Finding a Solution to Leadership E-Book

Niels Brabandt

• Herausgeber: Books on Demand
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2019

Seitenzahl: 670

Beschreibung

Business and employee management are key subjects in business administration. For decades, actually for centuries, there has been a discussion about how effective leadership of people or employees can be realized. It has always been a major concern within market-based economic systems to learn how its products and services should be designed in order to generate consumer demand. That the discussion about business and employee management is more relevant than ever is linked to the fact that leadership situations are influenced by a variety of external factors. They include, in particular, political, cultural, social, demographic, economic, and technological developments. It is therefore required for business and employee management to be adapted to those external framework conditions on a permanent basis. In former times, the assumption in mainstream leadership research was that leadership success relied on specific personal characteristics. Later on, the prevailing view was that the decisive factors in employee management lied in specific leadership behavior or leadership styles. Today's research on leadership is dominated by situation-oriented approaches, providing for specific leadership concepts for specific organizational and employee-related structures. The present thesis is an attempt to bundle a variety of approaches to leadership with the aim of providing an overarching framework for concepts of a similar nature. Therefore, the leadership concept to be developed in what follows is to be characterized by the principles of holism and sustainability. The first step is to present the fundamentals of leadership and management in order to introduce key terms and concepts and provide an overview of the research on leadership. Chapter 3 deals with separately displaying the business and employee management approaches of various management pioneers, distinguishing between early and con-temporary pioneers. Each approach is presented in consideration of its key elements, its strengths and opportunities, as well as its weaknesses and limitations. The fourth chapter, finally, is devoted to developing a holistic and sustainable leader-ship concept.

Leseprobe

Dissertation

Niels Brabandt

London

Faculty of Oeconomics

New York University

PhD Thesis

London / New York 2015/2016

Table of Contents

List of Tables

List of Figures

Introduction

Fundamentals of Leadership

2.1 Definition of Management / Leadership

2.2 Management Duties

2.2.1 Task-Related Management

2.2.2 Person-Related Management

2.2.3 Self-Leadership

2.3 Leadership Style and Leadership Behavior

2.4 Leadership Responsibility and Leadership Success

2.5 Management Levels

2.6 Institutional Elements of Corporate Management

2.6.1 Corporate Vision

2.6.2 Corporate Values and Corporate Mission Statements

2.7 Management Tools

2.7.1 Employee Assessment

2.7.2 Management by Objectives / Management by Indicators

2.7.3 Appraisal Interviews

2.8 Approaches to Leadership

2.8.1 The Property-Oriented Perspective

2.8.2 The Behavior-Oriented Perspective

2.8.3 The Situation-Oriented Perspective

Pioneers of Management

3.1 Early Pioneers of Management

3.1.1 Igor Ansoff

3.1.2 Chris Argyris

3.1.3 Chester Barnard

3.1.4 Warren Bennis

3.1.5 James Champy

3.1.6 Alfred Chandler

3.1.7 W. Edwards Deming

3.1.8 Peter Drucker

3.1.9 Henri Fayol

3.1.10 Mary Parker Follett

3.1.11 Sumantra Ghoshal

3.1.12 Frederick Herzberg

3.1.13 Geert Hofstede

3.1.14 Elliott Jaques

3.1.15 Joseph M. Juran

3.1.16 Rosabeth Moss Kanter

3.1.17 Philip Kotler

3.1.18 Theodore Levitt

3.1.19 Kurt Lewin

3.1.20 Abraham Maslow

3.1.21 Elton Mayo

3.1.22 Douglas McGregor

3.1.23 Henry Mintzberg

3.1.24 John Naisbitt

3.1.25 Kenichi Ohmae

3.1.26 Laurence Peter

3.1.27 Tom Peters

3.1.28 Richard Tanner Pascale

3.1.29 Edgar Schein

3.1.30 Peter Senge

3.1.31 Sun Tzu

3.1.32 Alvin Toffler

3.1.33 Fons Trompenaars

3.1.34 Max Weber

3.2 Contemporary Pioneers of Management

3.2.1 Clayton Christensen

3.2.2 W. Chan Kim & Renée Mauborgne

3.2.3 Don Tapscott

3.2.4 Vijay Govindarajan

3.2.5 Michael E. Porter

3.2.6 Marshall Goldsmith

3.2.7 Jim Collins

3.2.8 Gary Hamel

3.2.9 Nirmalya Kumar

3.2.10 Nitin Nohria

3.2.11 Teresa Amabile

3.2.12 Richard Rumelt

3.2.13 Jeffrey Pfeffer

3.2.14 Richard Florida

3.2.15 John Paul Kotter

3.2.16 Kenneth Blanchard

3.2.17 Daniel Goleman

3.2.18 Henry Chesbrough

3.2.19 Julian Birkinshaw

3.2.20 Rakesh Khurana

Developing a Holistic and Sustainable Leadership Concept

4.1 Focus of the Leadership Concept

4.1.1 Holistic Leadership

4.1.2 Sustainable Leadership

4.2 Principles and Elements of Holistic and Sustainable Leadership

4.2.1 Ethical Leadership

4.2.2 Corporate Social Responsibility

4.2.3 Servant Leadership

4.2.4 Authentic Leadership

4.2.5 Leadership and Gender

4.2.6 Diversity Leadership

4.2.7 Employee Involvement / Bottom-Up Processes

4.2.8 Adaptive Leadership

4.2.9 Health Leadership

4.2.10 Symbolic Leadership

4.2.11 Focussing on Quality and Excellence

4.2.12 Leadership within the Context of Knowledge Management

Source: author’s own illustration based on

4.3 Leadership within the Context of Socioeconomic Developments

4.3.1 Leadership within the Context of Changing Demographics

4.3.2 Leadership within the Context of New Technologies

4.3.3 Leadership within the Context of Value Change and Value Pluralism

4.4 Leadership within the Context of Corporate Organizational Structures and Specific Corporate Developments

4.4.1 Leadership in Company Networks and Virtual Companies

4.4.2 Shared Leadership

4.4.3 Leadership within the Context of Part-Time Employment

4.4.4 Leading Leaders

Table 39: Comparing Emotions and Behavior of Middle-Level Managers with those of ‘Regular‘ Employees and Top-Level Managers

4.4.5 Leading Talents

4.4.6 Leadership within the Context of Corporate Crises

4.4.7 Leadership within the Context of Corporate Change Processes

4.4.8 Leading Work and Project Teams

4.5 Instruments for Holistic and Sustainable Leadership

4.5.1 Storytelling

4.5.2 Self-Motivation and Self-Leadership

4.5.3 Mediation Procedures

4.5.4 The ‘World Café‘ Instrument

4.5.6 Appreciative Inquiry

4.5.7 Coaching of Leaders / Coaching by Leaders

4.5.8 Outdoor Training

Conclusion

Bibliography

List of Tables

Table 1: Distinguishing between Management and Leadership

Table 2: Dimensions and Indicators of Leadership Success

Table 3: The Four Management Levels

Table 4: Ansoff’s Product-Market Matrix

Table 5: Guidelines on Effective Learning according to Argyris and Schön

Table 6: Organization Styles according to Bennis

Table 7: Contrasting Business Process Reengineering with Kaizen

Table 8: Corporate Activities

Table 9: Fayol’s 14 Principles of Management

Table 10: Follett’s Leadership Model

Table 11: Strategic Orientation of Enterprises

Table 12: Opposite Cultural Dimensions According to Hofstede

Table 13: The Three Stages of Change Management according to Lewin

Table 14: Differentiating Mayo’s Human Relations Approach from Taylor’s Scientific Management Approach

