The Value of Leadership: Evidence from a Large-Scale Field Experiment
32 Pages Posted: 31 Aug 2021
Date Written: 2021
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: Suggested Citation