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“The Effect of Leadership and Innovation on Differentiation Strategy and Company Performance” by Semuel et al. Research Paper

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Updated: Jul 20th, 2021

Article Summary

Authored by Semuel, Siagian, and Octavia, the article “The Effect of Leadership and Innovation on Differentiation Strategy and Company Performance” presents two crucial elements, namely, leadership and innovation, which determine organizations’ profitability levels. According to these authors, companies that wish to perform exemplarily, thanks to their differentiation approaches, have to invest significantly in their leadership frameworks and innovation.1

Organizations operating in the present-day competitive and globalized business environment may not record remarkable results unless they revisit the prevailing leadership and modernization approaches. This article focuses on the hospitality industry which performance is highly dependent on the extent of inventiveness and customer retention and attraction levels among hotel leaders, staff, and managers.

Quantitative research strategies are applied whereby questionnaires are distributed to hotel superintendents, employees, and CEOs. According to results by Semuel, Siagian, and Octavia, leadership plays a huge role in influencing the performance of hotels, although it does not have a direct impact on the existing differentiation strategies.2 Nevertheless, innovation-driven leadership directly affects such differentiation approaches.

Article Comparison

İşcana, Ersarı, and Naktiyok published the article “Effect of Leadership Style on Perceived Organizational Performance and Innovation: The Role of Transformational Leadership beyond the Impact of Transactional Leadership -An Application among Turkish SME’s.” Similar to the work of Semuel, Siagian, and Octavia, this article appreciates the role of leadership in influencing organizational performance, innovation, and, consequently, productivity levels. The two scholarly materials rely on quantitative data, as evidenced by the authors’ utilization of questionnaires and SPSS, among other statistical tools.

Although Semuel, Siagian, and Octavia focus on the hospitality sector, İşcana, Ersarı, and Naktiyok examine the issue of leadership and innovation in the SME industry.3 However, these two studies agree that business proprietors and stakeholders can only survive in the current competitive environment by embracing innovation and leadership techniques, which balance organizational and clients’ demands. These two scholarly works also present leaders as key drivers of innovation, which, in turn, influences companies’ competitive edges.

Semuel, Siagian, and Octavia rely on one variable, namely, strategic leadership, without a mention of other leadership styles. Their counterparts examine the role of transformational leaders in influencing business performance and innovation while holding the input of transnational management practices constant. As Semuel, Siagian, and Octavia observe, “a person’s style of leadership positively affects the performance of employees in creating innovation.”4

This finding is comparable to İşcana, Ersarı, and Naktiyok’s conclusion that a specific leadership approach, namely, transformational headship, produces outstanding results in terms of organizational performance and innovation.5 Hence, according to the two articles, strategic and transformational leaders are depicted as forces that determine the extent of organizational productivity and modernization. Their practices focus not only on companies’ profits but also on clients’ welfare.

Own Judgment

In my opinion, regardless of the sector in which an organization operates, the role of leaders in influencing the implementation of sustainable business practices such as innovation cannot be overlooked. I agree with the authors of the two articles, particularly regarding their finding that strategic and transformational leaders are the best-placed individuals who can help their companies to overcome competition through modernization.

Strategic leaders oversee the creation of a business environment that encourages innovation.6 Their transformational counterparts instill enthusiasm among workers with a view to ensuring that they can innovate and handle challenging tasks, a strategy, which enables organizations to remain operational during tough economic times. However, I believe it would have been wise for these studies to include possible difficulties that such leaders have to endure when developing innovative ideas and differentiation strategies. This information would have been fruitful to emerging businesses that operate in challenging settings, which may require them to seek the services of transformational and strategic leaders.

Bibliography

İşcana, O. F., Ersarı, G., and Naktiyok, A., ‘Effect of Leadership Style on Perceived Organizational Performance and Innovation: The Role of Transformational Leadership beyond the Impact of Transactional Leadership -An Application Among Turkish SME’s’, Procedia – Social and Behavioral Sciences, vol. 150, pp. 881-889.

Semuel, H., Siagian, H., and Octavia, S., ‘The Effect of Leadership and Innovation on Differentiation Strategy and Company Performance’, Procedia – Social and Behavioral Sciences, vol. 237, 2017, pp. 1152-1159. Web.

Footnotes

  1. H. Semuel, H. Siagian, and S. Octavia, ‘The Effect of Leadership and Innovation on Differentiation Strategy and Company Performance,’ Procedia – Social and Behavioral Sciences, vol. 237, 2017, p. 1152.
  2. Semuel, Siagian, and Octavia, p. 1154.
  3. O. F. İşcana, G. Ersarı, and A. Naktiyok, ‘Effect of Leadership Style on Perceived Organizational Performance and Innovation: The Role of Transformational Leadership beyond the Impact of Transactional Leadership -An Application among Turkish SME’s,’ Procedia – Social and Behavioral Sciences, vol. 150, p. 881.
  4. Semuel, Siagian, and Octavia, p. 1157.
  5. İşcana, Ersarı, and Naktiyok, p. 888.
  6. Semuel, Siagian, and Octavia, p. 1154.
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IvyPanda. 2021. ""The Effect of Leadership and Innovation on Differentiation Strategy and Company Performance" by Semuel et al." July 20, 2021. https://ivypanda.com/essays/the-effect-of-leadership-and-innovation-on-differentiation-strategy-and-company-performance-by-semuel-et-al/.

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