The pandemic that shocked managers across the world: the impact of the COVID-19 crisis on leadership behavior

Abstract

In March 2020, the COVID-19 virus turned into a pandemic that hit organizations globally. This pandemic qualifies as an exogenous shock. Based on the threat-rigidity hypothesis, we hypothesize that this shock led to an increase in directive leadership behavior. We also argue that this relationship depends on the magnitude of the crisis and on well-learned responses of managers. In our empirical analysis we employ a differences-in-differences design with treatment intensity and focus on the period of the first lockdown, March until June 2020. Using a dataset covering monthly data for almost 27,000 managers across 48 countries and 32 sectors for January 2019 to December 2020, we find support for the threat-rigidity hypothesis. During the first lockdown, directive leadership increased significantly. We also find that this relationship is moderated by COVID-19 deaths per country, the sectoral working from home potential, and the organizational level of management. Our findings provide new evidence how large exogenous shocks like COVID-19 can impact leadership behavior.

Keywords: COVID-19; Working From Home; crisis; differences-in-differences; directive leadership; exogenous shocks; participative leadership; threat-rigidity hypothesis.

Fig. 1

COVID-19 deaths, March 1st 2020–December 31st (for five selected countries). https://ourworldindata.org/coronavirus

Fig. 2

Government Stringency Index, February 19th–April 23rd 2020 (for five selected countries). Source: Our World in Data.org. Both Fig. 1 and Fig. 2 construed by the authors using data options from https://ourworldindata.org/coronavirus.

Fig. 3

Relationship between the COVID-19 crisis and the number of COVID-19 deaths per 100,000 inhabitants. Note: Deaths per 100,000 inhabitants is centered and −1.08 is the lowest value and 0.86 the highest value observed in the data. The figure shows the start and end point for the level of directive leadership for managers of the two countries with the highest (blue line) and lowest levels (red line) of COVID-19 deaths per 100 K. Start point refers to the avg. level of directive leadership before the COVID-19 shock, in casu January 2019-February 2020, and End point refers to the avg. level of directive leadership after the COVID-19 shock (after March 1st 2020), in casu for the period March-May 2020. (For interpretation of the references to colour in this figure legend, the reader is referred to the web version of this article.)

Fig. 4

Relationship between the COVID-19 crisis and directive leadership for low, middle and high WFHP.

Fig. 5

Relationship between the COVID-19 crisis and directive leadership for low (1), middle (2) and high (3) levels of management.