Working Paper

Leadership Theories

Prof Dr Klaus Schweinsberg

Course Digital Leadership
Autumn Term 2020
ESCP Business School
Leadership theories - a brief overview

“If the facts don’t accord with the theory,

too bad for the facts” (Herbert Marcuse)
Set direction, build followership, inspire acceptance of change
- that is essentially the art of leadership in uncertain times, at
least according to many leadership textbooks.
It is likely that almost every reader of this book will have
enjoyed the benefits of one or more leadership meetings,
seminars or management conferences where you were
undoubtedly regaled with the favourite maxims of leadership
trainers, such as, “Management is efficiency in climbing the
ladder of success; leadership determines whether the ladder is
leaning against the right wall.” Another popular one:
“Managers do things right. Leaders do the right things”. Or:
“Managers work with things and numbers. Leaders work with
people and visions”.
Also fashionable in recent years were leadership concepts
that challenged employees simply because of their
unpronounceable names, which alone made them so fraught
with meaning. “Transformational leadership” and
“transactional leadership” are examples of this.

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Leadership theories abound

Concepts like transactional or transformational leadership are

more recent milestones in an historical succession of various
leadership theories that dates back as far as the 19th century.
Interestingly enough, one of the oldest concepts, the “great
man” theory, is enjoying something of a renaissance. I will
come back to this in more detail later.
It was the Scottish philosopher Thomas Carlyle who, in a
series of lectures on heroism in 1840, popularized the idea that
mainly “great men” or “strong men” determined the course of
history, writing, “The history of the world is but the biography
of great men”. In his account, all the traits and instincts it takes
to make a great leader, are inherent in that person from birth.
And eventually, the belief in the hero as leader and ruler of
the world served as the basis for a leadership theory that was
developed and formalised up to the 1940s: the “trait theory” -
a concept that puts great emphasis on the characteristics of
leaders. Ralph M. Stogdill analysed 24 studies to determine
the “personal factors associated with leadership” and
published an overview in the “Journal of Psychology” in 1948.
Stogdill compiled character attributes that he argued
distinguished “leaders” from “non-leaders”. The important
thing in the framework of this concept is that the leader’s traits
must be relevant for the situation he is in or with which he is
confronted. Only then can they come to the fore.

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 In the 1950s, Robert L. Katz shifted the focus away from
character traits toward an emphasis on abilities and skills - and
he did not mean skills that are inherent, but skills that can and
should be learned. He prioritised three kinds of skills;
technical, human, and strategic-conceptional.
“Behavioural theory” takes a different approach to
leadership, focusing instead on a leader’s behaviour towards
subordinates in different contexts. Four aspects are important:
The first is leadership style. Kurt Lewin (1939) distinguishes
three different styles: autocratic, democratic, and laissez-faire.
A second focus is on the balance between “initiating
structure”, that is, establishing structures to support both the
leader’s own role and the roles of subordinates with a view to
the tasks that need to be fulfilled, and “initiating
consideration”, or emphasizing personal relationships in
leadership, i.e., trust, respect, sometimes camaraderie. A third
element is focused on leadership in a continuum between an
employee-centred approach and a product-centred approach.
In summary is then, fourthly, the so-called “Blake and
Mouton Managerial Grid”. In a system of coordinates
measuring “focus on tasks/results” and “focus on humans”, we
define five leadership styles. The scale on each axis is from 1
(very low) to 9 (very high): Authority compliance (9,1),
Country Club Management (1,9), Impoverished Management
(1,1),

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Middle-of-the-Road-Management (5,5), Team Management
(9,9).
In contrast to the theories described above, which view one
particular leadership style as superior to the other,
“contingency theory” emphasises that there is simply no
perfect leadership approach. An effective manager will use
various styles, depending on the situation he is in. Thus Fred
E. Fiedler, the father of the contingency-oriented concept
coined in the 1960s, stresses that a leadership style that had
been very effective in the past might be absolutely inadequate
for a new situation.
In the 1970s, “implicit leadership” theories were very
popular. Such an approach assumes that not only the leader
makes assumptions about a situation, especially about the
skills and abilities of subordinates, but also that subordinates
make assumptions about the leader’s behaviour and their
leadership qualities. Thus, leadership is above all understood
as “a process of being perceived by others as a leader”.
The question of whether somebody is a “leader” or not is
not primarily defined by the actual characteristics or the
behaviour of the leader, but also by how subordinates perceive
that person and whether they ascribe to him or her the
characteristics of a “leader”.
Another approach dating back to the 1970s is the
psychodynamic leadership concept, based on the relationship
and the interaction between leaders and their employees. The
assumption is that leaders develop quite different kinds of
relationships with the members

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of their group, which the psychodynamic approach refers to as
dyads. Here, leadership is based on intense relationships
between two persons. The so-called “Vertical Dyad Linkage
Theory (VDL)” assumes that “in-group members” develop a
very close relationship to the leader based on trust, respect,
negotiation culture, and mutual influence. But the “out-group
members” do not enjoy such a close, confidential relationship;
the nature of their interaction with their boss is more
transactional, based on contracts and agreements and
determined by duties, with much less trust and respect.

