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Legitimacy, Communication and Leadership in the Turnaround Game

Author

Listed:
  • Jordi Brandts

    (Institutd'AnalisiEconomica(CSIC)
    Barcelona GSE)

  • David J. Cooper

    (Department of Economics, Florida State University
    University of East Anglia)

  • Roberto A. Weber

    (Department of Economics, University of Zurich)

Abstract
We study the effectiveness of leaders for inducing coordinated organizational change to a more efficient equilibrium, i.e., a turnaround. We compare communication from leaders to incentive increases and also compare the effectiveness of randomly selected and elected leaders. While all interventions yield shifts to more efficient equilibria, communication from leaders has a greater effect than incentives. Moreover, leaders who are elected by followers are significantly better at improving their group’s outcome than randomly selected ones. The improved effectiveness of elected leaders results from sending more performance-relevant messages. Our results are evidence that the way in which leaders are selected affects their legitimacy and the degree to which they influence followers. Finally, we observed that a combination of factors— incentive increases and elected leaders—yield near universal turnarounds to full efficiency.

Suggested Citation

  • Jordi Brandts & David J. Cooper & Roberto A. Weber, 2014. "Legitimacy, Communication and Leadership in the Turnaround Game," BELIS Working Papers 2014-01, BELIS, Istanbul Bilgi University.
    • Handle: RePEc:beb:wpbels:201401
    as

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    File URL: http://repeck.bilgi.org.tr/RePEc/beb/wpbels/BelisWP_BELIS01.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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