Lend me your wallets: the effect of charismatic leadership on external support for an organization
Article first published online: 24 FEB 2004
Copyright © 2004 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 25, Issue 4, pages 309–330, April 2004
How to Cite
Flynn, F. J. and Staw, B. M. (2004), Lend me your wallets: the effect of charismatic leadership on external support for an organization. Strat. Mgmt. J., 25: 309–330. doi: 10.1002/smj.377
- Issue published online: 24 FEB 2004
- Article first published online: 24 FEB 2004
- Manuscript Revised: 29 AUG 2003
- Manuscript Received: 18 SEP 2000
- external support
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.