Table 15: Megatrends according to Naisbitt and Aburdene

Table 16: Capturing the 7-S Factors based on a Management Survey

Table 17: Behavioral Factors for Corporate Success

Table 18: Edgar Schein’s Three-Level Model of Organizational Culture

Table 19: Learning Disabilities according to Senge

Table 20: Characterizing Toffler’s Three Waves

Table 21: Contrasting Red Ocean Strategies with Blue Ocean Strategies

Table 22: The Four Actions Framework using the Example of the Cirque Du Soleil

Table 23: Juxtaposing Feedback with Feedforward

Table 24: Characteristics of Successful Corporate Leaders

Table 25: Strategy Paradigm according to Hamel and Prahalad

Table 26: Applying the 3 V Approach to Three Different Types of Companies

Table 27: Evidence-Based Management of Change Processes

Table 28: The 3 Ts and its Indicators

Table 29: Reasons Why Change Projects Can Fail/Recommendations

Table 30: Four Levels of Maturity To Classify Employees

Table 31: The Model of Emotional Intelligence

Table 32: Leadership Styles within the Context of Emotional Intelligence

Table 33: Contrasting Structural and Contextual Ambidexterity

Table 34: Corporate Social Responsibility Tools

Table 35: Forms of Knowledge

Table 36: Barriers to Knowledge and Learning

Table 37: Measures of Age-Appropriate Personnel Policy

Table 38: Ideal-Type Presentation of an Innovation Process Based on Collaboration

Table 39: Comparing Emotions and Behavior of Middle-Level Managers with those of ‘Regular‘ Employees and Top-Level Managers

Table 40: Identification of Roles

Table 41: Types of Storytelling

Table 42: Coaching of Leaders

List of Figures

Figure 1: Management Scorecard

Figure 2: Appraisal Interviews as a Key Management Tool

Figure 3: Scheme of Approaches to Leadership

Figure 4: Levels of Learning according to Argyris and Schön

Figure 5: Organizational Theory according to Barnard

Figure 6: Corporate Structure as a Consequence and Antecedent of Corporate Strategy

Figure 7: The PDCA Cycle

Figure 8: The Deming Reaction Chain

Figure 9: The Systematics of Managements by Objectives

Figure 10: The Fayol Bridge

Figure 11: The Transnational Enterprise Model

Figure 12: Herzberg’s Two-Factor Theory

Figure 13: Hofstede’s Onion Model

Figure 14: Juran’s Quality Spiral

Figure 15: Stages of Strategic Planning

Figure 16: Product Typology according to Levitt

Figure 17: Maslow’s Pyramid of Needs

Figure 18: Demonstrating the Vicious Circle of Theory X compared to the Reinforcing Effect of Theory Y

Figure 19: Strategy Development and Strategy Implementation in Mintzberg

Figure 20: Ohmae’s Strategic Triangle

Figure 21: The McKinsey 7 S Model

Figure 22: Growth Limits

Figure 23: How Disruptive Technologies Change Markets

Figure 24: Typology of Roles according to Govindarajan and Gupta

Figure 25: Porter’s Five Forces

Figure 26: Level 5 Leader

Figure 27: Management Practices

Figure 28: Amabile’s Componential Theory of Creativity

Figure 29: Rumelt’s Discrete-Categorical Measures of Diversification

Figure 30: The Situational Leadership Theory of Blanchard and Hersey

Figure 31: Inefficiency of Conventional Innovation Exploitation

Figure 32: Open Innovation Model

Figure 33: Typologizing Companies based on Performance Management and Social Support

Figure 34: The Triangle of Sustainability

Figure 35: Performance Effects of Corporate Social Responsibility

Figure 36: The Different Roles of a Leader

Figure 37: Four Layers of Diversity

Figure 38: Objectives of Corporate Health Promotion

Figure 39: Areas of Work-Life Balance

Figure 40: Symbolic Leadership and Employee Behavior

Figure 41: The EFQM Model for Business Excellence

Figure 42: Media, Methods, and Theoretical Background of Blended Learning

Figure 43: Stages of IT Perception

Figure 44: Framework Conditions of Project Management

Figure 45: The Riemann-Thomann Cross

Figure 46: Using Mediation at Various Levels of Conflict

Figure 47: The Principles of the World Café

Figure 48: The Four Phases of the Appreciative Inquiry Process

Figure 49: Possible Arrangements of Outdoor Training

1. Introduction

Business and employee management are key subjects in business administration. For decades, actually for centuries, there has been a discussion about how effective leadership of people or employees can be realized. It has always been a major concern within market-based economic systems to learn how its products and services should be designed in order to generate consumer demand. That the discussion about business and employee management is more relevant than ever is linked to the fact that leadership situations are influenced by a variety of external factors. They include, in particular, political, cultural, social, demographic, economic, and technological developments. It is therefore required for business and employee management to be adapted to those external framework conditions on a permanent basis.

In former times, the assumption in mainstream leadership research was that leadership success relied on specific personal characteristics. Later on, the prevailing view was that the decisive factors in employee management lied in specific leadership behavior or leadership styles. Today’s research on leadership is dominated by situation-oriented approaches, providing for specific leadership concepts for specific organizational and employee-related structures.

The present thesis is an attempt to bundle a variety of approaches to leadership with the aim of providing an overarching framework for concepts of a similar nature. Therefore, the leadership concept to be developed in what follows is to be characterized by the principles of holism and sustainability.

The first step is to present the fundamentals of leadership and management in order to introduce key terms and concepts and provide an overview of the research on leadership.

Chapter 3 deals with separately displaying the business and employee management approaches of various management pioneers, distinguishing between early and contemporary pioneers. Each approach is presented in consideration of its key elements, its strengths and opportunities, as well as its weaknesses and limitations.

The fourth chapter, finally, is devoted to developing a holistic and sustainable leadership concept.

2. Fundamentals of Leadership

2.1 Definition of Management / Leadership

According to Bea (2010, p. 23), management is the ‘goal-oriented design of business organizations (= corporate management) or the goal-oriented influencing of persons (= personnel management), respectively‘1.

For Lindinger and Zeisel (2013, p. 4), leadership means ‘to achieve results with people in an inspiring and meaningful environment while further developing oneself, other people, processes, the market, and the business‘2. In the view of Sharma and Jain (2013, p. 310), leadership is ‘a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent’.

According to Tulowitzki (2014, pp. 49 & 50), the term ‘leadership‘ is often used synonymously with the German word ‘Führung‘. A characteristic feature, Tulowitzki holds, is that in conventional definitions both terms are used to express social and targeted exertion of influence. Exertion of influence can happen indirectly or directly. Indirect exertion of influence occurs through the conscious design of leadership-relevant framework conditions, which include, in particular, corporate culture, corporate strategy, and corporate structure. Direct exertion of influence, meanwhile, is carried out by way of direct, situational, and in many cases individualized communication.

