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The Change Process
An Insight in Transformational Leader‘s
Competencies
Authors: Mark Tonny Kirumira
Tutor:
Co-Tutor:
Dr. Philippe Daudi
Dr. Mikael Lundgren
Program: Master´s Programme in
Leadership and Management
in International Contex
Subject: Change Management
Level and semester: Master Level, June 2008
Baltic Business School, University of Kalmar. Sweden
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Acknowledgments
I would hereby take this opportunity to thank the people who have rendered great help and
support in writing this thesis research. Being part of this Masters Programme has been valuable
both in my life experience and the way forward towards my future. I would therefore like to
take this opportunity to thank the people who have contributed to this memorable learning
period.
Many thanks go to Professor Philippe Daudi, head of the Programme, for his precious advices
and innovativeness through the whole process of my research.
Dr. Mikael Lundgren and Professors Bertil Hultén for their positive support, and tireless work
upon guiding my thesis. I am very grateful to them.
I would also like to thank Terese Johansson for her tactful and essential contribution towards
this thesis and the Programme.
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Abstract
Purpose — this thesis aims at finding out the extent to which transformational leaders exercise
the required competencies during the process of change within an organization. It‘s simply
meant to highlight the pros and cons that are evidenced within transformational leaders during
the change process.
Design/ methodology/approach — the thesis relies on two cases involving mergers, notably
HP-Compaq merger, and Volvo-Renault merger are used for the analysis. The reliance on
models and concepts is employed, to test the empirical findings.
Findings — this paper illustrates that although transformational leaders competently fulfil
their, there is a certain level of incompetence that arise during the process of change.
Originality/Value — this paper provides a detailed analysis of the transformational leader‘s
virtue and short comings during the process of change.
Article type — Research Paper.
Keyword(s) — Transformational leadership- Change- Merger- Competence- Resistance
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Table of Contents
1. INTRODUCTION .......................................................................................................................................... 1
1.1. THE LEADERSHIP PUZZLE ............................................................................................................................... 2 1.2. THE INTRODUCTORY LEADERSHIP DEFINITION ............................................................................................... 3 1.3. BACK GROUND TO THE RESEARCH ISSUE ....................................................................................................... 3
1.3.1. The research’s guiding question ........................................................................................................... 4 1.4. THE OBJECTIVE AND PURPOSE OF THE RESEARCH .................................................................................... 5
2. THE RESEARCH METHODOLOGY APPROACH ................................................................................. 7
2.1. QUALITATIVE RESEARCH OVERVIEW ............................................................................................................. 7 2.2. THE GROUNDED THEORY APPROACH.............................................................................................................. 8 2.3. THE APPROPRIATE RESEARCH STRATEGY AND DESIGN................................................................................... 9
2.3.1. The motivational factor behind the choice of the selected merger cases .............................................. 10
3. THEORETICAL FRAMEWORK .............................................................................................................. 11
3.1. THE MAJOR LITERATURE TO BE USED ........................................................................................................... 11 3.2. LEADERSHIP CONCEPTS AND THEORIES ....................................................................................................... 12
3.2.1. Peter. F. Drucker on leadership ......................................................................................................... 12 3.2.2. John Adair on leadership ................................................................................................................... 13 3.2.3. The leadership theories ...................................................................................................................... 14
3.3. THE DIFFERENT LEADERSHIP STYLES ........................................................................................................... 16 3.3.1. Authoritarian/ Autocratic leadership ................................................................................................. 16 3.3.2. Participative/ Democratic leadership................................................................................................. 16 3.3.3. Delegate /Laissez-Fair leadership ...................................................................................................... 16
3.4. TRANSFORMATIONAL LEADERSHIP .............................................................................................................. 17 3.4.1. The transformational leadership description ..................................................................................... 17 3.4.2. The definition of transformational leadership .................................................................................... 18 3.4.3. Transformational leadership and charisma ....................................................................................... 19 3.4.4. The transformational leadership model .............................................................................................. 20 3.4.5. Transformational leadership and self-efficacy ................................................................................... 21 3.4.6. Transformational leadership, cohesiveness, performance and commitment ...................................... 21
3.5. THE CHANGE PROCESS ................................................................................................................................. 23 3.5.1. Introduction ........................................................................................................................................ 23 3.5.2. The different types of organizational change ..................................................................................... 24 3.5.3. The Business Process Re-engineering (BPR) ..................................................................................... 26 3.5.4. Steps that are a real test of competence ............................................................................................. 27 3.5.5. Models of organizational change ....................................................................................................... 28 3.5.6. The Burke-Litwin model ..................................................................................................................... 28 3.5.7. The implementation process in particular .......................................................................................... 30
3.6. THE SENSE MAKING PROCESS ....................................................................................................................... 33 3.6.1 Introduction ......................................................................................................................................... 33 3.6.2. An insight into the sense making process ........................................................................................... 34 3.6.3. Enactment, organizing, and sense making relationships .................................................................... 35 3.6.4. Organized sense making through communication .............................................................................. 36
3.7. THE EFFECT OF CULTURE IN THE CHANGE PROCESS ..................................................................................... 37 3.7.1. Introduction ........................................................................................................................................ 37 3.7.2. The definition of culture ..................................................................................................................... 37 3.7.3. The famous Geert Hofstede´s cultural dimensions ............................................................................. 38
4. THE CONCEPTUAL FRAME WORK ..................................................................................................... 41
5. THE EMPIRICAL FRAMEWORK AND FINDINGS ............................................................................. 44
5.1. THE GUIDING CASES TO THE RESEARCH ....................................................................................................... 44 5.1.1. Hewlett Packard and Compaq merger case ....................................................................................... 44 5.1.2. The Volvo and Renault merger case ................................................................................................... 46
5.2. CASE ANALYSIS AND FINDINGS .................................................................................................................... 49 5.2.1. The basis for motivation to carry out change processes ..................................................................... 49
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5.2.2. An overview of transformational leadership in due course of the merger .......................................... 51 5.2.3. An insight on organizational sense making as a roadmap towards implementing change ............. 53 5.2.4. The decision making paradox in a democratic set up......................................................................... 55 5.2.5. Proponent’s desire to un- scratchily walk the talk of change ............................................................. 57 5.2.6. Calls for transformation as a precursor to resistance ........................................................................ 59 5.2.7. Resistance as depicted from the cultural perspective ......................................................................... 62
6. CONCLUSION AND VISION .................................................................................................................... 67
6.1. THE RESEARCH CONCLUSION ....................................................................................................................... 67 6.2. THE VISION FOR FUTURE RESEARCH............................................................................................................. 68
BIBLIOGRAPHY .................................................................................................................................................. 70
APPENDIX .............................................................................................................................................................. A
THE UNIVERSITY OF KALMAR ...................................................................................................................... A
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1. INTRODUCTION
Leadership is associated and clustered with various meanings that create a very understandable
sense of interest (Burlingame, 2007). The evolvement of leadership as a term came up during
the 19th
century, making way to the creation of a multiplicity of terms and definitions that
many scholars have and will research about in the future (Ibid).
