The Value of Speaking for “Us”: the Relationship Between CEOs’ Use of I- and We-Referencing Language and Subsequent Organizational Performance

Abstract

CEOs have been argued to play a critical role for organizational performance. However, CEOs cannot achieve success singlehandedly. They rely on other organizational members to execute and implement their agenda and to contribute to organizational success. In the present research, we propose that CEOs serve as identity leaders of their organization who are able to enhance organizational performance by representing and cultivating a sense of shared collective identity (“us”) with those they lead. One way for leaders to do so is through the use of we-referencing (as opposed to I-referencing) language. We examine this idea in a pre-registered study of organizations listed in the DAX (i.e., leading German stock index) between 2000 and 2016, assessing the impact of CEOs’ use of we- and I-referencing language in letters to the stakeholders (N = 378) on objective indicators of organizational financial performance. In line with hypotheses, results show a positive relationship between CEOs’ use of we-referencing language and key indicators of financial performance: return on assets and sales per employee (while there was no evidence of an association with return on sales). At the same time, results indicate that the use of I-referencing language was unrelated to organizational performance. These findings advance the literature on strategic leadership and on the social identity approach to leadership by suggesting that CEOs’ thinking and acting in collective terms is associated with greater organizational financial performance.

Full text

ORIGINAL PAPER
The Value of Speaking for “Us”: the Relationship Between CEOs’Use
of I- and We-Referencing Language and Subsequent
Organizational Performance
Martin P Fladerer
1
&SAlexanderHaslam
2
&Niklas K Steffens
2
&Dieter Frey
1
#The Author(s) 2020
Abstract
CEOs have been argued to play a critical role for organizational performance. However, CEOs cannot achieve success
singlehandedly. They rely on other organizational members to execute and implement their agenda and to contribute to organi-
zational success. In the present research, we propose that CEOs serve as identity leaders of their organization who are able to
enhance organizational performance by representing and cultivating a sense of shared collective identity (“us”)withthosethey
lead. One way for leaders to do so is through the use of we-referencing (as opposed to I-referencing) language. We examine this
idea in a pre-registered study of organizations listed in the DAX (i.e., leading German stock index) between 2000 and 2016,
assessing the impact of CEOs’use of we- and I-referencing language in letters to the stakeholders (N= 378) on objective
indicators of organizational financial performance. In line with hypotheses, results show a positive relationship between
CEOs’use of we-referencing language and key indicators of financial performance: return on assets and sales per employee
(while there was no evidence of an association with return on sales). At the same time, results indicate that the use of I-referencing
language was unrelated to organizational performance. These findings advance the literature on strategic leadership and on the
social identity approach to leadership by suggesting that CEOs’thinking and acting in collective terms is associated with greater
organizational financial performance.
Keywords CEO leadership .Identity entrepreneurship .Financial performance .Social identity approach to leadership .
We-referencing language .Linear mixed-modeling
The leaders who work most effectively, it seems to me,
never say ‘I’. And that’s not because they have trained
themselves not to say ‘I’.Theydonotthink ‘I’. They
think ‘team’. They understand their job to be to make
the team function…There is an identification (very of-
ten quite unconsciously) with the task and with the
group. (Drucker 1992,p.14).
CEOs are the figureheads of their organization. Their
choices and behaviors have been argued to be critical for the
performance of organizational members and the organization
as a whole (Boal and Hooijberg 2001; Finkelstein et al. 2009;
Hambrick and Mason 1984). Although CEOs have direct in-
fluence on strategic decisions (e.g., acquisitions), they rely on
other organizational members to execute and implement their
agenda. Accordingly, without the engagement and support of
followers, CEOs’visions and goals will count for little be-
cause they will not be translated into material reality (Bennis
1999; Haslam and Platow 2001). In simple terms, this is
Electronic supplementary material The online version of this article
(https://doi.org/10.1007/s10869-019-09677-0 ) contains supplementary
material, which is available to authorized users.
*Martin P Fladerer
martin.fladerer@psy.lmu.de
S Alexander Haslam
a.haslam@uq.edu.au
Niklas K Steffens
n.steffens@uq.edu.au
Dieter Frey
dieter.frey@psy.lmu.de
1
Center for Leadership and People Management, LMU Munich,
Munich, Germany
2
School of Psychology, The University of Queensland,
Brisbane, Australia
https://doi.org/10.1007/s10869-019-09677-0
Published online: 6 February 2020
Journal of Business and Psychology (2021) 36:299–313
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because it is not a CEO’s vision that makes and sells products
and services, but the hard work of the people they employ.
So how do CEOs win the support of their followers? One
answer, suggested by social identity theorizing, is by cultivat-
ing a sense of shared social identity—a shared sense of “us”—
among organizational members (Haslam et al. 2011; Steffens
et al. 2014b). This is argued toencourage the internalization of
group membership (Haslam et al. 2003) by those followers in
ways that restructure their perceptions and behavior so as to
align them with the interests and goals of the group and ulti-
mately lead them to contribute to the achievement of shared
group goals (Ellemers et al. 2004; Turner 1991). In the present
paper, we advance the social identity approach to leadership
by examining the relationship between CEOs’representation
and cultivation of a sense of “us”through the use of we-
referencing language (opposed to I-referencing language)
and the financial performance of the organizations they lead.
This study also contributes to the strategic leadership literature
by extending the scope of strategic leadership theories beyond
characteristics of the CEO as an individual to consider and
understand the CEO as a member of a social group (i.e.,
their organization; e.g., Boal and Hooijberg 2001). In this
way, the present study addresses Hambrick’s(2007)callfor
the strategic leadership literature not to “glorif[y] elites”(p.
341) by focusing on the characteristics that set leaders apart
from their followers but rather to advance the understanding
of what enables strategic leaders to connect to followers.
The Social Identity Approach to Leadership
Traditionally, the strategic leadership literature has focused on
what makes leaders special as individuals (i.e., as “great I’s”;
Boal and Hooijberg 2001; Booth et al. 2016; Finkelstein et al.
2009; Hambrick 2007; Hambrick and Mason 1984). More
recently, though, researchers have increasingly seen leader-
ship as a social group process (i.e., a “we-thing”;Dinhetal.
2014; Yammarino et al. 2012). According to this perspective,
leaders have been argued to be influential not because they are
special as individuals (e.g., highly charismatic) or because
they hold a particular position of power, but rather because
they think and act in terms of a bigger “we”and are able to
cultivate a shared identity with those they seek to influence
(Ellemers et al. 2004;Haslametal.2011;Hogg2001; Hogg
et al. 2012;Steffensetal.2014b; van Knippenberg and Hogg
2003).
