Informal Institutions and Leadership Behavior: A Cross-Country Analysis

In today’s increasingly turbulent environment, recognition of the institutional differences between countries is needed for the development of leaders. Although the current debate has evolved to more complex levels, knowledge about personal leadership and sociocultural context is still underdeveloped. This chapter attempts to empirically examine the effects of informal institutions on leadership using panel data models. Through a sample of a balanced panel, with data from 67 observations and 35 countries, we show that institutions such as tolerance, creativity, social capital and responsibility have a positive effect on leadership behavior, while other informal institutions (e.g. power) have a negative effect. From a conceptual standpoint, it is argued that informal institutions are relevant to understand differences in leadership, considering that values, beliefs and behaviors may determine the social desirability of being a leader in one country or another. The study has also practical implications regarding education and business, in terms of promoting institutional factors to have more developed societies.