Social Image, Self-Confidence and Organizational Behavior

Abstract: This article analyzes the effects of self-confidence and social image on managerial performance in a model where the firm implements projects with stochastic returns and the manager cares about her social image. Three results are established. First, followers might exert a higher effort when the manager is confident compared to an unconfident manager despite knowing that there is a negative relationship between confidence and ability. This happens when the followers who are aware of the relationship between confidence and ability also know that a sufficient fraction of followers believe there is a direct association between confidence and ability. Second, image concern imposes a cost on organization because the manager is committed to implement inferior projects in order to save face. Our analysis therefore provides a behavioral explanation for commitment escalation. Third, managers with a high or low status are less vulnerable to image loss, compared to managers with an intermediate status, when it comes to correct a failed course of action. Image preservation is therefore the problem of middle status managers.

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