Informed by principles set out in both social identity theory
(Tajfel and Turner 1979) and self-categorization theory
(Turner 1991; Turner et al. 1987; see Haslam 2004), the social
identity approach to leadership sees this as an influence pro-
cess that is grounded in a sense of shared social identity be-
tween leaders and followers (Ellemers et al. 2004; Haslam
et al. 2003; Haslam et al. 2011; van Knippenberg and Hogg
2003). In line with these claims, extensive research points to
the importance of leaders being seen to be prototypical of the
group they want to lead (Barreto and Hogg 2017; Haslam
et al. 2011;Hoggetal.2012; van Knippenberg 2011)such
that they embody the norms, values, and ideals that make the
group special and distinct from other groups (van
Knippenberg 2011; van Knippenberg and Hogg 2003). In par-
ticular, perceived group prototypicality has been shown to
underpin (a) endorsement of leaders (Steffens et al. 2013;
Ullrich et al. 2009), (b) trust in leaders (Giessner and van
Knippenberg 2008), (c) perceived leader effectiveness
(Giessner et al. 2009; van Knippenberg and van
Knippenberg 2005), and (d) perceived leader charisma
(Platow et al. 2006;Steffensetal.2014a).
At the same time, scholars have asserted that successful
leaders do not simply accept received social identities as given
but instead actively seek to create and promote a particular
version of group identity (Augoustinos and de Garis 2012;
Huettermann et al. 2017; Reicher et al. 2005; Reicher and
Hopkins 2001). In other words, “leaders have to be masters
of identity, not merely slaves to it”(Haslam et al. 2011,p.
162). Among other things, this means that, as identity entre-
preneurs, leaders work hard to construct social identity in
ways that enhance both a sense of shared identity within the
groups they lead as well as their own prototypicality. They do
this, for example, by defining shared norms, values, and ideals
that align group members with their own agenda (Reicher
et al. 2005). This, in turn, is likely to render the social identity
more accessible and explicit for group members, promoting
social identification (Riantoputra 2010). In this way, identity
entrepreneurship facilitates collaboration between organiza-
tional members (e.g., inter alia stimulating trust and helping
behavior; Ellemers et al. 2004; van Knippenberg and Hogg
2003) making organizational success more likely (Carton
et al. 2014; Castanias and Helfat 1991; Fiol 2001; Millward
and Postmes 2010). Consistent with these sets of ideas, a study
of customer business managers in the UK showed that orga-
nizational identification among members of the organization
was a substantial predictor of both individual and team per-
formance (as indicated by sales turnover; Millward and
Postmes 2010). Yet, by the same token, if leaders neglect the
power of social identities by, for example, promoting their
individual authority rather than their collective interests, their
attempts to lead a group in a particular direction (or any direc-
tion at all) are likely to fail (Haslam and Reicher 2007).
CEOs’I- and We-Referencing Language
and Organizational Performance
In line with the preceding points, social identity theorizing
suggests that as strategic leaders of an organization, CEOs
are more likely to be effective to the extent that they develop
300 J Bus Psychol (2021) 36:299–313
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a sense of shared social identity (“Us”;Haslametal.2011;
Reicher and Hopkins 2001). One potential way in which
CEOs can express, create, and shape a shared social identity
is through we-referencing language (by referring to “we,”
“us,”“our,”or “ours”), which stands in contrast to I-
referencing language (by referring to “I,”“me,”“my,”or
“mine”) as a means to express and stress their personal iden-
tity. Language carries meaning that organizational members
use to make sense of organizational life and their part in it
(Finkelstein et al. 2009;Fiol2002;HaslamandReicher
2007). For example, using collective pronouns has been
shown to induce a shift in individuals from a personal to a
more collective self-definition (i.e., as a member of a group;
Brewer and Gardner 1996). In addition, using collective pro-
nouns is also a sign of a person’s own identification with a
social group (Mael and Ashforth 1992; Rousseau 1998).
Indeed, this idea is underscored by the fact that the most wide-
ly used organizational identification scale—developed in the
seminal work by Mael and Ashforth (1992)—includes the
item: “When I speak about [group under study], I usually
say ‘we’rather than ‘they’”. In line with these ideas, we argue
that there is likely to be a dual process at play such that
leaders’use of we-referencing language serves both (a) to be
an indication of, and signal, the leader’s own social identifi-
cation with the collective (Mael and Ashforth 1992;Rousseau
1998) and (b) to create a shared sense of identity among those
they lead and to clarify who we are, what we stand for, and
who we want to be in the future (Haslam et al. 2011;
Huettermann et al. 2017; Riantoputra 2010). These in turn
should inspire identification among members of the organiza-
tion (Schuh et al. 2012; van Dick et al. 2007; Wieseke et al.
2009)aswellasmobilizemembers’behavior towards a com-
mon goal (Haslam and Reicher 2007).
Supporting these ideas, research on leaders’use of we- and
I-referencing language has shown that this matters for a range
of important follower and organizational outcomes. Speaking
to the importance of we-referencing language, experimental
studies by Platow et al. (2006) showed that leaders were more
likely to be perceived as charismatic when they used we-
referencing language (see also Hornsey et al. 2005).
Furthermore, recent research by Weiss et al. (2018)showed
that the extent to which leaders of health care teams used we-
referencing language was positively associated with team
members’voice behavior (i.e., discretionary communication
of ideas, suggestions or concerns about work-related issues
with the intent to bring about improvement or change;
Morrison 2014), while I-referencing language was unrelated
to their voice behavior. There is also evidence for the positive
effect of leaders’we-referencing language from the political
domain. Specifically, an analysis of Australian federal elec-
tions has shown that candidates’use of we-referencing lan-
guage is positively related to followers’support (with 80% of
elections being won by the candidate who uses we-referencing
language the most; Steffens and Haslam 2013). At the same
time, the candidates’use of I-referencing language was unre-
lated to the election outcome. Relatedly, in the business do-
main, research by Chatterjee and Hambrick (2007)showed
that CEOs’use of I-referencing language in interviews
(referencing “me, myself & I”)—as indicator of their self-
preoccupation and narcissism—failed to have a positive influ-
ence on organizational performance.
Even though there is a growing body of research on
the relevance of leaders’we- and I-referencing lan-
guage, our knowledge is limited in at least two impor-
tant ways. First, prior research that has explored the use
of we-referencing language has tended to focus on set-
tings of supervisory leadership (Platow et al. 2006;
Weiss et al. 2018) and political leadership (Steffens
and Haslam 2013; see also Augoustinos and de Garis
2012; Gleibs et al. 2017) rather than strategic leadership
in organizations. We therefore know little about the ex-
tent to which processes implicated in we-referencing
language have any bearing on the leadership success
of senior leaders of organizations. In addition, while
exploring a range of outcomes (e.g., perceptions of cha-
risma and voice behavior) little work has examined the
relationship of we-referencing language and tangible
measures of (organizational) performance. As a result,
it is unclear whether CEOs’use of we-referencing lan-
guage as a means of creating a shared “we”among
organizational members relates to organizational func-
tioning and performance—one of (if not the) key indi-
cator of CEOs’leadership success. Moreover, it is un-
clear exactly how the use of I-referencing language is
associated with measures of leadership success. All
three, Chatterjee and Hambrick (2007), Steffens and
Haslam (2013)aswellasWeissetal.(2018), report
statistically non-significant results using null-hypothesis
testing which do not allow for the inference that I-
referencing language does not matter (i.e., null results
do not provide evidence in support of the null hypoth-
eses). Using a Bayesian approach, the research present-
ed here seeks to provide a test of whether the assumed
null-effect is more likely than its alternatives (i.e., a
positive or negative relationship).
