There is a new paper by Benjamin Hermalin, with the intriguing title “At the Helm, Kirk or Spock? Why Even Wholly Rational Actors May Favor and Respond to Charismatic Leaders.” The abstract runs like this:
When a leader makes a purely emotional appeal, rational followers realize she is hiding bad news. Despite such pessimism and even though not directly influenced by emotional appeals, rational followers’ efforts are nonetheless greater when an emotional appeal is made by a more rather than less charismatic leader. Further, they tend to prefer more charismatic leaders. Although organizations can do better with more charismatic leaders, charisma is a two-edged sword: more charismatic leaders will tend to substitute charm for real action, to the organization’s detriment. This helps explain the literature’s “mixed report card” on charisma.
Here is what actually drives the argument:
As shown below, a savvy leader makes an emotional appeal when “just the facts” provide followers too little incentive and, conversely, makes a rational appeal when the facts “speak for themselves.” Followers (at least rational ones) will, of course, understand this is how she behaves. In particular, the rational ones—called “sober responders”—will form pessimistic beliefs about the productivity state upon hearing an emotional appeal. But how pessimistic depends on how charismatic the leader is. Because a more charismatic leader is more inclined to make an emotional appeal ceteris paribus, sober responders are less pessimistic about the state when a more charismatic leader makes an emotional appeal than when a less charismatic leader does [emphasis added]. So, even though not directly influenced by emotional appeals, sober (rational) responders work harder in equilibrium in response to an emotional appeal from a more charismatic leader than in response to such an appeal from a less charismatic leader.
Would this same reasoning also imply we should choose intrinsically panicky leaders, because then, if we see them panic, we would think the real underlying situation isn’t so bad after all and we are simply witnessing their innate propensity to panic? Yet no one would buy that version of the argument.
I will instead suggest that we (sometimes) follow charismatic leaders because they have high social intelligence, and most of all because other people are inclined to follow them. Some of those followers of course do not have rational expectations but rather they are touched by the charisma directly. Given that, why not follow the focal leader, even if you yourself are not touched by the charisma?
A related question is to ask how many recent world leaders are in fact charismatic. Obama and Clinton yes, but how about David Cameron? How about most Prime Ministers of Japan, Abe being a possible exception? Arguably Merkel has become charismatic through a sort of extreme, cultivated anti-charisma, but I would not cite her in favor of the theory. Any Canadian since Trudeau? Helmut Kohl?
Putin? Well, he’s not charismatic to me but now we’re getting somewhere. And what does Putin have that say Prime Ministers of Japan do not? Could it be a citizenry that gets excited relatively easily by the brutish? Come to think of it, the USA has a wee bit of excitability of its own, though more about national pride and foreign policy than anything like Putin. Hint: does your theory predict that Argentina will have charismatic leaders relative to Denmark? Yes or no?
In which business sectors are the CEOs most likely to be charismatic?
For the pointer I thank the excellent Kevin Lewis.
Addendum: Hermalin responds here.