When Authoritarian Leaders Outperform Transformational Leaders: Firm Performance in a Harsh Economic Environment

Abstract

We investigate what leadership behaviors drive firm performance in harsh economic environments. Based on data collected from 102 independent subsidiaries of a telecommunications corporation located in 102 counties in China, we found that transformational leadership was not related to subsequent 4-month and 1-year revenue growth, irrespective of the level of the county’s economic resource munificence, which is defined as the level of the region’s overall level of economic activities and its consumption capacity. We also found, however, that authoritarian leadership was positively related to subsequent revenue growth when economic munificence was low but negatively related to revenue growth when economic munificence was high. Based on these results, we propose the theoretical development of the functionality of authoritarian leadership in future research.