The Present Research
One common and visible place for CEOs to communicate
their narrative about organizational identity is in stake-
holder letters in organizations’annual reports (Prasad
and Mir 2002; Smith and Taffler 2000). Such letters are
addressed to multiple stakeholders (e.g., shareholders, em-
ployees, and customers) and in them CEOs typically seek
to explain where the organization currently stands (“who
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we are”) and to delineate future pathways (“who we want
to be”). On the basis of social identity theorizing, we
propose that CEOs’use of we-referencing language in
these letters both is indicative of their own identification
as well as stimulates a sense of shared identity that en-
courages other members of the organization to identify
both with the CEO and with the organization as a whole
(Brewer and Gardner 1996; Platow et al. 2006;
Riantoputra 2010; Rousseau 1998; van Dick et al.
2007). This stronger identification with the organization,
in turn, is a basis for members to align their attitudes and
behaviors in ways that contribute to shared organizational
goals (Ellemers et al. 2004;Haslametal.2011; Lee et al.
2015).
It is also likely that, through a cascading effect of
social identification, customers and other stakeholders
will feel enveloped in a shared sense of we-ness and
therebyidentifymorestronglywiththeorganizationin
ways that encourage them to contribute to the organiza-
tion’s performance (e.g., by making more use of the
organization’s products and services; Schuh et al.
2012; Wieseke et al. 2009). More formally, then, we
hypothesize:
Hypothesis 1:CEOs’use of we-referencing language
(i.e., first-person plural pronouns) in letters to the stake-
holders will be associated with higher organizational fi-
nancial performance.
Atthesametime,Guptaetal.(2018) suggest that I-
focused CEOs “create environments of passive follower-
ship”(p. 12) rather than engaged followership within their
organization (Haslam and Platow 2001). In this regard,
high levels of CEO’s use of I-referencing language (i.e.,
first-person singular pronouns)—which signals CEOs’
strong personal identity—should fail to engage organiza-
tional members’and other stakeholders’sense of shared
social identity (Fiol 2002) and thereby fail to engender
improved performance. In line with social identity theo-
rizing, we can posit that this is because CEOs who think
“I”will act (and be seen to act) in ways that serve their
personal needs rather than those of the organization
(Boivie et al. 2011), and thereby put collective efforts in
jeopardy (De Cremer and van Dijk 2005;Steffensetal.
2018a; Weiss et al. 2018). Indeed, Chatterjee and
Hambrick (2007) found that high levels of CEOs’person-
al self-references in interviews were not related to (better
or worse) performance (but to greater variance in organi-
zational performance). In the realm of politics, too, there
was no evidence that candidates’use of first-person sin-
gular pronouns was related to the result (i.e., win or loss)
in Australian federal elections (Steffens and Haslam
2013). This leads to our second hypothesis:
Hypothesis 2:CEOs’use of I-referencing language (i.e.,
first-person singular pronouns) in letters to the stake-
holders will not be associated with higher organizational
financial performance.
Method
Open Science Practices
Enhancing the confidence in the present findings (e.g.,
Banks et al. 2019), the study was pre-registered on the
Open Science Framework (i.e., study design, hypothe-
ses, and analysis strategy were pre-registered prior to
data collection and analysis). All data and materials will
be made available online upon publication: https://osf.io/
znwu5.
Sample
We analyzed a sample of CEOs of large, multi-national cor-
porations listed in the DAX (i.e., Germany’s leading stock
index; as of November 2017) between 2000 and 2016. We
chose this sample for two main reasons: First, in regard to
the choice of time frame, annual reports were available online
for a much larger number of organizations after 2000 than in
prior years. In our initial sample, the majority (18 of the 30) of
organizations provided annual reports for the entire period
examined (2000–2016), while all but one organization provid-
ed reports for the last 10 years (2007–2016) or more. In total,
434 (of 510; 85.1%) annual reports were available. Second,
the vast majority of studies on CEOs has been conducted with
American samples limiting the generalizability of findings to
other countries (e.g., Crossland and Hambrick 2007). Despite
the fact that today’s organizations compete in a globalized
economy, national differences in informal (e.g., norms and
values) and formal (e.g., laws and rules) institutions affect
CEOs’leadership (Crossland and Hambrick 2007,2011).
For example, CEOs of American organizations have greater
latitude of action and less constraints in their role than their
counterparts in other countries such as Germany (Crossland
and Hambrick 2011). In consequence, due to the limitation of
their power as individual, CEOs of German organizations rely
even more strongly on winning the support and participation
of followers (i.e., creating collective power within their
organization; Ellemers et al. 2004). At the same time, results
from the GLOBE project show that the two societies differ
little in the degree to which they value group cohesiveness,
group loyalty, and collective action (i.e., institutional collec-
tivism; USA: 4.17 and Germany: 4.68; average GLOBE
score: 4.73 on a 7-point scale; Gelfand et al. 2004), while
evidence from the ILI-Global Project (van Dick et al. 2018)
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demonstrates that identity leadership (as measured by the
Identity Leadership Inventory; Steffens et al. 2014b) has the
same meaning in Germany and the USA (indicated by metric
invariance between the two groups). Thus, we selected a sam-
ple that matches prior samples in its core characteristics (i.e.,
publicly traded and multi-national) from an appropriate con-
text for the specific phenomenon under study.
A letter to the stakeholders accompanied 432 annual reports.
Twenty-six letters were excluded from the sample for one of the
following reasons: 15 letters were co-authored by either two
CEOs (n= 14; Deutsche Bank 2012–2015, RWE 2002, SAP
2000–2002 and 2008–2013) or the CEO and the chair of the
board (Henkel 2008). All reports for Vonovia between 2004
and 2012 were excluded because the organization only turned
into a publicly traded company in 2013. The financial data from
the first available report of each organization was not matched
by a CEO letter and therefore excluded. The final sample
encompassed 378 observations. In this final sample, letters
were written by 73 different CEOs (all Caucasian males). An
average of 5.18 letters per CEO was included (SD = 2.96,
range = 1–12). These CEOs held their position for an average
of 7.14 years (SD = 3.90, range = 1–16).
