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Legitimacy, Communication and Leadership in the Turnaround Game

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  • Jordi Brandts
  • David J. Cooper
  • Roberto A. Weber

Abstract

We study the effectiveness of leaders for inducing coordinated organizational change to a more efficient equilibrium, i.e., a turnaround. We compare communication from leaders to incentive increases and also compare the effectiveness of randomly selected and elected leaders. While all interventions yield shifts to more efficient equilibria, communication from leaders has a greater effect than incentives. Moreover, leaders who are elected by followers are significantly better at improving their group's outcome than randomly selected ones. The improved effectiveness of elected leaders results from sending more performance-relevant messages. Our results are evidence that the way in which leaders are selected affects their legitimacy and the degree to which they influence followers. Finally, we observed that a combination of factors- incentive increases and elected leaders-yield near universal turnarounds to full efficiency.

Suggested Citation

  • Jordi Brandts & David J. Cooper & Roberto A. Weber, 2014. "Legitimacy, Communication and Leadership in the Turnaround Game," UFAE and IAE Working Papers 947.14, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  • Handle: RePEc:aub:autbar:947.14
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    More about this item

    Keywords

    Leadership; Job Selection; Coordination Failure; Experiments; Communication;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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