Management Sciences Research

Does CEO charisma matter?

Does CEO charisma matter? Such question might rise controversial opinions. Intuitively we might believe that the charisma of the CEO is crucial for the company to succeed and achieve great performance, measured by a set of financial performance indicators. Nevertheless, the answer might not be that straightforward.
In order to provide some background, Bradley R. Agle, Nandu J. Nagarajan, Jeffrey A. Sonnenfeld and Dhinu Srinivasan (scholars from the university of Pittsburg and the university of Yale) in their work “Does CEO charisma matter? An empirical analysis of the relationships among organizational performance, environmental uncertainty, and top management team perceptions of CEO charisma” (2006) present a research that explores the relationship, between strategic charismatic leadership, organizational performance, and environmental uncertainty.
The authors suggest that the observed measure of organizational performance is associated with the perceptions of CEO charisma and that some objective measures of organizational performance are also significantly linked with this perception. On the other hand, the authors also found evidence that organizational performance is not associated with charisma and neither with the interaction between charisma and uncertainty.
Agle, Nagarajan, Sonnenfeld and Srinivasan conclude that there is evidence of a relationship between perceptions of CEO charisma and perceived measures of prior organizational performance, a relationship between some objective measures of prior organizational performance and CEO charisma, and no relationship between subsequent objective measures of organizational performance with charisma.
So, does CEO charisma matter?
By now, it seems clear that there is still room for further research in order to find more evidence and measure the impact of CEO’s charisma on the performance of a company. We should not neglect the fact that although charismatic leaders could tend to be more effective, there is also the “dark side” of it, as narcissism could also start to appear (in some cases) leading to a negative effect on the company.
We’ll keep this question open and looking forward to bring further discussion on this topic in the future.