Strategic Leadership and Organizational Learning

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Strategic Leadership and Organizational LearningAuthor(s): Dusya Vera and Mary CrossanSource: The Academy of Management Review, Vol. 29, No. 2 (Apr., 2004), pp. 222-240Published by: Academy of ManagementStable URL: http://www.jstor.org/stable/20159030Accessed: 01-03-2016 04:02 UTC

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? Academy of Management Review

2004, Vol. 29, No. 2, 222-240.

STRATEGIC LEADERSHIP AND

ORGANIZATIONAL LEARNING

DUSYA VERA

University of Houston

MARY CROSSAN

University of Western Ontario

Adopting the strategic leadership perspective, we develop a theoretical model of the

impact of CEO and top manager leadership styles and practices on organizational

learning. We take a fine-grained look at the processes and levels of organizational

learning to describe how strategic leaders influence each element of the learning

system. Researchers have implicitly assumed transformational leadership ap

proaches to organizational learning. We challenge this conventional wisdom by

highlighting the value of transactional leadership as well.

Organizational learning has been proposed

as a fundamental strategic process and the only

sustainable competitive advantage of the future

(DeGeus, 1988). Unfortunately, despite the grow

ing interest in the topic, researchers have said

little specifically about the role of CEOs and top

management teams in implementing organiza

tional learning in their firms. Yet strategic lead

ership theorists (Hambrick & Mason, 1984) assert

that top managers are crucial to firm outcomes

because of the decisions they are empowered to

make and because, ultimately, they account for

what happens to the organization (Hambrick,

1989: 5). Although there is an implicit assump

tion that strategic leaders are the guiding force

behind organizational learning (L?hteenm?ki,

Toivonen, & Mattila, 2001), researchers have not

delineated the specific behaviors and mecha

nisms through which leaders impact learning.

While large budgets are being expended on

training, databases, and new learning depart

ments (Stewart, 1998), CEOs and top executives

lack guidance on how their actions facilitate or

hinder learning. Strategic leadership and organ

izational learning have largely remained dis

connected fields of inquiry (Crossan & Hulland,

2002).

We address this gap in the literature by inte

grating strategic leadership theory and organi

zational learning. Specifically, we address the

question: Wha? is the impact of top management

leadership style (transformational and transac

tional) on organizational learning? Building on

current theories of transformational and trans

actional leadership (Bass, 1985, 1998) and on

the 41 framework of organizational learning

(Crossan, Lane, & White, 1999), we develop a

theoretical model and a set of propositions to

address this research question, and we describe

specific behaviors and practices of strategic

leaders that either facilitate or hinder organiza

tional learning.

We seek to contribute to the organizational

learning and strategic leadership fields by link

ing two developed streams of research that have

not been connected previously. In doing so, we

make explicit how strategic leaders impact

learning. We take a fine-grained look at the

processes and levels of organizational learning

to describe how strategic leaders influence each

of the elements of the learning system. In par

ticular, we note that researchers have implicitly

assumed transformational leadership ap

proaches to organizational learning, and we

challenge this conventional wisdom by high

lighting the value of transactional leadership as

well.

In addition, we introduce internal and exter

nal contingency factors that influence top man

agers' choice of leadership style and the type of

learning emphasized. Our integrative approach

provides a fresh perspective on transforma

tional and transactional leadership from which

we generate research propositions that have not

We thank the editor, Devereaux Jennings, and the anony

mous reviewers for their insightful and constructive contri

butions to this paper.

222


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2004 Vera and Crossan 223

been considered previously. We also seek to

contribute to management practice through con

sideration of specific leadership requirements,

responsibilities, and challenges associated with

organizational learning.

We begin with the theoretical context and an

outline of the conceptual models in which we

anchor this paper. We then develop an integrat

ing framework to describe and clarify the rela

tionship between strategic leadership and or

ganizational learning. Finally, we present

implications for theory and practice.

THEORETICAL BACKGROUND

Strategic Leadership

Strategic leadership theory has evolved from

the original upper echelons theory developed by

Hambrick and Mason (1984) to a study of not only

the instrumental ways in which the dominant

coalition impacts organizational outcomes but

also the symbolism and social construction of

top executives (Hambrick & Pettigrew, 2001).

Hambrick and Pettigrew (2001) note two distinc

tions between the terms leadership and strate

gic leadership. First, leadership theory refers to

leaders at any level in the organization,

whereas strategic leadership theory refers to the

study of people at the top of the organization.

Second, leadership research focuses particu

larly on the relationship between leaders and

followers. In fact, this relationship has been ex

amined from many perspectives (House & Ad

itya, 1997): trait and style approaches focus on

leaders (Bryman, 1986; Stogdill, 1948); informa

tion-processing approaches and implicit theo

ries of leadership focus on followers (Lord &

Maher, 1991; Phillips & Lord, 1982); sociological

approaches and substitutes for leadership mod

els focus on contexts (Kerr & Jermier, 1978;

Meindl, 1993); and contingency approaches,

leader-member exchange theory, individualized

leadership models, and social constructionist

approaches (Fiedler, 1967; Graef, 1983; Graen &

Scandura, 1987; Ho well, Dorf man, & Kerr, 1986;

Meindl, 1993) focus on the nature of interactions

among leaders, followers, and contexts. In con

trast to this micro focus, strategic leadership

research focuses on executive work, not only as

a relational activity but also as a strategic ac

tivity and a symbolic activity (Hambrick & Pet

tigrew, 2001). In this article we adopt the strate

gic leadership paradigm; thus, we do not focus

on the characteristics of the relationship be

tween leaders and their immediate followers

but, rather, on how the dominant coalition of the

firm influences the strategic process of organi

zational learning.

The roles and behaviors of effective top man

agers differ considerably from those of middle

managers (Norburn, 1989). In most prior re

search, scholars have looked almost exclusively

at small group leadership and made it applica

ble to middle and lower managerial levels (see

Bass, 1990, and Yukl, 1994, for reviews), but the

ories that describe the dyadic relationship be

tween supervisors and their followers ought not

be stretched upward. One branch of leadership

research that has, however, proven useful to the

study of CEO-level management is Bass's (1985,

1998) framework of transactional/transforma

tional leadership. Bass's framework was devel

oped within larger organizational contexts

(Burns, 1978), and it has been successfully ap

plied to the study of top-level managers (e.g.,

Lowe, Kroeck, & Sivasubramaniam, 1996). Can

nella and Monroe (1997) indicate that, together

with advances in personality theory, transfor

mational leadership and visionary leadership

theories can contribute to a more realistic view

of top management.

