28 Journal of Business Strategies
A MODEL RELATING CEO SOCIAL INTELLIGENCE AND
STRATEGIC ENGAGEMENT: A STUDY IN SMALL BUSINESS
ORGANIZATIONS
M. Afzalur Rahim
Western Kentucky University • Bowling Green KY
Jeffrey P. Katz
Western Kentucky University • Bowling Green KY
Shane Spiller
Western Kentucky University • Bowling Green KY
ABSTRACT
Answering the call for additional investigation into microfoundations recently
raised by organizational theorists and researchers, this study empirically investigates
the relationship between social intelligence (SI) and strategic engagement (SE)
among U.S. small business chief executive officers (CEOs). SI is being aware of
key social contexts, effectively addressing challenges occurring in those contexts,
understanding the concerns of others and their related personal situations/emotional
states, and building/maintaining positive relationships in social situations thereby
behaving appropriately. SE refers to actively participating in the process of
formulation, implementation, and review of strategies for the purpose of improving
the competitive position of the organization. Opinions of observers (top managers)
regarding their respective CEOs’ SI and SE were assessed with questionnaires
to explore the relationship between SI and SE. Data analysis using LISREL 9.2
suggests that social intelligence is positively associated with strategic engagement
behaviors among successful top executives. Implications for the selection of new
CEOs and the training of existing CEOs are offered.
Keywords: Social intelligence, Leadership, Strategic engagement, Top
management teams, CEO.
INTRODUCTION
Recent work by organizational theorists has concluded that organizational
analysis should be concerned with how individual factors can be studied, and
perhaps aggregated, to better understand the success of organizations at the
collective level (Gavetti, 2012). The overall conclusion is the assertion that
management and strategy researchers should seek to better understand the links
between micro–macro strategy relationships (Barney & Felin, 2013; Gavetti,
Volume 36, Number 2 29
2005). They suggest that microfoundations have been generally neglected in the
literature of strategic management.
One of the encouraging signs in connection with this notion is that scholars
are realizing that “we need to build microfoundations rooted in individual action
and interaction” (Felin & Foss, 2009, p. 162; see also Hodgson, 2012; Nadkarni
& Herrmann, 2010). The editors of a special issue of Strategic Management
Journal on psychological foundations of strategic management suggested that
“strategic management theory lacks adequate psychological groundings . . .
until strategy theory builds stronger foundations in psychology, it will struggle
to explain the facts of firm performance” (Powell, Lovallo, & Fox, 2011, p.
1370). In other words, individual organizational members have different ways
of thinking, feeling, and behaving that can significantly influence strategic
issues. According to Klein, Tosi, and Cannella (1999) “multi-level theories may
illuminate the steps organizational actors may take, individually and collectively,
to yield organizational benefits” (p. 243).
Over the past 10 years this discussion has resulted in studies reporting that
psychological attributes of CEOs significantly influence the strategic orientation
of the firm (Hiller & Hambrick, 2005; Nadkarni & Narayanan, 2007). A recent
study by Nadkarni and Herrmann (2010) reports that strategic flexibility mediates
the relationship between CEO personality and firm performance.
In this article, we take the lead from these findings and design a study to
explore the relationship between CEOs’ social intelligence and their strategic
engagement of the firm. Social intelligence is one of the constructs that was not
only neglected in the strategic management literature, but also in the literature of
organizational behavior and management (Rahim, 2018, 2014; Rahim, Civelek,
& Liang, 2018).
The present study presents a structural equations model and provides
empirical evidence that the SI competence of CEO’s can significantly influence
their contributions to strategic engagement. This study was designed to make
a value-added contribution to the microfoundations of strategic management
literature by showing the link between CEOs’ social intelligence and their
strategic engagement, that is, their active participation in the strategic engagement
processes of the firm.
Humankind generally associates intelligence with cognitive, academic,
or mathematical–logical competence. Scholastic Aptitude Tests, GPA, ACT,
GMAT, GRE, and other admission tests are surrogates of cognitive intelligence.
