Demystifying the impact of CEO transformational leadership on firm performance: Interactive roles of exploratory innovation and environmental uncertainty

Jian-Xun Chen, Piyush Sharma, Wu Zhan and Li Liu

Journal of Business Research, 2019, vol. 96, issue C, 85-96

Abstract: This paper aims to reconcile the inconsistent findings about the effects of CEO transformational leadership (CTL) on firm performance by using upper echelon theory to hypothesize and empirically demonstrate that CTL triggers exploratory innovation in a firm, which in turn has an inverted U-shaped effect on firm performance. In other words, CTL may only lead to better firm performance at moderate levels of exploratory innovation through optimal utilization of a firm's scarce resources and may actually hurt firm performance at higher levels of exploratory innovation because of suboptimal resource utilization. We also show that CTL's most detrimental effect on firm performance occurs when the contingencies of high technology uncertainty and low demand uncertainty are combined. Data from multiple sources within 288 Chinese firms support most of our hypotheses and provide insights into the complex mechanism by which CTL affects firm performance, especially in an increasingly uncertain global economic environment.

Keywords: CEO transformational leadership; Demand uncertainty; Exploratory innovation; Firm performance; Technology uncertainty (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296318305423
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:96:y:2019:i:c:p:85-96

DOI: 10.1016/j.jbusres.2018.10.061

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().