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There are many studies on the influence of the environment and how it affects the followers and the organizational characteristics of necessary leadership qualities, styles, and performance. However, the impact of business strategy on these aspects remains poorly studied, regardless of the fact that the main management responsibilities are formulated and implemented by an organization’s strategy. Leadership and a strategic approach must be inseparable, but these two aspects of leaders’ main activities once closely connected are divided nowadays.
This review examines the impact of leadership styles on strategy. The most important practical implication of the study is that managers must perform multiple functions, improve various skills, and alter their behaviors and leadership styles to apply alternative strategies effectively. These management tasks may be more difficult than aligning organizational structures and business systems with an organization’s approach. Senior business leaders also need to carefully assess their organizations’ leadership capabilities for introducing alternative strategic approaches. The acquired information has important implications for the future of the study, which requires an integrated approach to the analysis of leadership issues and strategies because the overview captures the close connection between them. Studies that ignore this relationship have little contribution to the scientific development of each of the two phenomena separately.
Leaders are chief architects of strategy depending on the culture of an organization. In this review, leadership is determined by the challenge of questioning the status quo and creating a vision, goals, strategies, and shared values of an organization. It also addresses the problem of followers’ collaboration and the achievement of their understanding of the most important aspect of performance, such as motivation, inspiration, and focus on attainment. The difference between management and leadership is blurred and contradictory as a number of functions overlap, which means that there is no significant distinction. Managers are more concerned with the allocation of resources, the establishment of rules, procedures, and systems, the maintenance of the status quo of stability, and problems solution in order to make the organization more efficient. Leaders, on the other hand, recruit the right team and determine (and managers lead the team to the goal of the authorities) where it should go, increase the motivation and commitment of the company’s employees. Managers are people who do things right, and leaders are people who do the right things.
Methodology of the review
The objectives of this review are to test and analyze the assumption that leadership style influences strategic approaches and to evaluate the effect on leadership studies and strategy — in symbiosis and separately. The main methodological tool was the overview of recent investigative studies in order to create a complete analysis of the given topic. A number of resources were studied alongside supporting evidence research overviews, which enabled a more detailed outlook for the problem.
Analysis and review
The most important feature of managing a modern company as a social system is a continuous search for a productive compromise between the interests of an enterprise and the interests of an individual. The formation of regulations or business rules should be supported by an appropriate staff’s desire to accept and implement them. This pattern is objectively related to the processes occurring in a civilized society (Groves, 2016). The phenomenon of organizational culture has always existed, regardless of whether or not its carriers were aware of it. Corporate culture can be determined as the norms and principles of behavior within the company that is focused on goals’ achievement (Rottman and Reeve, 2015). Every employee faces various manifestations of this phenomenon since the first days of his/her work because of its fundamental role in all areas. Organizational culture determines the adaptation of newcomers and the behavior of experienced workers as it is embodied in the current management philosophy and implemented in a specific organization strategy (Flanigan, 2017). Any firm, regardless of its size and scope, is a complex economic and social system, and the difficulties in using new approaches and development strategies are largely associated with the already established organizational culture.
In accordance with the traditional approach, organizational culture has three main sources: beliefs, values, and ideas of the founders responsible for the creation of a certain firm; collective experience gained by team members in developing the organization; and new beliefs, values, and concepts introduced by employees of the organization and leaders. Although all these factors play an extremely important role, the influence of managers remains the most significant of them during the first stages of the creation and development of culture. They not only determine the main mission and environment in which organizations will have to work but also impact recruitment strategies and shape the nature of the company’s reactions to survival and integration (Schmid et al., 2017). Strategic planning includes two different functions, which are formulation and implementation of a particular strategy. Both of these important aspects require different leadership skills and approaches. The first one is an analytical market process, usually conducted by a manager, whose experience, intuition, particular type of thinking, and motivation create and design a strategy (Clifton, 2015). Implementation is a people-centered process that presupposes communication with employees, inspiration, motivation, and explanation of new methods and goals performed by a leader.
Today, there are still many debates on whether strategy affects the top management and leaders, or they are responsible for the alteration of the existing plan of actions. It should be stated that both these perspectives remain valid. Leadership influences strategy formulation; however, strategical approaches also affect leaders (Snaebjornsson et al., 2015). In the long term, management must adapt to the organization’s strategy for the success of the company. Success, in turn, is unstable as it depends on the degree to which management is coping with the current market situation (Antonakis and Day, 2018). In such a way, the degree of management’s impact on the formulation of a strategy is a controversial issue. Leadership plays a key role in strategy development, recognizing that external conditions and affecting the utilized methods.
Many argue that strategy influences the functions, skills, behavior, and style of leaders of a particular organization. Experts agree that leaders must adapt themselves, their staff, and structures to topical goals in order to achieve them (Virtaharju and Liiri, 2017). There is also an idea that different leadership styles may also be required within the same organization (Virtaharju and Liiri, 2017). The policy also influences leadership by requiring an experienced manager whose skills, traits, behavior, and style are compatible with the company’s plan.
