When it pays to be less than perfect: Leaders sharing a flaw with investors increases contributions



A key challenge for business leaders is to raise investments into their business, and a common narrative in both the leadership and the entrepreneurship literatures is that such investments are more likely forthcoming for those who possess outstanding qualities (e.g., confidence, passion) as opposed to those who suffer from personal flaws (e.g., lack of self-confidence, arrogance). Drawing on theories about social comparison and identification, we suggest, however, that flaws can benefit leaders to the extent that they draw them closer to their investors. Specifically we propose that if a leader possesses a flaw, it will increase investment by an investor who shares this flaw. We further theorize that the type of flaw matters, with “bridging flaws” that highlight a deficit in a desirable trait (i.e., a lack of self-confidence) increasing investments from similar others and “distancing flaws” that indicate an excess of a desirable trait (i.e., inflated self-confidence) decreasing investments from similar others. Evidence across three studies including both archival data analyses and experiments provide general support for our conceptual model. Challenging the prevailing narrative on the benefits of leader exceptionalism, we provide a nuanced understanding of when and how leaders benefit from the exposure of flaws.