Reading notes (2021, week 16) — On virtuous leaderships, the weak case for grit, and the misinformation virus
By: Mark Storm
Tags: Grit, Misinformation, Leadership, Zeitgeist, Cardinal Virtues

Do leaders flourish through virtuous leadership?

A major reason why leaders regularly behave mischievously is their belief that acting righteously will have negative consequences, both for themselves and the organisation. In some situations, especially in the short term, mischievous behaviour can indeed have positive effects. For example, fraudulent behaviour regularly yields objective (financial) benefits in the short term. However, current empirical evidence consistently shows that virtuous leaders tend to flourish more. Wang and Hackett (2016), for example, show that virtuous leaders have higher hedonic well-being and are more effective leaders in organisations.

The literature on character strengths, which is mainly rooted in positive organisational psychology, shows that the use of a person’s character strengths and working on character weaknesses can be conducive to subjective well-being (eg Seligman et al., 2005), sense of purpose at work (Littman-Ovadia and Steger, 2010) and work performance (Lavy and Littman-Ovadia, 2017). Positive associations are often also found in studies of specific virtues. Sosik et al. (2012) find that the courage, social intelligence and especially integrity of leaders in corporate America are positively related to how their executives and board members rate the performance of these leaders.

An American experiment by Robinson et al. (2013) shows that others are more willing to do business in the future with CEOs who are compassionate. In relation to the well-being of the leader, Krause and Hayward (2015) find that more practical wisdom (prudence) is associated with a stronger sense of self-esteem and more hope. Thus, current literature suggests that virtuous leaders tend to flourish more. These findings confirm that good character is fundamental to effective leadership and that there is generally no ‘trade-off’ for leaders between virtuous behaviour and self-interest.

Six mechanisms

In theory, there are several mechanisms by which virtuous leaders perform better. First, a significant portion of the performance of leaders depends on the performance of employees and, as noted, virtuous leadership generally has a positive impact on employee performance.

Second, investors, customers and suppliers are more willing to do business with virtuous leaders. This has a positive influence on both the performance and the well-being (e.g. self-esteem) of the leader (Robinson et al., 2013).

Third, virtuous leaders tend to be more awe-inspiring because they are more respected and trusted. This allows them to implement their vision and ideas more effectively in the organisation (Yukl, 2010).

Fourth, virtuous leaders tend to be more engaged at work. For example, they experience work as more meaningful (Bass and Riggio, 2006), which helps in achieving personally valued goals (Arjoon, 2000).

Fifth, good character helps leaders in the ethical decision-making process (Crossan et al., 2013), promoting effective decision-making.

Sixth, virtuous behaviour has intrinsic benefits. For example, a large number of studies show that prosocial behaviour makes a person happier (Dunn et al., 2008).

And finally, virtuous leaders have better relationships and foster a virtuous organisational climate, which relates positively to both job happiness and performance (Cameron and Winn, 2012).

Do organisations flourish through virtuous leadership?

Good leadership can contribute to better performance of the organisation as a whole, through the positive associations with the performance of leaders and employees. On the other hand, a lack of virtuous leadership can damage the company’s reputation and thus make the company less attractive to investors, customers and suppliers (Shanahan and Seele, 2015).

They are better at mitigating risks than those whose behaviour is guided by deontological and utilitarian thinking (Chakrabarty and Bass, 2015) and, as a result, attract responsible investors. However, virtuous behaviours can also be costly, such as compensating for potential negative impacts on ecological environments or local communities.

The literature on the virtue of organisations has examined the sum of these positive and negative effects. In this literature it is generally found that the virtue of the organisation is associated with positive performance of the organisation, for example, better financial performance (such as higher profitability) and better operational performance (such as increased customer loyalty and lower staff turnover; for an overview see Meyer, 2018). At the team level, Palanski et al. (2011) find that behavioural integrity leads to better performance as a result of greater transparency and trust in the team. Also, the 2007 global financial crisis and many corporate leadership scandals at, among others, Enron, WorldCom, Hewlett-Packard and Siemens and more recently Barclays, Volkswagen and Samsun, illustrate that neglect of virtuous leadership can cause serious harm to organisations and the economy.

In conclusion

The main conclusion of this literature review is that the current evidence shows that employees, organisations, and the leaders themselves tend to flourish more when the leader has a virtuous character and displays virtuous leadership. An important consideration is that the current evidence is primarily correlational and that more research is needed to better determine the causal impact of virtuous leadership on thriving in organisations in different contexts.

The findings of this literature review provide initial support for Hannah and Jennings (2013) proposition that leaders must be both of good character and competent to achieve sustainable success and that both alone are insufficient. This general pattern also suggests that the concerns of many leaders are unfounded, that virtuous leadership is adversely affecting themselves or their organisations.

The findings imply that organisations can potentially benefit greatly from fostering virtuous leadership. However, it should always be remembered that virtue is a reward in itself and does not require a positive instrumental outcome.