Followers’ reactions to self-serving leaders: the influence of the organization's budget policy

Abstract

Purpose

Even though leaders often are seen as responsible guides, they sometimes behave in a self-serving way, for example, by spending the company's budget on their own, frivolous needs. In this study, the authors explore an aspect of such behavior: the authors examine how an organizational budget policy makes such spending more legitimate in the eyes of followers. Specifically, the authors examine when followers will react to a leader's self-serving behavior as a function of: the role of organizational budget policies, and whether followers are directly affected by the leader's behavior. The authors test two particular budget policies, i.e. carry-forward vs non-carry-forward (a.k.a., “use-it-or-lose-it” budget policies), which differ on whether a department/team's allocations not spent by the end of the fiscal year flow back to the central administration. The paper aims to discuss these issues.

Design/methodology/approach

Study 1 is a multi-source field study that should enhance the external validity of the results. Study 1 was analyzed with regression analyses and bootstrapping techniques. To be able to draw causal inferences, the authors also conducted an experimental study (Study 2).

Findings

Followers react more negatively – by showing increased turnover intentions and decreased commitment and cooperation – to a leader's self-serving behavior in a carry-forward policy than in a use-it-or-lose-it budget policy. Thus, organizational policies, such as the budget policy, affect how followers react to self-serving leaders.

Originality/value

The authors focus on self-serving leader behavior. The authors show that followers’ reactions to self-serving leaders are not necessarily negative and are influenced by the specific organizational context in which the self-serving behavior occurs. More specifically, the authors add to the literature by introducing budget policies as influencing followers’ reactions to leaders’ behavior.

Citation

Decoster, S., Stouten, J. and M. Tripp, T. (2014), "Followers’ reactions to self-serving leaders: the influence of the organization's budget policy", American Journal of Business, Vol. 29 No. 3/4, pp. 202-222. https://doi.org/10.1108/AJB-12-2013-0076