When Does Leadership Matter? The Contingent Opportunities View of CEO Leadership

Overview: Despite the large literature on leadership, previous studies have diverged in their assessments of the impact of CEOs on company performance. The debate has focused on the question of "Does leadership matter?" The "leadership" proponents state that leadership is a critical factor in organizational performance. On the other side of the debate, "constraints" researchers argue that leaders are so constrained that they have little impact on company performance. Past empirical studies have failed to satisfactorily resolve the debate. This paper, propose that the debate thus far might be misdirected. Instead, the appropriate question should be, "When does leadership matter?”. It propose a framework - the "contingent opportunities view" - that resolves the debate between the "leadership" and "constraint" camps, and then test the framework in a quantitative study of the contexts in which CEO leadership matters. Article first show that the impact that CEOs can have on company performance differs markedly by industry and then find that the industries in which CEOs have the most significant impact on performance are those where opportunities are scarce or where CEOs have slack resources. These results have implications for CEO compensation, CEO succession, and stock-market reactions to CEO turnover.

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Format: PDF | Size: 392KB | Date: Apr 2001 | Pages: 46