The CEO’s Dilemma

By John Richardson

The blog has, in its naivety, for some time been perplexed over why certain chemicals company CEOs portray a relentlessly optimistic picture of developing-markets growth. This is despite all the evidence pointing to increasing uncertainties over how China, India, and other developing economies are going to progress over the next decade.

Last week, during a conversation with a chemicals industry source, the light came on when he told us:

CEOs have to tow the line, as is the case with the analysts, because if they go against the conventional view, they might end up upsetting someone.

“For example, if a CEO comes out and says, ‘I don’t agree with the Chinese government that the country’s economy will grow by 8% this year,’ that particular company might not get approval to build a cracker in China.

“And as with the analysts, it is better to hunt with the pack, as if you are an outlier and are wrong, you are in big trouble. But if everyone is wrong, you can always blame unforeseen circumstances and cut costs to hit your quarterly-results target.”

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