The definition of transformational and trans

actional leadership styles builds on prior clas

sifications, such as relations-oriented versus

task-oriented leadership (Fiedler, 1967) and di

rective versus participative leadership (Heller &

Yukl, 1969). In addition, transactional leadership

follows House and Mitchell's (1974) path-goal

theory quite closely. And models of charismatic,

inspirational, or visionary leadership (House &

Shamir, 1993; Westley & Mintzberg, 1989) present

many similarities to transformational leader

ship. Bryman, Stephens, and a Campo's (1996)

new leadership versus traditional leadership di

chotomy extends the Bass model. Furthermore,

whereas novel notions of emotional (Goleman,

Boyatzis, & McKee, 2001), narcissistic (Maccoby,

2000), and compassionate leadership (Dutton,

Frost, Worline, Lilius, & Kanov, 2002) emphasize

the CEO's empathy and self-confidence as crit

ical determinants of firm performance, other re

search (e.g., Egri & Herman, 2000) has empha

sized that transformational leaders share all

these characteristics.




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224 Academy of Management Review April

Burns (1978) represents transformational and

transactional leadership styles as the opposite

ends of a continuum. Bass (1985, 1998), however,

views them as distinct dimensions, which al

lows a leader to be transactional, transforma

tional, both, or neither. Transactional leadership

motivates individuals primarily through contin

gent-reward exchanges and active manage

ment-by-exception (Avolio, Bass, & lung, 1999).

Transactional leaders set goals, articulate ex

plicit agreements regarding what the leader ex

pects from organizational members and how

they will be rewarded for their efforts and com

mitment, and provide constructive feedback to

keep everybody on task (Bass & Avolio, 1993b;

Howell & Hall-Merenda, 1999). Operating within

an existing system, transactional leaders seek

to strengthen an organization's culture, strategy,

and structure.

Transformational leadership, in contrast, is

charismatic, inspirational, intellectually stimu

lating, and individually considerate (Avolio et

al., 1999). These leaders help individuals tran

scend their self-interest for the sake of the larger

vision of the firm. They inspire others with their

vision, create excitement through their enthusi

asm, and puncture time-worn assumptions

through their resolve to reframe the future, ques

tion the tried-and-true, and have everybody do

the same (Bass & Avolio, 1990). The Appendix

presents examples of the survey items included

in Bass's Multifactor Leadership Questionnaire

(MLQ), which measures transformational/trans

actional leadership styles and serves as a sum

mary of the major traits of each.

In empirical tests using the transformational/

transactional framework, researchers have

found a high correlation?in the neighborhood

of 0.7-0.8?between behaviors of transforma

tional leadership and those of contingent re

ward leadership (e.g., Avolio et al., 1999; Bass &

Avolio, 1993b), indicating that both sets of be

haviors are likely to exist in the same individu

als in different amounts and intensities (Bass,

1998). This is consistent with Quinn's (1988) com

peting values model, in which Quinn argues

that executives must develop behavioral com

plexity or the ability to play competing leader

ship roles simultaneously (Denison, Hooijberg,

& Quinn, 1995). Transformational leadership be

haviors reflect the roles of the open systems

(innovator and broker) and human relations (fa

cilitator and mentor) models defined by Quinn,

while transactional leadership behaviors reflect

the roles of the internal process (coordinator and

monitor) and rational goal (producer and direc

tor) model (Egri & Herman, 2000). In addition,

Quinn's concept of master managers ?leaders

adept at seemingly contradictory capabili

ties?is close to Bass's proposition that the best

leaders are those who display both transforma

tional and transactional behaviors.

Organizational Learning

There have been extensive reviews of the lit

erature on organizational learning and multiple

conceptualizations (e.g., Crossan, Lane, White,

& Djurfeldt, 1995; Easterby-Smith, 1997; Fiol &

Lyles, 1985; Huber, 1991; Levitt & March, 1988).

Many researchers agree that, despite the field's

growth and development since the 1990s, it still

lacks consistent terminology and cumulative

work (Simon, 1991; Vera & Crossan, 2003; Weick,

1991). One recent theoretical model, Crossan et

al.'s (1999) 41 framework of organizational learn

ing, attempts to unify our understanding of or

ganizational learning and to establish a clear

connection between strategy and learning.

Crossan et al. (1999) see organizational learning

as the process of change in thought and action?

both individual and shared?embedded in and

affected by the institutions of the organization.

The basic challenge of organizational learning,

they argue, is the tension between assimilating

new learning (exploration) and using what has

been learned (exploitation). Managing the ten

sion between novelty and continuity is critical

for firms' strategic renewal (March, 1991), posi

tioning organizational learning as a fundamen

tal strategic process and the principal means of

achieving strategic renewal.

Incorporating a multilevel view of learning,

the 41 framework disentangles the processes

through which learning occurs in firms. As

shown in Figure 1, learning occurs at the indi

vidual, group, and organization levels, each in

forming the others. These three levels of learn

ing are linked by four social and psychological

processes: intuiting, interpreting, integrating,

and institutionalizing (41). Within these pro

cesses, cognition affects behavior, and vice

versa. Mintzberg, Ahlstrand, and Lampel sum

marize the learning process embedded in the 41

framework:




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2004

Vera and Crossan

225

FIGURE 1

41 Framework of Organizational Learning

Individual

Group

Organization

Individual

Group

Organization

Feed-forward learning flow

I I Individual learning stock: Individual competence, capability, and

'-' motivation to undertake the required tasks

I G I Group learning stock: Group dynamics and the development of shared

*?-* understanding

Organizational learning stock: Alignment between the nonhuman

storehouses of learning, including systems, structures, strategy,

procedures, and culture, given the competitive environment

Feed-forward learning flow: Whether and how individual learning feeds

forward into group learning and learning at the organizational level

(e.g., changes to structure, systems, products, strategy, procedures, culture)

Feedback learning flow: Whether and how learning that is embedded in

the organization (e.g., systems, structure, strategy) affects individual and

group learning

Adapted from Crossan et al. (1999: 532).

Intuiting is a subconscious process that occurs at

the level of the individual. It is the start of learn

ing and must happen in a single mind. Interpret

ing then picks up on the conscious elements of

this individual learning and shares it at the

group level. Integrating follows to change collec

tive understanding at the group level and bridges

to the level of the whole organization. Finally,

institutionalizing incorporates that learning

across the organization by imbedding it in its

systems, structures, routines, and practices (1998:

212).

Note the distinction, shown in Figure 1, be

tween stocks and flows of learning within an

organization (Bontis, Crossan, & Hulland, 2002).