Although academic institutions offer programs that are associated with this
30 Journal of Business Strategies
intelligence, the relevant literature on management generally acknowledges the
inadequacy of cognitive intelligence as a predictor of one’s success in life or
effective leadership (see the meta-analysis by Judge, Colbert, & Ilies, 2004).
That is, the management literature generally has ignored the contribution of
other types of intelligence that are necessary for successful leadership at the top
management level.
Gardner (1983), Goleman (2005), Mayer, Salovey, and Caruso (2008),
Sternberg (1985), and Ang, Van Dyne, Koh, Ng, Templer, and Tay (2007)
suggest that there are other components of intelligence—emotional, social,
and cultural—that may influence one’s success in life or business. People with
these types of intelligence are described by scholars as having “street smarts”—
which indicate that an individual is not constrained simply because he or she
may have below average academic intelligence or IQ (e.g. Bass, 2002; Rahim,
Civelek, & Liang, 2016). The value-added contribution of the present study is
the successful evaluation of a micro–macro model specifying the relationships
between SI components and the CEO’s engagement with the strategic functions
of the firm.
STRATEGIC ENGAGEMENT
Intelligence is associated with one’s ability to interact effectively with
the internal and external environments to be successful in life or as a leader in
organizations. However, most published discussions regarding leadership and
strategic engagement are focused at the national level rather than at the firm-
level. For example, Wright (2010) suggests that the concept of engagement “is an
amorphous and vague . . . Its purpose, parameters, and promise remain unclear” (p.
35). However, it seems that Wright’s comment on the concept of engagement in the
area of international politics is also applicable to a significant extent on the strategic
engagement construct in organizations. Unfortunately, there is no consensus on the
meaning of this construct in the area of management and organizational behavior.
In the private sector, some management consultants have suggested that strategic
engagement involves achieving changes in organizational culture and structure
designed to improve performance (e.g., Guttman & Hawkes, 2004; Smythe, 2007).
Others advocate employee engagement which emphasizes enhancing
employees’ commitment and loyalty to work for improving overall performance
(Federman, 2009; Macey, Schneider, Barbara, & Young, 2009). There are many
websites that advocate various types of change for improving performance.
Volume 36, Number 2 31
Unfortunately, there is no evidence that these changes improved learning and
effectiveness in organizations.
Thus, strategic engagement is associated with a top manager’s active
involvement in the strategy formulation, implementation, and review of processes to
attain the goals of an organization. This involves changes in the process and structure
at the macro-level so that top managers are actively involved in the continuous
review and refinement of strategies for improving the competitive position of an
organization. For the purpose of this study, CEO strategic engagement includes
articulating a compelling vision, formulating, implementing and refining strategies,
and moving those key factors from the drawing board to desirable organizational
outcomes. Drawing from previous research and recommendations in the strategic
management literature (Gavetti, 2012; Guttman & Hawkes, 2004; Wright, 2010),
strategic engagement is the process used by the leader of the firm to facilitate the
interaction between the external environment of the firm, the key stakeholders of the
firm, and the internal activities that align the goals of the firm with the expenditures
of resources (Baron & Markham, 2000).
SOCIAL INTELLIGENCE
Sternberg (2009) provides evidence that there are three types of intelligence―
creative, analytical, and practical―that are needed for one’s success. His concept
of practical intelligence is very similar to the commonly-used notion of social
intelligence. Several scholars suggest similar concepts―intrapersonal or emotional and
interpersonal or social intelligence (Gardner, 1999; Goleman, 2005; Mayer, Salovey,
& Caruso, 2008). Finally, cultural intelligence is another type of “intelligence” that has
been suggested by Ang et al. (2007).
