On the Power of Professional and Relational Respect of Chairpersons

The chairperson's leadership influences the board's decision making, and in turn, firm performance. In this study, we advance a respectful leadership lens to suggest that when the chairperson enjoys both professional and relational respect, the quality of strategic decisions and firm performance improve. Using data from 200 publicly traded firms in two countries, our research shows that a chairperson's respectful professional and relational leadership helps build trust within the board of directors and improves the quality of strategic decisions under high levels of environmental discretion, thereby enhancing long-term firm performance. This study contributes to the behavioral theory of corporate governance in general and the board literature in particular by demonstrating the power of respectful professional and relational leadership in improving decision quality and firm performance. We offer insights into strategies for integrating these forms of respect to improve corporate governance and firm functioning.