CEOs’ early war experiences shape workforce decisions
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Eun Hye Jo and Jenny Jung-Wha Lee, accounting professors at George Mason University Korea, investigated how experiencing the Korean War as children affected CEOs’ business choices.
The researchers analysed financial and employment data from Korean companies from 2002 to 2023, focusing on CEOs born before the 1953 Armistice Agreement.
They discovered that CEOs who lived through the war between ages four and fifteen oversaw companies with less stable workforces, hiring fewer employees during growth and laying off significantly more during downturns. The study showed these CEOs responded to sales declines by reducing staff more drastically than those who did not experience the war during their formative years.
The researchers linked this behaviour to heightened sensitivity to risk, suggesting that the instability and scarcity of wartime experiences shaped how these leaders perceived threats and made decisions. They confirmed this connection by comparing CEOs’ risk sensitivity to the number of civilian casualties in their home regions during the war. Jo and Lee believe early life experiences can have long-lasting effects on leadership decisions.
While cautious about applying their findings to other traumatic events, they suggest that boards of directors can provide oversight of workforce decisions, particularly during economic hardship, to balance individual leaders’ potentially biased responses. They recommend structured decision-making processes that consider long-term costs alongside immediate savings.
