Leading with Generosity and Responsibility through Reward Allocation Decisions in Teams

Abstract

Leadership generosity and responsibility are crucial elements in organizational management, particularly when leaders allocate rewards among team members. Through theoretical modeling and experimental validation, we examine leaders' allocation decisions at different stages of a project---before it begins, after completion but before outcomes are realized, and after outcomes are known---and how their decisions depend on their personality traits. Using a preregistered randomized controlled experiment with 520 participants, we examine two key leadership behaviors: generous commitment (taking a smaller share for oneself before the project starts) and responsibility (reducing one's share after poor performance), as well as how personal traits shape these behavioral styles.  Our theoretical framework predicts that more altruistic leaders will demonstrate stronger generous commitment while less altruistic leaders, counterintuitively, will demonstrate greater responsibility following negative outcomes. The empirical findings largely support these predictions. Female leaders show more generosity, while both genders demonstrate responsibility by reducing self-allocation following negative outcomes, albeit through different psychological mechanisms. Personality traits, especially altruism, as well as other psychological factors, moderate these behaviors. Our study finds that personality traits that are often associated with "strong" leadership tend not to demonstrate responsibility. These findings provide insights into leadership decision-making, with implications for organizational design and leadership development.

Keywords: team production, leadership style, gender differences, reward allocation, generosity, responsibility, survey experiment

JEL Classification: M52, M54, D91, D23