Can you spot an overconfident manager? The influence of overconfidence bias in subordinate rated 360-degree leadership evaluation in multiple Finnish work organizations
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School of Business |
Master's thesis
Authors
Date
2024
Department
Major/Subject
Mcode
Degree programme
People Management and Organizational Development
Language
en
Pages
75 + 7
Series
Abstract
This thesis explores the concept of overconfidence in psychology and management, its implications for performance, and its relationship with leadership perceptions in organizational settings. Overconfidence has been a focal point of psychological research since the 1970s, typically categorized into the better-than-average effect, self-attribution, and miscalibration. Research indicates that overconfidence is frequent among people and often leads to poorer performance in various tasks. In managerial contexts, overconfidence is prevalent and linked to predominantly negative outcomes, such as increased risk-taking, delayed communication of adverse news, and underperformance. However, some evidence suggests positive outcomes, such as improved optimism, confidence, and proactive engagement in organizational decision-making. The study further examines 360-degree leadership evaluations, focusing on their validity and impact within organizations. Data were collected from eight organizations across five sectors (Healthcare, Leisure, Industry, Technology, and Financial) between 2021 and 2022. Two regression analyses were conducted to investigate the relationship between managerial overconfidence and subordinates' perceptions of leadership. The findings reveal two key insights. First, overconfidence presents a significant but weak positive association with subordinates' perceptions of their managers' People Leadership -skills. Second, overconfidence is more strongly associated with People Leadership compared to Operational, Strategic, and Change Leadership -dimensions. Results are partly contradicting existing literature on overconfidence and leadership effectiveness. These results offer new perspectives on the role of overconfidence in leadership and underscore the potential for integrating findings into leadership development and coaching programs. This research provides a foundation for further studies and practical applications in enhancing the effectiveness of 360-degree evaluations and fostering more nuanced leadership practices.Description
Thesis advisor
Diehl, Marjo-RiittaKeywords
overconfidence, 360-degree feedback, people leadership, leadership development, managerial overconfidence, leadership evaluation