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The effect of the financial crisis on leadership

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Published on Jan 15, 2019

Ten years ago, the financial crisis set in. The downfall of the Lehman Brothers hit the business world hard, causing deep recessions across the globe. How did this shock impact leadership in organizations? Professors Janka Stoker and Harry Garretsen from the University of Groningen analysed the behaviour of more than 20,000 leaders of almost 1,000 organizations in 36 countries.
They found that the financial crisis led to a significant increase in directive behaviour. Leaders tightened the reins, took more decisions by themselves and exercised more control. This happened mainly in industry, but not in the financial sector, where the crisis began. Directive leadership increased even more strongly in countries with a very hierarchical culture. Yet it is striking that the effect of the crisis was temporary. Managerial control returned to the original level just one to two years after the crisis.
This research, conducted by Centre of Expertise ‘In the Lead’, demonstrates the importance of the environment for the behaviour of leaders and, therefore, for the functioning of organizations.

For more information, visit https://www.rug.nl/inthelead

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