Credible leadership signals

Abstract

Credible leadership signals are observable pieces of information emitted by potential leaders that credibly convey the state of unobservable leadership qualities. Credible signals bridge information asymmetries between leaders and followers and play a crucial coordination role in the leadership process by assisting followers in identifying competent leaders. Yet, despite empirical work on leadership signaling, its theoretical foundation remains underdeveloped. We thus integrate Spence’s signaling model into a theoretical framework for better understanding signaling in the leadership process. Specifically, we propose three conditions for credible leadership signals: 1) an unobservable leadership quality that followers care about, 2) an observable signal, and 3) signaling costs that are negatively correlated with the quality. We then systematically review the literature on leadership signaling, showing that conditions for credible signals are not respected in a majority of cases. We conclude by deriving theoretical implications and providing practical guidelines for future research on credible leadership signals. This manuscript advances the discourse on leadership signaling by clarifying when signals effectively guide followers to discern capable leaders.