Institutional Logics, Extended Rationality, and the Effects of Military Background of Business Leaders

Abstract

This is a theoretical and empirical study of leadership. Although sociologists have contributed important theories and research on authority and power, there is not yet a developed leadership theory in sociology. On the other hand, leadership studies in other disciplines are not satisfying, and they will not be satisfying in the foreseeable future if they adhere to their basic theoretical orientations, e.g. focusing on leadership personal traits and characteristics. I elaborate the important sociological theories that can be used in the study of leadership. I also intend to link sociological theories of leadership to social background analysis. The social backgrounds considered are family status, education, religion, military service, and more. Particular attention is paid to military background and its impact on business, because military has always been such an important social phenomenon but the theories of it have been controversial.The study of leadership inevitably involves both individuals and their groups. With evidence obtained from different data sources on leaders and on business organizations, I studied the impact of military social background of business leaders. This research unpacks the rise of business leaders with military experience in the late 20th century, using a database on the 20th century Great American Business Leaders. This research also measures the organizational performance of these leaders, incorporating information from Standard & Poor's Compustat database. Statistical techniques like logistic regressions and hierarchical linear models are used in the analysis to test various effects on personal and organizational performance. I found that military experience does not help a business leader in aspects like time taken to become a CEO and time to be a CEO, but it does help organizational performance as measured by profitability. Both rank and number of years in the military contribute to profitability. I also found that ex-military business leaders differ from non-military business leaders in certain organizational behaviors, e.g. they are less likely to downsize the organizations.The theory of institutional logics and social background analysis were combined in this study. I also attempted to link institutional logics with theories of rationality. From the idea of institutional leadership and inter-institutional relationship, I suggested a theory of extended rationality.