Learning stocks reside within each level (indi

vidual, group, and organization) and comprise

the inputs and outputs of learning processes. In

contrast, learning flows are the processes

through which learning moves from one level to

another. The feed-forward flow moves from the

individual and group to the organization




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through the 41 learning processes: intuiting

interpreting, interpreting-integrating, and inte

grating-institutionalizing. At the same time, an

analogous flow feeds back from the organiza

tion to the individual and group, forming a new

variation of processes: institutionalizing-inte

grating, integrating-interpreting, interpreting

intuiting, and institutionalizing-intuiting. The

tension between the feed-forward and the feed

back flows of learning represents the tension

between exploration and exploitation (March,

1991). The feed-forward process allows the firm

to innovate and renew. The feedback process

reinforces what the firm has already learned

(Crossan et al., 1999) and ensures that organiza

tion-level repositories of knowledge (such as

culture, structures, systems, procedures, and

strategy) guide individual and group learning.

CONCEPTUAL FRAMEWORK

While previous research has suggested organ

izational learning as an important responsibil

ity of strategic leadership (e.g., Fiol & Lyles,

1985; Friedlander, 1983; Kiernan, 1993; Senge,

1990; Ulrich, Jick, & Von Glinow, 1993), most of

this work is prescriptive in nature and says little

about leadership styles or specific practices

through which CEOs and top management

teams contribute to learning. For example, Ben

nis and Nanus (1985) and Sri vast va (1983) locate

organizational learning squarely in the camp of

leadership, and they argue that, in order to be

able to respond to tomorrow's challenges and

opportunities, strategic leaders must initiate a

process that enhances day-by-day learning.

However, there is no discussion of the underly

ing leadership processes. Crossan and Hulland

(2002) present an exploratory study in which

they start to delineate leadership behaviors as

sociated with learning, choosing to develop a

new approach rather than build on prior leader

ship models. Our intent is to build on prior re

search in both leadership and organizational

learning to propose explicit relationships be

tween the two.

In our model of strategic leadership and or

ganizational learning, we consider close and

distant leadership processes on the part of the

CEO and the top management team that foster

the development of the stocks and flows of

learning. Although the distinction between

close and distant leadership is not prominent in

the literature (some exceptions are Shamir, 1995,

and Waldman & Yammarino, 1999), it is critical

to the study of top leadership because of the

social distance between leaders and organiza

tional members. Researchers studying the effect

of CEO charisma?an important feature of

transformational leadership?have found that

charismatic leadership can either cascade from

higher to progressively lower echelons or can

bypass the hierarchy and reach directly to lower

echelons (Bass, Waldman, Avolio, & Bebb, 1987;

Pastor, Meindl, & Mayo, 2002; Yammarino, 1994).

We build on models of charismatic leadership

(Waldman & Yammarino, 1999) to describe ways

in which the dominant coalition affects organi

zational learning. The impact can be direct, via

interaction with the top management team

(close leadership), or indirect, via middle and

lower management's attributions to the CEO

and the top executives (distant leadership)

through symbolic, ideologically based visions,

sagas, and storytelling.

Need for a Combined Leadership Style

The fundamental premise of our model is

based on a contingent view of leadership: at

certain times organizational learning processes

thrive under transactional leadership, and at

other times they benefit more from transforma

tional leadership. Particularly in times of

change, these processes make evident the need

to alter the firm's institutionalized learning?a

task best suited to transformational leadership.

In times of stability, organizational learning

processes serve to refresh, reinforce, and refine

current learning?a task best suited to transac

tional leadership. However, this contingent

characterization presents a very gestalt view of

the dominant processes in an organization.

More accurately, every organization faces the

challenges of both change and stability (Tush

man & O'Reilly, 1996). An ideal strategic leader

would be able to identify?and exercise?the

leadership behaviors appropriate for the cir

cumstances. An effective CEO, for example,

would recognize when feed-forward or feedback

learning is called for, or when a particular

learning stock needs to be developed, and what

type of leadership style would best accomplish

that objective.

There is evidence that leaders may possess

both transactional and transformational behav




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iors. Recent research has suggested that trans

formational leadership builds on transactional

leadership and, in particular, on contingent re

ward behaviors (Avolio et al., 1999). Shamir

(1995), for example, notes that by consistently

honoring transactional agreements, CEOs build

trust, dependability, and an image of consis

tency among organizational members. These

can contribute to the high levels of trust and

respect associated with transformational lead

ers. In addition, a leader may excel at transfor

mational behaviors but may choose transac

tional behaviors when needed; this is Quinn's

(1988) concept of a master manager.

Furthermore, given the speed and complexity

of today's competitive environments, strategic

leaders need to be ambidextrous (Tushman &

O'Reilly, 1996)?that is, they need the capacity to

simultaneously implement diverse courses of

action: incremental and discontinuous innova

tion, exploration and exploitation, flexibility

and control, and feed-forward and feedback

learning. This is also consistent with Rowe's

(2001) description of strategic leaders who

combine managerial leadership?sensitive to

the past?and visionary leadership?future

oriented.

The ability to adapt leadership styles, how

ever, differs across CEOs, because they differ in

their values, orientations, and preferences, as

well as in their effectiveness as transactional or

transformational leaders.1 Two characteristics

of emotional leadership (Goleman, 1998)?self

awareness and self-regulation?would particu

larly help strategic leaders to assess their own

ability to adapt their moods and behaviors to

the needs of the situation. The ideal leader

might recognize his or her limitations and share

the leadership of organizational learning with

colleagues in the top management group. Thus,

we argue that the next-best solution to having

an ambidextrous CEO would be seeing this ca

pacity ensconced in the top management team

and making allowances for the integration pro

cess. Researchers have suggested that diverse

leadership styles within the dominant coalition

might serve as well as an ambidextrous CEO

(Kendall, 1995). Firms that have incorporated the

chief learning/knowledge officer position (Stew

art, 1998) within their top management teams

may communicate with this move not only their

commitment to learning but their intent to

achieve the leadership profile needed for organ

izational learning.

The previous arguments lead to our first prop

osition about the impact of strategic leadership

on organizational learning.

Proposition 1: Leadership of organiza

tional learning requires strategic

leaders to frequently perform roles in

volving both transformational and

transactional leadership behaviors,

albeit under different conditions.

In the next sections we present propositions

linking transactional/transformational leader

ship styles to the flows and stocks of learning.

Ideally, strategic leaders would pursue the de

velopment of high levels of the learning stocks

and flows across the organization. In practice, a

misalignment between learning stocks and

flows may lead, for example, to high levels of

individual or group learning and a low level of

the feed-forward flow (Bontis et al, 2002). This

situation would suggest that there is a learning

bottleneck and that learning is not being ab

sorbed by the organization. We next discuss the

mechanisms that top executives pursue to facil

itate organizational learning flows and stocks.

Strategic Leadership and Learning Flows

We argue that managing organizational

learning requires top executives to be both

transformational and transactional but that

these leadership behaviors play different roles

in the processes of exploration (feed-forward

learning) and exploitation (feedback learning).

