Organizational identity and firm performance: What happens when leaders disagree about "who we are?"

Abstract

This study examines how the organizational success of 113 nonprofit professional theatres was affected when two top leaders responsible for different parts of the organization held divergent views about organizational identity. Focusing on five values that differentiate theatres, we find that leaders' disagreement about organizational identity was related to lower ticket revenues and lower net income, and that organizational performance was lowest when disagreement about identity was extreme. Although some findings suggest that minor identity disagreement between leaders may not hurt organizations, results generally support the perspective that leaders should actively promote a single identity. © 2006 INFORMS.