ICTlogy

Abstract:

Despite the importance attributed to leadership in many economic, organizational and political contexts, the topic has received little attention in the economic discipline. In other fields, however, extensive research documents important characteristics of effective leaders, including the ability to influence followers through "charismatic" communication. We report a field experiment that examines whether charisma—in the form of a stylistically different motivation speech—can induce costly effort among workers, and therefore generate higher output for a firm. In our experiment temporary workers have to prepare envelopes for a fundraising campaign conducted on behalf of a hospital. Workers are exposed to speeches that differ in the number of charismatic elements, as well as to varying financial incentives. We observe that workers who are exposed to a charismatic speech increase their output on average by about 17% relative to the workers who receive the standard speech. This performance effect of charisma is statistically significant and comparable in size to the positive effect of standard performance pay.