STRATEGIC LEADERSHIP

Strategic Leadership

Strategic leadership

Theory and research on the relations among top managers, company directors, investors, and external contenders for corporate control -broadly, the field of corporate governance -experienced a remarkable flowering during the 1990s. Early work addressed the central puzzle raised by the widespread separation of ownership and control among large American corporations, namely, why would any sensible person - much less thousands or millions of them - invest their savings in businesses run by unaccountable professional managers? Yet generations of individuals and financial institutions continued to invest in these firms. Why?

Answering this question led to the creation of a new theory of the firm that portrayed the public corporation as a 'nexus of contracts'. In the contractarian model, the managers of the corporation were disciplined in their pursuit of shareholder value by a phalanx of mechanisms, from the way they were compensated, to the composition of the board of directors, to the external 'market for corporate control'. Taken together, these mechanisms worked to vouchsafe shareholder interests even when ownership was widely dispersed. Research in this tradition flourished in the 1980s, as takeovers of under-performing firms became common and restive institutional investors made their influence known. Studies focused on assessing the effectiveness of devices such as having boards numerically dominated by shareholders, tying compensation to share price, or ensuring susceptibility to outside takeover. (Lublin, 2004, 82)

The real action, though, is likely to emanate from the shareholder side, including investors with different agendas and approaches. Institutional and other organized shareholders are exercising more pressure for changes in corporate governance, with a growing focus on the unresolved issue of executive compensation. As the shareholder movement gathers more force and momentum, it is manifesting both division within its own ranks and an expanding agenda of concern. This concluding analysis also notes the growing role of labor unions in the shareholder movement, as well as the less active role of mutual funds. While shareholder voice has grown louder, the traditional check of shareholder exit from the market remains another check on corporate misdeeds. This analysis also examines the growing importance of research and intelligence gathering by the shareholder activist movement. (McGhee, 2004, 29)

Strategic Leadership

Strategic leadership is a multidisciplinary concept. The foremost academic journal on the topic, The Strategic leadership Quarterly, asserts that it is an international journal of the political, social, and behavioral sciences, indicating the breadth of the disciplinary subjects where the concept is discussed. Within this range of subjects, much of the cutting-edge strategic leadership research is focused on strategic leadership in the business world and, more specifically, strategic leadership in organizations. As with any topic, this literature has its own competing perspectives and initially bewildering terminology—LMX theory, MLQ tests, and so on. However, during the last couple of decades, the dominant paradigm in this area has been the charismatic or transformational approach. More recently, there has been a shift towards a "post heroic" model of strategic leadership that emphasizes the relational strategic leadership more dynamic than ...