Do similarities or differences between CEO leadership and organizational culture have a more positive effect on firm performance? A test of competing predictions.

Abstract

This study examines the nature of the interaction between CEO leadership and organizational culture using 2 common metathemes (task and relationship) in leadership and culture research. Two perspectives, similarity and dissimilarity, offer competing predictions about the fit, or interaction, between leadership and culture and its predicted effect on firm performance. Predictions for the similarity perspective draw upon attribution theory and social identity theory of leadership, whereas predictions for the dissimilarity perspective are developed based upon insights from leadership contingency theories and the notion of substitutability. Hierarchical regression results from 114 CEOs and 324 top management team (TMT) members failed to support the similarity hypotheses but revealed broad support for the dissimilarity predictions. Findings suggest that culture can serve as a substitute for leadership when leadership behaviors are redundant with cultural values (i.e., they both share a task- or relationship-oriented focus). Findings also support leadership contingency theories indicating that CEO leadership is effective when it provides psychological and motivational resources lacking in the organization's culture. We discuss theoretical and practical implications and delineate directions for future research. (PsycINFO Database Record