Strategic Use of Unfriendly Leadership and Labor Market Competition: An Experimental Analysis

Anastasia Danilov, Ju Yeong Hong and Anja Schöttner
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Anastasia Danilov: HU Berlin
Ju Yeong Hong: HU Berlin

No 507, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: A significant portion of the workforce experiences what we term `unfriendly leadership,' encompassing various forms of hostile behavior exhibited by managers. The motivations driving managers to adopt such behaviors are insufficiently understood. To explore this phenomenon, we conducted a laboratory experiment examining the relationship between managers' use of unfriendly leadership and labor market competition. We discern two labor market states: excess labor demand, where managers compete to hire workers, and excess labor supply, where workers compete to be hired. By perceiving unfriendly leadership as a performance-contingent punishment device inflicting discomfort on workers, we hypothesize that managers are less inclined to resort to unfriendly leadership when they compete to hire workers. We find that managers tend to engage in unfriendly leadership more frequently and intensely under excess labor supply, in comparison to excess labor demand. This trend is particularly pronounced among male participants. Additionally, workers display a decreased likelihood of accepting employment offers from more unfriendly managers and exert lower levels of effort when working under such managers, indicating that unfriendly leadership is costly.

Keywords: leadership style; labor market competition; non-monetary incentives (search for similar items in EconPapers)
JEL-codes: L20 M14 M55 (search for similar items in EconPapers)
Date: 2024-07-08
New Economics Papers: this item is included in nep-exp and nep-hrm
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Working Paper: Strategic Use of Unfriendly Leadership and Labor Market Competition: An Experimental Analysis (2024)
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