On the one hand, transformational leadership,

as the term suggests, best suits situations in

volving a change to the existing order of insti

tutionalized learning (the firm's strategy and

routines, for example). Transactional leader

ship, on the other hand, is appropriate for situ

ations involving current learning and its institu

tionalization, reinforcement, and refinement.

Feed-forward learning flow. Within the 41

framework (Crossan et al., 1999), the feed

forward flow may begin with individuals' intui

tive insights and experiences. These, after being

filtered through individual perceptions and

shaped through group conversations, emerge as

shared understanding and may, in time, become

1 We thank an anonymous reviewer for this insight.




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integrated into a sense of collective action. Fi

nally, coherent collective actions may take root,

become routines, and grow into institutionalized

plans and formal systems. We argue that there

are conditions under which top executives'

transformational and transactional leadership

behaviors positively impact the feed-forward

flow of learning.

In the case of transformational leaders, their

agenda commonly includes both the creation of

a vision of change and the institutionalization of

change (Tichy & Ulrich, 1984). As part of this

agenda, transformational CEOs encourage indi

vidual and group learning by motivating follow

ers to question assumptions, be inquisitive, take

intelligent risks, and come up with creative

observations (Bass, 1998). Transformational

CEOs value effective communication as a

means of fostering individual and group partic

ipation. They encourage individuals to break

through learning boundaries and to share their

learning experiences both within and across de

partments. By being accessible, asking for input,

and serving as fallibility models (Goleman et

al., 2001), transformational CEOs create positive

attributions toward the transfer of learning, and

by promoting and exhibiting these behaviors to

the top management, they help these behaviors

cascade to lower levels of management (Wald

man & Yammarino, 1999). Top-level executives

who are available and who manage by walking

around convey a clear message about the value

of others' opinions. By explicitly requesting con

tributions from members at different manage

ment levels, these leaders help create an envi

ronment of information sharing. And by

admitting their shortcomings, they foster a

learning orientation that signals to other firm

members that errors and concerns can be dis

cussed openly (Goleman et al., 2001).

If transformational leaders' focus on institu

tional change facilitates the learning flow from

the individual to the group, it plays an equally

critical role facilitating the learning flow from

the group to the institution. Leaders' methods

include assigning special task forces, planning

meetings, and intervening in team building

(Tichy & Devanna, 1986). They establish mecha

nisms that enable individuals and groups to

participate in strategy and to influence values,

structures, procedures, systems, and products.

When people understand where they and their

groups fit into the larger pattern envisioned by

top management, they are motivated to offer

their ideas (Bass, 1998). For example, Shrivas

tava (1983) relates how leaders designed a par

ticipative learning system by forming ad hoc

committees to resolve all strategic and manage

ment control problems. Through these commit

tees, participation in decision making was insti

tutionalized. In contrast, in a scenario where a

suggestion box initiative or a brainstorming ef

fort leads to solutions not considered and never

implemented at the organization level, learning

from individuals and groups is not institutional

ized, and members stop generating ideas. An

example is Argyris and Sch?n's (1978) descrip

tion of a situation where top management re

fused to listen to or comprehend important neg

ative performance feedback from middle or

lower levels. Over time, lower levels learned not

to report unpleasant results. Thus, power differ

ences hinder learning when individuals sup

press or deny their own resources and expertise,

or when leaders impose or proclaim theirs

(Friedlander, 1983).

While transformational leadership fosters

feed-forward learning when the current order of

routines is changed, we now make a corre

sponding case for transactional behaviors and

the role they play in the institutionalization of

learning. Entrepreneurial companies, because

they generally lack routines and standard pro

cedures, require no overhaul of current routines

in order to institutionalize learning. They simply

need to codify current practices and put routines

in place. Transactional leadership's focus on

control, standardization, formalization, and effi

ciency (Bass, 1985) is best suited for these tasks.

Summarizing our argument so far, we arrive

at the following propositions.

Proposition 2a: Transformational lead

ership will have a positive impact on

feed-forward learning that challenges

institutionalized learning.

Proposition 2b: Transactional leader

ship will have a positive impact on

feed-forward learning that reinforces

institutionalized learning.

Feedback learning flow. Feedback learning

relates to the way in which institutionalized

learning (culture, structures, systems, proce

dures, and strategy) affects individuals and

groups. This flow is about refreshing and rein




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forcing learning?ensuring that routines are not

neglected or forgotten so that the organization

can continue to produce and perform (Crossan et

al., 1999). Actions making up the institutionaliz

ing process feed back to individuals and groups

by creating a context through which they inter

pret subsequent events and experiences. This

process involves changes in cognition and be

havior, as individuals and groups continue to

make sense of prior routines when contexts

shift. Firms that lack feedback learning fail to

remember ; their members disregard past learn

ing, and, since routines fail to provide guidance,

individual learning is driven entirely by the con

text.

Feedback learning also operates in situations

where a newly institutionalized routine needs

to be communicated (horizontally and vertically)

to the organization so that all members, not

just the ones who developed the routine, will

learn and use it. This describes the situation of

new hires who, being unfamiliar with the

firm's repository of learning, use orientation pro

grams, procedure manuals, and direct observa

tion of organizational practices and values to

acquire the necessary current organization

level learning.

We move on to consider how transactional/

transformational leadership affects feedback

learning, arguing that certain top management

behaviors have a positive impact on this flow.

Transformational leadership is the style best

suited to selling a strategic vision for change

or a new order of routines (Tichy & Ulrich, 1984).

Transformational CEOs facilitate feedback

learning because they are effective communica

tors who can mobilize commitment to the firm's

vision and inspire organizational members to

work toward its realization (Egri & Herman,

2000). They steadfastly explain their vision and

keep members up to date with important infor

mation. When new routines are established,

transformational CEOs motivate individuals to

overcome resistance to change, abandon self

interest in the cause of the firm, adopt the new

institutionalized learning, and make sense of it

when environments change.

Whereas transformational behaviors facili

tate feedback learning in a context of change,

transactional behaviors refresh and refine cur

rent learning. This maintenance role is instru

mental in motivating organizational members to

use and take advantage of existing learning

stored in the firm's culture, structure, strategy,

procedures, and systems (Waldman, Ramirez,

House, & Puranam, 2001). Transactional CEOs

emphasize existing values and routines, focus

on increasing efficiency in current practices,

and usually produce only incremental changes

in institutionalized learning. For the sake of ef

ficiency, transactional leaders foster rule-based

ways of doing things (Bass, 1998). They stimulate

the flow of learning from the organization to

individuals and groups by assigning a strong

value to organizational rules, procedures, and

past experiences (Friedlander, 1983). In addition,

they provide organizational members with for

mal systems (such as diagnostic or control sys

tems) and training programs that disseminate

existing learning to guide future actions and

decisions (Shrivastava, 1983).