Enormously centred in this thesis research, is transformational leadership‘s role during
the process of change. As far as I am concerned, the challenges that are faced by the leaders of
today are quite many, positioning them on the verge of pulling out all the necessary and
required strategies in order to get things done in the right way. As all such developments
unfold though, the search of greener pastures such as competitiveness, organizations begin the
process of expanding in different countries, territories, as well as unprecedented positions
hence coming face to face with the challenges/barriers through which if overcome, it would be
an achievement.
The way I view the pending developments is that the testing period for transformational
leaders will always bear the theme; survival for the fittest simply because the ways in which
transformational leaders behave towards the very challenging need of having, and employing
the required competencies within the ever competitive and changing business world, is always
a daunting task. The onus is on these leaders to go an extra mile. As a matter of fact as far as I
know, no leader would be amused at being labelled the lame duck. It should therefore be noted
that any organization or business that enjoys the fruitful periods of possessing the most dreamt
about competent leaders/work force would by any means survive the competition, become
profitable, and even think about expanding in strategic positions.
In the sense of envisaging the developing events, the process of surpassing the expected
results may seem far-fetched for organizations and businesses that posses incompetent leaders.
Although not all businesses/ organizations that employ below par leaders/employees fail, the
effects may be felt in the long run, for the chances are high that the scenario may lead to the
creation of other un-wanted circumstances such as low productivity, tensions, losses,
redundancies, exploitation, liquidation, expulsions etc, which is definitely un-welcome news
for the organization and its stake holders. So theoretically, transformational leaders should
have the best qualities to run the show, with a challenge of playing a big role with an aim of
doing the right thing from the start.
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1.1. The leadership puzzle
Since leadership has very many meanings, some degree of confusion is always created when
trying to derive it in various contexts (Northouse, 2004). For example, we may talk about
leading a meeting, a discussion, a market, or rather a tour. In order to clearly understand the
meaning of leadership, we need to sort out the confusions that arise while contextualizing
leadership. For instance, when we talk about leading a meeting, the meaning of leadership is
depicted from the chairperson or some one who facilitates it. As regards leading a tour, a closer
look is given to the tour guide. But in stark contrast from the above two meanings, leading a
market may have a leader in a very real sense as the top player. This indicates that leaders
should have qualities that may not be easily possessed by other players/ leaders.
Most researchers and authors on leadership (Bennis and Nanus, 1985) focus on what it
means to be a leader as in the context of being at the top of a group hierarchy, the CEO,
President, Chief, King, team leader, Managing Director, etc. As a result, individuals tend to
overlook the uses of the term, for whatever else we say about leadership, every usage focuses
on one person as a central figure. As a result, that person moves us to do things we would not
do otherwise. So, this being said and done, the biggest question and test to be put ahead of us is
whether we can define leadership or a leader as whatever moves or influences us as individuals
(Northouse, 2004). In general, such definition is too all-inclusive. A good explanation to this
fact is that according to Northouse, individuals may not want to think of teachers, sales people
or our uncles and aunties as leaders just because they succeed in persuading us to do our home
work, buy something or watch some educative programmes on television respectively. All this
is because leadership is a group function, involving a player who succeeds in bringing people
together for a common purpose (Northouse, 2004).
“And you know my friends, there comes a time when people get tired of being trampled
over by the iron feet of oppression, there comes a time when people get tired of being
pushed out of the glittering sunlight of life’s July, and left standing amidst the chill of
an Alpine November. We are here because we are tired now.” Dr Martin Luther King
(Gardner, 1995: 206).
From the above quotation, a leader such as Martin Luther King perfectly fits the bill because he
used all the necessary rhetoric to appeal to all the people in order to realize an urgent need.
Similar is Mahatma Ghandi who was so competent in calmly convincing his followers to
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protest peacefully, and refrain from fighting and violence against their adversaries (Gardner,
1995: 268-284).
1.2. The introductory leadership definition
Several authors have defined leadership in many different ways, but each definition has a
meaning that is being drawn against the background of the existing situation. As it will be
discussed later on in this research, there are many definitions that will be reflected upon.
The reflection of my introductory leadership definition will be depicted from one of the
most interesting literature. According to Warren Bennis, leadership is a function of knowing
your self, having a vision that is well communicated, building trust among colleagues, and
taking effective action to realize your own leadership potential (Bennis, 2003). At first, I would
however view such a definition as one that outlines some of the many various traits that a
leader should have in order to be able to lead and have followers that are loyal. But having had
a closer look at it, Bennis outlines exactly what good leaders have in abundance, within this
modern day era.
1.3. Back ground to the research issue
This thesis research is aimed at finding out whether transformational leaders have the required
competencies as of when the process of change is taking place. In short terms, this puts the
leaders in a spot light for the need of finding out if they do their job in a proper manner and if
not, the examining of any other circumstances that could be playing a role towards their
failures. Within this modern dog eat dog /competitive business world, businesses usually
expand in new territories that are quite very un-familiar. These expansions though, take place
on different grounds that range from mergers and acquisitions, globalization, knowledge
transfer, alliances, outsourcing, technology advancements, and many more circumstances. Not
only stopping at that, these changes may also lead to the creation of needs and requirements
that out rightly need to be addressed whenever they surface. As Northouse argues, the need for
survival or have a huge cake on the market share while using low costs of production/ services,
are a challenge to the transformational leaders, hence putting them in position to do every thing
possible within their reach and capacity in order to prevent any business slack (Northouse,
2004).
