Organizational Leaders and Their Socioeconomic Background: Effects on Sense of Control and Justice Perceptions

The financial and economic crisis has induced management and organization scholars to call for changes in the discipline. Kochan et al. (2009) for instance, suggest to “reframe and broaden the dominant paradigm guiding management research”. In a similar vein, Lounsbury (2013: 3) states that much of the research in the field of organization and management theory lack “imagination or deeper engagement with broader societal and political issues”.

In the present research, I argue that looking at how the socioeconomic background of organizational leaders might affect organizational processes and outcomes is one of the paths toward a less socially disconnected study of organizations. In fact, despite the long posited relevance of the socioeconomic background of organizational leaders (Hambrick & Mason, 1984), management and organizations scholars have almost ignored the variable. The present study intends to contribute toward an understanding of how the socioeconomic background of organizational leaders can influence their management-relevant attitudes.

Taking a micro-level perspective, I focus on explaining how socioeconomic background influences the sense of control of organizational leaders and their justice perceptions toward less privileged socioeconomic groups such as low-wage earners. The debate around individual characteristics of leaders which might have played a role in the recent crisis has made salient the importance of attitudes such as overconfidence, optimism, and empathy. These can be related to either sense of control or justice perceptions. In order to shed light on the issue at hand, I integrate sociological research on class dynamics and social psychological research on the links between socioeconomic class and management-relevant attitudes. More specifically, my argument is grounded on works about the socioeconomic roots of sense of control (Kohn, 1963; Kraus et al., 2012; Weber, 1920/1972) and the justice-related effects of social distance (Small & Simonsohn, 2008).

On the conceptual side, I classify organizational leaders into four distinct groups. Firstly, organizational leaders from higher socioeconomic backgrounds, i.e. reproduced leaders, are divided into those who, due to intergroup contact, exhibit a lower social distance toward the broader classes of the society. The other group consists of leaders from higher backgrounds with a high social distance toward the broader classes. Secondly, organizational leaders from lower socioeconomic backgrounds, i.e. the social climbers, are divided into those who were formally or informally supported during their career and those for whom that support was absent. The introduced 4-group classification of leaders allows us to cast a differentiated light on the relationship between the socioeconomic background of organizational leaders and their management-relevant attitudes.

Cross-sectional data from the German Socioeconomic Panel (SOEP, v28) are used to empirically test the hypotheses. The classification of leaders is based on the 2005 wave since most of the variables used in the empirical models were surveyed in or around that year. Probit and OLS regressions are used for testing the hypotheses. Control variables include education, household income and wealth, age, and gender.

Research hypotheses and findings

Hypotheses	Empirical findings
H1a: Reproduced leaders exhibit a stronger sense of control than other leaders.	Supported
H1b: Socioeconomic descenders exhibit a weaker sense of control than reproduced leaders.	Supported
H1c: Non-supported climbers exhibit a stronger sense of control than supported climbers.	Not supported
H2a: Socioeconomic climbers exhibit more favorable justice perceptions toward low-wage earners than reproduced leaders.	Not supported
H2b: Non-distant reproduced leaders exhibit more favorable justice perceptions toward low-wage earners than distant reproduced leaders.	Supported

Summing up the empirical results, we can conclude that the classification of organizational leaders along the lines of socioeconomic background can help us explain their sense of control as well as their justice perceptions. Additionally to showing that reproduced leaders exhibit a stronger sense of control, the present study also cast a light on self-legitimization. To the best of my knowledge, this study presents the first empirical test for Max Weber’s (1921/1972) idea of self-legitimization in the context of control orientations. This finding enriches the literature on sense of control by showing that the duality of conceptualism and solipsism, as discussed for instance by Kraus et al. (2012), might be incomplete for explaining why privileged individuals exhibit a stronger sense of control. The results of the analysis support the idea of self-legitimizing privileged individuals. Assuming that the legitimizing is based on meritocratic considerations, the reproduced organizational leaders exhibiting a stronger sense of control could tend to believe that they deserve their socioeconomic advantages.

Furthermore, the findings show that reproduced organizational leaders who could reduce their social distance to the less privileged groups disclose more favorable justice perceptions toward the latter than distant reproduced leaders. This finding suggests that researchers aiming at understanding the justice perceptions of organizational leaders should consider their socioeconomic background and the related integration within social structures. The findings on justice perceptions illustrate that the socioeconomic background of organizational leaders might affect issues of inequality within organizations. As suggested by Wegener (1987: 1), “if we perceive social distributions as just, even though this is not what they are, then nobody will attempt to strive for change.” This is a strong hint that distant reproduced leaders are less likely to focus their efforts on improving the justice within their organizations whereas non-distant reproduced leaders might engage in justice-restoring behaviors. In the organizational context, these justice-restoring behaviors could be, for example, the introduction of new compensation schemes or changes in the performance appraisal or promotion strategies.

The results underscore the importance of researching management-relevant variables such as leaders’ attitudes within the larger framework of elite reproduction and social stratification. The present research contributes to the literature on social class and organizations by demonstrating that not only the current class but also the class origin of organizational leaders influence their attitudes in ways which should be relevant for organizations. Although previous research has shed light, for instance, on class as source of inequality within organizations (Côté, 2011; Gray & Kish-Gephart, 2013), the nuanced approach based on the 4-group classification of leaders delivers novel insights. My research enriches the literature by theoretically introducing and empirically discussing the effect of social dynamics on leaders’ attitudes influencing organizational outcomes.