Summarizing the previous arguments, we of

fer the following.



feedback learning that challenges in

stitutionalized learning.



feedback learning that reinforces in

stitutionalized learning.

Strategic Leadership and Learning Stocks

Having looked at the impact of leadership

styles on the flows of learning, we turn to how

transactional/transformational leadership af

fects individual, group, and organizational

learning stocks. At the individual level, strate

gic leaders create learning opportunities by

promoting such mechanisms as continuous

improvement, competence acquisition, experi

mentation, and boundary spanning (Ulrich et al.,

1993). In addition, in order to provide fertile

ground for new ideas, CEOs and top managers

create a rationale for intelligent failure in

their organizations (McGill & Slocum, 1993).

Strategic leaders' control orientation also af

fects individual learning (Snell & Man-Kuen

Chak, 1998; Winter, Sarros, & Tanewski, 1997)

by potentially limiting employees' freedom to

significantly change the nature of their work

activities. At the group level, top managers may

design structures and communication infra

structures that provide incentives to individuals




10/20


to share their ideas, practices, and experiences

(Friedlander, 1983). Strategic leaders affect

group learning by encouraging teamwork, trust,

cross-training, heterogeneity, and connectivity,

as well as productive meetings, confrontation

when viewpoints differ, and conflict as an op

portunity for learning (Friedlander, 1983).

We now look at individual and group learning

in light of the transactional/transformational

leadership model. Transformational leaders,

through change-oriented and challenge-seeking

behaviors, promote the growth of individual and

group learning by inspiring organizational

members within a change-positive environment.

First, transformational leaders are intellectually

stimulating?they motivate individuals to re

frame problems, take risks, and approach old

situations in new ways. These leaders encour

age innovation and double-loop learning (Argy

ris & Sch?n, 1978) through a democratic/consid

erate style and an open approach to decisions

and problems. Second, transformational leaders

are individually considerate, providing individ

uals with support, mentoring, and coaching.

When creating new learning opportunities,

these leaders pay attention to individuals'

unique needs for achievement and growth.

Third, transformational leaders inspire individ

uals and groups by instilling meaning and chal

lenge in their work. Their own individual learn

ing motivates others to learn. Fourth, because

transformational leaders tend to be charismatic,

they are natural role models whom individuals

identify with, emulate, and learn from. Along

side charisma is usually a single-minded dedi

cation to the firm's vision and purpose?a trait

that could negatively influence individual-level

learning (Nahavandi, 1993), limiting its scope

but not its depth.

In addition, transformational leaders encour

age conversations within and among groups,

fostering cooperation in order to achieve inte

grated goals (Bass, 1985, 1998; Yukl, 1994). They

take advantage of their team members' diverse

backgrounds and experiences and establish

mechanisms for effective conflict resolution.

Transformational CEOs believe that groups

with diverse expertise and backgrounds are

more creative and learn more than homoge

neous groups. By sharing information, providing

feedback, using individual members' skills, and

removing obstacles to team performance, trans

formational CEOs increase trust and self

confidence within the team (Boehnke, DiStefano,

DiStefano, & Bontis, 1997).

While transformational leaders foster individ

ual and group learning in a context of change,

transactional leaders do so within a context of

stability. Transactional leaders reinforce the

mastery of current learning and the develop

ment of the necessary competencies to do one's

job. They motivate individuals to exploit current

learning by concentrating on getting tasks done

and exercising convergent thinking. Leaders

communicate organizational norms and values;

pay attention to deviations, mistakes, or irregu

larities; and take action to make corrections.

They encourage groups to meet organizational

goals through more efficient interactions within

and across departments and by fostering con

versations that seek incremental improvements

in current ways of doing things. Within organi

zations that do not undergo significant or con

stant change, individual and group learning are

more reactive than proactive. They focus on

knowing what clearly works and how to keep

the system running (Bass, 1985).

The difference between the learning opportu

nities provided by transformational and trans

actional leaders is that the former emphasize

experimentation, risk taking, punctuated

change, and multiple alternatives, whereas the

latter focus on prior logic, incremental change,

efficiency, safety, and continuity (Bass, 1985).

The impact of the transactional/transforma

tional leadership styles on learning at the or

ganization level is consistent with the effects we

suggest at the individual and group levels. Or

ganization-level learning represents the trans

lation of shared understandings and collective

action into new products, procedures, systems,

structures, and strategies (Crossan et al., 1999).

Although individuals may move on, these non

human repositories of learning endure, repre

senting what authors have referred to as organ

ization al memory (Huber, 1991; Walsh & Rivera,

1991). Crossan et al. (1999) explain that although

the processes of intuiting, interpreting, and in

tegrating are fluid and continual, the institution

alization of changes in systems and routines

occurs less frequently in organizations. As noted

previously, transformational leaders focus on

managing and institutionalizing radical

change, whereas transactional leaders seek ef

ficiency goals and incremental evolution of the

status quo. In other words, transformational




11/20


leadership is most effective in renewing prod

ucts, processes, and structures by capturing on

going individual and group learning, while

transactional leadership is most effective in re

inforcing, refining, or taking advantage of the

firm's current routines and memory assets.



individual-, group-, or organization

level learning that challenges institu

tionalized learning.



individual-, group-, or organization

level learning that reinforces institu

tionalized learning.

Strategic Leadership and Organizational

Repositories of Learning

Organization-level learning is more than the

formalization of practices into routines. Reposi

tories of learning need to be aligned with one

another in a coherent way so that the culture,

systems, structures, and procedures support the

strategic orientation of the firm, given the com

petitive environment (Crossan et al., 1999).

These elements, which represent the organiza

tion's internal context or inner environment

(Hedberg, 1981), strongly influence individual

cognition and behavior, social processes be

tween individuals, and dynamics of groups. The

inner environment affects the learning process

in the sense that some environments are more

conducive to learning than others, making

learning more or less likely to occur. At the same

time, the learning process can bring about

change to the inner environment (Argyris &

Sch?n, 1978; Fiol & Lyles, 1985; Hedberg, 1981).

We see a similar reciprocal relationship within

leadership. Leadership may be constrained by

the inner environment, but strategic leaders can

also affect and shape aspects such as the firm's

culture, strategy, and structure (Bass, 1985, 1998;

Duncan & Weiss, 1979; Nahavandi, 1993; Schein,

1992).

