Leadership in organizations: looking ahead to the 21st century

Canadian Psychology, Feb-May 1998 by Kanungo, Rabindra N

Abstract

The paper highlights four major changes in the corporate environment that pose future challenges for Canadian organizations. It is argued that in order to meet these challenges, organizations need to develop adaptive capabilities. Specific leadership strategies necessary for developing such capabilities are identified. A brief review of extant leadership theories suggests that for developing adaptive capabilities, Canadian organizations would benefit most from charismatic/transformational leadership of their executives. An agenda for future research is outlined by drawing attention to a number of emerging trends in leadership research that could have significant impact on management practice in the 21st century.

An individual's behaviour is a function of the person's disposition and his/her environment. The same is true of organizational behaviour. Like individual behaviours, organizational responses are determined by both the environmental demands and the capabilities of the organization to meet such demands. In fact, the start-up, survival, and growth of an organization depend upon successfully meeting the challenges posed by its environment When the organization looses its capability to meet environmental demands, it simply dies.

Organizational responses to environmental challenges are largely reflected in the type of leadership practiced by corporate executives (Hambrick & Mason, 1984). It is the task of a leader to identify the demands of the environment through environmental scanning, and then to provide direction and support to organizational members by exercising adequate control and influence over them. Generally, the leader executes such functions that are necessary to meet the environmental demands. Schein (1992) has convincingly argued that when an organization "encounters adaptive difficulties, as its environment changes to the point where some of its assumptions are no longer valid, leadership comes into play..." (p. 2).

As we stand at the doorstep of the next century, it is prudent to examine the environmental challenges Canadian organizations might be facing in the next decade or two. Such an examination might help us identify what capabilities Canadian organizations need to develop in order to respond successfully to the challenges that lie ahead. Identification of needed organizational capabilities naturally leads to several other questions. How such capabilities can be built into the organizations? What type of managerial and leadership roles Canadian executives have to play to build their organizations in order to meet the environmental challenges of the 21st century? In their managerial and leadership roles, what types of adaptive changes do the executives have to bring about in their own behaviours in order to reshape organizational missions, goals, structures and operating procedures? What would be the nature of their leadership influence process when they try to direct and control members of the organization in order to achieve organizational missions and goals? Are the extant theories of leadership and leadership influence process adequate to answer all these questions? What directions should leadership research and theory follow in the future?

In order to address these questions, this paper is divided into three sections. The first section describes four major ongoing changes in the corporate environment that pose future challenges. Necessary organizational capabilities and specific leadership strategies to successfully meet the challenges are then identified. The next section briefly reviews the research literature on leadership role behaviours and influence processes, specifically highlighting which types of leadership behaviours and influence processes are conducive to building organizational capabilities and leadership strategies specified in the first section. The final section of the paper provides some direction for future research by drawing attention to a number of emerging trends in leadership research that would have significant impact on management practice in the 21st century.

Changes in Corporate Environment

The business environment of 1990s is characterized by a number of changes. Compared with the 1970s and 80s, Canadian business is experiencing radical changes at a rapid pace. Specifically, changes are noticed in four areas that are going to have increasing impact on business in the 21st century. Rapid changes are taking place in (a) the economic environment, (b) the information technology, (c) the socio-cultural environment, and (d) the demand on social responsibility of business.

(a) Changing Economic Environment

The economic environment of Canada has changed with increasing trade liberalization and globalization of economy all over the world. Recent developments such as, the Canada-US Free Trade Agreement, formulation of NAFTA and European Economic Union as trade blocks, emergence of Pacific Rim as powerful players in manufacturing and international trade, presence of emerging markets in the developing countries such as China and India, are exerting increasing pressure on Canadian business to build organizational capabilities for gaining competitive advantage in the world market (Cohen, 1995).