Leadership Theory in a Globalizing Business Marketplace

Introduction

Modern business practice is permeated by the complexities of a changing world. The impact of globalization on the cultural makeup of companies, the effects of the global recession on the conventions of daily business, and the evolutionary shifts brought on by emergent technology all call for an orientation toward simultaneous stability and adaptability. Only under the stewardship of a qualified, communicative, flexible, and respected leader can an organization hope to establish these capabilities. However, exactly what constitutes such a leader is subject to a great deal of variation, elaboration, and even some disagreement. With the ultimate interest of designing a personal plan for leadership development, there is a need to evaluate existing literature on the subject of modern business leadership with a focus on the theoretical constructs promoting best practices. These best practices will be evaluated relative to the challenges of the modern organization. Consequently, this evaluation will be applied to a discussion emergent from personal field experience and, thereafter, will be employed in the articulation of a Personal Leadership Development Plan.

The setting for the present research endeavor is the modern business realm. This may refer to any of a variety of company types, including small businesses, family-owned businesses, privately owned corporations, publicly traded companies, and multinational conglomerates. While these companies span a wide range of incarnations, face a broad spectrum of differing challenges, and possess highly distinct needs, one characteristic they all share is the need for strong, effective, and suitable leadership. Here, we refer to the text by Bass & Bass (2008), which reports that there is an increasingly universal acceptance of the notion that organizational conditions are impacted positively by the presence of meaningful leadership. Bass & Bass note that leadership is not a mystical or ethereal concept. Rather, leadership is an observable, learnable set of practices. Certainly leaders make a difference — there is no question about it. But as noted by Henry Mintzberg, leaders often make a difference because they stimulate others (Bass & Bass, p. 1).

Scene Setting and Overview

How exactly leaders stimulate those around them remains subject to the examination conducted hereafter. In particular, this research takes an interest in determining how others are stimulated by effective leadership in the face of challenges distinct to a business environment undergoing massive change today. Therefore, such factors as globalization, multiculturalism, technological innovation, communication accessibility, and recession are essential to laying out the landscape upon which leadership is to be evaluated.

There is no single right formula for leadership qualifications. In fact, while some traits are inherently preferable — such as decisiveness, diligence, and the ability to inspire respect and commitment in others — the shifts in business identified above have created a context where one is best served by balancing a multitude of theoretical approaches. This is the rationale for the topic explored hereafter, which seeks to present a sweeping introductory discussion on various leading theoretical constructs, strategies for leadership, and templates for leadership development. The assessment of a wide range of scholarly sources is intended to serve as the basis for adapting practical skills and knowledge to be used in developing and serving in a leadership role.

The text by Bass & Bass (2008) provides an exhaustive handbook to be used in the service of a leadership role. In doing so, it adheres to the premise stated at the outset: that one is best served with access to a broad spectrum of theories. These can inform the practice of leadership with the discretion needed to navigate the challenges and changes that are part and parcel to survival in the business world. From the perspective of the authors as well as a host of other modern business theorists, the abilities represented in leadership are tantamount to an organization's overall success. Accordingly, Bass & Bass remark that "leadership is often regarded as the single most critical factor in the success or failure of institutions. For instance, T.H. Allen (1981) argued that the principal's leadership is the most important factor in determining a school's climate and student's success . . . and Smith, Carson, and Alexander (1984) found that among the 50 Methodist ministers they studied, some were more effective leaders than others. The effectiveness of these ministers was evidenced by the differential impact that their ministries had on church attendance, membership, property values, and contributions to the church." (Bass & Bass, p. 11)

Review of Literature

This helps to provide a basic foundation for the assertion that will gird the findings throughout this review and the subsequent analysis: that leadership is, if not the core determinant, at least a core determinant of organizational performance and outcomes. Moreover, as is contributed to the discussion by the Cartwright (1965) article, the notion of leadership must be seen as transcending the matter of position or title. As this source demonstrates — the only one included in the review from prior to the last five years — the characteristics and qualities that comprise effective leadership will have less to do with job title than with social and professional performance in coordination with personnel. The leader, this formative historical source asserts, will be fundamentally effective in facilitating the cooperative interaction of otherwise individual employees. According to Cartwright, "social influence emanates from individuals with leadership, and not necessarily because of the position they occupy. According to Dahl (1957), agents exert social influence through the manipulation of a base of resources, and resources like recognition, appreciation, and friendliness as well as economic rewards are used. However, the relationship between power and determinative action is complex, and depends on the agent using power as a means or an end. The agent must calculate the cost of exerting influence, which hinges upon the outcome of the influence." (Cartwright, p. 1)

