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Lend me your wallets: the effect of charismatic leadership on external support for an organization

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  • Francis J. Flynn
  • Barry M. Staw

Abstract

We argue that charismatic leadership can influence external support for the organization, particularly in making the company more attractive to outside investors. Two studies were conducted to test this general hypothesis. First, an archival study demonstrated that the stock of companies headed by charismatic leaders appreciated more than the stock of comparable companies, even after differences in corporate performance were controlled. It was also found that the effect of charismatic leadership was heightened under more difficult economic conditions. Second, an experiment was conducted in which the salience of charismatic leadership was manipulated, along with information about the prospects for an organization's turnaround. Results showed that appeals from a charismatic leader led to increased investment in the firm, and the leader's influence was greater when the prospects for an organizational turnaround were more difficult. It was also found that an endowment of stock enhanced the influence of charismatic appeals and that charismatic leadership may have affected the general risk propensities of followers. These findings were interpreted in terms of an external perspective on leadership, illustrating how leaders can manage the firm's economic and social environment. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Francis J. Flynn & Barry M. Staw, 2004. "Lend me your wallets: the effect of charismatic leadership on external support for an organization," Strategic Management Journal, Wiley Blackwell, vol. 25(4), pages 309-330, April.
  • Handle: RePEc:bla:stratm:v:25:y:2004:i:4:p:309-330
    DOI: 10.1002/smj.377
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    Cited by:

    1. Alexander Styhre & Per-Erik Josephson, 2006. "Revisiting site manager work: stuck in the middle?," Construction Management and Economics, Taylor & Francis Journals, vol. 24(5), pages 521-528.
    2. Nathaniel Boso & Paige S Carter & Jonathan Annan, 2016. "When is brand orientation a useful strategic posture?," Journal of Brand Management, Palgrave Macmillan, vol. 23(4), pages 363-382, July.
    3. Lorenz Graf-Vlachy & Jonathan Bundy & Donald C. Hambrick, 2020. "Effects of an Advancing Tenure on CEO Cognitive Complexity," Organization Science, INFORMS, vol. 31(4), pages 936-959, July.
    4. Philippe Jacquart & John Antonakis, 2015. "When does charisma matter for top-level leaders? Effect of attributional ambiguity," Post-Print hal-02276710, HAL.
    5. Daniel Högele & Sascha L. Schmidt & Benno Torgler, 2012. "The Influence of Superstars on Organizational Identification of External Stakeholders: Empirical Findings from Professional Soccer," CREMA Working Paper Series 2012-18, Center for Research in Economics, Management and the Arts (CREMA).
    6. Yan Ling & Zeki Simsek & Michael Lubatkin & John F. Velga, 2008. "Transformational Leadership's Role in Promoting Corporate Entrepreneurship : Examining the CEO - TMT Interface," Post-Print hal-02276697, HAL.

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