Does the Korean CEO’s Political Orientation Influence the Non-financial Performance of the Firm with Dynamic Capability as Mediator?

This study investigates the impact of Korean CEOs' political orientation on the non-financial performance of small and medium-sized enterprises (SMEs), with a specific focus on the mediating role of dynamic capability. By comprehensively examining the relationship between CEOs' political orientation and the non-financial performance of their firms, the study aims to provide insights into the complex interplay between personal political beliefs, managerial leadership styles, and organizational success within the context of the South Korean business environment. A survey was conducted, targeting a total of 187 Korean CEOs representing a diverse range of industries within the SME sector. Data were analyzed using a three-pronged approach: factor analysis, correlation analysis, and regression analysis, to ensure reliability in the findings. The study found that CEO political orientation does significantly affect non-financial performance; specifically, the more conservative the CEO, the stronger the non-financial performance of the company. In addition, the study also identified that all three capabilities of dynamic capability – adaptative, absorptive, and innovative capabilities – positively affect non-financial performance. Most notably, the study found that innovative capability acts as a positive mediating factor between CEO political orientation and non-financial performance. These findings add to the expanding collection of studies investigating the impact of CEO attributes, leadership styles, and personal beliefs on the performance of an organization, underlining the need to take into account mediating factors such as dynamic capabilities.