Working Paper: NBER ID: w14339
Authors: Patrick Bolton; Markus K. Brunnermeier; Laura Veldkamp
Abstract: What makes a good leader? A good leader is able to coordinate his followers around a credible mission statement, which communicates the future course of action of the organization. In practice, leaders learn about the best course of action for the organization over time. While learning helps improve the organization's goals it also creates a time-consistency problem. Leader resoluteness is a valuable attribute in such a setting, since it slows down the leader's learning and thus improves the credibility of the mission statement. But resolute leaders also inhibit communication with followers and leader resoluteness is costly when followers have sufficiently valuable signals.
Keywords: Leadership; Coordination; Management
JEL Codes: D21; D23; D7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Resoluteness (D74) | Organizational adaptation (L29) |
| Resoluteness (D74) | Coordination among followers (D70) |
| Leader's commitment to mission statement (L21) | Followers' expectations and actions (C92) |
| Resoluteness (D74) | Credibility of mission statements (M14) |
| Resoluteness (D74) | Organizational alignment (L29) |
| Resoluteness (D74) | Outperforming rational leaders (D29) |
| Resoluteness (D74) | Maladaptive costs (D61) |