Leadership and Organizational Performance: State of the Art and a Research Agenda

Abstract

A large portion of the everyday discourse about leadership and leaders takes it for granted that leaders make a big dierence in terms of performance. The football managers discussion is one clear example; the wider fascination with business leaders likewise marks this association – and so too the fascination with political leaders. However, the academic literature nds it hard to nd reliable evidence for a clear association, because both main concepts (leadership and performance) are broad and dicult to dene and because of many confounding variables that make it dicult to demonstrate clear cause and eect. But, while some academics have seemingly abandoned the attempt to tackle this dicult but central subject, there are some who seek to trace the relationship. It can be shown that a change of leader does produce some kind of performance outcome. For example, appointments of some leaders and the dismissal of others can trigger dramatic shifts in stock prices. In this chapter we will systematically examine the relationship between leadership and performance, both theoretically (in the second section) and empirically (in the third section). In the fourth section, we will use public leadership and performance as illustrative of our analysis. We will conclude with an overview of the current state of the literature and we will outline a research agenda. Overall, we show that empirical studies have mainly found positive relationships between leadership and performance, although eect sizes vary considerably. However, cross-sectional designs with subjective performance measures tend to nd relatively strong eects. Therefore, we advocate a systematic approach to studying the leadership-performance relationship with attention to research designs, and we urge that more panel designs and experimental designs are applied in future studies, because these enable scholars to assess changes over time and get a much better grasp of causality.

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