In a sense, Cartwright reveals, leadership effectiveness is a self-fulfilling process. The ability of one in a position of leadership to influence action in his or her employees is predictive of the credibility of his or her claim to leadership. There is therefore a great danger in attempting to over-reach with one's authority. By creating a scenario in which one's leadership is likely to be challenged, the leader must be prepared to demonstrate the potency of his or her authority. Ideally, then, decisions and demands impacting personnel should be made only with careful calculation and with a view toward reducing prospects for resistance. One important way to reduce this type of resistance is to establish a strong grounding in the ethical practice of leadership. This is a particular challenge in an atmosphere that calls for increasingly cutthroat tactics in contending with competition that outsources labor to countries without strong labor laws, transgresses basic principles of sound environmental practice, and otherwise engages in illicit practices aimed at shaving costs. Globalization and the inception of free trade have made these irresistible forces and, moreover, the recession has magnified the pressure they impose. So denotes the compilation text by Sergiovanni (2006), which collects a number of essays on leadership practice and pays particular focus to the importance of ethicality.

According to Sergiovanni, ethicality can be an important and common compass for navigating the challenges connected to leadership in varying contexts. Accordingly, Sergiovanni asserts that "context plays a key role in deciding whether certain approaches to leadership will be effective or not. Thus what a leader says and does to be effective in one kind of enterprise may not lead to effectiveness in another kind of enterprise. Susan Moore Johnson puts it this way: 'Leadership looks different and is different depending on whether it is experienced in a legislature, on a battlefield, at a rally, on a factory floor, or in a school district.'" (Sergiovanni, p. 1) Here, Sergiovanni reiterates a core assertion of the research thus far: the critical importance of achieving a stable set of values that can function as a centering point across a divergent offering of organizational contexts.

Sergiovanni goes on to apply this notion to the public school context, suggesting that this is a working environment where the need for morally informed leadership is well demonstrated. Moreover, Sergiovanni finds, it is incumbent upon leadership in schools to mold the type of atmosphere where teachers and students alike can thrive. According to the Sergiovanni text, the educational context carries its own particular demands for moral orientation while simultaneously imposing many of the traditional expectations of leadership common in a generic organizational sense. Thus, for principals and administrators, a balance is demanded. Sergiovanni reports that "the unique context for schooling, particularly in a democratic society, raises the question of sources of authority for leadership practice. As important as a school leader's personality and interpersonal skills may be to success, and as handy as bureaucratic reasons may be to use, neither are sufficiently powerful to provide that leader with the sources of authority needed to reach students, parents, teachers, and others in powerful ways." (Sergiovanni, p. 2) Sergiovanni therefore asserts that the discretion provided by moral orientation can help drive this balance and make one's leadership style adaptable to the specifics of any type of system.

One reason that this adaptability takes on added importance in discussions of modern business is because of the demographic impact of globalization. As the text by Chhokar et al. (2007) reports, it is increasingly the norm in business to engage partners, employers, or other personnel overseas. Today, all manner of cultural and ethnic backgrounds are converging on the global trade forum and bringing with them a diversity that challenges the sensibilities of many experienced leaders. That is why, Chhokar et al. argue, it is important to understand that different cultures enter into this forum with their own distinct values where leadership is concerned. By providing an overview of the way that a number of different business cultures perceive leadership, we can see that there are no universal formulas for effective leadership. Again, the ability to remain flexible and adaptable is of central importance. In its review of 25 distinct societies and the way that each addresses the issue of leadership, the text by Chhokar et al. presents leadership as something defined by an extremely wide range of variables and contextual factors. As with the balance provided by morality in the text by Sergiovanni, cultural sensitivity should be seen as a centralizing force in the face of great diversity and, frequently, in the face of unfamiliarity. According to Chhokar et al., "it is obvious that globalization is the name of the game in business, and no large firms can afford to ignore their overseas markets. Toyota has 39 overseas production centers in 24 countries, Microsoft has offices in over 60 countries, and Nestlé operates in over 80 countries. Even firms from emerging economies are keen to globalize. Haier, a Chinese firm that sells household appliances, conducts business in over 160 nations and operates manufacturing facilities in many countries, including the United States, Italy, Iran, Jordan, Malaysia, and Vietnam."

