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Conformity and Leadership in Organizations

Author

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  • Shunsuke Matsuno

    (Columbia Business School, Columbia University, U.S.A. and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN)

Abstract

Some organizations are characterized by a conformity culture, where followers are expected to conform to the leadership's behavior. In contrast, other organizations exhibit an anticonformity culture. What drives the variation in conformity culture across organizations? This paper develops a model of leadership and (anti)conformity culture in organizations with dispersed information. The optimal culture trades off coordination gains against informational losses. I show that with strategic complementarity, conformity is optimal; whereas with strategic substitutability, anticonformity is optimal. By showing how culture coordinates agents in organizations with dispersed knowledge–much like the price system coordinates agents in decentralized markets (Hayek, 1945)–I contribute to the theory of organizations centered on corporate culture (Kreps, 1990). Comparative statics of optimal culture sheds light on the origins of cultural variation across organizations from an informational perspective.

Suggested Citation

  • Shunsuke Matsuno, 2025. "Conformity and Leadership in Organizations," Discussion Paper Series DP2025-15, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2025-15
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2025-15.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    Leadership; Corporate culture; Conformity; Coordination games;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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