Professional Documents
Culture Documents
can enhance the performance of an organization if they are consistent with the types of
processes needed to accomplish the mission and adapt to internal and external challenges
(Gordon & DiTomaso, 1992; Kotter & Heskett, 1992). For example, shared values such as
The third in organizational is leader influence on culture. Leaders can influence the culture of
an organization in a variety of ways, and the effects are stronger when the different
approaches are consistent with each other. One form of leader influence on the organizational
culture is the use of ideological appeals and repeated articulation of an inspiring vision for the
organization or subunit. Leaders communicate their values when they make statements about
values and objectives that are important and formulate long‐term strategies and plans for
attaining them. Another approach for influencing culture involves the use of cultural forms
such as symbols, slogans, rituals, and ceremonies (Trice & Beyer, 1993). A third way for
Besides that, the fourth in organizational culture is difficulty of culture change. In general, it
is much more difficult for leaders to change culture in a mature organization than to create it
in a new organization. One reason is that many of the underlying beliefs and assumptions
shared by people in an organization are implicit and unconscious. Cultural assumptions are
also difficult to change when they justify the past and are a matter of pride. Moreover,
cultural values influence the selection of leaders and the role expectations for them. In a
mature, relatively prosperous organization, culture influences leaders more than leaders
influence culture.
The effects of CEO leadership on company performance have been examined in research
with different methods. Results will be reviewed for succession studies, intensive case
studies, and survey studies of CEO behavior. The first one in studies of CEO Succession that
for understanding importance of strategic leadership. The research method in most succession
studies is an archival field study on CEOs for a sample of business corporations, but a few
succession studies have used coaches of professional sports teams. All data is from archival
records, and characteristics of the successors (e.g., internal vs. external) are related to changes
in objective measures of organizational performance in the years before and after succession
occurs (e.g., Grinyer, Mayes, & McKiernan, 1990). Reviews of the succession research
provide evidence that changes in the chief executive have important effects on the long‐term
The second we discuss in descriptive studies of CEO decisions and actions. Several types of
descriptive studies have been used to investigate the influence of CEOs on their
questionnaires, company records, annual reports, and financial databases. Some researchers
also use information from secondary sources such as biographies, autobiographies, and
magazine articles about organizations and their leaders. Descriptive studies of chief
executives usually examine the types of decisions and actions that account for the success or
failure of an organization over a period of several years. One limitation of most descriptive
studies is the difficulty in getting accurate information about the behavior of chief executives
and their influence on organizational performance. Information provided by a current or
former CEO may be biased by a desire to present a favorable image. Few members of the
organization have an opportunity to directly observe most of a chief executive’s actions. The
people who are close to the CEO may be unwilling to discuss controversial decisions or
events in which they were involved, out of loyalty, fear for their own reputation, or because
difficult to assess the influence of a single CEO. Many of a chief executive’s strategic
decisions and actions only indirectly affect the financial performance of a large company, and
The third in research on effects of strategic leadership is survey study on CEO leadership.
effectiveness in some studies but not others. None of the studies included adequate measures
of performance determinants that explain how a CEO influences financial performance for a
large company. This attribution bias occurs when the CEO of a company known to have
forcompanies with weaker performance, despite no actual difference in their behavior. In one
study that attempted to control for this bias by including a measure of past performance, a
significant effect for CEO charismatic leadership was not found (Angle et al., 2006).
The research on leadership by chief executives of organizations shows that they can influence
organizational processes and outcomes, but this influence varies greatly depending on the
situation and the traits and skills of the leaders. The succession studies, descriptive studies,
and survey studies all have limitations, and more comprehensive research is needed to
accurately determine how chief executives can influence the financial performance of their
firms. The research should examine a much broader range of actions and decisions by chief
executives, including how they influence strategy, structure, programs, systems, and culture.
The research should include measures of other relevant mediating processes and performance
essential to gather information about the influence of other top executives and leaders at
Executive Teams
All organizations have a top management group that includes the CEO and other top
executives, but organizations differ greatly in the way this group operates. The traditional
approach is to have a clear hierarchy of authority with a CEO (usually the chairman of the
board, but sometimes the president of the organization), a chief operating officer (usually the
president of the organization), and several subordinate executives (e.g., vice presidents) who
head various subunits of the organization. This structure is still prominent, but an
increasingly popular alternative is to share power within the top management team (Ancona
& Nadler, 1989). Executives in the team collectively assume the responsibilities of the chief
operating officer in managing the internal operations of the organization, and they assist the
Potential Advantages
Executive teams offer a number of potential advantages for an organization (Ancona &
Nadler, 1989; Bradford & Cohen, 1984; Eisenstat & Cohen, 1990; Hambrick, 1987; Nadler,
1998). The members often have relevant skills and knowledge that the CEO lacks and can
compensate for weaknesses in the skills of the CEO. Important tasks are less likely to be
neglected if several people are available to share the burden of leadership. A recent study
found that when the CEO allowed other members of a top executive team to influence a
strategic decision, the decision quality was better, the decision was perceived as more fair,
team members were more committed to implement the decision, their trust in the leader
increased, and they identified more with the team (Korsgaard, Schweiger, & Sapienze, 1995).
