus also the company’s belief in the correctness of the information provided. This can mitigate robustness as reporting is not accepted as a stabilizing procedure, which provides correct information to keep the company going also in difficult situations. However, it has to be mentioned that the study by Chu et al. (2019) shows that it has not yet been conclusively clarified whether these negative effects of managerial overconfidence are so pronounced.

Further detrimental effects can be observed in terms of auditing. These processes are designed to uncover mistakes and fraudulent behavior to prevent decision-makers from concealing undesirable developments and thereby causing organizations to react too slowly to adverse changes. Thus, processes which hinder these procedures to reach their full potential are detrimental to organizational resilience. So far, literature to judge the impact of managerial overconfidence on these procedures is limited. However, as discussed in Sect. 4.4.2 existing research indicates of a negative influence. Thus, the identified literature mainly points to a detrimental effect as follows:

Moreover, literature provides evidence regarding a positive impact of overconfidence on innovation processes, one further building block of procedural resources, although not always in an efficient way. This observation also holds for innovations related to environmental-friendly investments, as discussed in Sect. 4.6. Overconfident managers are more optimistic than more rational ones and, thus, are also willing to start very risky, but potentially very valuable innovation projects. Yet, this risk also comes at the price of severe failures. All in all, overconfidence has the potential to increase firms’ adaptability through innovation policy and thereby also their resilience. However, as pointed out by Guo and Ding (2020), overconfidence can exert a detrimental effect on the implementation of an optimal patent application rhythm, which potentially mitigates a firms’ adaptability. Thus, literature indicates a potential for positive effects on adaptability through innovation, but this observation does not apply without restriction. As indicated in Table 5, industry characteristics, particularly competition and industry innovativeness, can foster the beneficial aspects of overconfidence on innovations. This observation indicates that the beneficial impact of overconfidence on innovations depends on the type of industry in which a company led by an overconfident CEO operates. Those companies which operate in an environment in which innovations are of high importance due to the pressure of competitors can benefit from overconfident CEOs’ behavior. This leads to the following proposition:

Besides articles which deal with one of the three core resources, several scholars provide insights regarding the impact of managerial overconfidence on topics related more generally with decision processes. As elaborated further when discussing future research paths, literature on risk-taking induced by overconfidence so far does not provide insights which can be condensed to one proposition. While this literature criticizes the risk-taking behavior by overconfident managers, until today, the relation between this risk-taking and the decision processes observed in the different corporate areas are unclear. For example, a propensity to take risks might induce aggressive tax policies, ambitious innovation processes but also inadequate takeover activities.

One further article deals with the handling of errors by overconfident managers. Chen et al. (2015) observe a significantly negative relation between the willingness to correct predictions and overconfidence. While the literature on this topic still is limited to one article, one can already note, that this characteristic is detrimental to organizational resilience, as it avoids necessary decisions and reduces adaptability. As top-managers exert a major impact on organizational culture, this unwillingness to face up to mistakes also can establish itself in the organization and thus endanger adaptability in the long term resulting in Proposition 5:

Also, literature indicates detrimental effects of overconfidence on strategic decision-making, which in turn can reduce companies’ adaptability and thus organizational resilience: Strategic planning allows companies to adapt to changing circumstances and make provisions to respond flexibly to unpredictable events. Thus, we can derive the following proposition:

The pursuit of CSR goals has become an important strategic issue in recent years, as both customers and regulation are increasingly demanding sustainable business practices. The successful implementation of these goals also makes sense for companies themselves, as they secure their economic basis in the long term through the sustainable use of natural resources and sustainable interaction with all stakeholders. This allows companies to adapt to changing circumstances and make provisions to respond flexibly to unpredictable events. The identified literature provides mixed evidence regarding the impact of managerial overconfidence on CSR. Particularly, overconfident managers tend to overemphasize CSR performance in their communication and they are unlikely to show real commitment. This discrepancy can disturb the basis of trust with stakeholders and thereby can exert a negative impact on social resources. However, more recent publications indicate a positive effect of managerial overconfidence on CSR activities (Bouzouitina et al. 2021; Dick et al. 2021; Lee 2021). Moreover, as indicated by Arena et al. (2018), managerial overconfidence might foster environmentally innovations, which in turn positively affect material resources through e.g., generating earnings. Therefore, extant literature points to both positive and negative relations with CSR, which in turn affect several resources related to resilience. Consequently, so far, no clear proposition can be derived based on the identified literature.

Beside these propositions, also several paths for future research emerge from the previous discussion. First, as indicated above, evidence regarding the impact of managerial overconfidence on financial performance is mixed. This observation might result from the fact, that a company’s performance is only partly affected by the outcomes of single decision areas, like takeovers or investment decisions. Only a mixture of these single influences finally leads to the observed financial performance. Consequently, to understand the impact of managerial overconfidence on material resources via its impact on firm performance, aspects like takeover activities and investment decisions have to be considered as mediators. Yet, while single relations are already empirically analyzed, literature lacks a more comprehensive perspective, which investigates the combined effects of managerial overconfidence on firm performance mediated by these areas. This combined perspective is important because the impact of managerial overconfidence varies across areas and therefore it cannot be determined ex ante what the overall effect will be. Thus, one promising avenue for future research is the structured identification of mediating internal factors, like investment behavior, takeover activities, leadership, etc., and external factors, like environmental dynamics, uncertainty, and complexity, between managerial overconfidence and financial performance and the investigation of their joint impact. Thereby, future research can shed more light on the impact of managerial overconfidence on one of the most important building blocks to generate material resources needed to establish organizational resilience.