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As a matter of reflection, businesses are driven by factors such as the political, social,
economic, legal, and technological. One example is that when all these factors are constant,
and a new low cost business is expanded in a foreign country, its only survival hopes hinges on
either outsourcing or employing the cheap local people. The resulting circumstances for such a
business will be resorting to getting competent work force, with an option of applying the
expensive strategy of outsourcing. On the other side, is the HP-Compaq merger case that as it
will be noted later in this study, was not easy to apply changes without affecting the corporate
culture that may be strongly embedded in some people‘s values and beliefs.
The research issue in question culminates from the many problems that have occurred
during the honey moon period of different organizations and companies. While many of such
profitable businesses have had a lot of successful situations to talk about, there have been
situations where failures in realizing the dream have not gone un-noticed. Many of such
situations have recently been as a result of Western and Asian businesses being shifted
overseas, under the umbrella of aiming at low production costs, low taxes, and cheap labour.
Nevertheless, we have seen them in ventures such as mergers and alliances. The resulting
factors from such change situations range from business losses, redundancies, expulsions, lost
contracts, economic weaknesses, cultural backlashes, and political failures.
Bruner and Spekman argue that the rise in some of the above problems may be
attributed to leaders since they are the decision makers, needed when a business needs to
survive and succeed in a very competitive business world (Bruner and Spekman, 1998). And
since change has always been happening within different cultural settings (corporate and
traditional), transformational leadership has been in the spot light for the reasons that would
make the whole process of change a success.
1.3.1. The research’s guiding question
Basing on the research issue of having a close look at transformational leadership during the
process of change, I have realized that there are quite a big number of effects that arise due to
this process. These however depend on the circumstances that prevail as of when the change
process is taking place, which is tantamount to saying that different research problems may
arise from different situations within the organization.
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To what extent do transformational leaders show the required competencies during
the process of change?
The research question below will be used to give a reflection on how to analyse the
existing problem that occurs during the process of change.
1.4. The objective and purpose of the research
“I learned the value of hard work by working hard” - M. Mead
The focus on transformational leadership during the change process in this thesis project
creates a lot of interest for the fact that for its part, transformational leadership challenges any
road blocks that gets into change‘s way. Theoretically the notion that transformational
leadership challenges the existing status quo is true and realistic because as leaders get to the
point of implementation of the set strategies, one thing that is always on their minds is to do
away with the old structures, hence embracing a paradigm shift in different organizational
sections. A point that would be under trial in this thesis research is to envisage whether such a
theoretical notion would prove the practical implications as relevant.
During the periods of study about leadership, I have had a realization that on its part, it
entails grasping all the necessary skills and techniques that are necessary for application with
an aim of achieving the objectives of a group. This being said and done, leaders that achieve
such milestones with all the confidence and courage are deemed to be exceptional and
successful. According to Bennis and Nanus, the vision of the leader in an organization is quite
important when making revolutionary changes, for leaders have an initiative to motivate the
followers through communicating the organization‘s vision (Bennis and Nanus, 1985).
Perfection in what leaders outline to their followers is something that is realistically not easy to
achieve though, due to the fact that in one way or another, however much there is success that
looms around the organization there will always be some leadership dark spots to be wiped out.
For that matter, I am optimistic that the highlights and hints on how leaders proceed in that
direction would be of great use for future research.
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According to Solow, the role of innovation within the process of change deservedly
bears recognition due to its role in inspiring followers. Solow further reiterates that successful
change processes therefore, are a lesson to many more business owners and practitioners within
the field of research (Solow, 1957). Innovation is enormously influential to the development of
economic growth, welfare, and change. Nevertheless, future prosperity of an economy
crucially depends on its success in promoting technological progress (Ibid). On its part, I hope
this study will highlight how innovation can be of importance for any competitive positioning,
as well as an initiation for competence.
In addition to all the above, I would be glad if this research would logically contribute,
as well as being of an added value to the business world of fellow researchers, practitioners,
future managers, etc. In this ever changing and unpredicted world, human beings face many
situations that all of a sudden come into existence during the process of change. Not until some
one realizes a certain problem/issue, and then addresses it to the rest of the world, we may not
be attentive of a certain occurrence/ phenomenon.
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2. THE RESEARCH METHODOLOGY APPROACH
“By using the literature, the researchers should find a balance
between their own creativity and the existing knowledge about their
research topic.”
(Straus and Corbin, 1990: 45)
Methodology, as far as I am concerned is a very important area in any research that is being
carried out. The research methodology and design that I will use to explore the problem will be
well explained here under, since it is well known that the methods for collecting information
play a big role in the empirical findings of the research.
For that matter, the decision of whether to choose a quantitative or a qualitative design
entirely depends upon the nature of the realized problem/ issue. And in order to draw good
empirical conclusions for this research, the adequacy of the design will further hinge upon the
type of information needed, the context of the study, and the availability of recourses (time,
money, and human). In order to shade some light upon the initial circumstances of this
research, I had first opted for a broader qualitative research approach. But due to time
resources, I couldn‘t get a timely response to the interview request letters from the contacted
would-be respondents. Knowing that urgency was much needed therefore, a decision was made
in favour of selecting some cases from which there was a rich availability of secondary sources
such as articles, books, journals, websites, document analysis, etc.
2.1. Qualitative research overview
Qualitative research has a purpose of getting a deeper understanding of the
phenomenon, consequently going deeper than quantitative research. It is believed that
closeness to the source of information is a characteristic of qualitative research, and hence
basic data gathering techniques are observations, interviews, and document analysis (Walcott,
1999), which gathered information is usually in form of words or sentences. To have a clearer
look, qualitative research is the collecting, analyzing, and interpreting data by observing what
people do and say.
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The qualitative approach can refer to research about persons‘ lives, stories, behaviour,
but also about organizational functioning, social movements, or interaction relationships
(Strauss and Corbin, 1990). Having chosen the qualitative method and the nature of
information and literature at my disposal, I decided to use the guidance of grounded theory in
order to get to the empirical findings.