Procedure and Measures
Annual reports are typically published 3 months after the end of
the preceding financial year (for 27 of the 30 organizations in
our sample the financial year corresponds to the calendar year).
For example, Adidas published the annual report corresponding
to the financial year 2014 on 5 March 2015. In the present
analysis, we therefore used indicators of we- and I-referencing
language in a given year as predictors of organizational perfor-
mance of the subsequent financial year (ending about 9 months
after the publication of the preceding annual report). This means
that in the present design, there was time lag of 9 months be-
tween our independent and dependent variables.
Two sets of information were extracted from each annual
report. First, we recorded the number of first-person singular
(“I,”“me,”“my,”“mine”) and first-person plural pronouns
(“we,”“us,”“our,”“ours”) within each CEO letter. For this
purpose, we specified a word count algorithm in EXCEL that
ran over each letter to identify all references (cf. Tausczik and
Pennebaker 2010).
1
All references within a letter were com-
bined to obtain indicators of CEOs’useofI-andwe-
referencing language, respectively. For example, in the fol-
lowing passage from the 2014 letter to the stakeholders by
Siemens CEO Joe Kaeser (Siemens 2014), seven first-
person plural pronouns (i.e., we, us, we, our, our, our, our)
and four first-person singular pronouns (I, my, my, my) were
recorded:
We’ll be working on the three areas outlined above.
They describe the key factors that are enabling us to
lead Siemens into a successful future. Throughout this
process, we will gear all our actions to the requirements
of our customers, our owners and our employees as
well as to the values of society. Ipersonally intend to
ensure that the next generation will inherit a better
Company. That’smy vision. That’smy responsibility.
That’smy promise. (emphasis added; p. 9)
Second, for each year reported, the following variables
were documented: (a) total sales, (b) earnings before interest
and tax (EBIT), (c) net profit, and (d) total capital.
2
These
were used to obtain two commonly used accounting-based
financial performance indicators (e.g., Agle et al. 2006;
Richard et al. 2009): Return on assets (ROA = net profit di-
vided by mean total capital of the current and previous year)
and return on sales (ROS = EBIT divided by total sales). We
focused on ROA and ROS as indicators of financial perfor-
mance because CEOs have been observed to have greater
control over accounting-based indicators, via their decisions
and behaviors, than over market-based indicators (Agle et al.
2006; Richard et al. 2009). Not least, this is because market-
based performance indicators, such as Tobin’s Q, reflect in-
vestors’evaluations of the organization’s growth prospects
rather than their actual performance (Haslam et al. 2010).
ROA is an indicator of how efficiently an organization uses
its assets to generate earnings, while ROS is known as an
organization’s operating profit margin. Table 1provides an
overview of descriptive statistics.
Analytic Strategy
The study data had a nested (panel) structure: That is, it contains
observations of a set of variables obtained over multiple time
periods for the same organizations and individuals. In order to
account for the nested data structure in our analyses (and hence,
the non-independence of our observations), we used linear
mixed-effects modeling (Bauer et al. 2006; Faraway 2016).
We specified the number of I- and we-references in CEOs’
letters to the stakeholders as predictors of financial performance
at the end of a given financial year (i.e., 9 months after the
publication of the annual report). We ran separate analyses for
the effect of I-referencing and we-referencing language on each
outcome variable (i.e., ROS and ROA, as well as sales per
employee). The use of I- and we-referencing language was
entered as fixed effect (i.e., systematic predictor), respectively.
The total number of words used was entered as covariate (i.e.,
fixed effect). For 69 CEOs (94.52% of all CEOs; M=5.18,
1
Fifteen CEO letters were presented as written interviews. In these cases, we
isolated only those portions that represented the CEO’s words.
2
In all but one case (Fresenius Medical Care) numbers were providedin Euro.
For Fresenius Medical Care, figures were converted from US-Dollar to Euro
based on the exchange rate at the reporting date.
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SD = 2.96) we had multiple measurements (i.e., different years)
in our sample. Accordingly, we included a random intercept for
CEO to allow for variations between CEOs. Moreover, we had
multiple measures for each organization (M= 12.60, SD =4.18,
range = 3–16) and therefore included organization as random
intercept to model differences between organizations.
3
In a sec-
ond model, we also tested the generalizability of our results
beyond our selected period by introducing year as random in-
tercept, which expresses the variation between years.
4
The internal validity of random effect models is threatened
when random effects are specified without testing their statisti-
cal justification (Antonakis et al. 2010). For this reason, prior to
estimating our models, we determined the appropriateness of
our random effect models using the Breusch-Pagan Lagrangian
Multiplier Test (Breusch and Pagan 1980) and the consistency
of the estimator using the Hausman Test (Hausman 1978)im-
plemented in the plm package (Croissant and Millo 2008)inR
(R Core Team 2017). The Breusch-Pagan Test was significant
for all models (χ
2
(1) > 133.12, p< .001), justifying the use of
random effects. The Hausman Test was non-significant for all
models (χ
2
(2) < 5.37, p> .068), pointing to the consistency of
the estimator. Overall, statistical assumptions for modeling ran-
dom effects were met.
For each analysis, we specified two models: a null model
that excluded, and an alternative model that included, the fixed
effect of the predictor use of language. The models were iden-
tical in all other respects. We used the likelihood ratio test
statistic to compare the two nested models. Parametric
bootstrapping (n
bootstrap
= 1000) was applied to determine p-
values for the likelihood ratio test (Faraway 2016). We present
marginal R
2
values based on Nakagawa et al. (2017), which
only consider the variance of the fixed effects. We used the
lme4 package (Bates et al. 2015)inR(RCoreTeam2017)
for subsequent analyses.
Hypothesis 2 proposes a null effect. This cannot be tested
using conventional statistical analysis (i.e., null hypothesis sig-
nificance testing) because the failure to reject a null hypothesis
does not yield evidence in favor of it. We therefore used a
Bayesian approach that can compute the odds favoring the null
hypothesis over its alternative hypothesis predicting an effect.
Accordingly, to test Hypothesis 2, we additionally determined a
Bayes factor (i.e., BF
01
) for the hypothesis that the regression
coefficient for the use of I-referencing language is equal to zero
based on a weakly informative prior using the brms package
(Bürkner 2017).
Results
Confirmatory Analyses
Use Of We-Referencing Language
For our first model, comparison of the null model and the
alternative model indicated that CEOs’use of we-
referencing language was significantly and positively associ-
ated with subsequent ROA (χ
2
(1) = 10.676, p= .001,
SE = .001, R
2
= .023), raising ROA by 0.047% (b) ± .014
(SE b) per additional we-referencing pronoun used. This cor-
responds to an average increase in organizations’net profit of
approximately 820,000 EUR (SE ≈245,000 EUR) per addi-
tional we-referencing pronoun. For ROS, the null model and
the alternative model did not differ significantly (χ
2
(1) =
0.909, p=.331, SE = .015).
