CEO Implicit Person Theory: Its Effect on Firm Level Outcomes via HR Practices and Leadership Behavior

Implicit person theory (IPT) is concerned with the assumptions that individuals have about the malleability of personal attributes such as ability, intelligence, and personality. A growth mindset assumes that such personal attributes are relatively malleable and thus able to change over time. On the contrary, a fixed mindset reflects the assumption that personal attributes are largely fixed and tend not to change much over time. As IPT can influence employees in organizations, during the last decade a number of studies have examined IPT in organizational settings, with the most focus on managers’ IPT. However, in organizations the IPT held by chief executive officers (CEOs) may be of paramount importance theoretically and practically given that the CEO is the one who leads the entire organization. No study has yet examined how CEOs’ IPT influences organizations and what the consequences are. Thus, in this study, I examine how CEOs’ IPT influences organizational performance and employees’ organizational commitment by proposing structural and behavioral mechanisms: high performance work systems and transformational leadership. Specifically, I propose that CEOs with a growth mindset are more likely than those with a fixed mindset to implement high performance work systems and engage in transformational behaviors, which in turn positively contribute to organizational performance and employees’ organizational commitment. I also propose that CEOs’ perceived change in workforce productivity moderates the relationship between CEOs’ IPT and utilizing high performance work systems and transformational leadership, such that CEOs with a growth mindset are more likely to utilize high performance work systems and transformational leadership when they perceive a decrease in workforce productivity than when they perceive an increase. I test the proposed model using a sample of 50 firms representing 50 CEOs, 50 HR managers, and 156 employees. The model was partially supported. The findings and theoretical implications are discussed.