This research is aimed at envisaging how transformational leaders react during the
change process, by getting to know whether they are competent with what they do. In the stated
context, the use of experiments; archival analysis and history would be inappropriate methods.
Nevertheless, the most appropriate methods as regards the research issue would therefore be
the use of surveys and case studies. Looking at how events will unfold and the type of cases at
my disposal, the inappropriateness of the use of surveys leaves me with the choice of case
studies. This being said, I would like to clarify that I will use both case studies from
organizations where past events in leadership have already been researched about but where
leadership forms are still effective to date.
2.2. The grounded theory approach
According to Strauss and Corbin, Grounded Theory is the process of discovering and
generating theory. In their extensive research work, the authors clarified that the grounded
theory method is used to approach research, and later generate theory from the observed data.
The authors argue that the ability to recognize what is important in data and give it meaning
will practically be an out come of enhancing my theoretical sensitivity in correspondence to my
own research process (Strauss and Corbin, 1990). In their interesting work, Strauss and Corbin
relate grounded theory to qualitative research through defining it as a qualitative research
method that uses a systematised set of procedures to develop and inductively derive grounded
theory about the phenomenon. The researchers use the qualitative data collected in order to
define their own theory, which would be grounded in data later on.
In relating this thesis research to grounded theory, the managerial perspective of this
study engages the research process in moving from the specific to the more inductive/general
perspective, a result that would make an empirical observation as a comparison to the literature
knowledge. Within the grounded theory for that matter, data collection, analysis as well as
theory stand in reciprocal relationship with one another. This means that the process is
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continually progressive and open; hence theory should progressively emerge from the data
(Strauss and Corbin, 1990: 23).
Depicted from my understanding of Strauss and Corbin, my motivation for using the
grounded theory approach is rooted from the fact that as one of its main objectives grounded
theory will be in position to create a trustworthy theory that would show some indications
about the research area. That is the one reason I have a belief that the empirical frame work and
analysis may be one of the most important areas that profits from grounded theory in this
research, for I would build own theory and analyses, as depicted from meaning within the
theoretical frame.
2.3. The appropriate research strategy and design
Flyvbjerg (2006) suggests that rather than using large samples and following a rigid protocol to
examine a limited number of variables, case study methods involve an in-depth, longitudinal
examination of a single instance or event: a case. They provide a systematic way of looking at
events, collecting data, analyzing information, and reporting the results. As a result, according
to Flyvbjerg, the researcher may gain a sharpened understanding of why the instance happened
as it did, as well as what might be looked at more extensively in future research. For that
matter, case studies lend themselves to both generating and testing hypotheses (Flyvbjerg,
2006).
The author reiterates that case studies should be defined as a research strategy, an
empirical inquiry that investigates a phenomenon within its real-life context (Ibid). Flyvbjerg
also noted that case study research means single and multiple case studies which can include
quantitative evidence that relies on multiple sources of evidence and benefits from the prior
development of theoretical propositions. In a real research scenario, there is need of
eliminating the confusion between case studies with qualitative research due to the fact that
they can be based on any mix of quantitative and qualitative evidence. Hence the conclusions
drawn from the above is summarized by Lamnek, who suggests that the case study is a
research approach situated between concrete data taking techniques and methodological
paradigms (Lamnek, 2005).
The merger cases that I have chosen will be helpful due to the fact that I rely on Yin,
who suggests that the choice of multiple case designs (HP-Compaq and Volvo-Renault merger
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cases) will make the research work to be more ―compelling and robust.‖ And so in my
research, it will be easy to make comparisons and analyses of the collected data (Yin, 1984:
29).
2.3.1. The motivational factor behind the choice of the selected merger cases
Before going further into a deep discussion about the selected merger case from which my
research will be based, I would like to reason out why I was motivated into these change
processes. First of all, I was aware that the process of change involves a lot of dimensions that
would have been favored in this research. Some of these include; adaptation to new situations,
changing markets, globalization, knowledge transfer, alliances, outsourcing, innovation,
women leadership, from poverty to wealth and vice versa, as well as many more processes
that could have been interesting for this research. Being swayed was a unique experience that
took me considerable amount of time before deciding that the two selected mergers and
acquisitions would contextually be favorable for this research.
In the first place though, these change situations are a real test of competence and good
leadership since they leave an organization very disorganized, and in need of restructuring (e.g.
HP-Compaq merger). This may be in form of expected chaos that may either be short or long
term. Secondly, by researching about amalgamations, I envisaged that a wider choice of
scenarios would be of great interest because these range from politics, economics, social-
cultural situations, technological situations, firms and businesses, humans, the surrounding
environment, the changing times, education, name it—the list is endless. So, having been faced
with such occurrences, I was of the view that these cases were spot on for they are deeply
intertwined in most of the change dimensions hence making my thesis research broad and
interesting.
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3. THEORETICAL FRAMEWORK
Frames of reference may be defined as the past moments of socialization that does enable
people to locate, perceive, identify and label occurrences in their lives and world. In
accordance to Weick (1979), examples of frames of reference may be in form of ideologies,
local assumptions and definitions, paradigms, collective cognitive structures, traditions, as well
as stories and myths. In order to get deep into the research issue/ problem, the frames of
reference will be really so important since meaning is created against their background (Weick,
1979).
In this particular thesis research therefore, meaning/empirical results will therefore be
created if I succeed in constructing a plausible relationship between a frame and a cue. This
means that by relating the cues to a better known frame of reference, meaning is created about
the cue, and sense is made of what is happening, which can reaffirm or change the frame of
reference. I would like to personally assert that the possible meanings from this thesis research
will be quite many, and what is created therefore will be a matter of politics, pragmatics, values
and context, which therefore open up for active agents in the process.
3.1. The major literature to be used
The literature to be used during my research will give me a guide to the construction of
meanings towards the empirical frame. Being the main subject, leadership in general will be
discussed thoroughly hence giving me a good background to the problem. Transformational
leadership will also be part of the theoretical frame work, giving me all the necessary aspects
that are required for this research. Another area that requires literature review is the business
process re-engineering, a topic that will be central, due to the fact that costs, quality, and speed
variables were of much relevance during the HP-Compaq, as well as the Volvo-Renault
mergers. The leader‘s management styles will also be part of the theoretical frame work during
my thesis research. It is evident that patches of management are visibly seen within
leadership‘s sense making and the process of change. More literature about culture will be
involved in this theoretical frame simply because of the background from which my research
will take place.
