Optimal Psychological Autonomy and its Implications for Selecting Portfolio CEOs

Abstract

This article demonstrates the relationship between two dimensions of the active coping style “psychological autonomy and instrumental coping” and leadership effectiveness. Conceptually, we focus on the portfolio CEO, for whom psychological autonomy is crucial in resolving potential tensions between the demands of running a company and satisfying investors' expectations for returns. The CEO's psychological autonomy manifests itself as an ability to recognize and respect the aims and feelings of investors and organizational constituents while maintaining a sense of objectivity and personal agency that allows for creative, workable resolutions to conflicts. The successful CEO cannot become a sole representative of either side, nor become fully independent and rejecting of any side, but must function as a participant intermediary who employs lucid reasoning and an unfaltering sense of integrity.

TOPICS: Private equity, manager selection, in portfolio management, statistical methods