This demonstrates the sheer proliferation of multinational trade and, as a consequence, shows the new frontier before business leaders. Especially in those operational contexts that call for interaction with overseas markets, leadership that is not adaptable to the positive engagement of other business cultures will be at a considerable disadvantage. What most conspicuously emerges from the text by Chhokar et al. is the imperative for the modern organization to prioritize cultural sensitivity, adaptability, and flexibility in personnel employed in positions of management, administration, or executive leadership. These are the individuals most often relied upon to interface with leaders and personnel from different national, ethnic, and cultural backgrounds. A certain inherent makeup will coincide with training and knowledge of leadership in a multicultural setting.

At its root, this demand helps to restate an important idea about the versatility of effective leadership. Chhokar et al. confirm a position already articulated throughout: the job of defining leadership should not be left to oversimplification, and discourse on this subject necessarily remains in a state of constant evolution. According to Chhokar et al., "leadership has been a topic of study for social scientists for much of the 20th century (Yukl, 2006), yet there is no universally agreed-upon definition of leadership (Bass, 1990). A large number of definitions have been advanced by scholars. The core concept of almost all such definitions concerns influence — leaders influence others to help accomplish group or organizational objectives. The variety of definitions is appropriate as the degree of specificity of the definition of leadership should be driven by the intentions of the research." (Chhokar et al., p. 5)

Again, the literature impresses upon the researcher that leadership cannot be encapsulated simply or without the exhaustion of a variety of perspectives. Especially in light of the increased probability of interacting with unfamiliar cultures — as created by the context of globalization and trade liberalization — preparation for navigating and mediating this variety of perspective may itself be a determinant of leadership qualification. And from the perspective of much of the literature already encountered, leadership qualifications can be a strong determinant of the performance exhibited by personnel and by the business as a whole. As the text by Charan et al. (2011) asserts, leadership may be the single most important feature driving a company's success. Charan et al. put forth the argument that only through strong, confident, respected, and highly centralized leadership can a company be influenced to perform adequately in today's highly tumultuous marketplace. According to Charan et al., therefore, the organization must recruit, train, vet, and advance its leaders with clarity, care, and judiciousness.

This will depend on the combination of effective evaluation and effective job definition. To the latter imperative, Charan et al. report that clarity of the roles and expectations before leadership will be tantamount to their ability to navigate the challenges of technology-mediated employment, to weather the pitfalls of a recession economy, and to generally reflect company values in their actions and approach to work. To this end, Charan et al. indicate that "in this rapidly changing environment, leaders are no longer sure of their roles and responsibilities. How are they to treat employees who invest so much time and energy in communicating electronically? How transparent can and should they be when it comes to issues such as downsizing and performance? How can they build trust among employees who are increasingly distrustful of management? No leader at any level can answer these questions effectively without a framework that clearly defines his or her role." (Charan et al., p. xiv)