Regarding the issue/ problem within this research, it is worthy to define what leadership
is, since much of the focus is based on it during the process of change. With a richly worded
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knowledge on leadership definitions, theories, and styles, it will be easy to reflect and make
clear conclusions during the latter stages of the research. Similarly, most of the present day
research is also based upon studies from the earlier researchers and authors on leadership.
3.2. Leadership concepts and theories
During the early part of the twentieth century, interest in leadership increased dramatically
(Northouse, 2004). This happened when early leadership theories had directed focus on the
qualities that distinguished leaders and followers, while subsequent theories looked at other
variables such as situational factors and skill levels of the leaders (Ibid).
3.2.1. Peter. F. Drucker on leadership
For Drucker, there is little if any difference between leadership and management by definition.
Leadership is not about a list of attributes, as no two leaders will exhibit the same list, nor is it
about charisma or some king-like quality. It is therefore all about delivery of performance, just
like management (Drucker, 1999). According to Drucker, effective leadership is one that is
associated to thinking through the organization‘s mission, defining it and then clearly/visibly
establishing it. In addition to defining and maintaining standards, it is the leader who sets the
goals and priorities with total clarity. Effective leaders do not blame others of their wrong
doing for leaders are all too aware that ultimately their responsibility to take care of whatever
happens. Still, they do not and should not fear powerful independent thinking subordinates.
Instead, the strong leader does whatever they can to encourage and champion their team o
course of becoming stronger themselves. For that matter therefore, the leader‘s task is to create
the energy and vision where others might flourish.
Drucker (1999) argues that trust is very important and must be earned. In his literature,
he suggests that without trust, the leader will not have any followers. However, this doesn‘t
mean that the leader must be loved, nor does it mean that the followers must agree with
everything the leader says or does. Instead the followers must believe that leaders mean what
they say. Supporting Drucker´s views is the Churchillian leadership trait of integrity, stating
that there must be congruency between a leader‘s beliefs, his/ her words and actions, and these
must be consistent (Drucker, 1999).
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3.2.2. John Adair on leadership
Yet another definitive theory about leadership comes from the man who went to The Royal
Military Academy of Sandhurst (UK), just like Winston Churchill (Northouse, 2004). Adair
believes that great leaders exemplify the qualities that they expect from others. And according
to him, this does not necessarily mean that they need to be experts in the subordinate‘s role
rather that they should personify the qualities desired. While no two leaders will embody the
same list of "leadership attributes", Adair highlights a core list: enthusiastic, energetic, calm in
a crisis, warm and tough yet fair. For Adair, leadership is a privilege to serve and so a leader
serves his followers.
For any successful leader, one has to attend to the tasks at hand, the needs of the team
and the needs of each individual. Adair illustrates these 3 elements of leadership via a Venn-
diagram with each element intersecting and hence affecting each other. In his reasoning, Adair
suggests that if something significant happens in one of the 3 elements it will have
consequences in the other 2, since all the three elements are meant to work together for a strong
sense of achieving the vision (Adair, 1996).
Task Team
Individual
Source: John Adair, 1996.
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Adair further reiterates that there is no one correct style of leadership- it therefore
depends on the situation. One example of this is that during peace times, there is no doubt that
Prime Minister of Britain Winston Churchill would not be so famous nor his leadership
regarded with such reverence had he been Prime minister of Mexico instead (Northouse, 2004).
Northouse reiterates that when setting the agenda for the task and team, it is important to use
skills such as goal setting, planning, communicating and evaluating. For this matter therefore,
the correct leadership style will depend on the leaders themselves, the time available, the
knowledge / experience of the team, the culture, as well as the available priorities. Adair (1996)
therefore suggests that leadership should involve consistency of character and flexibility of
method / style. Within this thesis research therefore, situational leadership will be of reflection,
and will result in drawing conclusions from different case situations.
My observation deduces that there is a clear contrast between leadership and
management. Although these two should work together within the industry set up, they are
clearly not the same. When I reflect on Adair's point of view though, leadership is about giving
direction, developing teams and inspiring others by one‘s words and deeds. In contrast to such
a view, as of when one is appointed a manager of a certain organization/company, leadership is
earned in the eyes of one‘s followers. An amazing observation therefore should be that whereas
leadership and change go together, management is about administering efficient resources
typically in a relatively stable environment.
3.2.3. The leadership theories
Gibb (1947) describes one of the commonly discussed theories about leadership; the Great
Man theory. The theory assumes that the capacity for leadership is inherent, meaning that great
leaders are born, not made. These theories often portray great leaders as heroic, mythic, and
destined to rise to leadership when needed. The term ―Great Man‖ was used because, at the
time, leadership was thought of primarily as a male quality, especially in terms of military
leadership (Gibb, 1947). It can also be referred to as the trait approach to leadership that
regarded good leaders according to their traits. However, this approach came to a halt when
researchers found out that it was not consistent and there was not any evidence to confirm its
importance (Ibid).
Contingency theories, as one of leadership theories focus on particular variables related
to the environment, which might determine the particular style of leadership that is best suited
for the situation (Fielder, 1964). According to this theory, no leadership style is best in all
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situations. Fiedler reasons that success depends upon a number of variables such as the
leadership style, qualities of the followers, as well as the aspects of a given situation.
Nevertheless, it is believed that leaders prioritize between task-focus and people-focus where
by the relationships, power and task structure are the three key factors that drive effective
styles (Fiedler, 1964). In this particular research therefore, it will be found out if the
transformational leaders posses the competencies to focus on what would be fruitful for the
business.
Situational theories propose that leaders choose the best course of action based upon
situational variables. Different styles of leadership may be more appropriate for certain types of
decision-making (Northouse, 2004). According to Northouse, the path-goal theory of
leadership was developed to describe the way that leaders encourage and support their
followers in achieving the set goals by making the path that they should take clear and easy. In
accordance to Evans (1970), leaders do clarify the path so that subordinates should know
which way to go, by removing roadblocks that are stopping them from going there, hence
increasing the rewards along the route (Evans, 1970).
