13-2 Defining Leadership “The ability to influence through communication the activities of others, individually or as a group, toward the accomplishment of worthwhile, meaningful, and challenging goals.” It is a general concept that applies in many different social contexts. The traits and behaviors that are necessary for leaders of large organizations are different from those that are required for leaders of entrepreneurial ventures.

Alternate Definitions Of Leadership The act of providing direction, energizing others, and obtaining their voluntary commitment to the leader’s vision. The process of influencing a group toward the achievement of goals

13-1 Introduction (cont.) Research has determined that many entrepreneurs are effective in creating and running a company on their own. However growth requires additional employees, when the entrepreneur hasn’t the necessary skills to motivate and inspire followers. Efforts to analyze effective entrepreneurial leadership have focused on three general areas: The personal traits of leaders The behavior of leaders The situations in which leadership develops There is agreement that traits and behaviors necessary for being an effective leader vary depending on situation.

13-2a The Core of Leadership: Influence Leaders use influence as their primary tool to move the venture toward its goals. Seven influence strategies proposed as vital for entrepreneurial leadership roles: Reason Friendliness Coalition Bargaining Assertiveness Higher authority Sanctions Research indicates that employees demonstrate higher levels of motivation if they’re allowed to influence the way the organization works.

Exhibit 13-2 The Management-Leadership Continuum

13-3 Foundations Of Entrepreneurial Leadership The three main approaches at the center of the debate surrounding the foundations of leadership are: Trait theory Behavioral theory Contingency theory Over the years, each of these approaches has been refined and various dimensions have been added.

13-3a The Trait Theory of Leadership (cont.) Although the trait theory has identified a number of personality characteristics that have been linked to leadership, none have been determined to be essential in all places and under all circumstances. Studies have produced a lengthy list of possible traits essential to leadership, which are grouped into six categories: Physical traits Background characteristics Intelligence Personality Task-related characteristics Social characteristics

13-3b The Behavioral Theory of Leadership (cont.) Task-oriented leadership Techniques emphasize the need for leaders to plan each worker’s job tasks and job outcomes. Leaders try to ensure that each task is performed according to the business plan. Terms used to refer to task-oriented leadership behaviors include directive, production-oriented, autocratic, and initiating structure. Many modern leaders still believe that task-oriented behavior is the most effective for obtaining performance.

13-3b The Behavioral Theory of Leadership (cont.) Person-oriented leadership This perspective holds that the way leaders get things done through others has implications for the long-term health and prosperity of a venture. Another way of understanding the distinction between task-oriented and person-oriented leadership is through two leadership theories. Theory X assumptions Theory Y assumptions

Exhibit 13-3 Behaviors of Effective Leaders

McGregor’s Assumptions (about employees) Theory X Employees Irresponsible Lack ambition Dislike work Avoid responsibility Are motivated by extrinsic rewards/punishments Theory Y Employees Goal seeking Creative Like work Accept responsibility Are motivated by intrinsic rewards

13-3b The Behavioral Theory of Leadership (cont.) Combining Task-Oriented and Person-Oriented Leadership Contrasting perspectives make it appear that entrepreneurial leaders must choose one or the other, but not both. If so, then aspiring leaders need only develop a narrow range of skills that are either task- or person-oriented. If the most effective leaders are task-oriented, then leaders need skills only in the technical aspects of planning and organizing the work of others. If the most effective leaders are person-oriented, then human relations and interpersonal skills are required.

13-3b The Behavioral Theory of Leadership (cont.) The idea that effective leadership requires a balance between task- and person-oriented behaviors has considerable appeal. Two approaches to this idea have become well known in the theory and practice of leadership: Two-dimensional theory Managerial grid theory

13-3c The Contingency Theory of Leadership Current popular idea is that effective leadership behavior is contingent on the situation in which leaders finds themselves. The theory is considerably more complex than either the trait or the behavioral approach. Effective leadership depends on the interaction of: The leader’s personal characteristics The leader’s behavior Factors in the leadership situation A recurring theme is the concept of participation by subordinates in organizational decision making. At the extremes of this continuum are boss-centered leadership and subordinate-centered leadership.

13-3c The Contingency Theory of Leadership (cont.) Whether a leader should make the decision and announce it or share the problem with subordinates and seek group consensus depends on the interaction of factors related to the problem and to the subordinates. Factors related to the problem are: Likelihood that one solution to the problem is more effective than another Extent to which the leader has sufficient information to make a high-quality decision Extent to which alternative solutions are known with some certainty

13-3c The Contingency Theory of Leadership (cont.) Factors related to subordinates are: Likelihood that effective implementation of the solution depends on subordinates accepting it as appropriate Likelihood that if the leader makes the decision, the subordinates will accept it Extent to which subordinates recognize and accept the organizational objectives to be attained by the solution Likelihood that conflict among subordinates will result if the preferred solution is adopted Combining these seven factors creates different situations.