For the second model, we added year as random effect. As
shown in Fig. 1, this yielded substantially identical results.
Specifically, comparison of the null model and the alternative
model revealed a significant relationship of CEOs’we-
referencing language and ROA (χ
2
(1) = 8.019, p= .003,
3
Deviating from the pre-registered protocol, we applied this procedure instead
of group-mean centering the dependent variable to control for differences
between organizations because this procedure is a more consistent application
of the linear mixed-effect modeling approach. The pattern of results, however,
does not differ across the two approaches.
4
In a third model, following the pre-registered protocol, we added random
slopes by-CEO and by-year to account for inter-individual differences in the
effect of use of language. For all dependent variables, this model failed to
converge. Diagnostic procedures revealed parameter estimate singularity
(i.e., values close to zero) as cause for the convergence problems (Bates
et al. 2018). Because this analysis suggested that this model was too complex
to be estimated properly, we did not test it further.
Table 1 Means, standard
deviations, and within-CEO cor-
relations of focal variables
Variable MSD123456
1 Use of I-referencing language 5.37 5.37 –
2 Use of we-referencing lan-
guage
62.27 29.90 .21*** –
3 Total no. of words in letter 1132.06 507.18 .32*** .80*** –
4 Return on assets (in %) 3.34 4.66 .00 .08 −.04 –
5 Return on sales (in %) 10.36 12.74 −.01 −.00 −.01 .17** –
6 Sales per employee (Euro in
thousand)
398.42 289.90 −.03 .13* .08 .29*** −.04 –
N= 378 letters by 73 CEOs. Correlations are based on raw within-CEO scores.* p< .05, ** p<.01,***p< .001
(two-tailed)
304 J Bus Psychol (2021) 36:299–313
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SE = .002, ΔR
2
= .017). Thus, the association between we-
referencing language and subsequent ROA was not influenced
by the year and can be generalized beyond the period in our
sample. The strength and direction of the obtained coefficient is
also similar to that of our first analysis (b= 0.040, SE = .014).
Again, the comparison of a null model and the alternative model
did not relate to ROS (χ
2
(1) = 0.613, p= .458, SE = .016). The
results of the second set of models are summarized in Table 2.
Use of I-Referencing Language
We ran the same set of analyses for I-referencing language.
For our first model (i.e., random factors for CEO and organi-
zation), neither ROA (χ
2
(1) = 0.573, p=.464,SE = .016) nor
ROS (χ
2
(1) = 0.314, p=.573, SE = .016) were related to I-
referencing language. The BF
01
was 10.49 and 1.96, respec-
tively, suggesting that given these data, the null hypothesis
(i.e., a null effect) is more likely to be true than the alternative
hypotheses (i.e., an effect). Both outcomes were also un-
changed when adding year as random factor to the model
(ROA: χ
2
(1) = 1.705, p= .174, SE = .012, BF
01
= 8.96;
ROS: χ
2
(1) = 0.630, p=.415,SE = .016, BF
01
=2.18).
Exploratory Analyses
We ran several additional analyses to test the robust-
ness of the results. First, we introduced an alternative
predictor variable based on the ratio of the total num-
ber of words to the number of pronouns. Second, we
tested the effects of language on an additional key
accounting-based outcome variable: sales per employ-
ee. Third, we examined how the focal relationships
changed when controlling for organizational perfor-
mance in the preceding year. And fourth, we tested
the reverse relationship, that is financial performance
predicting CEOs’use of we-referencing language. We
also examined a set of several exploratory analyses
examining additional questions (e.g., change of use of
I- and we-referencing language over time, analysis of
CEOs’demographic variables, inspection of CEOs’
communication profiles) which are described in more
detail in the online supplement andonlybrieflysum-
marized here.
Ratio of We- and I-References To Total Words
To test the robustness of our results, we calculated the
number of words in a letter per pronoun by dividing
the total number of words by the number of I- and we-
referencing pronouns, respectively. For our first model
(i.e., including the random effect for CEO and organi-
zation), as expected, the greater the ratio of total words
to number of we-referencing pronouns, the smaller the
organization’sROA(b=−.089; χ
2
(1) = 14.731,
p= .006, SE = .002, ΔR
2
= .025). Again, there was no
association with subsequent ROS (χ
2
(1) = 7.491,
p= .530, SE = .016). For our second model (i.e.,
adding a random factor for year), results were again
robust and significant for ROA (b=−.086; χ
2
(1) =
14.665, p= .011, SE = .003, ΔR
2
= .021) but non-
significant for ROS (χ
2
(1) = 7.344, p=.612,
SE = .015).
For I-referencing language, in 50 cases, CEOs did not use
first personal pronouns in their letter, which reduced the sam-
ple size to 328. The ratio of total words to I-referencing pro-
nouns was not associated with ROA in any of the models
(χ
2
(1) < 1.010, p>.341, BF
01
> 197.87) or ROS (χ
2
(1) <
0.850, p>.372, BF
01
> 184.26).
Sales per Employee
We tested one additional key indicator of accounting-based
organizational performance, namely sales per employee
(e.g., Bhattacharya et al. 2005; Thomas et al. 1991).
5
This
constructive replication helps to test the robustness of our
results across variations in measurement (Eden 2002;
Richard et al. 2009). We calculated this indicator by dividing
the total value of sales (in Euros) by the number of an orga-
nization’s employees in that year. This analysis revealed a
positive and significant effect of we-referencing language on
sales per employee in both the first (χ
2
(1) = 3.814, p=.054,
SE = 0.007, ΔR
2
=.002, b= 753.12) and the second model
(χ
2
(1) = 3.649, p= .058, SE = 0.007, ΔR
2
= .002, b=
724.15). This indicated that sales per employee increased by
724 Euros in a year for a CEO’s every additional we-
referencing pronoun. With an average of about 131,000 em-
ployees in DAX organizations (n¼130:975 ), this corre-
sponds to an increase of total sales by approximately 99 mil-
lion Euros per additional we-reference. I-referencing
Fig. 1 Relationship between use of we-referencing language and return
on assets. Note. Predicted values for return on assets in percent as a
function of the number of we-referencing pronouns used in letters to the
stakeholders controlled for total number of words. Effects of the random
effects of CEO, organization and year (Model 2) are averaged. Upper and
lower graphs represent the upper and lower bound of a 95%-confidence
interval for the predicted values, respectively. Model statistics: χ
2
(1) =
8.019, p= .003, SE = .002, ΔR
2
=.017, b=0.040,SE b = .014
305J Bus Psychol (2021) 36:299–313
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language, on the other hand, was not associated with subse-
quent sales per employee (χ
2
(1) < 0.968, p> .372, BF
01
>
1.67).