Özbek-Potthoff (2014, p. 4) points out that leadership hinges not only on the person assuming the leading role, but also on those who follow and observe the leader in question. Thus, leadership is a cognitive process in which those being led make a comparison between their ideal image of the leader and their perception of the actual leader. Leadership is frequently equated with management, especially in Germany, where the term ‘Führung‘ is historically burdened. However, such an equation does not do justice to the phenomenon of leadership (Grasselt & Korte 2007, p. 26). For leadership goes beyond conventional business management. While management is focused on solving everyday problems within the predominant system, leadership pertains to designing the system (Matzler et al. 2013, p. 173). As depicted in Table 1 below, management and leadership can be distinguished in the following manner.

Table 1: Distinguishing between Management and Leadership

Management

Leadership

Implementation of agreed outcomes with an optimal use of resources. The future development of the business is considered to be fairly predictable.

Encouragement of employees to deliver and develop their full potential and energy in an effort to achieve certain goals.

The term ‘manager‘ is derived from the Latin word ‘manus‘ (English: hand) and is related to the Italien word ‘maneggiare‘

Leadership is to be understood as a dynamic process which includes such aspects as the following:

(English: to manage). Hence,

development and living of values

‘management‘ designates the organizaton, planning, execution, control, and

conveying a sense of purpose through communication

evaluation of working activities and processes.

encouragement and support

development of one’s own pesonality

Management is directly focused on work. It is responsible for the work results. Managers produce results.

Leadership is oriented towards employees. Leaders motivate employees and encourage loyalty, trust, and recognition.

The management concept is associated with the myth of feasability. Since everything is considered to be predictable, success is regarded as a logical consequence of correct behavior.

The leadership concept is associated with empowerment of employees. In view of the manifold challenges and changes that are being faced, it is imperative to provide orientation.

‘Managers do things right‘

‘Leaders do the right things’

Source: author’s own illustration based on Köster (2010), p. 101

On the one hand, the management of a company can be carried out by the company owner, as is the case with partnerships in particular. On the other hand, management can occur separately from the owner, such that the roles of executives are assumed by external managers, i.e., by persons who are not part of the community of owners. Such a practice is particularly common in limited companies (Hutzschenreuter 2009, pp. 57 & 58).

2.2 Management Duties

In the relevant literature on business management, a distinction is often made between task-related management (sach- und aufgabenbezogene Führung) and person-related management (personenbezogene Führung). This is done against the backdrop that executives both design working conditions (task orientation) and control qualitative work relations (employee orientation) (Holzträger 2012, p. 137). The distinction between task-related and person-related management is in line with the distinction between management and leadership, which means that task-related management typically corresponds with activities relating to management, whereas person-related management usually corresponds with activities relating to leadership. Equating person-related management with leadership would be inappropriate insofar as person-related management pertains to designing social systems with regard to person-related issues, while leadership is solely focused on the interaction between leaders and those who are led (Göke & Wirkes 2010, pp. 34 & 35).

1 ‘zielorientierte Gestaltung von Unternehmen (= Unternehmensführung) bzw. zielorientierte Beeinflussung von Personen (= Personalführung)‘

2 ‘Ergebnisse mit Menschen in einem inspirierenden und Sinn stiftenden Umfeld zu erzielen und dabei sich selbst, andere Menschen, Prozesse, den Markt und das Business weiterzuentwickeln‘

2.2.1 Task-Related Management

Conventional task-related management includes the planning, organization, and control of activities and processes. Added to this is the assumption of responsibility for outcomes, and the design of the company’s future (Kolb 2010a, p. 410). In doing so, the development of strategies, too, falls within the scope of task-related management. (Kaehler 2014, p. 57). Moreover, another task of executives is to initiate and pursue changes (Kolb 2010a, p. 410). Executive positions in companies are typically characterized by the fact that executives carry out a wide range of tasks, for example within the framework of superordinate projects or with regard to customer loyalty. An executive’s specific tasks are heavily dependent on the executive’s functional activity (e.g., manufacturing, purchasing etc.). What can also be regarded as part of task-related management is the activity of representing the company to external reference groups. (Kaehler 2014, p. 57) It should be noted that almost all decisions that are made by an executive have an impact on employees. Thus, strictly speaking, there are no genuine task-related management functions. (Meifert et al. 2013, p. 30).

2.2.2 Person-Related Management

Person-related management, i.e., employee leadership, always involves at least two individuals – namely, a leader and someone who is led – whose relationship is based on social interaction (relationship of reciprocity) (Schalk 2015, p. 9). Employee leadership frequently happens in terms of direct, personal contact between the superior and the staff. However, employee leadership can also be carried out through instruments and arrangements such as job descriptions, control instruments, or remuneration systems (Meifert et al. 2013, pp. 30 & 31).

Person-related management constitutes a form of exerting social influence on employees or employee groups needs, attitudes, and behavior. Such influence should not be confused with manipulation or supervision. Rather, its aim is to ensure that employee tasks can be optimally implemented. Employee leadership is based on communication, information exchange, and human interaction (Hungenberg & Wulf 2007, p. 30).

Among the tasks of person-related management are the selection and introduction of employees, communication with the staff, the delegation of tasks, the agreement of targets, as well as the motivation, promotion, and evaluation of employees (Kolb 2010a, p. 410).

In this context, employee motivation is one of the most important tasks of a leader. It allows to actively focus work activities on a target state which is assessed positively. Thus, a characteristic feature or motivation is that a staff member performs actions with the deliberate aim of reaching a state that is of major importance both to him/her and to the company. Here, the leader’s task is to create incentives that have a stimulating effect on employees. However, it should be taken into consideration that the effects of incentives may vary depending on the individual staff member (Lohaus & Habermann 2012, pp. 65 & 66).

Another task area of person-related management is the control and steering of corporate change processes. In order to be able to adapt to the changing socioeconomic framework conditions, companies are faced with the task of applying change management. In this context, leaders often have to make considerable restructuring efforts and changes in direction, and to communicate them to employees. In many cases, employees tend to respond to change processes with resistance. Hence, leaders have the function to deal with those resistances in a constructive and respectful fashion by supporting employees during the change process. What is important is to convince employees of the necessity of changes and, where need be, to actively integrate them in the change process (Frank 2010, p. 71).

It should be added that a great deal of the theoretical fundamentals of employee leadership originate in social science, especially in sociology and psychology (Bea 2010, p. 23).

2.2.3 Self-Leadership

Self-leadership is also partly considered to be falling within the scope of leadership. Hence, the job of leaders is not only to lead employees, but also themselves, although this ultimately involves similar tasks. It is one of the particularities of self-leadership that the leader knows his/her tasks, asks for feedback, and acts in a motivated manner. Self-organization and correspondence too can be regarded as being part of self-leadership, especially in cases where the leader is lacking someone to fulfill secretarial duties (Kaehler 2014, pp. 57 & 58).

