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Embracing the duality of consideration and initiating structure: CEO leadership behaviors and small firm performance

Inger N. Basker (Department of Strategy and Management, NHH Norwegian School of Economics, Bergen, Norway)
Therese E. Sverdrup (Department of Strategy and Management, NHH Norwegian School of Economics, Bergen, Norway)
Vidar Schei (Department of Strategy and Management, NHH Norwegian School of Economics, Bergen, Norway)
Alexander M. Sandvik (Department of Strategy and Management, NHH Norwegian School of Economics, Bergen, Norway)

Leadership & Organization Development Journal

ISSN: 0143-7739

Article publication date: 20 April 2020

Issue publication date: 12 May 2020

1126

Abstract

Purpose

This paper examines the relationship between chief executive officers' (CEOs') leadership behaviors (consideration and initiating structure) and firm and individual performance (i.e. profitability, affective commitment and employees' willingness to change) in small and medium-sized firms (SMEs) that need to adapt to changing environments.

Design/methodology/approach

Survey data was collected from SMEs (28 firms, 235 employees) in the accounting industry along with objective performance register data (profit and return on assets). The predicted model was tested with multilevel structural equations modeling (MSEM) using a maximum likelihood estimator.

Findings

The CEO leadership behavior of initiating structure was positively related to firms' profitability, while the CEO leadership behavior of consideration was positively related to employees' willingness to change and affective commitment.

Practical implications

Small accounting firms typically offer standard services that are now being replaced by digital solutions. These firms have an incentive to offer new services, such as business advisory services. Therefore, leaders should embrace the duality of consideration and initiating structure to gain employees' willingness to change and optimize overall firm performance.

Originality/value

The paper contributes to leadership literature by examining a novel context (CEO consideration and initiation of structure in SMEs in uncertain environments) using a combination of firm performance measures (e.g. objective outcomes at the firm level and employees' willingness to change as a new measure at the individual level). In addition, it reports a comprehensive test of the full model using MSEM, the findings of which demonstrate the importance of dual leadership behaviors for CEOs.

Keywords

Acknowledgements

This research was supported by the FOCUS (Future-Oriented Corporate Solutions) program at NHH Norwegian School of Economics. We want to thank Henny Marie Fløystad for her help in collecting the data. We are also grateful to Arne L. Kalleberg and Sven A. Haugland for insightful feedback. Thanks also to Jørgen Lund and Sandra Riise in Regnskap Norge for valuable support.

Citation

Basker, I.N., Sverdrup, T.E., Schei, V. and Sandvik, A.M. (2020), "Embracing the duality of consideration and initiating structure: CEO leadership behaviors and small firm performance", Leadership & Organization Development Journal, Vol. 41 No. 3, pp. 449-462. https://doi.org/10.1108/LODJ-04-2019-0170

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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