Second, as mentioned above, with respect to social resources, empirical results suggest a positive effect of managerial overconfidence. However, the existing literature is limited containing only four sources, which points to a considerable need for further research in this area, including a more in-depth analysis of the relationships addressed by Phua et al. (2018) and Campbell et al. (2011). Particularly, future research should analyze in more depth which mechanisms lead to these positive effects of overconfidence. Through this, certain behavioral characteristics can be worked out, which can also be conveyed to non-overconfident managers. This would make it possible to combine the more rational decision-making behavior of non-overconfident managers with positive behavioral patterns of overconfident managers in terms of building up social resources.

Third, with respect to accounting and auditing procedures scholars provide mainly detrimental effects of managerial overconfidence. Yet, with respect to manipulating activities in accounting, it has not yet been conclusively clarified whether there really is an impact of overconfidence, as indicated by the insights provided by Chu et al. (2019), who control for other firm characteristics. This raises the question of whether these firm characteristics or managerial overconfidence have a stronger impact on the manipulating activities and of whether both aspects could lead to joint detrimental effects. Further insights into these issues could provide angles to curb these manipulations on a broader basis by disentangling complex interactions. Furthermore, as indicated by Cormier et al. (2016) even corporate governance cannot mitigate the identified possible negative effects of managerial overconfidence on misreporting. This points to further research needs to better understand the mechanisms underlying the failure of these mechanisms to mitigate detrimental effects. Also, in case of auditing the identified literature is limited, and further investigations are needed to clarify in detail possible relations between managerial overconfidence and the establishment of effective auditing procedures. For example, it still is unclear, how managerial overconfidence in detail exerts an impact on certain auditing activities.

Fourth, as discussed previously, managerial overconfidence seems to increase the willingness to initiate innovations. However, this process is not carried out optimally, particularly in environments characterized by less competition and innovativeness, which can lead to negative consequences for the company’s performance. As innovation is a key process for companies to remain competitive in the long run, for companies it would be reasonable to try to curb the negative side-effects of managerial overconfidence while keeping its undeniable positive aspects. However, as indicated in Table 5, so far literature only provides moderators, like the environmental context, which cannot be influenced by companies. Therefore, one important path for future research lies in the more detailed investigation of moderating factors which are internal to a company and therefore can be deliberately applied to mitigate the negative effects of overconfidence on innovations while keeping the positive ones. As indicated by their effect on the relation between overconfidence and other corporate areas, strong boards and accounting measures might be promising candidates for such moderators.

Fifth, literature evaluates the largely positive relation between managerial overconfidence and risk-taking as unfavorable. Yet, as the propensity to take risks influences any decision process, and thus also decisions related to the previously discussed corporate areas, a deeper understanding of the relation between risk-taking induced by managerial overconfidence and these areas is warranted. So far, only few scholars dealing with certain corporate areas mention risk-taking (Simon and Houghton 2003; Ho et al. 2016). Therefore, our knowledge regarding the causal chain from managerial overconfidence via risk-taking to corporate areas is incomplete. Additionally, as highlighted by e.g., Brown and Sarma (2007) and Kolasinski and Li (2013), strong boards can curb overconfident managers’ excessive risk-taking behavior. This raises the question of whether this way positive effects of the elevated risk propensity, e.g., regarding innovativeness, can be maintained while the negative consequences can be mitigated by adequate control instances. Thus, based on these mentioned insights further research is warranted dedicated to each of the corporate areas to understand the mediating role of risk-taking and moderating factors to mitigate its negative effects.

Sixth, one paper deals with the impact of overconfidence on error handling and indicates a negative impact on the willingness to correct wrong predictions. Similarly to risk-taking, also error handling is a prerequisite to ensure effective decision processes. Accordingly, the question rises whether this observed negative effect in a particular context also applies to other decision contexts in which mistakes have to be corrected, e.g., in accounting or in the course of investment decisions, pointing to one further path for future research.

Seventh, literature indicates a mixed effect of overconfidence on CSR activities. On the one hand, several scholars show detrimental effects. As CSR activities enhance the relations to core stakeholders, like suppliers, employees and customers, these detrimental effects indicate a weakening of social resources. Moreover, a loss of customer trust due to severe violations of CSR principles can also have a negative impact on material resources. However, more recent publications point to a positive effect of managerial overconfidence in this context, which in turn would strengthen social and material resources. Moreover, Arena et al. (2018) find a positive effect on ecological innovations, which further underlines the at least partially positive effect on companies’ innovation activities, and thus procedural resources, already discussed above. Overall, so far literature does not investigate these relations in detail but remains at a level where the focus is on the fundamental connection between managerial overconfidence and CSR, pointing to further need for research to disentangle the complex relations with the three resource types. In this context emphasis also should be placed on the identification of moderators to reduce negative effects. So far, literature provides only few insights here, e.g., as observed by Sauerwald and Su (2019) the expertise of external board members can mitigate the decoupling between communication and actual CSR activities.