According to Zirbik (2013, p. 176), self-leadership can be divided into cognitive, emotional, behavior-related, and physical self-leadership. Cognitive self-leadership is based on the conscious reflection on personal goals in business as well as in private life. Here, the task of the leader is to develop successful strategies of willpower and goal-setting and to break through existing mental blocks and thought patterns. Emotional self-leadership, in contrast, aims to strengthen motivation by associating, recalling, or anticipatively envisioning positive emotions or experiences with regard to the task. Behavior-related self-leadership exhibits a similar orientation as emotional self-leadership. Its purpose is to enable the leader to reflect upon and, if necessary, correct behavior patterns in order to be able to cope with situations more effectively. Physical self-leadership may be regarded as conscious vitality management (Zirbik 2013, p. 175 & 176).

Hence, this type of self-leadership is also a frequent subject of discussion within the context of health promotion. On the one hand, health is a major condition to enable leaders to fulfill their tasks. On the other hand, due to their function as role models, the health behavior of leaders has an impact on the health behavior of employees as well. A fundamental factor of healthy self-leadership is that the leader knows specific means and measures of health promotion, and that he/ she implements them systematically (Spreiter 2014, p. 158).

2.3 Leadership Style and Leadership Behavior

According to Jung (2011, p. 422), the concept of leadership style includes ‘the characteristic, time-specific, yet situationally adaptable basic orientation of leadership as it is helped design by all involved in leadership technique, leadership of people, and contents of leadership‘3. Thus, leadership style can be referred to as the manner in which leaders carry out their activities. Leadership styles express the specific attitudes and behavior towards employees and thus have an impact on the behavior of those being led. They cannot clearly be distinguished from one another and vary with regard to its concrete design depending on the individual superior (Naegler 2011, p. 270).

Leadership style pertains to the reciprocal relationship between leader and employees, taking into consideration that differences in leadership style are particularly reflected in different cooperation relationships between the leader and those being led (Jung 2011, p. 421).

The difference between leadership style and leadership behavior resides in the fact that leadership style constitutes a leader’s guiding principle. Unlike leadership behavior, which is rather dependent on the specific situation, leadership style remains constant over an extended period of time (Knecht et al. 2011, p. 34).

2.4 Leadership Responsibility and Leadership Success

Leadership responsibility includes, for one thing, the obligation for special care and prudence with respect to the performance of tasks. For another thing, leadership responsibility comprises personal accountability. Leadership responsibility differs from the responsibility for action, which pertains to the implementation of tasks. Responsibility for action, unlike leadership responsibility, may be delegated to employees (Müller 2008, p. 31).

A key element of leadership responsibility is that leaders comply with and implement ethical norms and values, which are often defined by the companies, in day-to-day operations (Franken 2010, p. 246). According to Glauner (2013, p. 81), leadership responsibility rests on ‘the knowledge that people are not only a means but also an end and that at times they behave differently than they are expected to do. Responsible leadership appears as an open interaction with people and implies to be responsible for the counterpart’s developing and being trained as to his personality‘4. A typical value of leadership responsibility includes the respect for employees, to the effect, for instance, that they are not discriminated against, insulted, bullied around, humiliated, or sexually harassed. Equal opportunities, fairness, and justice too can be considered conventional leadership values. They are supposed to ensure that employees are not treated arbitrarily or according to a standardized scheme. Responsibility towards employees also implies humane working conditions, the recognition of good work, and constructive criticism (Franken 2010, p. 246).

The result gained by a leader after completion of a leadership tasks respresents leadership success. Leadership success arises from the interplay between leadership personality, leadership behavior, and leadership situation (Müller 2008, p. 30).

As a general rule, it can be stated that it is hardly possible for leadership success to be measured precisely. Therefore, a company’s success is determined by a variety of internal and external variables, with leadership being just one among many. That is to say that leadership success is not necessarily accompanied by corporate success. A further aspect is that the construct of leadership success can only be determined by means of indicative criteria such as economic and social-psychological effectiveness (Herbig 2005, p. 29). Thus, as to economic and employee-related effectiveness, leadership success, as illustrated by the table below, can be captured by means of various indicators. In this context, Kühlmann (2008, p. 25) distinguishes between proximal and distal factors of success. Proximal indicators of success include factors that can be detected within the scope of the responsibility of the leader, for which the leader can be held personally responsible, and that take place closely to the leadership events (Kühlmann 2008, p. 25).

The category of distal success factors includes effects that cannot arise in dependence on direct success indicators or the leadership actions of a single leader alone, but which are also influenced by other variables outside its sphere of responsibility (corporate structure, competition, economic situation) (Kühlmann 2008, p. 26).

Table 2: Dimensions and Indicators of Leadership Success

Description

Proximal Success Indicators

Distal Success Indicators

Economic Effectiveness

Realization of the company’s goals and objectives

Optimization proposals, delivery time, customer complaints, cost saving, product rejects

Profit, turnover, profitability, liquidity, product innovations, stock exchange value, corporate image, customer loyalty, market share

Employee-related Effectiveness

Fulfillment of employee expectations and needs

Satisfaction and willingness to perform of those being led, qualification of employees, the leader’s reputation, cohesion of the working group

Employee loyalty, fluctuation, times of absence, staff image, accident frequency

Source: author’s own illustration based on Kühlmann (2008), p. 25.

2.5 Management Levels

Large companies, in particular, are characterized by various management levels. The consequence of this is that an executive has managerial authority over certain employees or employee groups. In the literature on business management, a distinction is frequently made between four levels of management, i.e. top-level management, middle-level management, lower-level management, and management at the execution level (Ruthus 2010, pp. 185 & 186).

The execution level does not exhibit any management competences. It is the level where the employees performing the work are located. The next higher level is constituted by lower management, which consists of department managers and area managers. These managers are assigned with implementation work, but they also excercise a certain monitoring function. The (senior) heads of department are located at a company’s middle-management level. They are in charge of implementing executive tasks and dispositional decisions (Ruthus 2010, pp. 185 & 186). A characteristic feature of middle-level management is that it is situated in a kind of ‘sandwich position‘ between top-level management and lower-level management (Landes et al. 2012, p. 193).

Top-level management constitutes the highest management level. It includes a company’s owners and/or the executive board.

The four levels of management are illustrated by the table below. It should be noted that in business practice, the dividing line between the individual management areas may be blurred (Ruthus 2010, pp. 185 & 186).

Table 3: The Four Management Levels

Management Levels

Members

Orientation of Activities

Top-level management

Owner, board of directors, managing director

Strategic decisions

Middle-level management

Senior head of department, head of department

Dispositional decisions

Lower-level management

Department managers, foremen, team leaders

Arrangements

Execution level

Performing employees, workers

Implementation work

Source: author’s own illustration based on Ruthus (2010), p. 185 & 186 and Schwab (2010), p. 46.

Middle-level and lower-level management assume particular importance within the various management levels. A characteristic feature of middle-level and lower-level managers is that, on the one hand, they are leaders of employees and, on the other hand, they are led by a superior. Thus, they exercise a dual function, which often involves role conflicts. Due to their being in a ‘sandwich position‘, middle-level and lower-level managers are at risk of finding themselves in the center of a so-called intrarole conflict (Helm 2009, p. 25). One of the characteristics of such a conflict is that different incompatible expectations are placed upon the same role. In this context, the conflicting role demands are made both by the executive board and by their subordinate employees (Hausmann 2009, p. 72).

