Business now almost increasingly accepts that one of the primary leadership tasks is creating shared value: value for society, communities as well as end users and owners. This represents a significant move from the previously dominant focus on shareholder value alone.
In the developing context there is a need to rethink the nature of leadership required and the behaviours and style of leaders (particularly strategic leaders – Baden & Higgs, 2015). To address the challenges of a broader view of value creation there is a need to move away from the “heroic” models of leadership (e.g. Avolio, Walumbwa &Weber, 2009; Avolio & Gardner, 2003). Within the discourse around emerging leadership models there is an increasing focus on the concept of Authentic Leadership (Luthans & Avolio, 2003) that brings an ethical dimension to the leadership discourse. However, the impact of leaders’ personal values in the value creation process has been largely ignored in the literature.
This paper seeks to redress the current situation by investigating how leadership varies by strategic leaders’ values. Building on Hambrick and Mason’s (1984) Upper Echelon theory and Maslow’s (1970) Needs based theory, this paper takes a theory-driven approach to proposing how strategic leaders’ values influence vision, goals and strategic orientation.
Although executives’ personal values have been identified as a key determinant affecting strategic decision-making in organisations (e.g. Porter, 1980; Hambrick & Brandon, 1988; Kotey and Meredith, 1997; Mintzberg et al., 2003), it has been a neglected area of research. This is acknowledged by a range of scholars (e.g. Finkelstein & Hambrick 1996). Indeed Finkelstein and Hambrick suggest that: “Even though values are undoubtedly important factors in executive choice, they have not been the focus of much systemic study.”(p48)
This paper seeks to redress this by investigating how leadership varies by strategic leaders’ values.
Building on Hambrick and Mason’s (1984) Upper Echelon theory and Maslow’s Needs based theory (1970), this paper takes a theory-driven approach to proposing how strategic leaders’ values influence organisations’ vision, goals and strategic orientation.
Building on the review of the literature and previous empirical work, underpinned by theory, (Lichtenstein and Dade, 2007) our core research question is: To what extent do senior leaders’ values impact on their strategic decision making? In exploring this question we hypothesise that the underlying needs and values of strategic leaders shape a number of organisations’ strategic preferences including vision, goals and strategies to create stakeholder value. Moreover, these values and drives manifest themselves in patterns of strategic preferences.
Subjects were 35, full-time, senior executives in an executive MBA program. Using an on-line 10-item proprietary questionnaire, participants were categorised as either having an Inner-Directed (ID), Outer-Directed (OD) or Sustenance Driven (SD) values orientation (Maslow, 1970). Within the sample, 24 subjects were identified as ID, 11 as OD. A random sample of nine out of the 24 ID and nine of the OD were invited to participate in one of two focus groups, ID or OD, although respondents were unaware of the focus of each group or their own values-orientation as identified by the survey. Although nine ID respondents attended their focus group, only two out of the nine OD respondents came to that focus group, due to an unexpected, last minute conflict.
Focus groups were semi-structured, involving questions designed to identify participants’ motivations in the workplace, basis of satisfaction, and framework for decision-making. Sessions were audio-recorded and transcribed, then coded thematically by three independent raters based on a previously established framework (Lichtenstein and Dade, 2007, Higgs and Lichtenstein, 2010; Higgs and Lichtenstein, 2011).
Raters achieved inter-rater reliability of r=.81 for ID transcripts and r=.76 for OD transcripts. Although no standards exist for inter-rater reliability for qualitative data, a reliability rating of r=.70 on open-coding of phenomenological data in naturalistic settings can be considered an acceptable cut-point (Marquez & McCall, 2005; Miles & Huberman, 1994).
Data were analysed quantitatively and qualitatively. Chi-square analysis found statistically significant differences between the proportion of ID and OD comments in each set of transcripts "(χ²=42.5455, df=1, p less than .000). ID transcripts had significantly more ID codes than OD transcripts, and OD transcripts had significantly more OD codes than ID transcripts did. Regarding qualitative analysis, differences emerged between Inner- and Outer-Directed respondents with motivators for Inner-Directed (ID) respondents leaning towards innovation, intrinsic value, creativity, optimization, and inter-dependency. Outer-Directed respondents leaned toward effectiveness, performance, winning, maximization, and independence.
This study contributes to leadership theory development by validating the categorisation of Maslovian Inner- and Outer-Directed values orientations whilst addressing the gap in terms of examining to what extent strategic leaders’ values impact their decisions. Thus this contributes to the Top Management Team (TMT) literature by building on strategic leadership theory that postulates that strategic leader’s preferences are reflected in their values. The paper concludes with a discussion of the implications for researchers and practitioners, as well study limitations and potential areas for further research.