The multi-level analysis of a threat on leadership behavior: The effect of the 2008 financial crisis and the Brexit referendum
Janka I. Stoker, Harry Garretsen, Dimitrios Soudis, Wout de Vries & Hein Wendt[1]
[1] Garretsen, Stoker, De Vries and Soudis: Faculty of Economics & Business, University of Groningen; Wendt: Korn Ferry Amsterdam and University of Leuven
The presentation will cover two multi-level event studies of the effects of a crisis (the 2008 financial crisis and the Brexit referendum) on leadership behavior. Following assumptions from the threat-rigidity hypothesis, we expect that across firms and countries, such crises lead to an increase in directive leadership. In line with this hypothesis, we also anticipate that this change is context-specific. The impact of the 2008 financial crisis on the change in directive leadership is analyzed for over 20,000 managers in 980 organizations across 36 countries. The impact of the Brexit referendum is studied based on a sample of 5,048 managers working for 281 UK organizations. Results show that both crises went along with a significant increase in directive leadership. For the 2008 financial crisis, we also found that the effect was stronger in the manufacturing sector, and in countries with a high degree of power distance. For the Brexit referendum, using propensity score matching, we find that the increase in directive leadership only occurs for organizations in the UK, and not for similar organizations and their managers in other European countries. Our findings also indicate that this effect is persistent. We propose that our studies open up a new avenue of leadership research where context is an antecedent of leadership behavior more generally, and where the methodological set-up allows for causal inference.