Leadership, corporate culture and financial performance

Statement of the problem. The purpose of this study was to explore the relationship between leadership, culture and financial performance. Specifically, this study examined the relationship between leadership practices, adaptive corporate cultures and long-term financial performance in large corporations. The theoretical foundation and framework for this study is grounded in two bodies of literature: theories of organizational leadership and models of high performing corporate culture.;Procedure. A questionnaire was developed and disseminated to 271 human resource executives in 94 corporations. The instrument measured the prevalence of the independent variables of transformational leadership practices, change leadership practices, non-adaptive cultural norms and adaptive cultural norms. The dependent variable of financial performance was measured over a ten year period as net income growth and net income growth index.;Results. Bivariate correlations were computed to demonstrate the following positive relationships: (1) Transformational leadership practices and ten year net income growth. (2) Adaptive change leadership practices and ten year net income growth. (3) Adaptive cultural norms and ten year net income growth.;Multiple regression analysis yielded a stronger positive association when transformational leadership and change leadership are combined with adaptive culture over adaptive culture alone.;Conclusions. The findings of this study indicate that effective leadership and culture are key contributors to the long term financial performance of a corporation. Companies reporting a high prevalence of leadership and cultural norms that contribute to increasing adaptability substantially outperform companies that do not.