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The missing link? Investigating organizational identity strength and transformational leadership climate as mechanisms that connect CEO charisma with firm performance
Journal
The Leadership Quarterly
ISSN
1048-9843
ISSN-Digital
1873-3409
Type
journal article
Date Issued
2015-04-01
Author(s)
Abstract
In this paper, we suggest that CEO charisma is related to firm performance via its effect on two important mediators. First, charismatic CEOs are expected to raise the transformational leadership climate within an organization. Second, both CEO charisma and transformational leadership climate are proposed to increase a firm's organizational identity strength, which in turn, relates positively to firm performance. We tested these propositions on a sample of 150 German companies (20,639 employees) with a three-path mediation model at the organizational level of analysis, utilizing four independent data sources. To test the assumed relationships, we used structural equation modeling and applied bootstrapping. Our study helps open the black box of organizational leadership and organizational performance by demonstrating top-level leadership's (CEO charisma) cascading effect on the TFL climate throughout the organization and by showing that OIDS mediates both leadership levels' relationships with firm performance. Further, our study is the first to investigate and demonstrate the relationship between OIDS and performance at the organizational level of analysis.
Language
English
Keywords
Organizational identity strength
CEO Charisma
Transformational leadership climate
Firm performance
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier Science
Publisher place
Amsterdam
Volume
26
Number
2
Start page
156
End page
171
Pages
16
Subject(s)
Division(s)
Eprints ID
233499