Strategic leadership and social capital in an era of responsible leadership: implications for research

Strategic leadership is seen as a key driver in building the organisation's internal capabilities.

Among the roles fulfilled by strategic leaders, it is recognised that they are responsible for building the human and social capital of the organisation. However, when leading change, social capital may be seen as a facilitator of change, or as a hindrance.

Strategic leadership is responsible for recognising when the organisational landscape changes, interpreting what that means for the social capital of the organisation, and then possibly destroying, before rebuilding social capital.

Currently, the moral or ethical dimension of social capital is receiving increased attention. This calls for leadership to exercise stewardship and to be the moral guardian of the organisation.

It is within this context that further research ideas are considered, to explore how strategic leaders exercise their role in developing social capital in a responsible manner, for the long term good of all stakeholders.

In their seminal work, Katz and Kahn (1966) identify three distinctive categories of leadership in organisations, namely the strategic, operational and the tactical. These categories can be differentiated according to their effects on organisation structure, and its origination, interpolation and utilisation, respectively (Katz & Kahn, 1966: 308-335). Strategic leadership is seen as increasingly important to the success of an organisation and is the key driver in building the organisation’s internal capabilities.

Whilst there are various perspectives on the roles of strategic leaders, for the purposes of this paper, Hitt, Ireland and Hoskisson’s (2001: 497-513) six key actions that strategic leaders engage in to bring about the successful implementation of organisational strategy, are sufficiently representative and informative.

Firstly, strategic leaders need to determine the strategic direction of the organisation, usually crystallised in the form of a core ideology and an envisioned future (Collins & Porras, 1996).

Secondly, Hitt, Ireland and Hoskisson (2001: 497-513) suggest that strategic leaders need to exploit and maintain core competencies in the implementation of organisational strategy.

Thirdly, Hitt et al. (2001) note that human and social capital needs to be acquired and developed as part of strategy formulation and implementation.

Fourthly, an organisational culture that serves as a source of competitive advantage needs to be shaped and sustained by strategic leadership.

Closely related to the organization’s culture is the emphasis placed on ethical practices within the organization, by the strategic leadership so that managerial opportunism and self-interest is limited and the organization’s best interests served.

Finally, strategic leadership needs to establish balanced organisational controls supportive of strategic change and that serve as parameters for strategy implementation, monitoring and adjustment.

Human capital is an individual-level construct consisting of employee-capability, -satisfaction and -sustainability (Moon & Kym 2006). Together, these three elements describe the ability and motivation of an individual to perform within an organisation, in the longer term.

In a business context, relational capital (which is a form of social capital) refers to the value derived from the network of relationships that an organisation has developed both with its customers and other partners (Moon & Kym 2006). The characteristics of this capital can be understood by looking at social capital theory.

Human capital may be built by accident or naturally, as well as by design. The experiential learning cycle (Kolb 1984) suggests that knowledge is created and reshaped through reflecting on individual experience. The process of reflection is seen to facilitate the development of sets of potential solutions in the individual’s long-term memory that can be drawn upon to help comprehend new and difficult problem situations (Cheetham & Chivers 1998), thereby contributing to the employee capability component of human capital.

According to Nutt and Backoff (1996), strategic leadership emphasises the central role of leadership in ensuring successful change endeavours. By concentrating on the organisation as an entity, the strategic leadership of an organisation is therefore primarily responsible for initiating, implementing online casino and managing organisational change.

It is evident that leading change in organisations has significant implications for social capital, which may be seen as a great facilitator of change, or alternatively as a great hindrance.

During the last few decades, there has been intense debate about the role of business in society and calling into question the traditional assumption articulated by Friedman (1962) that the role of business should be limited to business activity or economic interests (e.g. Hood, 1996; Zohar & Marshall, 2004) and arguing that business at least has some form of moral obligation to engage in solving social problems, or alternatively that it is in their best interest to do so (Jackson, Farndale & Kakabadse, 2003; Zohar & Marshall, 2004).

The concept of sustainability relates to the maintenance and enhancement of environmental, social and economic resources, in order to meet the needs of current and future generations (Gilbert, Stevenson, Girardet & Stren, 1996).

This paper has examined the social dimension of strategic leadership, focusing specifically on the role of strategic leaders in developing social capital and utilising it for organisational ends. Furthermore, it has been argued that a different type of strategic leadership is required in organisations today. A research agenda has been proposed to learn more about how this type of leadership is, and should be exercised.

Answers for many of these proposed research questions may be found by investigating and reporting on the increasing number of examples of responsible leaders and sustainable organisational initiatives, making use of a range of research methods and procedures. However, the challenges in a new leadership era are great, and what is also required is normative research. Leaders themselves need guidance, not only by learning what others are doing, but also by being challenged to consider what responsible strategic leadership should, and could look like.

This article was originally published in Management Today, January 2012. It is reproduced with their permission. http://management-today.org/

REFERENCES

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Zohar, D. & Marshall, I. 2004. Spiritual capital: Wealth we can live by. London: Bloomsbury.


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