The Impacts of Company Size on Leadership

Abstract

This paper empirically tests the impacts of company size, measured by total sales revenues, on the importance of 12essential leadership functions, (e.g., encouraging teamwork), six skills (e.g., interpersonal), seven traits (e.g., beingdecisive), four leadership styles - participatory, directive, tasks oriented, and employee oriented, and on leadershipeffectiveness.The findings evidence patterns of leadership at larger companies that are significantly different from smallercompanies. The collective findings make a compelling argument that increasing company size reduces theimportance of leaders engaging and interacting with followers. This likely reflects characteristics of larger companiesthat lessen the importance of or substitute for employee engagement and interpersonal interactions. However, theleadership at larger companies was not found to be less or more effective. The study also found that largercompanies are more risk averse, which has additional implications for leadership. The findings have a number ofimplications for practitioners, researchers, and faculty teaching leadership.