Leaders' impression management during organizational decline: The roles of publicity, image concerns, and incentive compensation

Abstract

In this study, we develop and examine a model of leaders' impression management during organizational decline by elaborating on the roles of publicity, image concerns, and incentive compensation. We propose that the publicity of decline is an important antecedent of leaders' impression management during decline. We also examine how leaders' image concerns mediate this positive relationship. In addition, we consider the relative influence of incentive compensation and fixed compensation on the relationship between leaders' image concerns and their impression management during decline. Our results, based on a specially-designed management simulation game conducted with experienced Chinese managers, show that high publicity of decline elevates leaders' image concerns, which in turn increases their impression management during decline. In addition, incentive compensation strengthens rather than weakens the effects of leaders' image concerns on their impression management. We discuss the implications of leaders' impression management during organizational decline.