Beatrice Boulu-Reshef, Darden School of Business, University of Virginia
Friday, 16 January 2015
15:00 – 16:30
Store Street Room, One Alfred Place, WC1E 7EB
Mitigating free-riding in organizations is of paramount importance for increasing economic output. In most organizations, leaders are matched with followers to accomplish cooperative tasks, which often conflict with followers’ material payoffs. This paper asks the following question: how does organization style affect leaders’ choices of leadership strategy, and in turn, free-riding? We provide a theoretical framework to study the effect of organization style on leaders’ leadership strategy and report the results of controlled experiments in which we ask leaders to choose messages from a message set that induces a leadership style, and then to send them to participants at the beginning of each round of a repeated and finite horizon public goods game. The design features two leadership styles-top down and collegial-and two forms of communication-public leadership with no communication and public leadership supplemented with private communication between the leader and targeted followers. Leaders provided with collegial leadership style public messages perform better than their top down counterparts, but only when targeted private communication is not allowed. This is consistent with the economics insight on collegiality as a costly way to organize cooperation, but challenges a large literature that promotes collegial leadership. When targeted private communication is possible, top down leaders perform better than their collegial counterparts due to their increased efforts and increased use of public leadership that caters to the contributors and raises the contributions of free-riders. Leadership style affects leaders’ ability to induce a sense of obligation. We find that the key strategic prerequisite to successful leadership strategy is the leader’s ability to extract information about the existence of types of contributors combined with a targeted leadership style that caters to contributors on the basis of performance-based ad hoc coalitions. These findings have important implications for organizational design.
Last updated Wednesday, 14 January 2015