To Differentiate or Not? : How Individual and Collective-focused Leadership Relate to Firm Performance

Abstract

The question whether organizations should encourage leaders to treat their followers differently, or as a collective entity, has long fueled discussion among both practitioners and scholars. Recent advances point to two possible key constructs, namely, collective-focused leadership climate and differentiated individual-focused leadership. These constructs are important as they can have opposite effects on collective outcomes. However, at present, no single overarching theoretical framework has been put forward to help understand these opposite effects. Therefore, this study develops and tests a new, more unified, perspective. Drawing from the commitment literature and in particular the often used theories of social exchange and perceived organizational support therein, we first argue for opposite effects on the affective organization commitment climate among employees. Then we reason that organizational performance can increase, if such affective commitment is ‘put into action’ and raise the organizational-citizenship-behavior climate. Our three-path-mediation hypotheses are tested, and supported, by Structural Equation Modeling analyses in a multi-source dataset that contains more than 18,000 respondents from 175 companies. This new empirically tested and supported perspective takes important steps toward resolving the long lingering question of whether to differentiate leadership or not.