An Empirical Study of the Effect of Korean CEO Political Orientation on Firm Performance

Abstract

This study deals with the effect of Korean CEO political ideology on firm performance. First, it was found that conservative CEOs influence net profit and non-financial performance more positively than liberal CEOs. Second, it was found that organizational capacity has a moderating effect on non-financial performance, meaning that when political ideology affects non-financial performance, companies with high organizational capacity have higher non-financial performance than those with low organizational capacity. Also, the moderating effect of organizational capacity on net profit was found to be significant, meaning that when political ideology affects net profit, meaning companies with high organizational capacity have higher net profits than those with low organizational capacity. Finally, the influence of political ideology on non-financial performance was found to be weakened due to entrepreneurial orientation used as a mediator. The influence of political ideology on net profit disappeared due to entrepreneurial orientation. This means that although the effect of political ideology on net profit was originally significant, it became insignificant due to entrepreneurial orientation.