How failure to align organizational climate and leadership style affects performance

Purpose – The purpose of this paper is to investigate how misalignments between the organizational climate (measured as information‐processing demand) and the leadership style (measured as information‐processing capability) may result in negative performance consequences. Design/methodology/approach – The empirical part of the paper is based on questionnaire data. Key informant is the CEO and thus there is a focus on the CEO's perception of climate and leadership style. Data are subjected to regression analysis. Findings – The results indicate that misalignments between climate and leadership style are problematic for organizational performance. This is supported by the empirical findings that show partial support for three out of four hypotheses and full support for the fourth hypothesis. Research limitations/implications – Data cover information on Danish small‐ and medium‐sized firms. These cross‐sectional data and cannot study the effects of misalignments over time. Practical implications – Because the findings show that misalignments between climate and leadership style are problematic to organizational level of performance, this implies that in case of misfits either the climate or the leadership style must be changed. Originality/value – The main contribution of the paper is that the framework allows an explicit understanding of which managerial actions are needed to manage particular types of climate. Further, the framework enables an understanding of how misalignments may result in poor performance.