The Value of Leadership: Evidence from a Large-Scale Field Experiment

32 Pages Posted: 31 Aug 2021

See all articles by Florian Englmaier

Florian Englmaier

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics

Stefan Grimm

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics

Dominik Grothe

Ludwig Maximilian University of Munich (LMU)

David Schindler

Tilburg University

Simeon Schudy

University of Munich (LMU)

Date Written: 2021

Abstract

Companies increasingly shift from hierarchical to team-based organizational structures. Scholars and practitioners alike have emphasized the potential of leadership to foster performance in these settings. However, the causal impact of leadership is difficult to identify, as in agile and cross-functional teams leadership is often determined endogenously. This study exploits a unique opportunity to uncover the value of leadership in a non-routine task performed by teams with flat hierarchies. In a large-scale natural field experiment (>1200 participants in 280 teams), we randomly encourage teams to select a leader before performing a complex task. The leadership encouragement increases the fraction of teams solving the task within the given time limit by about 25% and teams’ remaining times by roughly 75%. Choosing a leader not only improves performance time-wise, but also team organization, without reducing the originality of solutions. Hence, leadership encouragements can serve as a cost-effective tool to foster team performance.

JEL Classification: C920, C930, J330, D030, M520

Suggested Citation

Englmaier, Florian and Grimm, Stefan and Grothe, Dominik and Schindler, David and Schudy, Simeon, The Value of Leadership: Evidence from a Large-Scale Field Experiment (2021). CESifo Working Paper No. 9273, Available at SSRN: https://ssrn.com/abstract=3912383 or http://dx.doi.org/10.2139/ssrn.3912383

Florian Englmaier (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28 III/ VG
D-80539 Munich
Germany

Stefan Grimm

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

Dominik Grothe

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

David Schindler

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Simeon Schudy

University of Munich (LMU) ( email )

Ludwigstrasse 28
Munich, D-80539
Germany
+49 89 2180 9786 (Phone)

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