Assessing the Relationship between Executive Psychological Contract and Narcissism with Firm Performance: the Mediating Role of Executive Stewardship of Listed Companies in Malaysia

Viora, Noga Clayton Jeffery (2023) Assessing the Relationship between Executive Psychological Contract and Narcissism with Firm Performance: the Mediating Role of Executive Stewardship of Listed Companies in Malaysia. Masters thesis, Tunku Abdul Rahman University College.

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Abstract

Nowadays, executive compensation is taking centre stage in the corporate governance literature due to the increased amount of scrutiny around hefty compensations given to executives despite companies facing unprecedented challenges. Executive compensation is a prescription of the agency theory and research has shown that it affects a firm’s performance. Past studies have focused on this relationship mainly through the lance of the agency theory thus there is insufficient study based on the stewardship theory. Thus, this research focuses on assessing how the role of executive stewardship will affect the relationship between an executive’s psychological contract and firm performance based on the stewardship theory. It also assesses the effect of organisations nudging their executives towards stewardship impulses and how the executive narcissistic behaviour affects the firm performance. To answer these questions, a survey of 33 questions was electronically disseminated to 300 executives of public listed companies in Malaysia. The data obtained was analysed using SPSS and PLS-SEM statistical analysis software. The results showed that there is significance in the result that proves that executive psychological contract, and executive stewardship, positively affects firm performance, while executive narcissism has a negative relationship with firm performance. Additionally, results also showed that executive stewardship partially mediates the relationship between executive’s psychological contract and firm performance. This research emphasises the need for organisations to shift towards stakeholder-centrism by capitalising on stewardship theory’s prescriptions to reduce the agency cost i.e. executive compensation.