It is generally agreed that SI is different from cognitive intelligence. Although
there is no agreement on the definition of the construct, many conclude that SI is
associated with understanding the thinking, feelings and behaviors of others, interacting
with them properly, and acting effectively in various situations (Ford & Tisak, 1983;
Kihlstrom & Cantor, 2000; Sternberg, 2002). Thus, social intelligence is defined as
being aware of relevant social situational contexts, effectively addressing challenges,
understanding the concerns, feelings and emotional states of others, communicating
by knowing what to say, when to say it and how to say it, and building and maintaining
positive relationships with others (Rahim, 2014). This definition consists of four
categories of abilities—situational awareness, situational response, cognitive empathy,
and social skills. Situational awareness is associated with one’s ability to collect data
32 Journal of Business Strategies
and information for the diagnosis and formulation of problem(s). Whereas situational
response is associated with one’s ability to use this information to make effective
decisions to attain desired results. These two basic abilities, or competencies, are
needed for one’s success in life or effective leadership (Rahim, Civelek, & Liang,
2015a, 2015b).
Cognitive empathy and social skills are needed to better understand the
feelings and needs of people, communicate with them effectively, and build and
maintain relationships. These two abilities can help CEOs remain aware of various
social situational contexts, which in turn, help them improve their situational response
competence. It is possible that these two abilities mediate or moderate the relationship
between situational awareness and situational response. The theoretical basis of the
four-category nomenclature of the SI construct is described as follows.
Situational Awareness
Bennis and Thomas (2002) have categorized this ability as contextual
intelligence. This is associated with one’s competence or ability to comprehend
or assess relevant social situational contexts. CEOs must be very strong in this
ability, as it is needed to collect relevant information from the internal and
external environments and make an appropriate diagnosis of the firm’s strengths,
opportunities, weaknesses, and threats in a timely manner. This ability enables
CEOs to formulate a problem correctly. If they feel that they do not have adequate
information on a problem or a potential business opportunity, they are likely to
engage in environmental scanning behavior. If they do not understand a particular
situation involving a technical problem, they may seek help from experts so that
they have an overall understanding of the problem. For example, experts may bring
different and even contradictory assessments of a problem, but it is the CEO who
decides which problem formulation reflects social reality and is to be accepted. One
can infer that CEOs who have high situational awareness ability are better able to
formulate their organization’s problems or challenges correctly. A study by O’Brien
and O’Hare (2007) reported that participants in training programs who had higher
situational awareness performed well irrespective of the training conditions.
Situational awareness competence is important at all levels of management,
but it is particularly important at the top management level. If a problem is wrongly
formulated, one would follow a wrong solution to the problem. This would lead
to Type III error, which is defined as the probability of solving the wrong problem
when one should be solving the right problem (Mitroff, 1998; Mitroff & Silvers,
Volume 36, Number 2 33
2010). CEOs who possess this ability are able to collect necessary information
and formulate a problem correctly, thereby avoiding Type III errors. Situational
awareness competence has been generally neglected in the theories of leadership,
which implicitly assume that leaders can effectively diagnose the relevant situational
variables and are able to formulate their problems correctly. However, leaders who
are deficient on this competence may not be able to fully comprehend important
situational issues.
Situational Response
This micro-factor is associated with one’s competence or ability to deal with
any social situation effectively. This is essentially the decision making competence
of leaders that is positively influenced by their prior problem formulation. Although
Bennis and Thomas (2002) describe this as adaptive capacity, situational response
is a broader concept than that. In the present study, a distinction is made between
the two abilities—situational awareness and situational response. It is possible for
leaders to recognize or diagnose a situation or problem correctly, but they may not
be able to make a decision due to political and other reasons that is likely to lead to
desirable outcomes.
