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The Leader as Catalyst: On Leadership and the Mechanics of Institutional Change

  • Sumon Majumdar

    ()

    (Queen's University)

  • Sharun Mukand

    ()

    (Tufts University)

Individual leaders have been central to the transformation of organizations, political institutions and many instances of social and economic reform. In this paper we take a first step towards analyzing the role of leadership to ask: when and how does a leader engineer change? We show that while underlying structural conditions and institutions are important, there is an independent first-order role for individual agency in bringing about change and thus transforming the institutions. We emphasize the key nature of the symbiotic relationship between followers decisions' to willingly entrust their faith in the leader and the leader's initiative at leading them. This two-way interaction can endogenously give rise to threshold effects; slight differences in the leader's ability or the underlying structural conditions can dramatically improve the prospects for successful change. Given the centrality of this leader-follower relationship, we further explore conditions under which an individual may deliberately prefer to follow an ambitious leader with divergent interests rather than a benevolent one with congruent preferences. Thus by virtue of having followers, both `good' and `bad' leaders may be effective at bringing about change.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1128.pdf
File Function: First version 2007
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1128.

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Length: 45 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:qed:wpaper:1128
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  1. Daron Acemoglu & Simon Johnson & James Robinson, 2004. "Institutions as the Fundamental Cause of Long-Run Growth," NBER Working Papers 10481, National Bureau of Economic Research, Inc.
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  11. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  12. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
  13. Young, Oran R., 1991. "Political leadership and regime formation: on the development of institutions in international society," International Organization, Cambridge University Press, vol. 45(03), pages 281-308, June.
  14. Julio J. Rotemberg & Garth Saloner, 1993. "Leadership Style and Incentives," Management Science, INFORMS, vol. 39(11), pages 1299-1318, November.
  15. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 835-864, August.
  16. Arvind Subramanian & Francesco Trebbi & Dani Rodrik, 2002. "Institutions Rule; The Primacy of Institutions Over Integration and Geography in Economic Development," IMF Working Papers 02/189, International Monetary Fund.
  17. Harberger, Arnold C, 1993. "Secrets of Success: A Handful of Heroes," American Economic Review, American Economic Association, vol. 83(2), pages 343-50, May.
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