Please rotate your device to landscape mode to view the charts.

Does competitive action intensity influence team performance via leader bottom-line mentality? A social information processing perspective

Journal: Journal of Applied Psychology

Date: 2024

Author: Shuang Ren, Mary B. Mawritz, Rebecca L. Greenbaum, Mayowa T. Babalola, Zhining Wang

Abstract:
Leader bottom-line mentality (LBLM) exists when leaders solely focus on securing bottom-line outcomes to the exclusion of alternative considerations. Our research examines why leaders adopt LBLMs and the implications of this focused leadership strategy on team sales performance and pro-environmental behavior. Utilizing social information processing theory, we examine LBLM as a mediator and contend that competitive action intensity in the work environment provokes LBLM, which then signals to teams the importance of raising sales performance and reducing pro-environmental behavior. We also suggest that leader performance reward expectancy (i.e., perceptions that rewards are directly tied to high performance) serves as a first-stage moderator and team performance reward expectancy serves as a second-stage moderator, with higher (vs. lower) levels of each strengthening the indirect effects of competitive action intensity, through LBLM, onto team sales performance and pro-environmental behavior. Utilizing field data from a large pharmaceutical company (Study 1) as well as an experimental causal chain design (Studies 2a and 2b), we found support for our theoretical model.

Link: Google Scholar

Background and Context

Study Overview

This research examines how competitive business environments influence leader bottom-line mentality (LBLM) and its subsequent effects on team sales performance and pro-environmental behaviors.

Theoretical Framework

Using social information processing theory, the study explores how leaders interpret competitive pressures, develop a single-minded focus on profits, and how this leadership approach affects team behaviors.

Methodology

The researchers conducted a field study with 269 teams from a pharmaceutical company and two experimental studies to establish causal relationships between the key variables.

Competitive Environment Drives Leader Bottom-Line Mentality

High Market Competition Low Market Competition Strong Bottom-Line Mentality Balanced Leadership Focus
  • Leaders who experience intense market competition tend to develop a strong bottom-line mentality focused solely on profits.
  • Competitive action intensity significantly predicted leader bottom-line mentality (B = .12, p < .001) in the study.
  • When competition is less intense, leaders are more likely to maintain a balanced focus across multiple priorities.

Social Information Processing Drives the Competition-Performance Relationship

Competition Creates Social Cues Leaders Process These Cues Teams Follow Leaders' Signals Perception Influence
  • Social Information Processing theory explains how competitive signals are transmitted through organizations to influence team behavior.
  • Leaders serve as "linchpins" that interpret competitive environment cues and pass them to their teams.
  • This theoretical mechanism creates a pathway from external competition to internal team performance behaviors.

Leader Performance Reward Expectancy Strengthens the Competition-LBLM Relationship

  • When leaders expect higher rewards for performance, competitive pressure has a stronger effect on their bottom-line mentality.
  • At high leader performance reward expectancy, the relationship between competition and LBLM was significantly stronger (simple slope = .20).
  • Leaders who don't associate performance with rewards are less likely to adopt a bottom-line mentality.

LBLM Has Opposite Effects on Sales Performance and Pro-Environmental Behavior

  • Leader bottom-line mentality increases team sales performance while decreasing pro-environmental behaviors when rewards are expected.
  • Higher team performance reward expectancy intensifies both the positive effects on sales and negative effects on sustainability.
  • With low reward expectations, LBLM has minimal impact on either sales performance or pro-environmental behavior.

Performance Reward Expectancy Significantly Moderates Indirect Effects

  • When both leaders and teams have high reward expectations, competitive intensity has stronger indirect effects.
  • The indirect effect on sales performance is 10× stronger with high reward expectations (.05 vs .00).
  • The indirect effect on pro-environmental behavior is 10× more negative with high reward expectations (-.10 vs -.01).

Contribution and Implications

  • Leaders don't develop bottom-line mentality solely from personal preferences, but also from contextual competitive pressures.
  • Competition drives bottom-line mentality, which improves sales but damages environmental initiatives, especially when rewards are expected.
  • Organizations facing market competition should structure rewards to balance financial goals with sustainability commitments.
  • Leaders should be trained to maintain multiple priorities despite competitive pressures by creating balanced incentive structures.
  • Companies seeking triple bottom line benefits (economic, social, environmental) should carefully manage competitive response mechanisms.

Data Sources

  • Chart 1 used data from Table 3 and Figure 2, showing how leader performance reward expectancy moderates the competition-LBLM relationship.
  • Chart 2 was derived from Table 3 and Figures 3-4, showing simple slopes of LBLM effects on team outcomes.
  • Chart 3 visualized data from Table 4, displaying the indirect effects under different reward expectancy conditions.
  • The SVG visualizations were created based on the conceptual model in Figure 1 and Social Information Processing theory.