In the present study, an attempt was made to integrate the diverse literatures
relating to the fields of organizational behavior and strategic management for
the application of social intelligence. In connection with organizational learning,
Argyris and Schon (1996) carefully examine the detection and correction of
error involved in organizational learning. In connection with the management or
organizational conflict, Rahim and Bonoma (1979) present a model of diagnosis of
and intervention in conflict, and Schmidt and Tannenbaum (1960) describe these as
abilities as “to diagnose an issue and its causes” and “to decide on the best course of
action” (p. 107). The two processes, diagnosis or detection of error and intervention
or correction of error, correspond well with the two components of SI—assessment
of and responses to situational contexts. These two components are conceptually
independent. Thus, it is possible for a leader to have high or low abilities associated
with these two components. A high–high leader is more effective than a high–low,
low–high, or low–low leader. In other words, these two abilities are essential for
effective leadership.
The literature on leadership has generally done a better job of prescribing how
to match leadership styles with situational variables for improving job performance
and satisfaction of followers. Unfortunately, scholars have been unable to capture
34 Journal of Business Strategies
the unique situations for which creative responses (leadership styles) would be
needed for improving outcomes. Contingency theories of leadership generally
suggest that certain situational variables should be adequately matched with
appropriate leadership styles in order to enhance job performance and satisfaction of
subordinates. Unfortunately, leadership theories did not discuss the need for leaders
to possess situational awareness and response competencies to define the situational
variables and respond to them with appropriate styles. Even if a leader can diagnose
a situation correctly, he or she may not possess the competence needed to make an
effective decision to deal with it.
The preceding discussion made clear that situational awareness and situational
response are two essential abilities that are needed for effective leadership. However,
there are other abilities, such as cognitive empathy and social skills that can help
leaders to improve their effectiveness. The following is a discussion of each ability
as measurable variables.
Cognitive Empathy
Another component of SI that has been discussed by scholars is empathy
(e.g. Goleman, 2005; Albrecht, 2007; see also Ang & Goh, 2010). Empathy refers to
understanding others and taking active interest in them, recognizing and responding
to changes in their emotional states, and understanding their feelings. Several
components of empathy are cognitive, intellectual, affective, and behavioral.
Cognitive empathy is associated with one’s ability to recognize the thinking, feelings,
intentions, moods, and impulses of people inside and outside the organization and is
a component of SI. Kaukiainen et al. (1999) suggest that “the cognitive component
of empathy forms an essential part of social intelligence” (p. 83).
Cognitive empathy should help to improve a leader’s awareness of the
feelings and needs of supervisors, subordinates, and coworkers as well as people
from outside the organization. This ability to connect with people should help
to improve a leader’s social skills. In other words, cognitive empathy should be
positively associated with social skills.
Volume 36, Number 2 35
Social Skills
Most of the definitions of social intelligence include social skills which are
one’s ability or competence to speak in a clear and convincing manner that involves
knowing what to say, when to say it, and how to say it. Social skills also involve
building and maintaining positive relationships, acting properly in human relations,
dealing with problems without demeaning those who work with him or her, and
negotiating and managing conflict with tact and diplomacy.
Social skills competence enables a CEO to continuously collect relevant
information from internal and external environments, which enhance their situational
awareness. Social skills help leaders explain and justify their decisions to followers
and motivate them so that the leaders’ decisions are effectively implemented.
Studies by Baron and Markham (2000) and Baron and Tang (2009) suggest that
entrepreneurs’ social skills—specific competencies that help them to interact
effectively with others—may also play a role in their success.
In the previous section, it was argued that cognitive empathy directly
influences social skills but indirectly influences situational awareness. Therefore, it
is likely that social skills will mediate the relationship between cognitive empathy
and situational awareness (Baron & Kenny, 1986). As previously discussed,
situational awareness positively influences situational response, but social skills
indirectly influence situational response. Thus, it is likely that situational awareness
will mediate the social skills–situational response relationship. On the basis of this
literature review, the we present the following research hypotheses.
Hypothesis 1: Social skills will mediate the relationship between cognitive empathy
and situational awareness.
Hypothesis 2: Situational awareness will mediate the relationship between social
skills and situational response.