Facilitating Conditions
The potential advantages of having an executive team depend in part on the situation, and
they are especially important in a complex, rapidly changing environment that places many
external demands on the CEO (Ancona & Nadler, 1989; Edmondson et al., 2003). Growing
turbulence in the environment due to rapid technological changes and increased global
competition has made the responsibility for developing successful strategy more difficult for
many organizations. Teams are also more important when the organization has diverse but
highly interdependent business units that require close coordination across units. In an
organization with several diverse business units, a single leader is unlikely to have the broad
expertise necessary to direct and coordinate the activities of these units. The quality of the
backgrounds and perspectives and their knowledge and skills are relevant for understanding
how the organization can adapt in a dynamic, uncertain environment (Bantel & Jackson,
Effective leadership is more likely if the CEO has relevant values, traits, and skills. For
example, a comparative case study of 17 CEOs (e.g., Peterson, Smith, Martorana, & Owens,
2003) found that CEO personality was related to the top management team characteristics
(optimism, cohesiveness, flexibility, and moderate risk taking), which were related in turn to
a measure of financial performance. Executive teams are more likely to be successful when
the CEO selects team members with relevant skills and experience, clearly defines objectives
consistent with shared values, gives the team considerable discretion but clearly specifies the
limits of team authority in relation to CEO authority, helps the team establish norms that will
facilitate group processes, facilitates learning of skills in working together effectively, and
encourages openness and mutual trust among team members. The CEO should avoid actions
among team members and meeting with individual executives to deal with issues that should
be addressed by the entire team. It is also essential for the CEO to help the team avoid
process problems that can prevent them from making good decisions. If the CEO dominates
decisions, the potential benefits of diverse members with relevant knowledge may not be
realized. The quality of a strategic decision is likely to be better if individuals with the most
expertise for that type of decision have ample influence over it. It is also important to make
decisions in a timely way. The CEO should seek consensus among the executives who would
be the most affected by a decision, rather than prolonging discussion in an effort to achieve
Eisenhardt (1989) conducted a study of eight minicomputer firms to investigate how the
speed and quality of strategic decisions were affected by the decision processes in these
firms. Interviews were conducted with members of the executive team in each company to
learn about the process used for important decisions, including when and how they were
made. Questionnaires, company documents, and industry reports were used to obtain
additional information about decision processes and company performance. The study found
that strategic decisions were both faster and better when the executive team conducted a
simultaneous evaluation of several alternatives rather than using the common “satisficing”
Some different ways of conceptualizing leadership have emerged in recent years, and they are
eliciting interest among scholars who believe that the currently popular theories are too
limited. Examples include shared and distributed leadership, relational leadership and social
networks, and emergent processes in complexity theory. These approaches are still evolving,
and as yet there is little conclusive research on them. Each approach will be described briefly.
The theory and research on leadership has long recognized that effective leaders empower
others to participate in the process of interpreting events, solving problems, and making
decisions (Argyris, 1964; Likert, 1967). In most of these approaches, the focus is on the
process by which focal leaders encourage and enable others to share responsibility for
leadership functions.
Relational Leadership
Most theory and research on leadership views it as an influence process and focuses on the
individual leader can develop and maintain cooperative relationships. An alternative view of
leadership is to describe it as part of the evolving social order that results from interactions,
To accurately describe effective leadership in organizations requires theories that are more
complex than most of the earlier ones. Distributed leadership, relational dynamics, and
emergent processes are not adequately described in the hierarchical leadership theories that
focus on the influence of a chief executive or the top management team. Complexity theory
involves interacting units that are dynamic (changing) and adaptive, and the complex pattern
of behaviors and structures that emerge are usually unique and difficult to predict from a
Two key functions for top executives in business organizations are to monitor the external
threats and opportunities for the organization, and competitive strategy guides the
External monitoring (also called “environmental scanning”) provides the information needed
for strategic planning and crisis management. Grinyer et al. (1990) studied 28 British
firms with only average performance; the top management of the high‐performing companies
did more external monitoring (e.g., environmental scanning, consultation with key customers)
and were quicker to recognize and exploit opportunities. The amount of change and
turbulence in the environment will determine how much external monitoring is necessary.