Controlling for Prior Year’sPerformance
We examined the extent to which the relationship of I- and we-
referencing language and subsequent financial performance
held when controlling for performance in the preceding year.
We were able to match prior and subsequent year’sfinancial
performance for 352 data points (from 70 CEOs). First, we
explored the correlation between prior and subsequent year’s
financial performance: For ROA, ROS, and sales per employ-
ee correlations were .58, .64, .92 (p< .001), respectively.
Thus, a high proportion of variance in these indicators of
financial performance was explained by prior year’sperfor-
mance (R
2
= .33, .40, .85).
We then conducted additional analyses in which we added
prior year’s performance as covariate to the model described
in the main confirmatory analysis reported above. When we
did so, the linear mixed effect models did no longer converge
due to parameter estimate singularity (Bates et al. 2015) which
might be due to overparameterization (Bates et al. 2018). As
suggested by Bates et al. (2018), we (stepwise) removed var-
iance components (i.e., random effects for organization and
year) to reduce model complexity. In this reduced model,
CEOs’use of we-referencing language was significantly and
positively associated with subsequent ROA (χ
2
(1) = 4.406,
p= .048, SE = .007, R
2
= .008) but not with ROS (χ
2
(1) =
1.861, p=.183, SE = .012). For sales per employee, due to
non-convergence we further reduced model complexity (i.e.,
by dropping the random effect CEO). The remaining linear
model was significant (F(5,348) = 1035.00, p< .001,
R
2
= .889) in which we-referencing language was significantly
and positively related to sales per employee (b=659.99, SE
b= 317.86, p= .039). CEOs’use of I-referencing language
was neither related to ROA (χ
2
(1) = 0.348, p= .555) nor
ROS (χ
2
(1) = 0.126, p= .723). For sales per employee, the
linear model was significant (F(5,348) = 1023.00, p<.001,
R
2
= .898) but this effect was merely driven by prior year’s
sales per employee (b=0.957, SE b =.017,p<.001).
Test of Reverse Relationship
It is plausible that recent group success may influence an
individual’s group identification and thereby their use of we-
referencing language. Accordingly, CEOs may identify more
strongly—and express this through greater use of we-
referencing language—as a function of financial performance.
To test this reverse relationship, we regressed the number of
we-references on financial performance in the previous year.
The variance of the random effects year and organization were
0
This was the only exploratory dependent variable that we examined.
Table 2 Estimated parameters of
linear-mixed effects models
predicting ROA and ROS from
CEOs’use of we-referencing
language
Outcome
ROA ROS
Variable Model (0) Model (1) Model (0) Model (1)
Intercept 3.979 (0.840) 3.789 (0.823) 11.359 (2.579) 11.168 (2.579)
Fixed effects
Use of we-referencing language –0.040 (0.014) –0.027 (0.034)
Total no. of words in letter −0.001 (0.001) −0.003 (0.001) −0.000 (0.001) −0.001 (0.002)
Random effects (variance)
CEO 8.672 (2.945) 9.134 (3.022) 22.188 (4.710) 21.331 (4.619)
Organization 3.229 (1.797) 2.672 (1.635) 109.350 (10.457) 109.116 (10.446)
Year 1.238 (1.113) 1.059 (1.029) 2.092 (1.446) 1.922 (1.386)
Residual 9.876 (3.143) 9.663 (3.108) 63.345 (7.959) 63.540 (7.971)
Evaluation
−2 LogLik 2089.6 2081.4 2780.2 2779.6
AIC 2101.5 2095.5 2792.3 2793.6
BIC 2125.1 2123.0 2815.9 2821.2
Δχ
2
(df = 1) 8.019 0.613
p(SE) .003 (.002) .458 (.016)
ΔR
2
.017 .001
N= 378 letters by 73 CEOs of 30 organizations from a period of 16 years (2000–2016). ROA = return on assets.
ROS = return on sales. Model (0) refers to the null model. Model (1) refers to the final model. For fixed effects
standard error in parentheses. For random effects standard deviation in parentheses
306 J Bus Psychol (2021) 36:299–313
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close to zero (i.e., parameter singularity) for models with ROA
and ROS as predictor. Consequently, these variables were
dropped from the models (Bates et al. 2018). The relationship
of ROA and use of we-referencing language was significantly
positive (χ
2
(1) = 15.859, p<.001, SE = 0.0001, ΔR
2
=.013,
b= 0.693) yet of smaller in magnitude than our focal relation-
ship reported above (accounting for 1.3% compared to 2.3%
of the variance). However, it was not for ROS (χ
2
(1) = .426,
p= .525, SE = 0.016) or sales per employee (χ
2
(1) = .058,
p=.831,SE = 0.012).
Summary of Additional Analyses
We conducted seven additional sensitivity and exploratory
analyses which are reported in detail in the online supplement
and which we briefly summarize here.
First, analyses yielded substantively identical results when
including all CEO demographics that were associated with
predictor or outcome variables (Becker et al. 2016; i.e., CEO
age, CEO education, internal, vs. external CEO, size of
organization) as control variables.
Second, to inspect the influence of extreme cases on the
results, we conducted a sensitivity analysis in which we ex-
cluded outliers (based on Cook’s distance measure; Cook
1977). Results were identical to those revealed by the main
analysis with the only difference that I-referencing language
was negatively associated with subsequent ROA (Model 2:
χ
2
(1) = 7.242, p=.006, SE = 0.002, b=−.084, ΔR
2
=.014,
n= 364 after excluding 14 outliers).
Third, to analyze whether the results were affected by the
Global Finance Crisis, we conducted a sensitivity analyses in
which we excluded years of the Global Financial Crisis (i.e.,
2008 and 2009). The significance of the results from these
analyses did not change.
Fourth, to explore the potential interactive influence of I-
and we-referencing language, we conducted additional analy-
ses in which we added the interaction term between I- and we-
referencing language. Results show that the models adding the
interaction of I- and we-referencing language did not signifi-
cantly improve explanatory power, providing no evidence of
interaction effects.
Fifth, to explore potential clusters of CEOs as a function of
their language use, we conducted a multilevel latent profile
analysis of CEOs’I- and we-referencing language
(Asparouhov and Muthén 2008). On the lower level, two pro-
files of use of language were revealed in stakeholder letters.
The profiles predominantly differed in the use of I-referencing
language (high vs. low) but were characterized by similarly
high levels of we-referencing language. Based on these pro-
files, two clusters of CEOs were identified: The dominant
cluster (76.5%) almost exclusively used “High We Low I”
profiles. CEOs in the second cluster (23.5%) used “High We
High I”profiles about twice as often as “High We Low I”
profiles.