Hypothesis 3: Situational response will mediate the relationship between situational
awareness and strategic engagement.
The hypotheses investigated in the present study are presented in the model
identified in Figure 1. The solid lines indicate significant positive relationships.
Dotted lines indicate indirect and non-significant relationships.
36 Journal of Business Strategies
Figure 1
A Model of CEOs’ Social Intelligence and Strategic Engagement
Cognitive
Empathy
Situational
Response
Social Skills
Situational
Awareness
Strategic
Engagement
METHOD
Sample and Procedure
Four hundred members of the chamber of commerce in a southern state in
the U.S. were invited to participate in the study. After two reminders 150 usable
responses were received, i.e. a response rate of about 37.5 percent. As respondents
were asked to estimate their CEOs’ social intelligence and strategic engagement,
a decision was made that each respondent must have at least five years of work
experience with his/her CEO. As a result, 74 respondents were selected and
their responses were used for further analysis. Chronological age and working
experience with the present CEO were 46.48 (SD = 10.15) and 13.42 (SD =
7.79) years, respectively. Their total job experience was 23.43 years (SD = 9.74).
Forty-eight percent of the respondents were female. Table 1 reports the relevant
demographical statistics.
Volume 36, Number 2 37
Table 1
Demographical Information of Respondents
Item Mean SD
Age 46.48 10.15
Education 14.59 2.19
Experience 23.43 9.74
Exp. w/CEO 13.42 7.79
CEO’s educ. 15.30 2.69
Employees 132.29 121.64
Gender 52% male 48% female
MEASUREMENT
Social Intelligence
The four components of CEOs’ SI were measured with 28 items adapted from
a new instrument—Rahim Social Intelligence Test (RSIT)—developed by Rahim
(2014). The items adapted from the RSIT were designed to measure observers’ (top
managers) perceptions of their respective CEOs’ SI. The RSIT was designed on the
basis of repeated feedback from respondents and faculty and an iterative process of
exploratory factor analyses of various sets of items in multiple samples. The final set
of items was selected on the basis of a confirmatory factor analysis.
The RSIT uses a 5–point Likert scale (5 = Strongly Agree . . . 1 = Strongly
Disagree) for ranking each of the items, and a higher score indicates a greater SI
of a CEO. The subscales were created by averaging responses to their respective
items. Sample items are: “The CEO of our company can size up a situation, he/
she finds himself/herself in, rather quickly” (Situational awareness); “The CEO
of our company usually adapts appropriately to different situations” (Situational
response); “The CEO of our company understands people’s feelings transmitted
through nonverbal messages” (Cognitive empathy); and “The CEO of our
company interacts appropriately with a variety of people” (Social skills). Rahim
(2014) provided evidence of internal consistency and indicator reliabilities and
convergent, discriminant, and criterion validities of the instrument and that it was
free from social desirability response bias.
38 Journal of Business Strategies
Strategic Engagement
This was measured with nine items particularly designed for this study. The
instrument uses a 5–point Likert scale (5 = Strongly Agree . . . 1 = Strongly Disagree)
for ranking each item and a higher score indicates greater SE of a CEO. These items
were completed by the CEO’s direct subordinates of the firm and directly assess the
CEO’s level of strategic engagement. Sample items for this scale are, my supervisor
(the CEO): “…participates in the strategy formulation process” and “participates in
strategy implementation.” The items were factor analyzed to determine they form a
single index measuring the level of CEO strategic engagement as observed by the
CEO’s closest direct-reporting employees.
ANALYSIS AND RESULTS
The first part of the analysis was designed to test the psychometric properties
of the measures of SI and SE. The second part of the analysis was designed to test the
three study hypotheses. Data analyses were performed with SPSS 24 and LISREL
9.2 (Jöreskog & Sörbom, 1996a, 1996b) statistical packages.
Validity Assessment (Measurement Model)
Confirmatory factor analysis of the 28 SI and nine SE items was computed.
