The impact of leader modeling fallibility on learning and failure correction in health-science sector
Innovation in health-science companies goes hand in hand with uncertainties that may lead to product failures. Failures may offer opportunities to learn valuable lessons to improve organizational practices. However, firms may fail to learn because business leaders may regard these failures as threats to their personal reputation and professional image and try to justify these failures or blame them on others. We posit that leader modeling fallibility (LMF) is one of the critical factors to understanding the role played by CEOs in firms’ response to product failures, including failure correction. LMF refers to business leaders openly acknowledging and discussing errors they made at work. In this project, using secondary data on product recalls from the medical industry in North America, we aim to understand the consequences of LMF at the firm level and explore the mechanisms through which CEOs’ LMF influences firm product failure correction speed. To our partner organization, this project will have lasting impact by contributing to its capacity building for learning, leadership, risk management, and professional growth.