Sixth, we explored how CEOs’use of language changed
over the course of their tenure. Results for we-referencing
language indicated that a quadratic model (i.e., inverted U-
shape) fitted the data best (F(3,286) = 18.61, p< .001,
R
2
= .155). For I-referencing language, a cubic model (i.e.,
U-shape followed by inverted U-shape) fitted the data best
(F(4,276) = 4.97, p<.001,R
2
=.054).
Finally, we explored within-CEO associations between use
of language and subsequent organizational performance (i.e.,
whether higher use of we-referencing language of a given
CEO in a given year was associated with greater perfor-
mance). Results showed that the key relationships also held
within-CEOs such that the years in which a CEO made greater
use of we-referencing language were followed by higher or-
ganizational performance.
Discussion
This study provides evidence that CEOs’use of we-
referencing language is positively associated with higher or-
ganizational performance. This association was found across
two key accounting-based financial performance indicators:
return on assets and sales per employee. There was no evi-
dence of a positive association with return on sales in this
sample. In a secondary analysis we also found that these find-
ings also held when controlling for prior years’organizational
performance. Why we obtained evidence for the hypothesized
relationship for only two of the three indicators is not clear.
One potential reason may be that CEOs’strategies and man-
agement practices are more concerned with improving the
organization’s efficiency (i.e., return on assets) rather than
with the revenue on goods sold (i.e., return on sales; Richard
et al. 2009). This is an issue that will be important for future
research to resolve.
Furthermore, results show that CEOs’I-referencing lan-
guage was not associated with return on assets and return on
sales (based on Bayesian statistics). This finding strengthens
previous findings (which relied on null hypothesis signifi-
cance testing) showing that I-referencing language is unrelat-
ed to measures of followers’organizational behaviors (Weiss
et al. 2018) and political voting behavior(Steffens and Haslam
2013) as well as organizational performance (Chatterjee and
Hambrick 2007). However, recent research by Steffens et al.
(2018a) points to the negative effect of CEOs’actions that
undermine a sense of shared identity between leaders and
followers—such as high levels of CEO pay—on followers’
personal identification with the CEO as well as perceptions of
CEOs’leadership and charisma.
Supporting predictions derived from a growing body of
social identity work in organizations (Ashforth and Mael
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1989;Haslam2004;HoggandTerry2000), the present find-
ings show that CEOs’use of language that emphasizes the
collective (“us”) was related to improved organizational per-
formance, as indicated by objective financial data, and I-
referencing language was not. In this respect it is important
to note that although we examined a limited part of CEOs’
communication (i.e., their use of language in stakeholder let-
ters), the part we focused on is generally representative of their
overall communication and is the most widely read part of
annual reports (Prasad and Mir 2002; Smith and Taffler
2000). Letters in annual reports are clearly not the only com-
munication (and pathway) that can help (and is sufficient; e.g.,
Haslam et al. 2011) to create a strong shared identity among
organizational members. However, they play a relevant role in
the negotiation of CEOs’relationships with other organiza-
tional members (Palmer and Short 2008; Smith and Taffler
2000).
Moreover, although the present research provides evidence
of a predictive association of CEOs’use of we-referencing
language at the beginning and financial performance at the
end of a year, as Steffens and Haslam (2013)observe,there
is also likely to be a recursive dimension to this relationship—
and our explorative analyses of the reverse relationship point
to this possibility. Nevertheless, it is noteworthy that the mag-
nitude of the effect of the hypothesized relationships (from
we-referencing language to organizational performance in
terms of ROA) was larger (almost twice as large) as the re-
verse effect (from organizational performance to we-
referencing language). We also note that bi-directional
(causal) relationships between variables are more common
than is often assumed (Smith 1982) and even though they
are often explicitly stated in theory (e.g., stakeholder theory),
they are seldomly tested in empirical studies (Money et al.
2012). Within the theoretical framework of the social identity
approach, this accords with the suggestion (e.g., Haslam
2004) that group success—conveying high group status—
increases the potential for people to self-enhance via their
group membership in ways that also render them both more
likely to identify with the group (Oakes et al. 1994)andto
strive to advance the group’s interests (e.g., Mael and Ashforth
1992). In sum, this bi-directional process speaks to the fact
that leaders not only shape the social realities of organizational
members but are also themselves shaped by those realities
(Haslam et al. 2011).
The present research was conducted with a sample of
German companies which primarily operate within an indi-
vidualistic, Western culture. For this reason, it remains an
open question whether the relationships studied here would
differ across cultures (e.g., for companies based in more col-
lectivistic cultures such as Japan). As things stand, we know
relatively little about how culture shapes the impact of identity
leadership (Haslam et al. 2011). However, there are two im-
portant exceptions. First, in the ILI-Global Project (research
conducted in over 20 countries on all six continents) van Dick
et al. (2018) showed that identity leadership (as measured by
the Identity Leadership Inventory; Steffens et al. 2014b)is
interpreted in similar ways in individualistic (e.g., Germany,
USA) and collectivistic countries (e.g., China, Japan). Second,
in a study of Chinese workers, Steffens et al. (2018b)founda
lagged association between leaders’identity entrepreneurship
and employee burnout, engagement, and turnover intentions.
This previous research, therefore, gives us no grounds for
thinking that the present results for we-referencing language
are likely to differ in more collectivistic cultures. However, in
regard to I-referencing language, it is possible that one might
find a more pronounced negative relationship with organiza-
tional performance. This is because speaking of “me, myself,
and I”constitutes a strong norm violation in this environment
and might therefore elicit a harsh response from followers
(Hornsey et al. 2006).
Our research offers a new perspective on strategic leaders
and the ways in which they can engage in leadership. Most
particularly, it challenges our understanding of what CEOs
need to do in order to be effective. In many ways, as individ-
uals CEOs may be unlike others and possess unique qualities
that they do not share with any of their potential followers
(Finkelstein et al. 2009). Yet, while this may be true, our
research suggests that this is not necessarily what makes them
effective. Instead, CEOs can also be seen as group members
and it is by demonstrating that they are one of “us,”they are
able to influence other group members in ways that motivate
them to contribute to shared group goals (Haslam et al. 2011).
These results point to the importance of CEOs acting as iden-
tity entrepreneurs who represent and create a shared identity
(i.e., the shared values, norms, and beliefs of their
organization; Reicher et al. 2005). To the extent that leaders
define and emphasize a shared sense of organizational identi-
ty, this in turn may help make this identity salient for other
organizational members (Riantoputra 2010). This is some-
thing CEOs can attempt to do themselves through general
communication (of the form studied here) or personal contact,
but it is also something that can be achieved by ambassadors
who speak to (and for) the group on their behalf (Finkelstein
et al. 2009; e.g., other members of their top management team,
Voss et al. 2006).
