Charismatic leadership at the strategic level: A new application of upper echelons theory

Abstract

The primary purpose of this article is to integrate charismatic leadership theory with the upper echelons perspective in an attempt to better understand the leadership role of chief executive officers (CEOs). We report data from 69 U.S. and Canadian firms suggesting that CEO charismatic leadership measured at a point in time predicts subsequent firm performance. However, it is essentially unrelated to prior firm performance. Findings were weak with regard to an expected interaction between charisma and perceived environmental uncertainty in the prediction of performance. When intellectual stimulation was substituted for charisma, interaction results became somewhat stronger. As expected, charisma was related to both subjective and objective measures of strategic change, although we did not find an expected interaction between charisma and strategic change in the prediction of firm performance. Results are discussed in terms of the need for additional multidisciplinary research bridging micro- and macro-level conceptualizations of the role of leadership in the upper echelons of organizations.