Results show excellent fit indexes for the five components of the two instruments
(see Table 2).
Table 2
Fit Indexes for the Measurement and Structural Equations Models
Fit Index Measurement Model
Structural
Equations Model
χ2/df 1.00 1.04
RMSEA .00 .00
RMSR .06 .07
NFI .97 .95
CFI 1.00 1.00
IFI 1.00 1.00
Note: RMSEA = Root Mean Square Error of Approximation, RMSR = Root Mean Square Residual, NFI =
Normed Fit Index, CFI = Comparative Fit Index, and IFI = Incremental Fit Index
Volume 36, Number 2 39
The values for the χ2/df should be less than 4, Root Mean Square Error of
Approximation (RMSEA) and Root Mean Square Residual (RMSR) should be low
and generally ≤ .07. The values for other fit indexes, such as Normed Fit Index,
Comparative Fit Index, Incremental Fit Index, and Goodness of Fit Index should
be ≥ .90. The fit indexes for the measurement model satisfied these requirements
(χ2/df = 1.00, RMSEA = .00, RMSR = .06, NFI = .97, CFI = 1.00, and IFI = 1.00).
Overall, these indexes indicate that the RSIT is a 4–dimensional measure of social
intelligence and the criterion measure is a one-dimensional measure of SE.
The two questionnaires were completed by the same subjects at the same
time, which could lead to common method variance. The extent of common method
variance present in the measures was tested with one of the procedures suggested
by Podsakoff, MacKenzie, Lee, and Podsakoff (2003). If common method variance
was present, then all the observed variables (items) measuring SI and SE will load
on a single factor. If a single-factor solution fits the data well, one can conclude
that common method variance is mainly responsible for explaining the relationships
among the variables (Mossholder, Bennett, Kemery, & Wesolowski, 1998). A one-
factor measurement model was computed and the results show that all the six fit
indexes (χ2/df = 6.43, RMSEA = 21, RMSR = .13, NFI = .80, CFI = .86, and IFI =
.78) were unsatisfactory. In other words, the single-factor model did not fit the data
and, as a result, the absence of five components of the two measures or the presence
of common method variance in the measures should not be assumed.
Convergent Validity
The average variance extracted by all the observed variables loading on a
given factor measures convergent validity and should exceed .50 (Carr, 2002). In
the present study, these values were averaged for factors and all of the average R2
exceeded .50, the threshold for supporting convergent validity.
This validity for the five latent variables (situational awareness, situational
response, cognitive empathy, social skills, and strategic engagement) was judged
by examining whether each observed variable had a statistically significant factor
loading on its specified factor (Netemeyer, Johnston, & Burton, 1990). Factor
loadings were highly significant, with a minimum t–ratio of 4.04 (p < .01). These
results provided support for the convergent validity of the latent variables.
40 Journal of Business Strategies
Discriminant Validity
One of the tests for discriminant validity requires squared correlations
between factors to be less than the average variance extracted for each factor (Carr,
2002). Results provide support for the discriminant validity between SI and SE.
Another test for discriminant validity involves pair-wise comparisons of
latent variables using a Chi-square difference test (Anderson & Gerbing, 1988).
For each pair of latent variables two models are developed. In one model the two
latent variables are defined by their respective observed variables. In the second
model, the correlation between the latent variables is constrained to 1.00. The Chi-
square difference test can be used to determine if the appropriately defined two-
factor model provides statistically better fit than the constrained model. In each pair-
wise comparison of latent variables, the constrained model resulted in a significantly
higher χ2 value supporting discriminant validity. Overall, there is adequate support
for discriminant validity.
Univariate Normality
The samples exhibited a high degree of univariate normality with skewness
and kurtosis statistics well within the acceptable levels of 1 and 7 for all items.
Descriptive Statistics and Reliability Coefficients
Table 3 reports the means, standard deviations, indicator and Cronbach
α internal consistency reliabilities, and inter-correlations of the five variables.
