Leadership in Dynamic organizations

ACKNOWLEDGEMENTS

First and foremost, praise is due to Almighty God for all his blessings for giving me patience, strength and good health throughout the duration of writing this book.
Next, I would like to express my sincere gratitude and appreciation to my supervisor from the National University of Malaysia (UKM), Associate Professor Dr. Zaher Zain, for his patience, motivation, critical thinking and immense knowledge. He has been a tremendous mentor for me throughout this journey, and his advice on my research has been priceless.

Finally, I would also like to thank my family. Words cannot express how grateful I am to my dear parents and brothers for their consistent emotional and spiritual support throughout writing this book and my life journey. I am also grateful to my friends who assisted and guided me to help me deliver a better book.

PREFACE

Nowadays, organizations face severe competition in the global market. To avoid being outperformed by their rivals, organizations need to be competitive, fast, flexible, powerful and resilient enough to fight back, stay in the market, or outrun their rivals (Porter, 1980, Greiner and Cummincs, 2009, Prahalad and Hamel, 1990, Porter, 1996, Valikangas, 2010). In order to stay alert and adapt themselves to such fast-changing contexts and competition, organizations also have to learn, just like people. The market economy has put organizations under constant and ever increasing pressure to innovate and introduce innovative products ahead of their competitors. Such rivalry has made product life cycles much shorter than before. In other words, organizations have to “reinvent” themselves repeatedly to gain competitive advantage (Singh, 2010).

The concepts of strategy and strategy formulation are also very hot topics nowadays for practitioners and researchers. If we take a look at recent trends in research and publications, we see that the concept of a competitive environment has increasingly come to the fore. However, throughout the last 40 years, theories regarding strategy formulation and implementation have tended to focus on the resources and capabilities of organizations (companies). Good examples of these types of theories are the Industrial Organization Model (also known as the IO Model), the Resource-Based View (also known as RBV), and the Dynamic-Capabilities View (also known as DCV) (DeToni and Tonchia, 2003; Barney and Clark, 2007; Hitt et al., 2014; Pearce and Robinson, 2014).

Leadership is one of the key elements that can contribute to the survival, health and competitiveness of organizations. For many decades, scholars have sought to understand what makes leaders effective and, to achieve this, have studied their traits, characteristics, values, needs, attributes and behaviors. Moreover, in more recent studies, leadership has increasingly come to the attention and consideration of scholars and researchers. However, while many scholars and researchers have worked on leadership styles, there is no clear or comprehensive typology that explains the behavior of leaders in a dynamic and ever-changing working environment. To put it another way, the role of leadership styles in dynamic firms and industries has not been well researched or explained.

This book first seeks to explain the nature of the resources and capabilities of dynamic firms from the perspective of the Dynamic Capability View (DCV). It then goes on to introduce and analyze major types of leadership behavioral styles. Its findings in this area suggest that the behaviors of leaders are defined by two key criteria: their degree of involvement in the decision-making process, and their degree of TRC-Orientation (Task-Orientation, Relationship-Orientation, and Change-Orientation) in dealing with subordinates. Finally, the study seeks to explain why managers adopt each behavioral style in Dynamic Capability-Oriented (DC-O) organizations. The reasons underlying these styles are also explored and explained in terms of four main criteria: perceived benefits for subordinates, perceived benefits for the leader, perceived benefits for the organization, and facilitating factors.
I hope that the findings set out in this book will help scholars and practitioners to enhance the performance of firms in turbulent markets, through adopting more efficient and effective leadership styles that will give them competitive advantage and above-average returns.

SECTION 1

LEADERSHIP IN DYNAMIC ENVIRONMENTS

Introduction

In order to become successful or gain competitive advantage in today’s highly dynamic and complex business environment, organizations need leaders who can effectively steer them in the right direction. They need people who can inspire followers to believe in their shared vision and to put in that extra effort to carry out their tasks; who can develop innovative people who think critically; reward employees for good performance; and generally make sure that their operations run as efficiently as possible (Bass, 1985a; Yukl, 2012; Tracy, 2011; Kotter, 1996; Mintzberg, 1998; Mintzberg, 1990).
Against the above background, it is alarming to note that, according to many studies, an average employee uses just 50 percent of his/her capacity at work. This striking statistic can be explained in part by factors such as the inability to prioritize tasks, a lack of task clarification, poor guidelines or management, a lack of proper feedback, and so on. On top of these work-related barriers to efficiency, there are many other ways in which average employees waste job-related time. These include things like chatting with co-workers and colleagues; extending lunch or coffee breaks; arriving at work late and/or leaving early; killing time by surfing the net; spending time and energy on conflicts and disputes with supervisors, subordinates or peers; and engaging in other activities that bring no return to organizations. Yet many of these time-consuming factors would not exist, or at least not to any significant extent, under a good management system. In other words, if managers and leaders can manage and lead their people effectively, issues such as these might not arise in the workplace (Tracy, 2011).

To highlight the importance of leadership, As-Sadeq and Khoury (2006) address the importance of this phenomenon at a time of change. They believe that, when organizations face unpredictable changes in their external environment, they should be led by people capable of enhancing the innovation and creativity of their organization, as well as developing people with critical thinking abilities. Franco and Almeida (2011) also stress the changing nature of the global business environment and the crucial need for effective leadership if organizations are to adjust and adapt to their political, economic, technological and social environments. They add that it is necessary not only for organizations but also for governments to develop effective programs to develop new leaders. Organizations that fail to recognize the importance of leadership and leadership development are doomed to lose market share and competitive positions to their competitors. Similarly, Russell (2014) argues that the success of organizations in coping with global tensions and challenges depends primarily on the skills and abilities of their leaders.

Most leaders do not feel happy facing pressures from a stressful environment. Many do not recognize the importance of changing their styles in response to such pressures. Instead, they continue to adopt styles which have served them well in the past. The environment can also produce opportunities and threats for corporate leaders. On the one hand, they would like to devote attention to their employees’ needs; but on the other hand, they have to increase the efficiency and productivity of the organization. This can lead to a situation in which they do not know how to achieve the objectives of the organization without making their employees feel alienated or burned out (Arnold et al., 2010).

ORGANIZATIONS AND COMPETITIVE ADVANTAGE

The impact of competitive advantage in companies and the business environment have been a lively topic of research for decades. Organizations are studied in the environments in which they operate. Every day, firms are influenced by elements in their external environment such as suppliers, customers, government bodies, economic or financial institutions, competitors or self-regulating groups. Furthermore, technological, cultural, demographic, political and economic changes force organizations to formulate new strategies to adapt to these changing factors.

In this regard, Crainer and Dearlove (2014b) highlight the fact that, while there are two different perspectives on competitive advantage (the Resource-Based and Industry Organization views), a key objective for most organizations is sustainable competitive advantage – which is moreover not simply a desire for firms, but a realistic and achievable objective. In fact, organizations pursue different strategies to achieve sustainable competitive advantage in markets and industries which are highly competitive.

Nowadays, it is not possible or appropriate to control and supervise subordinates tightly through traditional methods of autocratic decision-making – especially if a firm wants to be innovative, adaptable, responsive and agile. Leaders ought to lead organizational change, delegate responsibility effectively and enhance efficiency, all while keeping their organizations heading in the right direction and making sure that operations run smoothly (Arnold et al., 2010). So what should leaders do to respond to their environment? And how should they respond?
Thompson and McHugh (2003) make a critical argument about this matter from a system perspective. As they note, organizational theories have shifted from “closed system” to “open system” thinking. The conventional closed-system mindset in organizational theory is now old and outmoded. Classical management theories