The sample of studies provided a good view of companies of different sizes depending on their annual sales. However, there also were some more significant organizations among selected ones, as two-thirds of the selected pool had sales of more than $ 10 million a year, and more than 40% had sales of more than $ 100 million (Tafvelin et al., 2018). The number of followers of the company ranged from 10 (35% of companies) to more than 100 (16%). Moreover, almost two-thirds of the leaders participating in the study have more than ten followers, and 30% of them are over 50 years old (Black et al., 2017). All leaders in the study have outstanding experience in various spheres. More than 85% of them have five or more years of leadership experience; nearly two-thirds, more than ten years; and 40% possess more than 20 years of leadership experience (Shaw et al., 2015). The results show that 8 out of 12 functions of leadership are increasing in importance for the company, as the product strategy is more sympathetic to differentiation than cheapness.
Five leadership functions are becoming increasingly important with a certain strategic emphasis on differentiation, exchange of views, quality assurance, promotion of innovations, creation of competitive advantages, becoming an “agent of change,” greater multidimensionality, complexity, innovation, challenges to company leaders. All these features of product strategy are based on the constant search for information, the release of new products, the monitoring of quality, the introduction of innovations, and effective marketing (Crawford et al., 2019). These results indicate that organizational strategies have a significant impact on a number of the management functions required to implement a particular approach (Barnett and Weidenfeller, 2016).
Differences in product strategies, a relative strategic focus on differentiation and low cost, have a significant impact on these functions; at the same time, alterations in market strategies, the relative importance of competition in broad and niche markets, have a limited influence on leadership (Ruwhiu and Elkin, 2016). The importance of technical, administrative, interpersonal, and communication skills is enhanced when optimal cost strategies are used; analytical, strategic planning, interpersonal, and communication skills increase with the use of the method (Ford et al., 2017). The growing importance of technical and administrative domains, the rising emphasis on optimal cost strategies, the importance of analytical and strategic planning experiences with a greater strategic focus on using the certain approach are inseparable from the contradictory nature of the best value strategy and the extremely innovative quality of the organizational governance.
The importance of all seven leadership traits increases with the use of a product strategy that emphasizes the priority of differentiation over low cost. Similar processes can be observed regarding a strategic focus or when an organization uses a market strategy. This influences leadership features such as determination, risk, adaptability, sociability, openness, perseverance, and confidence. They are consistent with the impact of these strategies on the importance of leadership functions, such as innovation, empowering followers, driving change, promotion of analytic interpersonal and planning skills (Rosenbach et al., 2014). The importance of all leadership traits, apart from taking the risk, increases with a better price strategy; all seven features become more important with strategy (Kim and Beehr, 2018). These two strategies raise the profile of almost all aspects of leadership in the formulation and implementation.
The growing importance of participation (reducing the role of leadership autocracy) and employee-oriented leadership with a product strategy that emphasizes differentiation is consistent with the impact of these strategies. The importance of such leadership functions as innovation, agent change, engaging the right people, teamwork, empowering followers, analytical, planning, interpersonal, and communication skills remains highly important (Lunsford and Brown, 2016). Additionally, the style is not driven by a strategic focus on broad or niche markets when the organization operates according to a market strategy (Western, 2019). These findings also support the argument that employees and targeted leadership styles are independent as the importance of employee-oriented leadership increases. At the same time, the significance of task-oriented leadership does not decrease in terms of a company’s use of the product (Ragnarsson et al., 2018). All three components of joint participation, such as the invitation to take part in decision-making, encouragement of followers to make suggestions for improvement, and consultations with individuals to solve a problem, increase the importance of product strategies that emphasize low-cost differentiation.
Conclusion/Outcome and Recommendations
In conclusion, the main recommendation is to widen the scope of possible leadership styles, which can potentially shift the strategic aspect of the given matter. However, it is important to understand that there is no specific causal connection between leadership and organizational strategy. In other words, numerous factors should be taken into account with respect to corporate dynamics. Multiple studies of strategy, management, and leadership performed previously cannot be considered relevant enough today. It can be seen that as responsibilities shape and help to implement the company’s strategy, it determines the style of work of the authorities and adjusts their goals. Leadership is an important aspect of management, and the ability to lead is a key moment in becoming an effective manager in any organization. Given the elements of a manager, he/she needs to strive to become a leader in his/her organization. The specialist performs all of his/her roles (strategist, organizer, analyst) in order to achieve the purpose of the organization by combining the resources available to him/her. This requires freedom of action, determined by the powers delegated to the manager and the authority that results from leadership. If people assume that the manager has to be a leader, then, in this case, management and leadership are practically synonymous.
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