As well as speaking to the literature on characteristics of
effective CEOs, this research expands upon previous work
informed by the social identity approach to leadership (e.g.,
Ellemers et al. 2004;Haslametal.2011; van Knippenberg and
Hogg 2003). Previous organizational research in this tradition
has tended to focus on followers’evaluations of leaders (e.g.,
perceived trust or perceived effectiveness; Barreto and Hogg
2017) but considerably less on material outcomes of leader-
ship (e.g., organizational performance). At the same time, al-
though research by Steffens and Haslam (2013) has examined
the effect of we-referencing language on leader effectiveness
308 J Bus Psychol (2021) 36:299–313
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(i.e., election victory), studies of identity entrepreneurship
have largely involved qualitative studies of political leader-
ship (e.g., Augoustinos and de Garis 2012; Gleibs et al.
2017;ReicherandHopkins2001). Expanding this approach
to the strategic level of business leadership, the current study
provides evidence of the impact of CEOs’social identity-
related behavior on material organizational outcomes. The
present study advances our understanding of the relationship
between social identity and performance by, to our knowl-
edge, being the first study to provide evidence of the contri-
bution of CEOs’identity leadership to objective organization-
al performance.
On the basis of the findings, one might infer that CEOs
(and other leaders) simply need to use more we-references in
their communication to become more effective. Although
there is evidence of a positive association between we-
referencing language and organizational success, it is possible
that by increasing their use of we-referencing language,
leaders will not necessarily reap lasting benefits. Although
carefully crafting one’s pronouncements is important and
can be effective, leaders will ultimately also be challenged to
turn words into action (Haslam et al. 2011). If they see them-
selves and speak as individuals, this is unlikely to yield fruitful
returns. Moreover, if they speak for a collective that does not
exist or for which they are not representative of, then this too
seems likely do more harm than good.
Thus, in a first step (see Haslam et al. 2017), it is important
for leaders on all organizational levels to reflect on the role
that a shared social and organizational identity plays for orga-
nizations (Haslam et al. 2003; Haslam 2004) and for leader-
ship in particular (Haslam et al. 2011; van Knippenberg and
Hogg 2003). Following this, leaders may reflect on who the
people are who belong (and who do not belong) to the group
they want to lead and what the group is (and is not) about (i.e.,
its norms, ideals, and values). This should allow leaders to
engage in identity entrepreneurship (e.g., through their use
of we-referencing language as discussed here) in ways that
are more likely to help clarify and shape the group’sunder-
standing of goals and aspirations.
Limitations and Directions for Future Research
Three key strengths of this research are that it was pre-
registered (such that the study design and hypotheses were
specified prior to data collection and analysis), collected data
from organizations for a period of 16 years, and relied on
unobtrusive objective measures. However, the archival ap-
proach we adopted also has limitations—of which three stand
out. First, operationalizing organizational financial perfor-
mance is not straightforward (Agle et al. 2006; Richard et al.
2009). Indeed, every indicator has its own limitations and each
sheds only partial light on organizational performance as a
whole. Here, following Agle et al.’s(2006) recommendations,
we focused on accounting-based indicators of organizational
performance as these can be directly influenced by CEOs. Yet,
taking this forward, there could be merit in examining market-
based (e.g., Tobin’s Q) and other (e.g., corporate social per-
formance) indicators of performance. For example, although
we believe them to be less relevant to the ideas we were
seekingtotestinthepresentresearch(becauseourfocus
was on intra-organizational responses to CEOs), market-
based indicators might provide insight into external percep-
tions of organizations. Relatedly, it would be interesting to
explore whether (and how) external stakeholders react to
CEOs’use of we-referencing language as a function of their
identity-based relationship to the organization—as their reac-
tions might differ from those of employees (König et al.
2018).
Second, we were unable to explore the psychological pro-
cesses that link CEOs’use of we-referencing language to fi-
nancial performance. So although other evidence suggests that
(a) leaders’own organizational identification transfers to fol-
lowers’identification and, through this, affects those fol-
lowers’organizational behavior (e.g., OCB; van Dick et al.
2007)and(b)leaders’use of language affects followers’lead-
er endorsement (Hornsey et al. 2005; Weiss et al. 2018). These
are linkages that we were not able to examine in the present
research. In this regard too, it would be worth examining in
more detail the potential bi-directional nature of the relation-
ship between CEO language and organizational performance.
To further unpack possible causalbi-directional paths between
the variables (i.e., we-referencing language and organizational
performance), future work might examine these relationships
in experimental studies that manipulate these variables inde-
pendently (i.e., to create exogenous predictor variables;
(Smith 1982;Steffensetal.2013).
A third limitation relates to our reliance on CEOs’letters in
annual reports as the focus of our analysis. We chose to ex-
amine these because the CEOs’letter to stakeholders is part of
the non-statutory section of annual reports that is unaudited
and therefore gives CEOs the freedom to articulate their agen-
da for their organization in their own words. Unlike many
previous studies (e.g., Smith and Taffler 2000), our analysis
relied on an objective automated word count which is unob-
trusive and eliminates researcher bias. Nevertheless, future
research could explore additional aspects of identity-related
speech through more fine-grained analysis of CEO pro-
nouncements (e.g., examining linguistic strategies for
presenting oneself as prototypical of the group; Augoustinos
and de Garis 2012).
Concluding Comment
In line with the social identity approach to leadership (Haslam
et al. 2011;Hoggetal.2012; van Knippenberg 2011), the
present study served to underline claims that, to be effective,
309J Bus Psychol (2021) 36:299–313
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

CEOs need to be identity leaders—that is, leaders who inspire
positive organizational outcomes by representing and cultivat-
ing a sense of “we”among organizational members. More
specifically, the study supported this approach by demonstrat-
ing that CEOs’we-referencing language is positively associ-
ated with the subsequent financial performance of their orga-
nization. In line with the quote from Peter Drucker which
prefaced this paper, this suggests that leaders are likely to be
effective not by asserting their personal identity through ref-
erences to “I”but by cultivating collective identity through
references to “we”and “us.”Ultimately, though, as Drucker
intimates, the key to success here seems likely to derive from
thefactthattheleadersinquestionarenotsimplyparrotinga
concern for the group but really mean it.
Acknowledgements Open Access funding provided by Projekt DEAL.
This study was pre-registered and provides open data and material on the
Open Science Framework (www.osf.io). We would like to thank
Fabienne Ropeter for her assistance in data collection and preparation.
Open Access This article is licensed under a Creative Commons
Attribution 4.0 International License, which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as
long as you give appropriate credit to the original author(s) and the
source, provide a link to the Creative Commons licence, and indicate if
changes were made. The images or other third party material in this article
are included in the article's Creative Commons licence, unless indicated
otherwise in a credit line to the material. If material is not included in the
article's Creative Commons licence and your intended use is not
permitted by statutory regulation or exceeds the permitted use, you will
need to obtain permission directly from the copyright holder. To view a
copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
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