3 ‘die charakteristischen, zeitspezifischen aber situativ adaptierbaren Grundausrichtungen der Führung, wie sie von allen Beteiligten im Bereich der Führungstechnik, der Menschenführung und der Führungsinhalte mitgestaltet werden‘

4 ‘im Wissen, dass Menschen nicht nur Mittel, sondern Zweck sind und sich zuweilen anderes verhalten als ihnen erwartungsgemäß zugeschrieben wird. Verantwortliche Führung gestaltet sich als offener Umgang mit Menschen und bedeutet, verantwortlich zu sein, dass sich das Gegenüber in seiner Persönlichkeit entwickelt und schult‘

2.6 Institutional Elements of Corporate Management

2.6.1 Corporate Vision

Corporate visions are deemed to be able to contribute to increased employee motivation and employee performance as well as to enhance identification with the business. In addition, they are credited with providing a deeper meaning to everyday work activities. It is against this backdrop that corporate visions constitute a core component of many management theories (Hajas 2013, p. 10). A corporate vision is at the top of a company’s target hierarchy. It expresses the general ideas concerning the company’s future role (Junge 2012, p. 17). Using a clear wording, it therefore represents corporate management’s far-reaching ideas, mainly with the aim of motivating employees and stimulating their interest in what the company is trying to do. The corporate vision is frequently substantiated by a mission statement (Thiesen 2011, p. 49).

The corporate vision, also often referred to as corporate philosophy, includes the ways of thinking and acting as well as the behavioral norms a company is committed to (Junge 2012, p. 17) Visions can be regarded as mental images of a worthwile and realistic future (Hajas 2013, p. 7) A corporate vision forms the basis for deriving longterm corporate goals and provides the framework for future actions (Kiski 2002, p. 103) The corporate vision does not directly refer to the daily business activities and the quaterly and annual targets associated with it. Hence, it should have a qualitative rather than a quantitative character (Hauer & Ultsch 2010, p. 15). This also implies that the work contents determined in corporate visions are focused more strongly on emotional than rational aspects (Kiski 2002, p. 103).

In principle, corporate visions may have a positive impact on employees behavior and decisions. Desirable decisions and practices ‘are, on the one hand, the actual performance of tasks, which can be properly described through job descriptions and specific objectives, and, on the other hand, tasks which go beyond the actual work content and which are rarely covered by specific objectives‘5 (Eigenstetter 2011, pp. 131 & 132). Examples include qualities such as self-initiative, conscientiousness, helpfulness, and straightforwardness (Eigenstetter 2011, p. 132).

There are two different levels to be distinguished with respect to corporate visions: a strategic level and an ideational level. The scope of the strategic vision includes a company’s strategic goals, for instance in terms of determining what market position is to be achieved on what markets by means of what products. The strategic vision also involves the demands the firm puts on its own performances (quality, product and process innovation, service etc.). The ideational vision, on the other hand, is directed at the social mission the company aims to fulfill. Accordingly, the ideational vision includes values the company wishes to implement both internally and externally. Such values offer an idea of how the public is supposed to be provided with information about corporate events (Jung 2006, pp. 299 & 300).

2.6.2 Corporate Values and Corporate Mission Statements

Due to its more specific nature, mission statements can serve as a basis for strategies and measures more simply than corporate visions (Watrinet 2008, p. 82). In principle, the mission statement is the starting point for establishing not only economic goals, but ethical guiding values, principles, and voluntary commitments in the business as well (Marz & Dierkes 2013, p. 5). Mission statements combine the ‘intuition and (practical) knowledge of people, organizations, and professions about what appears to be feasible on the one hand and desirable on the other hand‘6 (Marz & Dierkes 2013, p. 5). Conventionally, mission statements are characterized by the following elements:

explanation of the company’s purpose and self-understanding

key value priorities and objectives

description of corporate activities and the needs the company wishes to satisfy

task-related principles

description of the relationship with relevant reference groups (Paul & Wollny 2011, pp. 53 & 54).

Mission statements allow to transfer visionary and normative ideas on the future development of the company to institutional structures. Aside from that, they can be translated into specific decision-making and action patterns in the operational area (Watrinet 2008, p. 83).

Closely linked to corporate mission statements are corporate values. Like corporate visions, they represent formalized values (Von Groddeck 2011, p. 135). Corporate values, which constitute a company’s DNA, as it were, set the direction towards which the business is to move. Corporate values can be divided into two categories: corporate guide values, serving to express corporate identity and to represent the organization, and the process values anchored in the company (Glauner 2013, p. 62). Process values represent practiced corporate culture. They particularly include standards and procedural requirements which determine how the cooperation of the individual company divisions as well as the individual work processes are to be designed, and how the individual employees ought to behave within this system. For example, they determine how to deal with conflicts, violations, and changes. Corporate guide values, in contrast, have the function of generating benefits (Glauner 2013, pp. 63 & 64). The generation of benefits pertains to the company’s goals in the fields of economy and society, with the benefits being directed at the company’s reference groups (Köster 2010, p. 65).

Corporate values may be regarded as as a tool for business and employee management. One of the tasks of such management by values is to make all values which –consciously or unconsciously – predominate in the company transparent and transfer them into a consistent value structure. Within the scope of management by values, the aim is to ensure that the values are shared and lived by all management levels (Glauner 2013, pp. 64 & 65).

According to Von Groddeck (2011, p. 135), those values which are formalized by the corporate mission statement, in particular, constitute a paradoxical way of corporate management and corporate control since they both maximize and minimize employees scope of action. Employees scope of action is maximized insofar as they are authorized to act in a autonomous, flexible, creative, and innovative way when uncertainties or obscurities occur. It is minimized insofar as the definition of values brings about guidelines regarding the conduct expected from employees. Since values generally have a certain abstract nature, concrete action situations always offer several ways of interpreting them. Therefore, values should be regarded as a management tool which does not involve any determinacy as to certain decisions and actions (Von Groddeck 2011, p. 135).

2.7 Management Tools

The function of management tools is not only to contribute to enable executives to implement their tasks more effectively and efficiently. They also make it easier for the company to gather information about the quality of the management function’s perception (Brand-Noé 2008, p. 42). In what follows, various management instruments are displayed. In doing so, the focus is not set on presenting the entire range of management tools. Rather, the intention is to exemplarily examine some key instruments which demonstrate how they allow to implement management tasks.

5 ‘sind einerseits die eigentliche Aufgabenerfüllung, die meist gut durch Stellenbeschreibungen und spezifische Ziele beschrieben werden können, andererseits auch Aufgaben, die über den eigentlichen Arbeitsinhalt hinausgehen und eher selten über spezifische Ziele abgedeckt werden‘

6 ‘Intuition und das (Erfahrungs-) Wissen von Menschen, Organisationen und Professionen darüber, was einerseits als machbar und andererseits als wünschbar erscheint‘

2.7.1 Employee Assessment

In principle, a number of employee assessment systems can be distinguished, especially in methodological terms. A common feature of all assessment systems is that they relate to three different dimensions of assessment, i.e. performance assessment, personality assessment, and potential assessment. Performance assessments are always focused on the past: they deal with evaluating an employee’s performance within a predefined period of time. In doing so, they not only allow to capture a performance in its pure form, i.e. the performance which is measured with respect to an employee’s workplace requirements, but also to display employees behavior within the context of rendering performance. Performance assessment is based on the assumption that employee behavior has a sustainable effect on the performance result. An absolute prerequisite for performance behavior and, with it, performance results is an employee’s ability and willingness to perform. Potential assessment, meanwhile, deals with an employee’s suitability for future tasks. Here, the aim is to determine the possibilities of the employee’s individual professional development. Potential assessments are therefore used when filling vacant positions, for individual career planning, within the scope of succession planning as to the specialist and managerial staff, and for determining educational needs. Last but not least, personality assessments are focused on an employee’s personality, with a view to recognizing specific behavioral patterns and characteristics. Since personality assessments require a high level of psychological expertise, they are rarely employed in business practice (Menzel et al. 2014, pp. 147).