Behavioural theories are another of the leadership theories that are based upon the
belief that great leaders are made, not born. Northouse (2004) argues that this leadership theory
focuses on the actions of leaders, but not on mental qualities or internal states. This theory
suggests that people can learn how to become leaders through teaching and observation (Ibid).
Another theory—management theory can also be referred to as transactional. The
theory focuses on the role of supervision, organization, and group performance. According to
the theory, leadership is based on a system of reward and punishment( Northouse, 2004).
Managerial theories are often used in businesses where by if at all employees are successful,
they are rewarded but if they fail and are not successful, they would be reprimanded or
punished (Ibid). One other theory which is a big subject of this research is transformational
theory, which results in transformational leadership.
My motivation to put a little more focus on the theories in this research is based upon
the need to know their background and the effects that are portrayed on leadership, and also
have a good ground / base from which to discuss transformational leadership. Added to that, I
will tend to find out how these theories relate under circumstances of change, to examine
whether some of them still exist in the modern day business world.
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3.3. The different leadership styles
Leadership styles were first identified by a group of researchers led by psychologist Kurt
Lewin in 1939. While further research has identified more specific types of leadership, this
early study was very influential in establishing three major leadership styles. In the study,
groups of schoolchildren were assigned to one of three groups with an authoritarian,
democratic, or laissez-fair leader. The children were then led in an arts and crafts project.
Lewin´s research then observed the behaviours of children in response to the different styles of
leadership (Lewin, 1951).
3.3.1. Authoritarian/ Autocratic leadership
In accordance to Lewin (1951), authoritarian leaders provide clear expectations for what needs
to be done, when it should be done, and how it should be done. This is tantamount to saying
that there is also a clear division between the leader and the followers. Authoritarian leaders
make decisions independently with little or no input from the rest of the group. Researchers
found that decision-making was less creative under authoritarian leadership. Lewin also found
that it is more difficult to move from an authoritarian style to a democratic style than vice versa
hence abuse of this style is usually viewed as controlling, bossy, and dictatorial (Lewin, 1951).
3.3.2. Participative/ Democratic leadership
According to Lewin( 1951), the democratic type of leadership is generally the most effective
leadership style due to the fact that not only do they offer guidance to group members,
democratic leaders also participate in the group and allow input from other group members.
Lewin´s studies of children in this group were less productive than the members of the
authoritarian group, but their contributions were of a much higher quality. Participative leaders
therefore encourage group members to participate, but retain the final say over the decision-
making process (Lewin, 1957). Such a scenario makes group members to feel engaged in the
process, hence becoming more motivated and creative (Northouse, 2004).
3.3.3. Delegate /Laissez-Fair leadership
In accordance to Lewin, children under delegate (laissez-fair) leadership were the least
productive of all three groups. The children in this group also made more demands on the
leader, showed little cooperation, and were unable to work independently
(Lewin, 1951). It was found out that delegate leaders offer little or no guidance to group
members and leave decision-making up to group members. However, while this style can be
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effective in situations where group members are highly qualified in an area of expertise, it
often leads to poorly defined roles and a lack of motivation (Ibid).
My interest in clarifying about these different leadership styles is that while doing this
research, it will be important to find out the type of leaders that will be faced. The leader‘s
recognition of what is best for their organization is tantamount to visualizing
leadership/management at its best in practice. The selected cases studies in this research
involve leaders with different styles of leadership and as it will be envisaged in the empirical
study, leadership styles may affect the leader‘s competencies in performance.
3.4. Transformational leadership
One of the main focuses of this research is based on the theory of transformational leadership
as of when the process of change is taking place within an organization. As regards to the
research problem/ issue of weather leaders employ the required competence, Bennis and Nanus
(1985) argue that the need for transformational leaders to make things happen get a spotlight in
the sense that whenever change takes place within the above mentioned setups, the success or
failure to achieve the set targets, goals, or vision is an obligation of leaders to do or not to do
what is required (Bennis and Nanus, 1985). Therefore, the theoretical frame of references
regarding transformational leadership will definitely help me get to a stepping stone towards
the empirical findings within this research.
3.4.1. The transformational leadership description
In accordance to Bryman (1992), Transformational leadership surfaced in the 1980´s as part of
The New Leadership Paradigm/ approach. The term New Leadership has been used to describe
a number of approaches to leadership that seemed to exhibit common or at last similar themes,
although undoubtedly, there were differences between them (Bryman, 1992). Together, these
different approaches seemed to signal a new way of conceptualizing and researching about
Leadership. This led to the writers to employ a variety of terms that describe the new kinds of
leadership with which they were concerned at that time— transformational leadership (Bass
1985; Tichy and DeVanna 1986), charismatic leadership (House 1977; Conger 1989),
visionary leadership (Sashkin 1988; Wesley and Mintzberg 1989), and simply leadership
(Bennis and Nanus 1985).
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Together, all the researchers within the new leadership paradigm revealed a conception
of a leader as some one who defines organizational reality through the articulation of vision
which is a reflection of how he or she defines an organization‘s mission and the values which
will support it (Northhouse, 2004).
Northouse (2004:170) opines that as the name implies, transformational leadership is a
process that changes and transforms individuals in the way that it is concerned with emotions,
values, ethics, standards, and long -term goals, and includes assessing follower‘s motives,
satisfying their needs, on top of treating them as full human beings. Northouse reiterates that
transformational leadership involves an exceptional form of influence, that moves followers to
accomplish more than what is usually expected of them. It is a process that incorporates
charismatic and visionary leadership (Northouse, 2004: 170).
3.4.2. The definition of transformational leadership
The term transformational leadership emerged as an important approach to leadership with the
beginning of classical work by the political sociologist James Macgregor Burns, where he
attempted to link roles of leadership and followers. In his work, Burns wrote that leaders are
those individuals who tap the motives of followers in order to better reach the goals of leaders
and followers (Burns, 1978).
Reflecting on Burns work though, it‘s agreeable that leaders and followers are still a
formidable team, whose actions put a big impact towards the motive realization. It is well
known that many scholars have attempted to make sense out of his findings and since it is three
decades ever since he did his work, it is understandable that the changing political, economic,
technological, and social situations leads his work into new directions, as people‘s tastes and
preferences also change.
