Abstract
Does a chief executive officer’s (CEO’s) ability to manage and motivate their direct reports impact firm financial performance? Good or bad, CEO leadership research is increasingly romanticized, leading to investigations of CEO traits as visionary and transformational behaviors at the expense of understanding whether the mundane, everyday management of a top management team (TMT) is important for firm performance. In this article, we developed and tested a model linking CEO performance management behaviors and firm performance through two mediating mechanisms. We hypothesized and found a positive relationship between CEO performance management behaviors and TMT flourishing. TMT flourishing related to TMT overall job attitudes and subsequently firm performance. Additionally, performance management behaviors were related to TMT overall job attitudes via TMT flourishing and performance management behaviors related to firm performance via TMT flourishing and job attitudes. Our analyses were based on a unique sample of 105 CEOs and 519 TMT members (60% response rate for CEOs and 90% response rate for TMT members). These findings provide important research directions for CEO research, performance management, upper echelons, and positive psychology research, highlighting the importance of CEO managerially oriented behaviors to create more optimally functioning environments for the TMT and organization.
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