In the following paragraphs we discuss the

impact of transactional/transformational lead

ership on the organization's internal context and

its relationship with learning. We argue that

different leaders (either highly transformational

or highly transactional) tend to emphasize dis

tinct aspects of the internal environment and,

thus, create cultures that are either open or

closed and structures that are either loose or

tight. The most effective leaders?those who

adapt their transformational and transactional

behaviors to each situation?are able to create

ambidextrous organizations (Tushman &

O'Reilly, 1996), which can simultaneously be

both open and closed and loose and tight. Am

bidextrous organizations are equally hospitable

to exploration and exploitation. They preserve

local autonomy, support risk taking, and build

control systems that ensure local responsibility

and accountability (Tushman & O'Reilly, 1996),

while a common vision and a core set of rules

and values act as glue to hold it all together.

We begin our discussion of internal context

with organizational culture. A firm's culture de

termines how people do things here and im

poses great challenges on dissenters. Culture

influences learning through reward systems

designed to favor organizational curiosity,

discourage complacency, and increase experi

mentation (Hedberg, 1981). Researchers have

suggested that a company can have a learning

orientation ?one that includes commitment to

learning, open-mindedness, and a shared vision

(Sinkula, Baker, & Noordewler, 1997)?or a

learning culture ?one that values continuous

learning, valid information, transparency, issue

orientation, and accountability (Popper & Lip

shitz, 1998).

The creation of a learning culture depends on

the strategic leader (Hurley & Huit, 1998; McGill

& Slocum, 1993; Sinkula et al., 1997) and how

well that leader can balance transactional and

transformational behaviors, authoritarian and

participative systems, and task and relationship

orientations (Schein, 1992). Strategic leaders

who choose transactional behaviors will work

within the current culture and follow existing

norms, rules, and procedures. In this sense,

transactional cultures reinforce institutional

ized learning and can be described as closed

and rule bound (Nahavandi, 1993). Transforma

tional leadership behaviors, in contrast, allow

top executives to adapt the organizational cul

ture and realign it with the new vision, when

needed. Transformational cultures can be de

scribed as open and flexible (Bass & Avolio,

1993a); it challenges institutionalized learning

by motivating employees to try new ways of

doing things.




12/20


Organizational structure serves as another re

pository of learning. An organization's structure

reflects the attempt to divide tasks among mem

bers and arrange the coordination of their dif

ferent task activities (Mintzberg, 1974). Strategic

leaders may directly determine their firm's

structure through straightforward decisions

about its type and elements, or they may do so

indirectly through the way information is used

and shared and through informal networks and

political activities (Duncan & Weiss, 1979; Miller,

1996; Mintzberg, 1974).

Organizational forms influence learning be

cause they shape how firms seek and process

information about key uncertainties (Cohen,

1991). Mechanistic structures (Burns & Stalker,

1966), favored by transactional leaders, are

highly centralized, formalized, and standard

ized. Reinforcing current routines, mechanistic

structures enable individuals and groups to

learn more effectively from their experience

(Carley, 1992). In contrast, transformational

leadership has been associated with organic

structures (Burns & Stalker, 1966), which are

adaptive, decentralized, and conducive to an ex

tensive set of coordination mechanisms, such as

cross-unit committees, integrator roles, shared

databases, and matrix structures (Daft & Huber,

1987; Gupta & Govindarajan, 1991). Within or

ganic structures, learning is disaggregated, and

communication is often lateral. Members recog

nize their interdependence and are willing to

share information to achieve the firm's vision

and sustain its effectiveness (Fiol & Lyles, 1985;

Slater & Narver, 1995). Strategic leaders with

both transformational and transactional behav

iors need to adapt the firm's structure to accom

modate both mechanistic and organic features

and, thus, simultaneously facilitate the rein

forcement of institutionalized learning and the

development of new learning.

Other important parts of the organization's in

ternal context are systems and procedures. Just

as learning can be institutionalized in systems

and procedures, systems and procedures can be

institutionalized to promote learning (Daft & Hu

ber, 1987). Researchers have described organi

zational learning systems (Shrivastava, 1983)

and mechanisms (Popper & Lipshitz, 1998) as

formal, informal, cultural, structural, or proce

dural arrangements that allow organizations to

systematically collect, analyze, store, dissemi

nate, and use information relevant to their per

formance. Examples include best-practices da

tabases, after-action reviews, and R&D units.

Strategic leaders make use of systems and

procedures that help achieve their goals of ad

aptation and efficiency, respectively. On the one

hand, transformational behaviors are conducive

to the implementation of formal management

systems as defined by Shrivastava (1983). To

systematize activities within formal manage

ment systems (strategic planning or environ

mental scanning, for example), the organization

draws on individual learning, standardizes the

ways in which this learning can be used, and

makes it available for use by other individuals

and groups in the organization (Shrivastava,

1983). On the other hand, we argue that transac

tional leadership assists the implementation of

bureaucratic learning systems (Shrivastava,

1983). Bureaucratic learning systems consist of

an elaborate set of procedures and regulations

to control the flow of information among organ

izational members.

The principal distinction between formal and

bureaucratic systems is their degree of rigidity

and their treatment of subjective knowledge. Be

cause they can evolve to incorporate new learn

ing and because of their innate flexibility and

ability to handle judgmental and intuitive types

of subjective learning (Shrivastava, 1983), formal

systems are suited to capture new learning gen

erated by CEO-led change processes. In con

trast, bureaucratic learning systems, being

rigid, highly objective, and bound to rules and

regulations, are unresponsive to organizational

members who want to share their perspectives

or frames of reference with one another. Bureau

cratic systems efficiently communicate existing

procedures and regulations defined by the

transactional leader. Again, in ambidextrous or

ganizations, the dominant coalition can tap into

both transformational and transactional leader

ship styles and can implement different types of

systems and procedures to promote the rein

forcement of institutionalized learning and the

development of new learning.

Finally, all organizational repositories of

learning (culture, structure, systems, and proce

dures) need to be aligned with the firm's strat

egy. In other words, the learning generated by

individuals and groups that is embedded in the

nonhuman aspects of the organization should

be consistent with the firm's vision and goals

(Crossan et al., 1999). And, as learning influ




13/20


enees the firm's strategy, so too does strategy

influence the firm's learning by providing a

boundary to decision making and a context for

the perception and interpretation of the environ

ment (Fiol & Lyles, 1985).

We have suggested that, on the one hand,

highly transformational leaders tend to encour

age open cultures, organic structures, adaptable

systems, and flexible procedures?attributes

that facilitate the implementation of change and

challenge institutionalized learning. This type

of internal context is characteristic of firms with

aggressive strategies and a high potential for

growth and innovation. We have also proposed

that highly transactional leaders, on the other

hand, tend to encourage closed cultures, mech

anistic structures, rigid systems, and procedures

that facilitate the reinforcement and refinement

of institutionalized learning. Organizations with

this type of internal environment usually select

conservative strategies.