This forces us to reconsider the theme of balance. Just as we are required to reflect on the need for flexibility, versatility, and cultural sensitivity, so too must the organization itself ensure that its core values and ideals are being channeled through leadership. Thus, a clear definition of what is expected can help the leader at the managerial or administrative level to meet and even exceed the expectations of the firm. Additionally, providing this type of structure for the role of the leader can help to provide the grounding needed to engage his or her responsibilities with discretion and autonomy. This is important because, as the text by Daft & Lane (2007) contributes, an extremely critical element of effective workplace leadership is possessing the sense of discretion and entitlement to forge meaningful working relationships with personnel. Through effective communication, motivational tactics, and modes of empowering personnel, a leader can influence the dedication and sense of contribution present in each employee. As the text by Daft & Lane indicates, a leader who helps to create an atmosphere where personnel feel thusly motivated will be more successful in obtaining desired performance levels. Daft & Lane make the case that "the importance of motivation is that it can lead to behaviors that reflect high performance within organizations. Studies have found that high employee motivation and high organizational performance and profits go hand in hand. An extensive survey by the Gallup organization, for example, found that when all of an organization's employees are highly motivated and performing at their peak, customers are 70% more loyal, turnover drops by 70 percent, and profits jump 40 percent. Leaders can use motivation theory to help satisfy followers' needs and simultaneously encourage high work performance. When workers are not motivated to achieve organizational goals, the fault is often with the leader." (Daft & Lane, p. 226)

Of course, it is a great deal easier to create an atmosphere for effective motivation when a company is experiencing success and moving forward with stability. However, these are conditions increasingly scarce in today's sustained era of recession and economic uncertainty. Even for large, sturdy firms with strong performance track records, the imposition of changes brought on by recession and globalization is demanding transformation. Therefore, it is necessary to consider the implications of transformational leadership, a specific style and orientation geared toward guiding personnel through the crisis of transition. Astin & Astin (2001) offer a critical discussion on how a leader might most effectively posture himself or herself to help a company weather this transition. The central focus of the text by Astin & Astin is the exploration of those characteristics which mold a leader both on the individual level and as a figure providing influence to a company. One of the key points is the argument that leadership is inherently a way to promote meaningful and effective change in an organization. As the text by Astin & Astin indicates, "leadership is a purposive process which is inherently value based." (Astin & Astin, p. 8) This means that the effectiveness of a leader in bringing about change will be reflected in the degree to which an organization is then more suited to meeting its operational goals and functioning consistently with its company-wide mission.

Astin & Astin also indicate that barriers to effective transformational leadership can emerge from a wide range of sources, and that an effective leader in a transformational context will be prepared to project these barriers and adapt to their emergence. External barriers — such as industry- or economy-wide recessionary trends, shortages of resources, or other negative market conditions — can interfere with the achievement of organizational goals. In such instances, effective change-leadership must be prepared to adjust plans and alter procedures according to these impediments. Sometimes these impediments may emerge from within, at the behest of discontented personnel. Change can frequently bring about uncertainty. The text by Astin & Astin indicates that this uncertainty can produce a sense of apprehension, resentment, or outright fear among personnel, resulting in a resistance to change that can be positively stultifying for the company and its leadership. Where internal resistance becomes clear, it is the responsibility of leadership to establish a multi-directional line of communication with personnel to identify and resolve the causes of resistance.

In order to help a company navigate through change and simultaneously help personnel make the adaptation, the effective leader will, Astin & Astin assert, possess certain characteristics that make this individual uniquely capable of motivating cooperation, quelling apprehension, and inclining personnel to put forth their best possible effort and commitment even in the face of uncertainty. Accordingly, the individual qualities comprising an effective leader as described by Astin & Astin help to support the claim that the nurturing of personal relationships is a good predictor of leadership success. Outlining such optimal traits as self-knowledge, authenticity, integrity, commitment, empathy, and competence, the authors indicate that there is a prototype for the type of leader who can effectively navigate a company through the difficulties and unfamiliarity of change simply by providing a stable centering force (Astin & Astin, p. 12–13). The argument is made that such positive traits will induce a loyalty among personnel to the leader, the company, and the goals of transformation.

Conclusion

Ultimately, the combination of the literature evaluated throughout and personal experience produces a valuable basis for how best to proceed in personal development as a future organizational leader. Most importantly, a greater appreciation emerges for the value of theoretical grounding, particularly as this relates to the ability to navigate a wide range of leadership contexts and scenarios. Additionally, it is clear that the realities of globalization are changing the way that leadership must be pursued, both practically and philosophically. And finally, change is a constant in the business world. Training and familiarity with the various dimensions of transformational leadership is absolutely essential to sustainable success.