2.7.2 Management by Objectives / Management by Indicators

Agreements on objectives are management tools which are related to the ‘management by objectives‘ approach, which was developed in the 1960s and 1970s and which has been further developed ever since (Kolb 2010b, p. 6). Experience has shown that management by objectives has by now been expanded to all company areas as well as to all employee levels. While formerly it was ‘the top-level executives and sales people who were primarily managed by objectives, it [i.e., management by objectives] can today be considered a comprehensive tool that is characterized by flexibility and agility, independence and room for manoeuvre, the solution of problems relating to conventional employee assessments, and the possibility of being ‘connected‘ to performance-based remuneration‘(7Kolb 2010b, p. 7).

A crucial aspect within the context of management by objectives is the so-called management scorecard (Führungs-Scorecard), which derives from the employee-related balanced scorecard. The purpose of the management scorecard is to allow executives to make objectives and management principles transparent, to convey them within the company, and derive the necessary strategies for action. The basic idea of the management scorecard is to establish a connection between the different dimensions of employee management. The four perspectives of the management scorecard read: market, employees, corporate management, as well as improvement and learning ability (Bonack 2014, pp. 26).

In this context, the focus lies on a few number of indicators that are vital for effective employee management. As for the market dimension, the strategic aim is for management to take account of the requirements of the market. Here, possible indicators are share of executives familiar with customer demands, customer reaction times, and number of benchmark visits. The dimension of corporate management, on the other hand, is about making sure that management considers the requirements of corporate management. In this connection, possible indicators are fluctuation rate, share of executives with a written agreement on objectives, and number of promoted employees per executive. The dimension of improvement and learning ability involves the strategic aim to strengthen the willingness to accept change within the company. Here, indicators are: share of executives providing training courses by themselves, number of training days, and increase in the number of implemented improvement suggestions per employee per year. Within the employee dimension, the strategic aim reads ‘employee orientation‘. In this context, suitable indicators are number of areas with visualizations, number of employees working in teams, transfer requests per executive/ department, and number of appraisal interviews (Weibler 2012, p. 471).

Figure 1: Management Scorecard

Source: Bonack (2014), p. 27.

2.7.3 Appraisal Interviews

Another management tool is presented by appraisal interviews. Especially in the case of management by objectives or management by indicators, respectively, it is imperative to conduct interviews with employees at regular intervals. The interviews focus on evaluating the level of achievement of objectives. In addition, appraisal interviews provide executives with the opportunity of talking with employees about their wishes, concerns, needs, as well as their future role and the requirements they have to meet for that purpose. Such interviews help executives gain access to employees, which typically benefits management success (Hurtz & Flick 2002, p. 186).

Figure 2: Appraisal Interviews as a Key Management Tool

Source: Kolb (2010b), p. 7.

Appraisal interviews may also include criticism, which usually occurs when there has been any violation of instructions and rules on the part of an employee. The aim of critical talks is to ensure that in future the employee in question will behave according the rules. Critical talks might put the relationship between executive and employee under strain. Critical interviews with negative outcomes may lead to a decrease in performance on the part of the employee. On the other hand, they can also help create a new, stable work level (Dahms 2010, p. 55).

7 ‘die oberen Führungskräfte und der Vertrieb, die über Ziele gesteuert wurden, so kann es heute als flächendeckendes Tool gelten, das sich durch Flexibilität und Beweglichkeit, durch Eigenverantwortung und Handlungsspielraum, durch die Lösung von Problemen herkömmlicher Mitarbeiterbeurteilungen sowie durch die Möglichkeit zum ‚Anschluss‘ leistungsorientierter Vergütung auszeichnet‘

2.8 Approaches to Leadership

Leadership approaches, at least as far as classical leadership theories are concerned, can be categorized according to three perspectives: the property-oriented perspective, the behavior-oriented perspective, and the situation-oriented perspective. As can be seen from the figure below, all leadership approaches aim to explain leadership success (Lippold 2013, p. 491).

Figure 3: Scheme of Approaches to Leadership

Source: Lippold (2013), p. 492.

2.8.1 The Property-Oriented Perspective

Property-oriented leadership theories constitute the oldest approaches within the overall complex of leadership research (Lippold 2014, p. 211). Especially in the 1930s and 1940s, many studies arose which dealt with the characteristics of leaders (Reichwald & Möslein 2005, p. 2).

The focus of leadership theories assuming a property-oriented perspective lies on examining a leader’s personal characteristics and its relation to leadership success (Stock-Homburg 2013, pp. 351 & 352). Hence, in order to distinguish successful leaders from less successful ones, property-oriented leadership theories take account of social, psychological, or cognitive outlasting properties (Becker 2014, p. 20). This approach is important with a view to the fact that many famous leaders from industry and politics are attributed certain characteristics that distinguishes them from other persons (Becker 2014, pp. 19 & 20). The property theory is oriented on the so-called Great Man Theory, with which it is frequently equated. The Great Man Theory is primarily focused on famous persons from politics, the military, and the social field. It states that there is only a small number of people who by virtue of their personality structure are capable of implementing leadership tasks. Due to innate skills and characteristics, the theory goes, these personalities are naturally destined to become leaders (Lippold 2014, p. 212).

Early property-oriented approaches put particular emphasis on physical properties such as age, appearance, weight, level of education, or intelligence. Subsequent approaches, in contrast, mainly analyzed psychological characteristics such as neuroticism, dominance, or extraversion/introversion (Özbek-Potthoff 2013, p. 67).

One of the properties which allegedly or actually characterize successful leaders is a high level of expertise, since it facilitates task-related management and promotes the leader’s acceptance among employees. Many property-oriented theories also count intelligence among the key characteristics of successful leaders. This includes both intelligence in the conventional sense (e.g. in terms of analytical thinking) and emotional intelligence. According to property-oriented theories, leadership is facilitated if the leader is capable of recognizing, understanding, and influencing employees emotions, as well as of actively mobilizing and controlling his or her own emotions too (Becker 2014, p. 20). According to Lippold (2014, pp. 212 & 213), the property groups mentioned below are prominent characteristics that occur in all property-oriented approaches:

ability (intelligence, communication ability, power of judgement, originality, vigilance)

performance (school performance, physical performance, knowledge)

responsibility (reliability, stamina, self-confidence, initiative, desire to distinguish oneself)

participation (willingness to cooperate, adaptability, activity, sociability, humor)

status (socioeconomic position, popularity).

