An exploratory study of leadership behaviour and strategic change in small, high-performing, U.S. technology firms

Abstract

This study is an explorative investigation of the role of leadership behaviour in process reconfiguration as a strategic change outcome. Motivated by 25 years of experience observing over 200 small firms implementing process innovation initiatives, the researcher noticed that some firms were more successful than others and speculated that leadership is a key factor in sustaining strategic process change. Strangely, the strategy and leadership literature do not inform each other. Although the role of management in strategy is now being addressed through the subset of the dynamic managerial capabilities literature, the role of leadership is still largely being ignored. While the dynamic managerial capabilities framework appears very promising, it only addresses two of the dynamic capabilities constructs (evolutionary and technical fitness) and ignores the third construct: entrepreneurial fitness, a concept Teece (2009) introduced but left unexplained. Interestingly, entrepreneurial fitness was vaguely linked to leadership but was left unexplained and has largely been ignored in the strategy literature. The leadership literature, particularly the transformational leadership stream, seems to indicate that leadership is an enabler, if not a source of, competitive advantage. This mutuality of the leadership and strategy literature appears to be different sides of the same coin that remain uninterested in each other. As a result, this study examined the interface of these two literatures and investigates the phenomenon of leadership and strategic change. An inductive multiple case study approach utilizing primarily semi-structure interviews and a leadership style questionnaire was conducted. This study discovers dynamic leadership capabilities of sensing, committing, communicating, and coordinating, which were linked to leadership styles. Transactional leaders express dynamic leadership capabilities sequentially, while transformational leaders express them all together as needed. The study found that, in the presence of these dynamic leadership capabilities, change coheres and builds, thus sustaining process reconfiguration. Likewise, in the absence of dynamic leadership capabilities, change is dissipative. The research findings suggest and offer for further development that entrepreneurial fitness is heavily dependent on transformational leadership style and patterned learning enabled by the dynamic leadership capabilities of sensing, committing, communicating and coordinating.