Eighth, the identified literature focuses on a broad set of areas. However, further research is needed to gain deeper insights of whether these areas are the only and the most important ones to understand the major impacts of managerial overconfidence on organizational resilience in the corporate context.

Ninth, so far, the identified literature deals with the relation between managerial overconfidence and corporate areas in a way that allows to derive insights only about one core resource type, mainly material resources. In contrast, so far it is mute about the impact of managerial overconfidence on different core resources via the same corporate area. As only the joint deployment of these core resources leads to a resilient organization, a deeper understanding of joint impacts is of high relevance to theory building and business practice.

Finally, while large parts of research provide insights regarding corporate areas mainly related to material resources, social and procedural resources are covered to a lesser extent. This observation may result from the fact that the field of overconfidence in the business context is strongly shaped by scholars from the area of behavioral finance, who typically concentrate on a financial perspective, like investment behavior and takeover frequency, which in turn is related to material resources. However, the identified research related to social and procedural resources shows a strong impact of overconfidence which indicates that research in these areas is worthwhile and should be intensified. One possible way to achieve this broader perspective is to pick up those corporate areas which are mainly linked to material resources and to further elaborate on the question of whether and how managerial overconfidence additionally affects changes of social and procedural resources in this context. For example, one should further investigate whether mergers conducted by overconfident managers are less successful to deploy social networks across the merged firms and thus fail to extract benefits from the merger to strengthen organizational resilience. Another possible research question considers the question of which effect has an aggressive tax policy on the general willingness to take responsibility for all stakeholders and thereby build stable networks and norms that contribute to a resilient organization.

Beside the mentioned outcomes with respect to the relation between managerial overconfidence and organizational resilience, we observed several methodological peculiarities. An evaluation of Table 4 shows that almost all authors perform an indirect measurement of overconfidence, especially option-based and media-based. This type of measurement is certainly preferred, since a direct measurement of overconfidence using validated scales via questionnaires is difficult to implement in the target group of subjects. However, these indirect measures are also influenced by other personality traits. In the option-based measurement, there exists a potential connection with risk preferences, as it assesses the behavior of a decision-maker in a risky situation. Media-based measures could be influenced by characteristics such as extraversion. It is therefore advisable to develop other measuring instruments in the future, that relate more precisely to overconfidence as a personality trait and are psychometrically validated (Hinkin, 1998), and to carry out comparative analyses to check whether the relations identified are robust. In addition, there are hardly any experimental studies. This makes it difficult to identify causal relations. The restriction to publicly accessible data, which is found in many studies on managerial overconfidence, is due to the difficult access to the target group, i.e. managers in higher positions. Nevertheless, it would be desirable for future research to strive for greater access to this target group in order to be able to derive actual causal relations. This would also make it possible to examine the connection with other related personality traits, e.g., self-efficacy expectations (Bandura 1977; Judge et al. 2002) or self-esteem, neuroticisms, and locus of control (Judge et al. 2002), and to obtain a more comprehensive picture of the effect of the interplay of different traits.

The preceding discussion has revealed a differentiated picture regarding the relation between managerial overconfidence and organizational resilience. However, the study has several limitations. The focus on English literature narrows the perspective, as research published in other languages might contain further insights, particularly with a certain cultural background.

Furthermore, the analysis focuses on articles that define overconfidence as a personality trait. This does not allow a comparison with studies that consider overconfidence as a cognitive bias. However, this limitation seems reasonable since personality traits influence behavior much more fundamentally than cognitive distortions and are more difficult to influence.

Additionally, the present study focuses on contributions in which findings were obtained on the basis of managers. In this way, experiments were largely ruled out, since the experiments found in the literature were conducted with other subjects, especially students, and, thus, do not provide insights into the behavior of managers. It must also be taken into account here that although experimental research on overconfidence is very broad, it tends to focus on general contexts and situations outside business practice. Accordingly, a transfer to the business context, as it is the focus here, seems unwarranted. In contrast, experimental research has the advantage of deriving causalities. This is not fully possible in the studies considered.

Finally, the literature review focuses on articles published in journals with review procedures. Doctoral theses were excluded as a result. We have decided to take this step because the evaluation of a dissertation cannot be viewed by external parties and we would therefore be forced to make a subjective assessment of its quality. We wanted to avoid this in the context of this study. It is to be asked whether a future overview should also include this literature.

Overall, despite the limitations mentioned above, the previous analysis presents a broad picture of current research on managerial overconfidence, provides a number of paths for further research and highlights the findings that are relevant to business practice. It thus makes an important contribution to an improved understanding of the influences of managerial characteristics on business processes demanded by Upper Echelon Theory.