Academic journal article IBAR

Tough Times Make Tough Bosses: A Meso Analysis of CEO Leader Behavior

Academic journal article IBAR

Tough Times Make Tough Bosses: A Meso Analysis of CEO Leader Behavior

Article excerpt


This research investigates relationships between financial performance of the firm and subsequent chief executive officer (CEO) leader behaviors. The study was inspired by previous micro-level research that found that leaders respond to poorly performing subordinates with greater use of directive behaviors and punishment. Extrapolating from these micro-level findings, we posited that CEOs of firms with poor financial performance will demonstrate greater "strongman" or "tough" leader behaviors than CEOs of higher performing firms. Leader behavior descriptions were collected from the subordinates of CEOs at 56 high technology firms in a large metropolitan area. Generally, the results supported the notion that CEOs of poorer performing firms were "tougher" in their leader behavior toward direct-report members of their top management team than CEOs of higher performing companies. This research is an example of "meso" level research, where an organizational level dimension -- financial performance - is correlated with an individual level dimension -- leader behavior.

Judith A. Scully, Henry P. Sims, Jr., Judy D. Olian, Eugene R. Schnell, Kenneth A. Smith*

The traditional view of leadership is unidirectional - the leader influences followers. Somewhat later, leadership theorists posited that leader behavior may be both a cause and a consequence of subordinate behavior (e.g., Hollander & Julian, 1969). Subsequent empirical investigations supported the reciprocal determinism perspective (Farris & Lim, 1969; Lowin & Craig, 1968; Herold, 1977; Sims & Manz, 1984). Reciprocal determinism involves two distinct components: a) traditional causality, where the leader influences the environment (e.g., the subordinate); and b) reverse causality, where the environment (e.g., subordinate) influences the leader. The research reported here explores the later component of reciprocal determinism, adopting the reverse causality perspective.

Substantial micro-level research has explored the reverse causality perspective of the effect of subordinate performance on subsequent leader behavior. However, few studies have examined this same relationship at the organizational level (i.e., organizational performance and subsequent chief executive officer (CEO) leader behavior). Given the similarities between these relationships, this is a curious void in the literature. In both instances -- leader influenced by subordinate performance and leader influenced by organizational performance - the source stimulating variation in behavior is outside the leader (i.e., the leader responds to stimuli external to him or herself). The research reported here examines a reverse causality relationship between objective financial performance of the firm and subsequent leader behavior of the CEO. The primary research question is: Does poororganizational financial performance trigger certain kinds of CEO leader behaviors? The inspection of this question requires examination of two distinct levels of analysis.

"Level of analysis" refers to the target population from which the sample is obtained, be it individual, group, organization, or industry. In this research, an individual level phenomenon - how leaders behave toward members of their top management team (TMT), and an organization level variable - firm financial performance, are examined. House and Rousseau define meso research as "the simultaneous study of at least two levels of analysis wherein a) one or more levels concern individual or group behavior processes or variables, b) one or more levels concern organizational processes or variables, and c) the process by which the levels of analysis are related is articulated in the form of bridging, or linking, propositions and tested or inferred" ( 1992 p. 9).

An example of meso level theory is Schneider's ( 1987) "The People Make the Place" in which he contends that aggregate individual attributes, beliefs, and emotions influence organizational climate and culture. …

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