Strategic leadership

Strategic leadership and strategic management has always been an integral part of business world. Ireland & Hitt (cited in Crossan et. al 2008) discussed the need for effective strategic leadership practices that help firms enhance performance while competing in turbulent environments as they theorized that, 'Competition in the 21st century's global economy will be complex, challenging, and filled with competitive opportunities and threats'. Strategic management is defined in this study as an array of decisions and processes that lead to the development of an effective approach to achieve the organization's objectives (Glueck & Jauch 1984). Whereas strategic leadership according to Ireland & Hitt's (cited in Crossan et. al 2008) is a person's ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organization. However, this article presents a fairly new and more useful outset of strategic leadership than has been measured to date in the debates regarding the scientific position of strategic leadership and strategic management. This paper also focuses on the perspective that corporate governance is a set of processes and laws that impact the economic efficiency of an organization. Lastly, a discussion on theoretical rational for analyzing on the duties of board of directors and chief executive officer, management and other stakeholders as a whole integrated part of an organization.

Strategic leadership in comparison to strategic management does add extra value to companies and society. Taking a cue from Douglass North's (cited in Boal & Schultz 2007 ) view of history suggested in the quote above, that strategic leaders play a central role in the organization's capacity to learn from its past, adapt to its present, and create its future. Strategic leaders perform many activities and wear many hats as they carry out their roles, such as making strategic decisions, creating and communicating a vision of the future; developing key competencies and capabilities; developing organizational structures, processes, and controls; managing multiple constituencies; selecting and developing the next generation of leaders; sustaining an effective organizational culture; and the infusion of ethical value systems into the organization's culture (Boal & Hooijberg cited in Boal & Schultz 2007 ). Research on strategic leadership and its antecedent, upper echelon theory, focuses on executives who have overall responsibility for an organization (Hambrick & Mason, cited in Crossan et. al 2008), based on the principle that ultimately, they account for what happens to the organization. On the contrary, Tyran et. al (1992) portrayed that Strategic management is often performed by a large number of managers from throughout an organization and they are also involved with the strategic management processes that require rational techniques. It is clear from this conceptualization of strategic leaders that they play a more active role in developing ideas and vision, while more traditional management roles work toward implementing them in the structures and processes of the organization (Locke & Zaleznik cited in Boal & Schultz 2007). The following paragraph outlines the importance of strategic leadership and strategic management.

Strategic leaders enhance collective learning and the development and use of the organization's procedural and transactive memories by promoting intra- and extra-organizational dialogue that provides access to and encourages the sharing of knowledge about history, issues confronting the organization in real time, and possible futures (Boal & Schultz 2007). Moreover, according to House and Aditya 1997 (cited in Crossan et. al 2008) stated that strategic leadership includes: making strategic decisions concerning the products and services of organizations and markets; selection of key executives; and allocation of resources to major organizational components; formulation of organizational goals and strategy; providing direction for the organization with respect to the organization's domain conceptualizing and installing organizational designs and major infrastructures, such as compensation, information, and control systems; representing the organization to critical constituencies such as representatives of financial institutions, government agencies, customer interest groups, and negotiating with such constituencies for legitimacy and resources.

Quite the opposite, Strategic management depicted by Tyran et al is his paper carries out the following duties, managers formulate goals as the goals of an organization are defined to provide a foundation for the development of the strategic plan. This activity involves an evaluation of economic criteria as well as recognition of the various organizational stakeholders. They carry out environmental analysis since the environment consists of all the external entities and influences that are not directly controlled by the organization. Environmental analysis involves: (a) finding reliable sources of environmental data, (b) compiling and examining the data to identify trends, developments, and relationships, (c) monitoring environmental conditions, and (d) anticipating the future. Execute strategy evaluation, seeing that this step is concerned with evaluating the content and action plans associated with a strategic plan, whether it is an existing strategy or a proposed strategy. Execute strategy implementation as the successful implementation of strategy depends on an organization's ability to make a strategy work in the operating environment. Hence, line managers are typically responsible for the management of implementation. Implementation is often viewed as behavioral in nature and considered to be a task requiring sensitivity to the social and political implications of change. And lastly, they accomplish strategic control which is somewhat similar to the evaluation step. However, strategic control is concerned with monitoring the implementation and outcome of a selected strategy, instead of the content of the strategy. The next paragraph focuses on the real issue that corporate governance system is relevant in the overall economic efficiency of the organization and with a strong emphasis on shareholders funds.

Corporate governance is defined by Solomon (2007) as companies that discharge their accountability to all their stakeholders and act as socially responsible system of checks and balances of their business activity. Furthermore, in 2004, Organization for Economic Cooperation and Development (OECD) (cited in Chalhoub 2009) described that corporate governance is one key element in improving economic efficiency and growth as well as enhancing investor confidence. Corporate governance involves a set of relationships between a company's management, its board, its shareholders and other stakeholders, present the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined, endow with proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders, consequently, the cost of investment is lowered and firms are encouraged to use resources more efficiently, thus supporting growth. Below is the diagram showing corporate governance as a

  • Glueck, W. F., & Jauch, L. R. (1984). Business policy and strategic management (4th ed.). New York: McGraw-Hill

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