An examination of executive leadership and organisational performance in publicly listed companies of Thailand

Abstract

Despite great interest for many years on the effect of executive leadership on organisational performance, there has been limited research into executive leadership particularly the impact of CEOs’ behavioural complexity on organisational performance or the association between the behavioural complexity and CEO attributes in developing Asian countries such as Thailand. The main purpose of this thesis is to examine the impact of CEOs’ executive leadership on organisational performance in publicly listed companies of Thailand. This study has built upon Hart and Quinn’s (1993) study based on the Competing Values Framework about executive leadership roles and Zakliki’s (1996) study that further developed a new integrative framework to examine CEOs’ executive leadership by incorporating the concept of behavioural complexity and CEO attributes including demographic characteristics, personality traits and leadership styles. Executive leadership was tested against the three domains of organisational performance, namely financial, business and organisational effectiveness in publicly listed companies of Thailand. The contingency factors namely firm size, environmental conditions and business strategy were also incorporated into the study in order to describe CEOs’ executive leadership and its relationship with organisational performance under different conditions. The research fieldwork was conducted in Thailand by the use of personal interviews over a four and half-month period in 2003 and one hundred and twenty three CEOs participated in total, representing an effective response rate of 51.25 per cent. Non-response bias analysed showed that there was no important difference between the respondents and non-respondents in term of industry or size classification. Thai replication (H&Q) results showed a low significant relationship between the roles played by CEOs and organisational performance, which was consistent with Hart and Quinn’s (1993) study and Zakliki’s (1996) replication of Hart and Quinn. The Thai replication (H&Q) revealed similar results with the original (H&Q) study and showed that high behavioural complexity CEOs was predictive of higher firm performance with respect to business performance and organisational effectiveness. In all these three studies high behavioural complexity of the CEOs had little to do with financial performance of firms. Thai replication (Z) results showed that executive leadership including leadership roles and CEO characteristics had more impact on the organisational effectiveness than other aspects of firm performance. Both studies showed a similarity in that high behavioural complexity of CEOs was associated with higher firm performance for organisational effectiveness in general and for large firms and for firms following an analyser type of strategy. Both studies also revealed that there was no association between CEO behavioural complexity and financial performance regardless of situational factors. The major results from the extended Thai study were examined against each of the seven research questions generated for this research. It was found that CEOs make a difference but there is a limited connection between executive leadership and firm performance. Executive leadership including leadership roles and CEO attributes had greater impact on organisational effectiveness than other firm performance dimensions. High behavioural complexity of CEOs had a positive association with higher business performance and organisational effectiveness in general, in large firms and for firms following an analyser type of strategy. High behavioural complexity group also had a positive relationship with organisational effectiveness in a stable environment and for firms pursuing a prospector strategy. There was no association between high behavioural complexity and financial performance regardless of any situational factors except for the firms pursuing the analyser strategy. This study was able to show a broad pattern in firms following an analyser type of strategy, namely that they had high behavioural complexity CEOs with an internal locus of control and a positive association with all three firm performance dimensions namely financial performance, business performance, and organisational effectiveness. This pattern which was not detected in previous studies may have been identified because of the refinement of the instrument and the classification system. This finding is particularly important as it demonstrates an association between behavioural complexity and financial performance is possible in certain specific situations. This research identified that CEOs in high performing firms had a relatively longer tenure in the existing position, a longer tenure in the current firm, a higher need for achievement, a greater internal locus of control, an internal origin of appointment and an autocratic leadership style. Further by applying contingency factors, the results found that high performing firms tended to be associated with CEOs who have particular attributes with the specific attribute requirements being dependent on the situation. High behavioural complexity CEOs had a higher need for achievement, more internal locus of control, autocratic leadership style and were less likely to come from a planning and management background. Attributes required in CEOs to be effective were determined by the situational context namely firm size, environmental conditions and business strategy. CEO attributes differed in smaller firms compared to larger firms, in stable environments compared with turbulent environments as well as for defenders firms compared with prospector firms and analyser firms. Additional findings on other dimensions on executive leadership in Thailand identified the key success attributes required for effective leaders, the major strengths and weaknesses of CEOs, the main criteria for appointing CEOs, the important knowledge and skills required for executive development, the leadership style and the CEO’s origin of appointment. The data analyses were performed with respect to firm groups, contingency factors, behavioural complexity group, and leadership style. Overall, the findings from this research have significant implications for top management theory, executive development, CEO selection, management education, and research methodology. Future research with other types of organisations, replicating these findings in another context other than just in Thailand and expanding the list of contingency factors investigated would be worthwhile to help further understand the relationship between executive leadership and organisational performance