At the Helm, Kirk or Spock? The Pros and Cons of Charismatic Leadership

55 Pages Posted: 4 Apr 2014 Last revised: 3 Oct 2014

Date Written: October 2, 2014

Abstract

Charisma is seen as a generally positive attribute for a leader to possess, yet many studies give it a "mixed report card": finding it can have little or no effect, or worse a negative effect. This paper develops a model to explain why. The key insight is that presenting the cold hard truth is often incompatible with simultaneously firing up followers — a tradeoff exists between information and inspiration. In particular, a temptation exists to hide bad news behind upbeat rhetoric. Rational followers understand such appeals conceal bad news. But as long as any followers are swayed by such appeals — respond to the leader's charisma — rational followers' pessimism is tempered, and more so the more charismatic the leader. Hence, a more charismatic leader can generate better responses from all followers with an emotional appeal than can a less charismatic leader. This is a benefit to charisma. But this power has a dark side: a highly charismatic leader is tempted to substitute charm for action — she is less likely to learn relevant information and, on certain margins, works less hard herself — all to her followers' detriment.

Keywords: leadership, charisma

JEL Classification: D23, D02, D83, M14

Suggested Citation

Hermalin, Benjamin E., At the Helm, Kirk or Spock? The Pros and Cons of Charismatic Leadership (October 2, 2014). Available at SSRN: https://ssrn.com/abstract=2419586 or http://dx.doi.org/10.2139/ssrn.2419586

Benjamin E. Hermalin (Contact Author)

University of California, Berkeley ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-7575 (Phone)
510-643-1420 (Fax)

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