Doing well and doing good: The relationship between leadership practices that facilitate a positive emotional climate and organizational performance

The purpose of this study is to investigate whether and how leadership practices that facilitate a positive emotional climate (the “PEC practices”) are related to organizational outcomes in terms of performance (increase in revenue), strategic growth, and outcome growth.

A panel study was conducted to test the hypotheses. Data were collected from 229 entrepreneurs and small business owners operating in Greater Vancouver, British Columbia, Canada. In the first wave of the study, the authors collected data regarding the PEC practices. The data on outcome variables, i.e. revenue, strategic growth, and outcome growth, were collected in the second wave, 18 months later.

The regression analyses showed that the PEC practices were positively related to company performance, revenue growth, and outcome growth, providing support for the hypotheses in the study.

This study provides valuable insights about the role of emotional factors in organizational‐level outcomes, a relatively unexplored area in emotions research. Analyzing a set of panel data, the study has shown that leadership practices that facilitate a positive emotional climate in an organization make a difference in organizational‐level outcomes.