The inter-correlations of the five variables ranged between .42 and .68. All the
correlations were positive and significant at .001 level. The variance inflation
factor (VIF), which ranged 2.10 and 2.55 was < 10.00 which indicate that multi-
collinearity was not a problem.
Volume 36, Number 2 41
Table 3
Means, Standard Deviations, Cronbach α and Indicator
Reliabilities, Correlations, and Variance Inflation Factor
Variable M SD α IR 1 2 3 4 VIF
1. Situational
awareness
3.84 .84 .77 .50 2.10
2. Situational
response
3.96 .66 .72 .54 .67 2.50
3. Cognitive
empathy
3.48 .75 .86 .60 .65 .66 2.55
4. Social skills 3.99 .71 .81 .62 .54 .68 .43 2.34
5. Strategic
engagement
3.79 .90 .93 .69 .51 .45 .52 .42
Note. N = 75. IR = Indicator reliability, VIF = Variance inflation factor. All the correlations are significant at
p < .001 (two-tailed).
Indicator Reliability
Each item has a reported R2 that measures the item’s variance explained by
the factor. This measure of indicator reliability should be greater than or equal to .50
for each of the indicators. The R2s for all the variables ranged between .50 and .69.
These reliabilities were judged sufficient.
Internal Consistency Reliability
The internal consistency reliability coefficients of the five scales/subscales,
as assessed with Cronbach α, ranged between .72 and .93. Overall, these coefficients
are satisfactory.
Structural Equations Model
The three mediation models presented in Figure 1 were tested with a SEM
suggested by James and Brett (1984) that differs from the widely used incremental
approach of Baron and Kenny (1986). In the SEM, mediation is indicated when the
paths between the independent and mediator, and the path between the mediator
variable and the outcome variable are significant and the overall model shows
acceptable goodness of fit (see James, Mulaik, & Brett, 2006 for details). The fit
indices, which are portrayed in Table 2 suggest an excellent fit for the hypothesized
42 Journal of Business Strategies
model (χ2/df = 1.04, RMSEA = .00, RMSR = .07, NFI = .95, CFI = 1.00, IFI = 1.00).
The path coefficients for the SEM are presented in Table 4.
Table 4
Statistics for Structural Equations Model
Relationship β t
CE -----> SS .90 6.69 ***
SS -----> SA .91 5.72 ***
SA -----> SR .99 5.94 ***
SR -----> SE .49 3.75 **
** p < .01. *** p < .001.
Note: CE = Cognitive empathy, SA = Situational awareness, SS = Social skills, SR = Situational response,
SE = Strategic engagement.
• Hypothesis 1 is concerned with the mediation effect of social skills on the
relationship between cognitive empathy and situational awareness. The path from
cognitive empathy to social skills (β = .90, p < .001) and the path from social skills
to situational awareness (β = .91, p < .001) were significant which provide full
support for Hypothesis 1. This finding implies that cognitive empathy can influence
situational awareness only indirectly through social skills. A mediation hypothesis
suggests that the independent variable (i.e., cognitive empathy) causes the mediator
variable (i.e., social skills), which in turn, causes the dependent variable (i.e.,
situational awareness). The mediator variable, then, serves to clarify the nature of
the relationship between the independent and dependent variables.
• A similar procedure was used to test Hypothesis 2, which is concerned with
the mediation effect of situational awareness on the relationship between social
skills and situational response. The path from social skills to situational awareness
(β = .91, p < .001) and the path from situational awareness to situational response
(β = .99, p < .001) were significant which provide full support for Hypothesis 2.
This finding implies that social skills can influence situational response only
indirectly through situational awareness. This mediation hypothesis suggests
that the independent variable (i.e., social skills) influences the mediator variable
(i.e., situational awareness), which in turn, influences the dependent variable (i.e.,
situational response).
