Leading with the (Recently) Successful? Performance Visibility and the Evolution of Risk Taking

University of Zurich, Department of Economics, Working Paper No. 382

64 Pages Posted: 23 Apr 2021

See all articles by Sönke Ehret

Sönke Ehret

affiliation not provided to SSRN

Sonja Vogt

ETH Zürich

Andreas Hefti

University of Zurich - Department of Economics; Zurich University of Applied Sciences

Charles Efferson

Faculty of Business and Economics, University of Lausanne

Date Written: April 2021

Abstract

The popular practice of “leading by the successful” is viewed as a hallmark of motivational leadership. A central rationale for leaders to make successful team members salient is that it may induce social learning, where followers strive to adopt a favorable behavior. The reliance of a leader on such success-biased social learning presumes that imitation by followers occurs only to the extent as outstanding success was caused by a superior ability or knowledge of the respective peer. In this article, we conduct a laboratory experiment to study whether imitation of the successful may occur even if imitation necessarily fails to be an effective way of improving one’s performance. The experimental approach establishes the necessary control to assure that success-biased learning cannot systematically improve the decisions made, and allows us to isolate the behavior of the followers from possible feedback effects of the leader. The data show that a substantial amount of imitation occurs, which in our setting leads to a sizeable and persistent increase of the average risk taken in the teams. Our finding thus indicates a limitation of the practice to lead with the successful.

Keywords: Social learning, laboratory experiments, motivational leadership

JEL Classification: C91, C92, D91

Suggested Citation

Ehret, Sönke and Vogt, Sonja and Hefti, Andreas M. and Efferson, Charles, Leading with the (Recently) Successful? Performance Visibility and the Evolution of Risk Taking (April 2021). University of Zurich, Department of Economics, Working Paper No. 382, Available at SSRN: https://ssrn.com/abstract=3823176 or http://dx.doi.org/10.2139/ssrn.3823176

Sönke Ehret (Contact Author)

affiliation not provided to SSRN

Sonja Vogt

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

Andreas M. Hefti

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

Zurich University of Applied Sciences ( email )

Institut fuer Angewandte Medienwissenschaft
Zur Kesselschmiede 35
Winterthur, CH 8401
Switzerland

Charles Efferson

Faculty of Business and Economics, University of Lausanne ( email )

Lausanne, CH-1015
Switzerland

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