Using Miles and Snow's (1978) typology of

business-level strategy, Nahavandi (1993) ar

gues that transformational leaders will choose a

prospector or an analyzer position, whereas

transactional leaders will select a defender

strategy. These strategic decisions, all outputs

of learning, are what shape ongoing learning. A

prospector strategy is likely to promote in indi

viduals the desire for new challenges and op

portunities, along with the habit of flexibility

when acquiring new learning. In contrast, a de

fender strategy is likely to promote risk aversion

in individuals and to create incentives to

achieve efficiency.

We summarize our discussion of how transac

tional/transformational leadership behaviors

affect the internal organizational context and

the consequent impact on learning.

Proposition 5a: When aligning the or

ganizational repositories of learning,

transformational leadership will fos

ter (a) an open culture, (b) an organic

structure, (c) flexible systems and pro

cedures, and (d) a prospector-like

strategy.

Proposition 5b: When aligning the or

ganizational repositories of learning,

transactional leadership will foster (a)

a closed culture, (b) a mechanistic

structure, (c) rigid systems and proce

dures, and (d) a defender-like strategy.

CONTINGENCIES

Fundamental to the 41 framework of organiza

tional learning is the premise that organization

al learning is a critical process for firms' strate

gic renewal (Crossan et al., 1999). In this section

we further explore transformational and trans

actional leadership styles' distinct effects on or

ganizational learning by incorporating three

contextual variables in our model. These vari

ables, both external and organizational, fre

quently trigger strategic renewal (Huff, Huff, &

Thomas, 1992) and, consequently, affect the

leadership style required and the type of learn

ing pursued under different circumstances. Al

though in prior work scholars have suggested

contingency variables related to transactional/

transformational leadership (e.g., Keller, 1992;

Nahavandi, 1993; Pa war & Eastman, 1997; Wald

man et al., 2001; Waldman & Yammarino, 1999),

they have not looked at the joint effects of con

tingency factors and leadership style on organ

izational learning.

Environment

Firms pursue a renewal strategy essentially

because they need to meet the requirements of a

changing environment (Huff et al., 1992). We ex

pect that highly turbulent and uncertain envi

ronments will favor the emergence of transfor

mational leadership. Research has shown that,

in contexts of crisis, anxiety, and high risk, or

ganizations are more receptive to transforma

tional behaviors and, in particular, to charis

matic behaviors (e.g., House, Spangler, &

Woycke, 1991; Waldman et al, 2001). Because

they generate a collective feeling that some

thing must be done to deal with external prob

lems (Waldman & Yammarino, 1999), turbulent

and uncertain environments allow transforma

tional leaders great latitude for discretion. In

these conditions, transformational leaders en

hance individuals' self-confidence and self

efficacy, help them to see the environment as a

source of opportunity, and encourage them to

engage in feed-forward learning processes.

Within turbulent environments, transforma

tional leadership best motivates organizational

members to overcome their resistance to change

and adopt new institutionalized routines

through feedback learning.




14/20


In contrast, when environments are stable,

transformational leaders' charisma can be

somewhat dysfunctional (Waldman et al., 2001).

If individuals do not perceive the need to

change, they seem to reject the transformational

leader's vision, and their satisfaction and com

mitment decrease. We expect also that the con

verse holds true: stable environments foster

transactional leaders who focus on strengthen

ing existing structures, culture, and strategies,

and who pursue efficiency by exploiting and

refining current ways of doing things.

Proposition 6a: In turbulent and uncer

tain environments, transformational

leadership will have a positive im

pact on feed-forward and feedback

learning.

Proposition 6b: In stable and certain

environments, transactional leader


feedback learning.

Prior Firm Performance

Poor performance is a source of strategic re

newal because it is associated with stress aris

ing from the apparent limitations inherent in the

current firm strategy (Huff et al., 1992). We build

on Miller's (1993) architecture of simplicity the

ory to argue that successful firms generally lack

the motivation to pursue new and more complex

strategies. Instead, they tend to rely on transac

tional leadership and feedback learning to

simplify their value propositions. According to

Miller (1993), success brings the danger that

firms will become more simple by focusing on

a single goal, a single strategic activity, a single

department, or a single world view. Associated

with extreme transactional leadership, this kind

of simplicity can lead to monolithic cultures,

systems, and processes that thwart the organi

zation's ability to adapt to complex environ

ments. In successful organizations, managerial

learning is frequently biased in favor of what

seems to work (Levitt & March, 1988; March, 1991;

Miller, 1993). Extreme reliance on feedback

learning may lead to mastery of pre-established

standards and to specialization in a limited set

of skills.

In contrast, poor performance typically makes

organizations more receptive to changes in the

status quo (Boeker, 1989). We expect that poor

performance will foster transformational leader

ship and motivate feed-forward and feedback

learning processes to enable and implement

change. Firms experiencing major difficulties

and disappointments are more likely to preserve

healthy levels of doubt, debate, and diversity

(Miller, 1993)?all basic elements of transforma

tional leadership. Through feed-forward learn

ing processes, transformational executives en

courage organizational members to reassess

their standards and challenge current assump

tions and mental models; through feedback

learning processes, they communicate their vi

sion for change and reinforce the use of new

practices.

Proposition 7a: When firms are per

forming poorly, transformational



learning.

Proposition lb: When firms are per

forming well, transactional leader


feedback learning.

Stage of Organizational Life

Strategic renewal has also been associated

with the natural evolution of organizations

(Hurst, 1995; Quinn & Cameron, 1983). We argue

that a firm's leadership and learning require

ments vary according to the distinct challenges

posed by each stage of organizational life. Lack

ing rules and norms, the birth stage is often

chaotic and ambiguous (Nahavandi, 1993), and

leadership is usually a one man show (Adizes,

1979). The strategic leader exercises great influ

ence, working to boost morale, encourage broad

employee involvement, and facilitate both ex

perimental and feed-forward learning. Transfor

mational behaviors are best suited to this stage.

Transactional leadership behaviors become

more important as organizations grow. Leaders

quell chaos and ambiguity by formalizing and

standardizing current ways of doing things

through feed-forward learning. As we discussed

earlier, transactional leadership is best suited

to entrepreneurial firms that must establish rou

tines, assimilate learning, and institutionalize

knowledge for the first time. In addition, when

firms reach maturity, they rely on well-estab

lished procedures and norms, both cultural and




15/20


structural, to influence employee behaviors.

Control, goal setting, productivity, and efficien

cy?all are emphasized with a transactional

leadership style. Also, transactional behaviors

foster feedback learning to reinforce and refine

current routines and develop activity programs

that replicate earlier successes.

