The missing link? Investigating organizational identity strength and transformational leadership climate as mechanisms that connect CEO charisma with firm performance

Stephan A. Boehm, David J.G. Dwertmann, Heike Bruch, Boas Shamir

Research output: Contribution to journalArticlepeer-review

62 Scopus citations

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 (OIDS), 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. 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 the relationship between OIDS and performance at the organizational level of analysis.

Original languageEnglish (US)
Pages (from-to)156-171
Number of pages16
JournalLeadership Quarterly
Volume26
Issue number2
DOIs
StatePublished - Apr 1 2015
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Applied Psychology
  • Sociology and Political Science
  • Organizational Behavior and Human Resource Management

Keywords

  • CEO charisma
  • Firm performance
  • Organizational identity strength
  • Transformational leadership climate

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