Burns distinguished between two types of leadership: transactional and
transformational. Transactional leadership refers to the leadership models which focus to the
exchange that occurs between leaders and their followers (Burns, 1978). Citing from modern
day examples; within a class room, teachers can be transactional when they give students a
grade for work completed. Similarly politicians who win elections through promising
economic reforms do demonstrate transactional leadership, and managers who offer
promotions to employees that surpass their goals also exhibit transactional leadership.
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In contrast to transactional leadership, transformational leadership refers to the process
in which an individual engages with others and creates a connection that raises the level of
motivation and morality in both the leader and the follower. One example of such of such a
leader is Mahatma Ghandi who was attentive to the needs and motives of followers by trying to
help them reach their fullest potential. Similar to Ghandi was Martin Luther King, who raised
the hopes and demands of millions of people for a just cause (Gardner, 1995).
3.4.3. Transformational leadership and charisma
The concept of charisma came up when researchers used to describe a special gift that is
possessed by selected individuals. Max Weber (1947) described charismatic individuals as
ones who have the capacity to perform extra ordinary things. In the beginning of the whole
story of charismatic leaders, Max Weber had described them as heroes that transformed and
changed the world until the point when they were ousted or succeeded by bureaucratic or
authority that was traditional. Weber meant that these individuals had super human or
exceptional power that is reserved for a few, is of divine origin, and results into some one
becoming a true leader (Weber, 1947). Burns (1978) expounded on Weber‘s work and
reasonably distinguished that transactional leaders were like bureaucrats, whereas charismatic
heroic leaders were the transformation leaders (Burns, 1978).
Like Weber, Burns reasoned that moral values were important to leadership and that
while transforming leaders focused on ends, transactional leaders negotiated and bargained
over the means. In his tireless work to the science though, Burns studied the historical, social,
economic, and political context of the theories of great leaders to develop subcategories of both
transactional and transformational leaders.
Weber‘s emphasis on charismatic leadership as a personality characteristic added
recognition of the important roles played by followers in validating charisma in their leaders
(Bryman 1992; House, 1976). Breaking through different ranks, House suggested that
charismatic leaders are ones that act in unique ways which have specific charismatic effects
onto their followers. In addition to displaying certain personality characteristics, House
lamented they also demonstrate specific types of behaviours. One good example of this is
Mahatma Ghandi who advocated non-violence and was an example of a role model of civil
disobedience. On the other side of the dice was Martin Luther King who articulated an
ideological goal that had moral overtones in his speeches (Gardner, 1995: 203). Another of
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these great leaders was John F. Kennedy, who aroused task- relevant motives to the Americans
that may include affiliation, power, or esteem (Ibid).
3.4.4. The transformational leadership model
Transformational leadership models were developed by Bass, who went ahead with researching
about Burn‘s earlier work on transformational leadership. With his tireless work, Bass begun
by highlighting that Burns did not pay attention to the portfolio of followers´ needs and wants,
restricted transformational leadership to moral ends, and worst of all, set up a single continuum
running from transactional to transformational leadership types (Bass, 1985). Bass further
suggested that transformational leadership could apply to situations in which the outcomes
were not positive. This would be true when describing transactional and transformational
leadership as a single continuum rather than mutually independent continua. In accordance to
Yammarino( 1993), Bass extended House‘s work by giving more attention to the emotional
elements and origins of charisma and by suggesting that charisma is a necessary but not
sufficient condition for transformational leadership (Ibid).
Source: Bass, 1985.
In accordance to my submission herein, earlier research brings up an argument that
transformational leadership motivates followers to do more than the expected by raising the
follower‘s levels of consciousness about the importance and value of specified and idealized
goals. In so doing, they get followers to transcend their self-interest for the sake of the team or
organization, as well as moving followers to address high level needs. Such kind of attitude is
crucial to the direction in which the organization is going during the process of change and
much of it will be discussed more, while researching about the issue/ problem.
Transformational
Leadership
Transactional
Leadership
Laissez-faire
Leadership
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3.4.5. Transformational leadership and self-efficacy
Talking about transformational leadership without relating it to motivation would not really
make sense. Motivation is a central issue for transformational leaders as of when the process of
change is taking place because without it, leaders would not possess their full character to carry
out action.
In relation to motivation, self-efficacy is defined as the beliefs in one‘s capabilities to
organize and execute courses of action required in managing prospective situations. According
to Bandura (1997), efficacy beliefs influence how people think, feel, motivate themselves, and
act (Bandura, 1997). Several studies have demonstrated the importance of self-efficacy for
improving performance in the organizational context (Gist and Mitchell, 1992). Originally
conceived of as a task-specific variable, support has been shown for general self-efficacy
which is a disposition predicting individual behaviour across situations. Among the
determinants of self-efficacy are enactive mastery (personal attainment), vicarious experience
(modelling), verbal persuasion and physiological arousal; all of which serve to increase self-
efficacy perceptions (Gist and Mitchell, 1992).
3.4.6. Transformational leadership, cohesiveness, performance and
commitment
Festinger (1950) opines that group cohesiveness is described as the resultant forces which are
acting on the members to stay in a group (Festinger, 1950). This definition has been widely
accepted by researchers who have spent valuable time on a very important issue; group
cohesion. This particular topic has also led other researchers to describe cohesiveness as the
degree to which group members are attracted to, and motivated to stay with a group (Zaccaro et
al., 1995). Zaccaro et al (1995) argue that leaders who show consideration for their followers
cause them to become more attached to the group. Such leaders may thus draw the group closer
together towards the attainment of group goals. Bass (1985) argues that the collectivistic focus
of groups led by transformational leaders where there is a consensual sharing of meaning may
be a catalyst in eliciting higher levels of commitment and performance (Bass, 1985).
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Self-Efficacy
Transformational
Leadership
Cohesiveness
Commitment
(Internalization)
Perceptions of
Unit Performance
Source: Pillai and Williams, 2002.
