Authoritarians, who impose discipline and obedience, make the best leaders when the going is tough, study finds
January 6, 2016
For more information, contact: Ben Haimowitz , (718) 398-7642, firstname.lastname@example.org
Several years ago, when the bite of the global recession was being
keenly felt, a leading management consultancy published a summary of interviews with CEOs
of 14 major U.S. companies on how they had responded to hard times.
Prominent in their responses was a combination likely to come as no surprise to
students of contemporary management – the need for decisiveness on the one hand
and for congenial openness on the other. For example, the chiefs emphasized
"the power of openness at all levels" and "the need to assure
employees that the CEO has faith in them."
A study in the current issue of Academy ofManagement Discoveries begins by citing this paper. It then
proceeds to find virtues in an authoritarian approach diametrically opposite
the openness endorsed there.
Yes, the researchers concede, authoritarian leadership is out of
favor and there is plenty of evidence that employees don't like it. But there
has been little research on its effect at the company level. And, in what
the authors believe to be a first, they find that "authoritarian
leadership does have a positive impact on firm performance when firms operate
in a resource-scarce environment. In such a situation, authoritarian leaders,
who reinforce discipline and obedience, can help followers and organizations to
achieve operational efficiency and effective coordination, which are critical
in harsh environments."
Comments Xu Huang, a professor at Hong Kong Polytechnic
University and a co-author of the study, "Despite its drawbacks, such as
its tendency to suppress creativity and innovation, authoritarian leadership
remains prevalent in business enterprises not only in China, where we conducted
this research, but through much of the world, including the US and EU. Our
findings suggest why this remains the case."
Collaborating with Prof. Huang on the study were
Erica Xu of Baptist University of Hong Kong, Warren Chiu of
the Hong Kong Polytechnic University, Catherine Lam of City University of Hong
Kong, and Jiing-Lih Farh of the Hong Kong University of Science and
The new research is based on data from 102 subsidiaries of a major
telecommunications company in a Chinese province about the size of Germany,
units operating with a high degree of independence that makes them comparable
to small firms. The research analyzes the interrelationship among three factors
– 1) economic conditions in the county where each of the subsidiaries operates;
2) the extent of transformational or authoritarian leadership in each of these
units, as revealed by manager surveys; and 3) the performance of each
subsidiary as measured in revenue growth over the four months and 12 months
post-survey. Economic conditions ("economic resource munificence," as
the authors put it) were calculated for each county from four measures -- gross
domestic product (GDP) per capita, GDP growth, average income of the
population, and total retail sales per capita.
As the authors explain, "there are two alternative
perspectives on the role of leaders when their firms operate in resource-scarce
environments.... Advocates of the motivational perspective assert that
transformational leadership is particularly effective because [it] helps
followers transcend their self-interests and increases their awareness of
larger issues and collective goals, while also enhancing their motivation and
reducing their frustration. In contrast, the efficiency perspective posits that
in a resource-constrained environment operational efficiency and effective
coordination are essential for firm survival [and best achieved] by an
authoritarian leader [who] exerts absolute authority and control over
subordinates and demands unquestioned obedience."
To choose between these perspectives, the professors gauged the
extent of the two types of leadership through surveys in which members of the
top management team in each subsidiary were asked to respond on a scale of
1/strongly disagree to 7/strongly agree to statements about their boss the
Transformational leadership was measured through
the managers' response to such statements as “paints an interesting picture of
the future for our group”; "inspires others with his/her plans for the
future"; "develops a team attitude and spirit among employees";
"shows respect for my personal feelings"; and “has stimulated me to
rethink the way I do things.”
Authoritarian leadership was assessed by responses to such
statements as “always behaves in a commanding fashion in front of employees”;
“determines all decisions in the team whether important or not”; “exercises
strict discipline over subordinates”; “scolds us when we can’t accomplish our
tasks”; and “requires we follow his/her rules or we are punished severely.”
In counties where economic conditions were strong (those roughly
in the top 15% of the sample), greater authoritarian leadership was associated
with significantly lower performance in both the four months and 12 months
post-survey; by contrast in counties where economic conditions were poor
(lowest 15%) greater authoritarian leadership was associated with significantly higher performance.
No such relationships were found for transformational leadership.
In short, the results "support the efficiency perspective but
not the motivational perspective."
The authors acknowledge that these findings "may be somewhat surprising,
because in the literature transformational leadership has long been lauded as a
humanistic and effective leadership style... inspir[ing] employees to
achieve excellence and to contribute extra effort...In contrast, authoritarian
leadership has a negative connotation in the literature and has been seen as a
less desirable leadership style by employees across a variety of nations."
And clearly this view has been widely accepted by top executives
too, Prof. Huang observes, as evidenced by the responses of the
14 U.S. CEOs cited above. "It may be that their response to the recession
partly reflected the munificent conditions in which they normally
operate," he surmises. "Possibly, too, there was an element of
political correctness in what they said. In any event, what our study suggests
is that the best leaders have more than one style of leadership and adjust them
based on circumstances. For example, we cite the case of Steve Jobs, who was as
inspirational a leader as one can find but who resorted to an authoritarian
approach when Apple was on the brink of bankruptcy."
The professor adds that his own interest in the issue stemmed from
an experience teaching a class of CEOs and senior executives of some of the
largest companies in China. "They didn't buy the idea of transformational
leadership," he says. “They were quite sure the authoritarian approach
worked best. My co-authors and I decided to put the issue to the test, and this
study is the result.”
The paper, entitled "When Authoritarian Leaders Outperform
Transformational Leaders: Firm Performance in a Harsh Economic
Environment," is among the research published in the fall/winter
issue of Academy of Management Discoveries, a
new journal dedicated to exploring management issues at ground level. The
Academy of Management, with about 18,000 members in 117 countries, is the
largest organization in the world devoted to management research and teaching.
The Academy's other publications are Academy of Management Journal, Academy
of Management Review, Academy of Management Perspectives, Academy of Management
Learning and Education, and Academy of Management Annals.