• Hypothesis 3 is concerned with the mediation effect of situational response
on the relationship between situational awareness and strategic engagement. The
Volume 36, Number 2 43
path coefficients from situational awareness to situational response (β = .99, p
< .001) and from situational response to strategic engagement (β = .49, p < .01)
provided support for this hypothesis.
DISCUSSION
This was an exploratory investigation to test a model of CEOs’ leadership
as measured by strategic engagement based on their social intelligence. Our results
provide compelling support for the model presented in Figure 1. Previous studies
did not test the relationships of top managers’ perception of CEOs’ SI components
to each other and to SE. The present study contributes to our understanding of the
microfoundational linkages between situational awareness and situational response
and between situational response and strategic engagement. It also contributes to
our understanding of the relationships between cognitive empathy, social skills, and
situational awareness as they relate to situational response.
The results provide acceptable evidence of convergent and discriminant
validities as well as internal consistency and indicator reliabilities of the measure
of SI and SE. Evidence from the present study and the studies by Rahim (2014)
and Rahim et al. (2015a) provided support for construct validity of the measure of
SI. The present study provided some new evidence for the construct validity for
CEO strategic engagement. However, since the measure of SE is relatively new,
we recommend additional assessment of the SE instrument in other contexts, such
as larger organizations and not-for-profit firms. In addition, it was assumed the SE
respondents were the closest subordinate managers to the CEO with full knowledge
of the CEO’s activities. Future research should include hierarchy information
regarding the relationship between the two.
Implications for Management
There are several key implications of our study. First, it is clear that cognitive
empathy, social skills, situational awareness, and situational response are important
for the success of top managers. Those social intelligence factors have direct and
indirect impacts on the strategic engagement displayed by top organizational leaders.
This study supports the contention that microfoundations are complex yet critical to
better understanding the interaction between individual behaviors and the strategic
focus of the firm (Klein, Tosi, & Cannella, 1999). Clearly, behavioral interviews
for top managers need to include assessments of the four components of SI along
with the assessment of CEO strategic engagement. For those seeking higher level
44 Journal of Business Strategies
leadership roles within their own organizations, appropriate employee development
plans may be needed to strengthen their SI competencies. Such activities may include
additional education and role-playing training (Cherniss & Adler, 2000; Goleman,
2005). Second, CEOs and managers should be encouraged to enhance their abilities
through continuous self-learning and through mentorship programs. Organizations
should provide positive reinforcements for learning and improving CEOs’ essential
SI competencies needed for their specific jobs.
Finally, even though education and training are useful for improving the SI of
supervisors and leaders, there are limitations on enhancing the appropriate workplace
behaviors in each of the SI components. To address this issue, the board of directors
should clarify the position description of CEOs to specifically acknowledge the
importance of SI factors and SE behaviors as necessary for job success.
Strengths and Limitations
One of the strengths of this study is that the measures of independent and
dependent variables were collected from observers, which should reduce the
problems of method variance (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Also,
confirmatory factor analyses of the items indicated the absence of common method
variance. If common method variance was present, the items of the independent and
criterion measures will not significantly load on the five a priori factors.
Limitations of this field study should be noted. Data were collected from a
convenience sample and might limit generalizability of the results. Also, a small
sample size of 74 cases may be an issue that should be investigated in future studies.
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BRIEF BIOGRAPHICAL SKETCH OF AUTHORS
M. Afzalur Rahim (Ph.D. University of Pittsburgh) is a University
Distinguished Professor of Management at Western Kentucky University. He
specializes in the management of organizational conflict, emotional and social
intelligence, creativity, and organizational learning.
Jeff Katz (Ph.D. University of Florida) is the Oppitz Endowed Professor of
Business and Professor of Management at Western Kentucky University. His research
focuses on global competitors, strategic decision-making, and corporate governance.
Shane Spiller (Ph.D. University of Alabama) is a Professor of Management
and Hays Watkins Teaching Fellow at Western Kentucky University. His research
interests include decision-making, leadership, and ethics.