Leading as a specific form of serving

In his inaugural address on the 20th of January, 1961, the 35th

President of the United States, John F. Kennedy, said something
that remains unforgotten to this day: “Ask not what your
country can do for you – ask what you can do for your country”.
This quote is essentially the core of a leadership concept
referred to in the literature as servant leadership theory. The
leader is, so to speak, the first servant to a cause. In Germany,
this approach looks back on a long tradition. It was Frederick
the Great who saw himself as “first servant” and who wanted to
anchor such a self-conception, that “The ruler is the state’s first
servant”, in the Prussian civil service. A pioneer of this idea in
corporate Germany was Hans L. Merkle, the long-time CEO of
the Robert Bosch GmbH, for whom leading was just a special
way of serving. This humble

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management approach is tangible even today at Bosch, where
generations of managers have developed a leadership culture
that is clearly different from other companies.
One leadership style, however, that would have a hard time
finding its place in a company like Robert Bosch is the
“charismatic leader” approach. Not a single one of the Bosch
CEOs over the past decades was particularly charismatic. And
that was certainly no coincidence.
Other companies, for their part, wish to have a charismatic
leader at the top. Particularly in the automobile and media
sectors, the selection of a new CEO is the subject of
continuous debate: Will she or he be charismatic enough as
No. 1? The idea of charismatic leadership was coined largely
by Max Weber. In his book “Economy and Society” (1922),
he distinguishes between three types of power. His underlying
question is; Why do people allow themselves to be ruled? In
essence, he sees three reasons: Tradition legitimizes
traditional rule, the sanctity or heroism of a person legitimizes
charismatic rule, law and order legitimize bureaucratic rule.
The basic idea was picked up by leadership theories and
elaborated into various models of “charismatic” leadership. In
the chapter “Toxic Leadership”, I will come back to the
question of charisma. In particular, such times of crisis and
disruption as we are seeing now provide a favourable
environment for “charismatic” leaders.
The 1980s and 1990s, were dominated by the idea of
transactional leadership. This approach is clearly illustrated by
a statement once common among investment bankers in salary
negotiations: “I work for money. If you want loyalty, hire a
dog.”

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Transactional leadership is based in large part on merit
systems and granting privileges to ambitious and successful
top executives. At the same time, subordinates are also
controlled by the same incentive systems. There is a
transaction across different levels in the hierarchy between the
employee and the salary or bonuses granted by the employer.

Transformational leadership

The business psychologist Bernard M. Bass expressed

criticism of the transactional model and in 1985 suggested as
an alternative the transformational leadership model for
business. According to Bass, a leader is not supposed to
incentivize his employees but to motivate them, meaning he
must address higher-level needs on Maslow’s pyramid. His
ideal is a visionary who can persuade subordinates they serve
a higher cause through vision and example and make them see
beyond their own selfish interests (such as bonuses and
salaries). For the purposes of practical management
consulting, the range of skills expected of a transformational
leader was translated into four alliterative leitmotifs: idealized
influence, inspirational motivation, intellectual stimulation,
and individualized consideration.
Other more recent leadership models are the theories of
“distributed leadership” and “authentic leadership”. The
former encompasses approaches such as “shared leadership”,
“team leadership” or participative and democratic leadership.
They have in common the idea that the leadership function is
no longer associated with one single person

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but is shared among all members of a team. So the key to
success is not one individual but the efforts and performance
of the group. Proponents of these theories argue that, in a
highly complex world such as ours, one person alone cannot
possess all the expertise and the right skills necessary for
success. Harvard Professor Clayton Christensen, for instance,
whose research served as an inspiration for Apple CEO Steve
Jobs and Amazon founder Jeff Bezos, among others,
emphasizes that “cooperation and collaboration” are the
essential keys to success in today’s VUCA world. The term
“WeQ” also appears in the same context. To some extent,
WeQ supersedes both the individual intelligence quotient (IQ)
and EQ, which measures the emotional intelligence of a
business executive; it also describes the systemic expertise of
the entire team, the “we-intelligence”.
The significance of strong teams for a company’s
performance was explored and processed in a big-data project
under the umbrella of Google. It turns out it is not so much the
personal characteristics and the specific expertise of team
members that lead to success, but rather how team members
interact with each other. The decisive factor is what is called
“psychological safety”, which requires a high degree of trust
and openness among group members. A number of more
recent studies show that psychological safety and an open
feedback culture allow teams and companies to perform
better. Harvard professor Amy C. Emondson is one of the
main proponents of this theory with her 2019 book, “The
Fearless Organization: Creating Psychological Safety in the
Workplace for Learning, Innovation, and Growth”.

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 “Authenticity” has been recognized as an extraordinarily
important leadership characteristic ever since 2003. Although
there is no widely recognized definition and not much
academic research, the concept still enjoys great popularity in
particular in the seminar and training business as well as in the
media. Essentially, the term is used to describe a leader who
recognizes his strengths and weaknesses, who makes clear in
his interactions with his team what he stands for and why, who
can listen to and even adopt the views of others, and who
demonstrates an ethical conviction, even in the face of
external opposition. The concept obviously has a lot in
common with the “contingency” theory described above.
And, finally, there is the “entrepreneurial leadership”
theory, which has gained a certain popularity in the new
millennium, in particular in some of the larger medium-sized
enterprises. Senior executives are expected to act “simply” as
if they owned the company; entrepreneurs are viewed as
dashing leaders who mobilise people and resources with their
vision. Here, we find even less of a general definition or clean
theoretical foundation than for the concept of authentic
leadership, with the result that the concept is criticized as
“atheoretical” and not well thought through. Claire Leitch and
Thierry Volery provide a good overview of the state of
discussion in their 2017 publication, “Entrepreneurial
Leadership: Insights and Directions”.