The Ripple Effect of Managerial Behavior: Exploring Post-experimental Impact of Leading by Example on Small Firms' Cooperation and Performance.

Abstract

Cooperation between employees in a company is an important input to firm performance. This study examines how a manager's cooperative behavior and the visibility of this behavior affect the cooperation amongst employees, and subsequently firm performance. To do so, we conducted a field experiment with managers and their employees from 320 Vietnamese small and micro firms to determine the impact of a manager's leading by example (LBE) on employees' behavior, corporate culture, and firm performance. Both managers and employees participated in a Public Good experiment which aimed to elicit an individual cooperative behavior. Noteworthy is that the decision made by a manager in the experiment was given as an example to employees before they made decision in that same experiment. We considered that the example of cooperation by managers in the Public Good experiment communicated a powerful signal to the employees regarding the importance of fostering cooperation in the workplace. Such a signal by the manager, who is at the top in the organizational hierarchy, would impact their employees' behavior in the workplace and firm's outcomes beyond the experiment. Interestingly, we found that concealing a manager's identity from their employees enhances the impacts of LBE.