Does the Leader Make a Difference? Relationship Between Executive Leader Personality and Entrepreneurial Firm Performance
Welbourne, Theresa M.; Cavanaugh, Marcie A.; Judge, Timothy A.
The purpose of this study was to expand research on personality and leadership by investigating the relationship between executive leader personality and firm performance. Drawing from research on the five-factor model of personality (the Big Five), executive leader emotional adjustment (low neuroticism) and conscientiousness were hypothesized to be positively related to firm performance. No specific hypotheses were offered for the relationships between the remaining Big Five personality traits (extraversion, agreeableness, and openness to experience) and firm performance. Using a longitudinal sample of initial public offering (IPO) firms, results indicated that emotional adjustment and extraversion were related to measures of firm performance. Specifically, after adjusting for the influence of prior firm performance, as well as for the effects of several industry, firm, and demographic variables, executive leader emotional adjustment was associated with firms that had higher earnings per share and higher stock price; executive leader extraversion was associated with firms that had lower earnings per share and lower productivity. Contrary to expectations, conscientiousness was not related to firm performance.
leader; personality; firm; relationship; earning; relationship; productivity