Finally, on reaching their decline phase, firms

may be rigid and shortsighted. If they are un

able to take drastic actions to adapt to changing

circumstances, they do not survive. As noted

above, change-oriented transformational lead

ership can often remedy a firm's poor perfor

mance. The most successful firms are those with

a top management team that can achieve re

newal without instigating a crisis. They are able

to trigger a process of creative destruction that

sets the stage for a new cycle of birth and

growth (Hurst, 1995).

Proposition 8a: For firms in the birth

stage, transformational leadership

will have a positive impact on feed

forward learning.

Proposition 8b: For firms in the growth

and mature stage, transactional lead


feed-forward and feedback learning.

Proposition 8c: For firms in the de

cline/revival stage, transformational



learning.

IMPLICATIONS FOR RESEARCH AND

MANAGEMENT

The central contribution of this work is a

model that integrates and extends two estab

lished frameworks in the management litera

ture (Bass, 1985, 1998, and Crossan et al., 1999) to

propose a theoretical link between two previ

ously disconnected constructs: strategic leader

ship and organizational learning. While there

has been an underlying assumption about the

role of strategic leaders in organizational learn

ing, in this paper we offer insight into how spe

cific leadership styles and mechanisms can fa

cilitate and promote the development of stocks

and flows of learning. Moreover, we conclude

that, in order to manage organizational learn

ing, the most effective strategic leaders will be

those best able to function in both transforma

tional and transactional modes. Both leadership

styles are effective in facilitating organizational

learning, albeit in different situations.

One of the primary contributions and implica

tions of this article for both researchers and

managers is to reinforce the value of transac

tional leadership in organizational learning. We

have observed a tendency to equate organiza

tional learning with only the feed-forward pro

cesses of exploration, which suggests a need for

more transformational leadership behaviors.

However, this perspective misses much: the full

breadth of organizational learning, the require

ment to extend learning to the far reaches of the

organization, and the need for leadership to re

fresh and reinforce institutionalized learning.

As Paul-Chowdhury (1999) found in her study of

financial institutions that failed to learn from

loan loss cycles, when transactional leadership

is absent, organization members do not benefit

from learning that has been institutionalized.

Furthermore, our model does not simply

match transformational leadership with feed

forward organizational learning processes and

transactional leadership with feedback learn

ing processes. We have discussed conditions

under which transformational and transactional

leadership styles play a role in both exploration

and exploitation. There are a number of contin

gencies that need attention, each with implica

tions for both research and management. Future

empirical research will be needed to assess the

role of these contingency variables as modera

tors of the relationship between leadership

styles and learning. In addition, we encourage

researchers to acknowledge the role of transac

tional leadership and to consider a more fine

grained view of the relationship between lead

ership and organizational learning. Although

we have focused on the positive effects of trans

formational and transactional leadership on

learning, the scope of this paper does not allow

us to discuss how, when used out of context, the

two leadership styles could have negative or

less positive effects on learning.

To advance this line of investigation, re

searchers will need to address several empiri

cal issues related to the challenges of measur

ing transactional/transformational leadership.

As noted, prior research has revealed a strong

correlation between transformational and con




16/20


tingent reward behaviors, which suggests con

cerns about discriminant validity. Addressing

this point, in a recent re-examination of the MLQ

survey, Avolio et al. (1999) discuss the impor

tance of considering hierarchical models with

higher-order factors underlying the first-order

leadership dimensions. By including two corre

lated higher-order factors to represent the trans

formational and transactional contingent re

ward leadership factors, the authors reduced the

latent correlations and enhanced the discrimi

nant validity between higher-order factors. In

addition, when testing the effects of transaction

al/transformational leadership on outcome vari

ables such as learning or performance, hierar

chical regression can be used to understand the

effect that transformational leadership adds

to the effect of transactional leadership (e.g.,

Waldman et al, 2001).

In future theoretical work, researchers will

need to address whether transactional/transfor

mational leadership behaviors encompass the

full range of behaviors required to manage or

ganizational learning. Providing initial insights

on this question is Collins' (2001) concept of

Level 5 leadership. This leadership builds en

during greatness through a paradoxical combi

nation of personal humility plus professional

will (Collins, 2001: 70) and is evident in firms

that have moved from good to great. Collins'

model suggests that Level 4 corresponds to a

transformational style, and Level 3 corresponds

to a transactional style. On reaching the top of

the hierarchy, a leader has mastered the capa

bilities of all lower levels and must develop new

ones unique to Level 5.

Although this recent theoretical work points to

a possible missing factor in transformational

and transactional leadership, we believe that

the record and strength of research to date pro

vide a strong foundation and rationale for fur

ther work. As noted, previous studies on trans

actional/transformational leadership have

developed reliable and valid instruments and

have already established critical research links

to areas such as training. Bass (1985, 1998) es

tablished that transactional and transforma

tional leadership behaviors can be learned

through training programs. This, of course,

holds an important message for management.

Individuals can develop transformational and

transactional behaviors, and, as we have ar

gued here, these leadership behaviors can have

a positive impact on organizational learning

and, hence, firm performance.

To conclude, this study provides researchers

in organizational learning and strategic leader

ship with a preliminary map of how these two

fields are related, and of the important chal

lenges and responsibilities that are associated

with the leadership of organizational learning.

Practice has taken the lead and enthusiastically

embraced the need for firms to learn. Theory has

yet to enlighten the work of practitioners with a

more instrumental and comprehensive view of

the role of strategic leaders in the strategic pro

cess of organizational learning.

APPENDIX

MLQ: SAMPLE SURVEY ITEMS2

Transformational Leadership

Charismatic leadership

Makes everyone around him/her enthusiastic

about assignments

I have complete faith in him/her

Encourages me to express my ideas and

opinions

Inspirational motivation

Is an inspiration to us

Inspires loyalty to him/her

Inspires loyalty to the organization

Intellectual stimulation

His/her ideas have forced me to rethink some

of my own ideas, which I had never ques

tioned before

Enables me to think about old problems in

new ways

Has provided me with new ways of looking at

things, which used to be a puzzle for me

Individualized consideration

Gives personal attention to members who

seem neglected

Finds out what I want and tries to help me get it

You can count on him/her to express his/her

appreciation when you do a good job

Transactional Leadership

Contingent reward

Tells me what to do if I want to be rewarded

for my efforts

2 Source: Bass (1985, 1998).




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There is a close agreement between what I

am expected to put into the group effort and

what I can get out of it

Whenever I feel like it, I can negotiate with

him/her about what I can get from what I

accomplish

Management by exception?active

Asks no more of me than what is absolutely

essential to get the work done

It is all right if I take initiatives but he/she

does not encourage me to do so

Only tells me what I have to know to do my job

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