It should be pointed out that property-oriented leadership theories have enjoyed some rennaissance since the early 1990s. The reason for this was an increased interest in emotional and social intelligence, alternative management skills, and charismatic leadership (Reichwald & Möslein 2005, p. 3).

The thematic complex of charismatic leadership – as well as the approaches to transactional/transformational leadership – may be considered a major trend within property theories. The theory of charismatic leadership proclaims that a leader’s charisma has a large impact on employee behavior, whereby charisma is understood as a key factor in triggering authority. Ideally, charismatic leadership provides a leader with trust, acceptance, and loyality on the part of employees. What is viewed as a problematic aspect of charismatic leadership is the danger that employees fail to question the leader’s vision and actions (Lippold 2014, p. 213).

Transactional leadership is characterized by an exchange relationship between leader and employees. A transactional leadership style is supposed to control employee behavior directly through conditioned reward, particularly in terms of feedback and target agreements (Kauffeld 2011, p. 74).

Transformational leadership aims to ‘transform‘ those being led. Given its proximity to charismatic leadership, it is also referred to as a neo-charismatic approach (Röttcher 2009, p. 9). Unlike transactional leadership, where behavior control is mainly based on employees need structures, transformational leadership is focused on the relationship aspect and the cognitive structures of employees. To be able to apply a transformational leadership style, the leader must have the following characteristics:

idealized influence (leaders role model function)

inspirational motivation (leaders ability to motivate and inspire others)

intellectual stimulation (stimulation of employees intellectual and creative abilities)

individual consideration (appreciation of employees) (Zaugg 2009, p. 218).

2.8.2 The Behavior-Oriented Perspective

Leadership theories characterized by a behavior-oriented perspective are concerned with how successful leaders behave towards employees (Stock-Homburg 2013, p. 352). Behavior-oriented leadership theories differ from property-oriented approaches in that leadership and leadership behavior can be learned. A characteristic of behavior-oriented theories is that they involve the definition of various leadership styles (Özbek-Potthoff 2013, p. 68). In addition, it is assumed that a leader’s success relates to his or her behavior towards employees (Lippold 2014, p. 210). Behavior-oriented leadership concepts particularly emerged in the 1950s and 1960s (Reichwald & Möslein 2005, p. 3).

In behavior-oriented leadership theories, two different paradigms are expressed. According to the first paradigm, a leader is ‘the ‘doer‘ who, driven by tremendous energy, gives a clear direction, and expects maximum employee commitment to achieve the targets set‘(8Hinterhuber & Krauthammer 2015, p. 14). Within the framework of the second paradigm, the leader fulfills the function of a wise man who supports employees in committing themselves for the corporate vision in order to implement it. The second paradigm is characterized by such elements as trust, understanding, empathy, openness, commitment, and employee involvement (Hinterhuber & Krauthammer 2015, p. 14).

2.8.3 The Situation-Oriented Perspective

If one considers leadership from a situation-oriented perspective, emphasis is placed on situations in which leadership takes place. Here, the aim is to examine what specific leadership behavior leaders should exhibit in different situations. A particular point of interest within situation-oriented leadership theories is the power structure between superior and subordinate employees (Stock-Homburg 2013, p. 352).

In situation-oriented approaches, a leader’s success is particularly ascribed to his or her adaptability. Such theories go beyond the analysis of personality traits and behavior patterns, for they assume that ‘the successful use of certain characteristics or behavior varies depending on the respective leadership situation‘ (9Lippold 2014, p. 211). Even though they do concede that a leader’s traits and behavior have an impact, they do not assume the existence of universally effective properties or behavioral manners (Reichwald & Möslein 2005, p. 5).

By now, situation-oriented leadership theories play a dominant role in leadership research (Lippold 2014, p. 211).

8 ‘der ‚Macher‘, der […] von ungeheurer Energie getrieben, eine klare Richtung vorgibt und von seinen Mitarbeitern höchsten Einsatz zur Erreichung der vorgegebenen Ziele verlangt‘

9 ‘der erfolgreiche Einsatz bestimmter Merkmale bzw. Verhaltensweisen in Abhängigkeit der jeweiligen Führungssituation variiert‘

3. Pioneers of Management

3.1 Early Pioneers of Management

3.1.1 Igor Ansoff

3.1.1.1 Presentation of Ansoff’s Approach

Igor Ansoff (1918–2002) created a system of marketing strategies that are referred to as product-market combinations. His theory includes different basic strategies to generate corporate growth. From the business point of view, the key question is whether or not current products allow to create growth in an optimal manner. Ansoff (1966, pp. 130) distinguishes between four strategies, i.e. market penetration, market development, product development, diversification, whereby application of one of the strategies depends on whether a particular business uses its existing or future products in existing or future markets. If the product-market combination is structured in such a way as to offer existing and established products in existing and established markets, then the market penetration strategy proves suitable. If existing products are predominant in new markets, Ansoff recommends the market development strategy. While the product development strategy is suitable in the case of new products in established markets, the diversification strategy is appropriate in the event of using new products in new markets.

Table 4: Ansoff’s Product-Market Matrix

Existing Products

New Products

Existing Markets

Market Penetration

Product Development

New Markets

Market Development

Diversification

Source: author’s own illustration based on Milz (2013), p. 19.

The main characteristic of the market penetration strategy is that it tries to penetrate the market more systematically and deeply using existing products. The aim in this context is to gain market shares from competitors, to increase sales on the basis of existing customers, or to reach new target groups. In this strategy, growth opportunities are relatively small since most markets show a high degree of saturation and, furthermore, since competitors struggle hard to maintain their market position (Scheuss 2012, p. 115). If the market development strategy is being used, a company wishes to expand its market presence by reaching new customer groups and market sectors using current product know-how. This can transpire through an internationalization strategy, for instance. It should be noted that, in the context of this strategy, market development not only includes the development of new markets in spatial and geographical terms but also in terms of developing new application areas for existing products (Deimel et al. 2013, p. 159). The product development strategy, i.e., the strategy to develop new products in existing markets, aims to satisfy customer needs using new products. Application of this strategy can be useful where product variants or innovations have been developed. One of the measures relating to the product development strategy is unbundling, meaning that products and services which have previously been offered in bundles are now sold separately (Scheuss 2012, p. 116). The diversification strategy involves a complete recasting of market development, such that new markets are entered using new products. On the one hand, diversification may pertain to products used in the same stage of production, which is referred to as horizontal diversification. If, on the other hand, a company adds ‘upstream or downstream products to its range of products, e. g. by shifting procurement of a building component from external procurement to in-house production, vertical diversification takes place‘(10Steven 2012, p. 284). Last but not least, lateral diversification occurs if there is no recognizable link to a company’s existing product range (Steven 2012, p. 284).

3.1.1.2 Strengths and Opportunities of Ansoff’s Approach

The Ansoff Matrix is a ‘systematic analysis tool applicable to every business and designed to be a tool for companies to locate and juxtapose various growth possibilities, rather than a comprehensive, sole tool of growth planning‘(11Teiner 2014, p. 40). With the help of further tools, it is then possible to test those growth possibilities for its feasability (Teiner 2014, p. 0).

