Abstract General Motors (GM) and Toyota competed in the global automobile
industry for many decades. While GM hung on to the Number 1 position longer than
any other automaker, it lost this position to Toyota in 2008. It took Toyota 71 years to
beat GM but only 2 years for GM to regain the top spot in 2011. Through a brief analysis
of the history of these two rivals, I explain why GM and Toyota demonstrated different
ways of falling from the Number 1 spot. I argue that the reason for the reversal of
leadership positions for these two automakers can be understood by examining
executive hubris and the way it either facilitated path dependence or promoted a
departure from an established path for the perpetuation of market leadership. I then
demonstrate how GM and Toyota acted contrastingly with respect to path dependence
and how their CEOs injected hubris almost the same way in their decisions to hold on
to the top position. Contrary to the longstanding myth, I also demonstrate that it was
hubris–—as opposed to humility–—that characterized executive leadership in Toyota in
its last 15 years. Recommendations for practicing or budding executives of large
corporations are given.
# 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All
rights reserved.