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Does the Leader Make a Difference? Effects to Top Executive Personality on Entrepreneurial Firm Performance

Author

Listed:
  • Welbourne, T.M.
  • Cavanaugh, M.A.
  • Judge, T.A.

Abstract

The purpose of this study was to expand research on personality and leadership by investigating the relationship between leader personality and firm performance. Drawing from research on the five-factor model of personality ("the Big Fife") leader emotional adjustment (low neuroticism) and conscientiousness were hypothesized to be positively related to firm performance. Using a longitudinal sample of initial public offering (IPO) firms, results indicated that only emotional adjustment was related to two measures of firm performance. Specifically, leader emotional adjustment was associated with firms that had higher earnings per share and stock price, after adjusting for the influence of prior firm performance, as well as for the effects of several industry, firm, and demographic variables. In addition, leader extraversion was negatively related to earnings per share. Contrary to expectations, conscientiousness was not related to firm performance.

Suggested Citation

  • Welbourne, T.M. & Cavanaugh, M.A. & Judge, T.A., 1998. "Does the Leader Make a Difference? Effects to Top Executive Personality on Entrepreneurial Firm Performance," Papers 98-17, Cornell - Center for Advanced Human Resource Studies.
    • Handle: RePEc:fth:corirl:98-17
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    Cited by:

    1. Mueller, Gerrit & Plug, Erik, 2004. "Estimating the Effect of Personality on Male-Female Earnings," IZA Discussion Papers 1254, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    MANAGERS ; PERSONALITY ; ENTERPRISES;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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