How Labor Market Competition Shapes the Strategic Use of Unfriendly Leadership: An Experimental Analysis

Unfriendly leadership — hostile or punitive behavior by managers — remains a prevalent yet poorly understood workplace phenomenon. We investigate when and why managers adopt such behavior through a laboratory experiment simulating two labor market conditions: excess labor demand (where managers compete to hire workers) and excess labor supply (where workers compete to be hired). We conceptualize unfriendly leadership as a performance-contingent punishment that imposes discomfort on workers and hypothesize that managers are less inclined to adopt this style when competing to attract workers. Supporting this prediction, we find that managers engage in unfriendly leadership more frequently and intensely under excess labor supply. This effect is particularly pronounced among male managers. Moreover, we show that unfriendly leadership imposes costs on organizations: workers are less likely to accept offers from unfriendly managers and exert lower effort under them. Our findings highlight the role of labor market dynamics in shaping managerial behavior and its consequences for organizational performance.