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