A CEO’s charismatic personality is connected to the company’s business success in terms of profit and brand image

In popular culture, charisma is described as an unexplainable spark. In politics, religion, or business, charisma seems to be a factor that distinguishes leaders from followers. The special relationship between leader and follower allows this, as followers perceive their leader to have extraordinary traits. These characteristics range from high self-confidence and a visionary mindset to simply being the most likeable person in the room. Followers experience a positive spill-over effect from these traits in their leader by wanting to be part of their leader’s plan, being more motivated, more engaged, and therefore, better in action. Many companies thrive due to such leadership. Especially in the technological and digital sector, most successful firms have been headed by charismatic CEOs. In academic research, however, the possible relationship between charisma and business success is still underexplored. Moreover, only employees’ or CEOs’ perception are studied upon and not customers’, although customers are as important to a business’s success as employees. This study aims to contribute valuable outcomes in terms of filling these gaps. Therefore, the question addressed in this thesis is not only if a company needs a charismatic CEO for success, but also to what extent this relationship might hold, which underlying factors are relevant, and which parts of business success are affected by it. A quantitative survey is conducted. The underlying hypotheses include the independent sub-variables self-confidence, visionary mindset, and likeability, while business success as the dependent variable is defined by brand image and profit. A distinction will be made for the latter in terms of perceived profitability and average net profit increase of the last three years. The sample contains n = 169 participants, who were questioned on their familiarity and perception of a CEO and their respective company. Based on former literature, the variables and respective items were evaluated using 7-point Likert scales. By conducting a cumulative factor analysis and multiple regression analysis through SPSS, several outcomes were shown. While a CEO’s likeability significantly increases a brand’s image, it has no significant influence on profit. In fact, likeability has a significant negative effect on average net profit increase. Business success in the form of perceived profitability and average net profit increases if a company is led by a self-confident CEO, and perceived profitability increases through a visionary CEO, too. These findings support the conclusion that underlying traits of charisma affect aspects of business success. A recommendation for firms would, therefore, be to evaluate which kind of business success factor is crucial for them and choose a CEO with fitting attributes.