3.1.1.3 Weaknesses and Limitations of Ansoff’s Approach

According to Pepels (2013, p. 112), one of the weaknesses of Ansoff’s approach is that it is one-sidedly oriented to growth. This may be explained by the fact that in economic thinking in the 1960s, an approximately infinite growth potential was assumed. However, Pepels contends, the present economy is marked by stagnation or even by a shrinking markets, which diminishes the applicability of Ansoff’s theory. In this context, Pepels considers it necessary to complement the theory by the two strategic alternatives of market withdrawal or product feeding. In his opinion, withdrawing from the market is useful, if the remaining market demand appears too low, if there is an increasing competition intensity going on, if non-tariff barriers and protectionism are predominating, or if local trading partners turn out to be unsuitable. In contrast, a product feed may be carried out, if growth no longer seems to be desirable, for example due to a product’s adverse ecological effects. A further point of criticism regarding Ansoff’s theory is that it implies that (sub) markets, customer groups, and product categories are clearly identifiable, and that sector boundaries remain stable for extended periods. Today’s markets, however, are frequently characterized by the emergence of entirely new competition situations as well as by the convergence of various industries (Michel & Oberholzer-Michel 2011, p. 82). Additional concerns as to Ansoff’s approach pertain to the fact that the financial resources required for implementing a recommended growth strategy remain unconsidered. Precisely because the growth strategies discussed by Ansoff are cost-intensive, the availability of financial resources constitute the major limitation. Moreover, Ansoff’s theory hardly makes any mention of the influence of competitors, thus ignoring the fact that the decision about which growth strategy to choose is also dependent on the competitive environment, for example in cases where already established rival providers have set up market barriers which hamper market penetration (Pepels 2013, p. 113).

10 ‘Produkte von vor- oder nachgelagerten Fertigungsstufen in sein Produktionsprogramm auf, z.B. indem der Bezug eines Bauteils vom Fremdbezug auf Eigenfertigung umgestellt wird, so liegt eine vertikale Diversifikation vor‘

11 ‘systematisches, auf jedes Unternehmen anwendbares Analyse-Tool, das nicht darauf ausgerichtet ist, ein allumfassendes, alleiniges Werkzeug der Wachstumsplanung zu sein, sondern ein Werkzeug, mit dem Unternehmen verschiedenste Wachstumsmöglichkeiten ausfindig machen und einander gegenüberstellen können‘

3.1.2 Chris Argyris

3.1.2.1 Presentation of Argyris Approach

Chris Argyris (1923–2013), together with Donald Schön, designed a theory of organizational learning at the end of the 1970s (Reinhardt 2014, p. 321). Chris Argyris, who had been a disciple of Douglas McGregor and Kurt Lewin, proclaimed that the main goal of organizational learning is for a company to improve the accomplishment of its tasks over a specific period of time. Organizational learning takes place when a company –by whatever means – gains all sorts of information. That is to say that in companies learning is ubiquitous (Röhrich 2013, p. 70).

Argyris approach is based on theories of action, which exist in all companies and which, for example, contain strategies for carrying out difficult tasks (Klein 2011, p. 156). The basic idea of theories of action is that in companies actions always come from a reservoir of organizational knowledge. Theories of action make reference to specific situations in which a specific result is intended to be achieved as well as to the specific action strategy used to achieve that result. (Liebsch 2011, p. 70).

Argyris differentiates two theories of action, i.e., espoused theory and theory-in-use. Espoused theory is applied in order to explain or justify a particular activity pattern. Theory-in-use, on the other hand, is a theory of action that is implicitly contained in the implementation of the activity pattern (Klein 2011, p. 156). It consists of collectively shared expectations and knowledge, and includes the current valid truths on the reality of the company and its environment (Liebsch 2011, p. 72). Argyris and Schön, then, distinguish ‘between a basic concept of action which is ususally ‘hidden‘ and unarticulated as well as deeply rooted in an individual or an organization (theory-in-use) and which forms the actual basis for action, and a publicly expressed and represented concept of action that individuals believe is implemented by their actions (espoused theory)‘ (12Hartmann 2003, p. 17). The discrepancy between these two concepts of action, as well as employees failure to perceive that discrepancy constitute fundamental factors for ineffective actions. In other words, the failure to recognize the difference between what is intended to be done and what is actually done is the reason for having difficulties in acting effectively. As a matter of fact, organizational learning according to Argyris and Schön is viewed as a process in which the learning of employees presupposes a company’s capability to learn as a collective. Thus, only through the experiences and actions of its employees can a company gain the capability to learn (Hartmann 2003, p. 17). Organizational learning commences when employees have recognized a particular problem within the company and begin to conduct a problem analysis as well as initiate an inquiry process on its behalf (Richta 2012, p. 48). In that process, reflection is made on the company’s strategies, beliefs, roles, and rules (Hartmann 2003, p. 17). The ultimate goal of the inquiry process is to bring result and expectation back into harmony. The result is a change in the way employees perceive the company and understand organizational phenomena. This, in turn, changes their actions and theory-in-use, respectively (Richta 2012, p. 48). The important part is that employees reflections and conclusions can become rooted in the company, not only in terms of written documents, processes, and routines, but also in terms of changed behavioral dispositions (Hartmann 2003, p. 17).

According to Argyris and Schön, organizational learning is characterized by three levels of learning, i.e. single-loop learning, double-loop learning, and deutero learning (Gust von Loh 2012, p. 137).

Figure 4: Levels of Learning according to Argyris and Schön

Source: Schreyögg (1996), p. 522

Single-loop learning constitutes a form of ‘instrumental learning which changes action strategies and assumptions underlying strategies in such a way that the values relating to a particular theory of action remain unchanged‘ (13Klein 2011, p. 157). The starting point of this learning process is the task of defining a ‘correct‘ system state in order to register and correct deviations that might occur during day-to-day business operations. The definition of the correct system state is done on the basis of theory-in-use (Klein 2011, p. 157). Single-loop learning takes place when a company or individual employees undertake the task of identifying changes in the internal and external environment and initiating adaptation measures without changing prevailing theories in use (Reinhardt 2014, p. 321). Single-loop learning is simple troubleshooting, aimed at changing individual situations rather than the system as such (Gust von Loh 2012, p. 137). Accordingly, the purpose of this level of learning is to recognize and rectify errors or deficiencies. However, singe-loop learning can only be successful if the company ensures a smooth functioning of receiving and communicating feedback. In everyday business, feedback, Argyris and Schön believe, is frequently rejected in various ways, with the result that the basic requirement for single-loop learning is not met (Klein 2011, p. 157).

Double-loop learning is characterized by the fact that the first loop – analogous to single-loop learning – is directed at changing individual strategies and actions. The second loop, by contrast, is directed at reflecting and developing the goals, values, and norms underlying actions (Röhrich 2013, p. 72). Thus, the focus here is to bring about comprehensive changes to processes (Gust von Loh 2012, p. 137). In the case of any deviations between the actual value and the target value at this level of learning, the appropriateness of the target values, too, is assessed. Through common reflection, the agents not only gain insight in the conditions of their own actions but also in the action of others. From this level upwards, it is possible to achieve profound changes in the company (Röhrich 2013, p. 72). The key prerequisite for double-loop learning is open-mindedness. In a way, double-loop learning is about unlearning conventional orientation patterns in order to create the scope for new perspectives and conceptions (Klein 2011, p. 158).