In relation to the theoretical model shown in the above figure as well as the consistency with
the arguments presented, direct relationships are specified from leadership to self-efficacy,
cohesiveness, performance and commitment. Zaccaro et al (1995) argue that in the presence of
transformational leadership, cohesive groups with members who have high levels of self-
efficacy are motivated in turn, to perform at higher levels and be highly committed, which in
turn may bring about positive changes in the organization (Zaccaro, et al, 1995). By using the
strategies of visioning, coupled with setting high performance expectations for the group, and
participation in the group goal setting, transformational leaders may be successful in
motivating group members to remain attracted to the group, make personal sacrifices and work
towards a common goal (Ibid). Nevertheless, by internalizing the values of the leader,
followers of transformational leaders identify the vision and become committed to collective
interests that can bring about the desired organizational change.
My comments from such readings are that in any given company or organization, it
appears that transformational leaders have the capability and competencies meant to facilitate
the formation of a cohesive group that performs at higher levels. This great role that is played
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by the transformational leaders means that the cohesive group is not only committed to the
group, but also to the organization as whole.
3.5. The change process
3.5.1. Introduction
Burke (2002) contends that every day and time that passes by, organizations do go through the
process of change. Significant organizational changes occur for example, when an organization
changes its overall strategy in order to realize success, adds or removes a major section or
practice, or even changing the very nature by which it is doing business/operations (Burke,
2002). The occurrence of change may also happen when an organization evolves or goes
through various life cycles, just like how people must successfully go through different ages
and decades. Burke (2002) reiterates that for organizations to have a clear sight of its much
needed vision, they often must undergo significant change at various points in their
development. This explains the reason why organizational change and development as a topic,
has become widespread in communications about business, organizations, leadership and
management practices (Ibid).
According to my understanding, the need for change in organizations today is larger
than ever. It should be believed that since the need for such an increasing demanded overhaul
is sky rocketing, there must be reasons for this; Changing markets, changes in work
environment requirements, demands for more effectiveness from parent companies, demands
of openness from both public authorities, share and stake-holders, the demands for more
flexibility towards employee family life and leisure time, internationalization, etc. The list is
really endless but it should be noted and asserted that such incidences indicate how real the
exact need is, an indication to a desired and continued future success. Consequently, this
results in sending these organizations´ decision makers into situation rooms for detailed
preparations before implementation of these changes. However, the easiest change to create is
one that is mandatory.
Often, there are laws that require change to be made in organizational policy. One good
example is the non-discrimination laws requiring employers to investigate and put a stop to
harassment if it is based on age, sex, race, colour, religion, disability, etc. In that sense, if at all
that sort of harassment is truly happening, the easiest way of making the needed changes may
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be simply pointing out to the people in power in requirement of the law. On the contrary
though, this research will be based upon the changes that are rather not mandatory, but
necessary as it will be detailed in the merger cases.
3.5.2. The different types of organizational change
Having a closer discussion about the types of change within this research is meant to give a
profound background to the areas that are covered. In relation, it will highlight the effects of
change to the dynamics of leadership and culture.
According to Burke( 2002), the phrase ―organizational change‖ is about a significant
change in the organization, which may be in form of reorganization or adding a major new
product/ service. The change of this type may be termed as revolutionary. A notable example
of this huge overhaul may be adopting a new computer procedure, setting up new production
lines, restructuring the marketing techniques, etc. Nevertheless, organizational change can
seem like such a vague phenomena that is really helpful if one can think of change in terms of
various dimensions (Burke, 2002).
McNamara (2008) argues that the planning of change creates one of the types in
organizations. Unplanned change usually occurs because of a major, sudden surprise to the
organization that causes its members to respond in a highly reactive and disorganized fashion
(McNamara, 2008). Unplanned change for example might occur when the Chief Executive
Officer suddenly leaves the organization, when significant public relations problems occur, as
well as having a scenario of poor product performance which may quickly results in loss of
customers (Ibid). On the other hand, planned change occurs when leaders in the organization
recognize the need for a major change and proactively organize a plan to accomplish the
change. Change that is well planned may also occur with a successful implementation of a
strategic plan for reorganization, or any other implementation of a change of this magnitude (
Ibid) Note that planned change, even though based on a proactive and well-done plan, often
does not occur in a highly organized fashion. Instead, it tends to occur in more of a chaotic and
disruptive fashion than expected by participants (Ibid). One typical example of such a change
process was the HP and Compaq merger case.
Burke (2002) argues that another type is the organization-wide change in comparison to
the subsystem type of change. Usually, organizations must undertake organization-wide change
to evolve to a different level in their life cycle. Such an example would be going from a highly
reactive entrepreneurial organization to one that has a more stable and planned development.
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Examples of organization-wide change might be a major restructuring, collaboration, etc.
Experts assert that successful organizational change requires a change in culture – hence
cultural change is another example of organization-wide change. On the other hand, subsystem
change may include addition or removal of a product or service, reorganization of a certain
department, or implementation of a new process to deliver products or services (Burke, 2002).
According to Warner W. Burke, change can be intended to remedy current situations
such as the improvement of the poor performance of a product / entire organization, reduction
of burn out in the workplace, helping of the organization to become much more proactive and
less reactive, as well as addressing large budget deficits (Burke, 2002). Remedial projects often
seem more focused and urgent because they address a current, major problem. It is often easier
to determine the success of these projects due to the fact that the outcome may lead to either
solving the problem or not.
Burke (2002) also opines that change can be developmental, which may be viewed in
ways that may make a successful situation even more successful. Added to the above is the
expansion of the amount of customers served, or duplicate successful products or services
(Ibid). Developmental projects can seem more general and vague than remedial, depending on
how specific the goals are and how important it is for members of the organization to achieve
those goals. Some leaders might have different perceptions of what is a remedial change versus
a developmental change because they might reason that if developmental changes are not made
soon, there will be need for remedial changes hence recognition of current remedial issues to
establish a developmental vision, in need of addressing the issue (Burke, 2002). Having such
an attitude is a typical example of transformational leaders like Carly Fiorina, the former CEO
of HP.
De Wit and Meyer (2004) argue that most managers within the business world tend to
struggle in selecting an approach for strategic change and how bold they should be yet the
reality remains that in order to fundamentally transform the organization, a break with the past
is essentially needed (De Wit and Meyer, 2004). On the other hand, they also recognize the
value of continuity, building on past experiences, investments and loyalties. In order to achieve
active strategic renewal, people in the organization will need time to learn, adapt and grow into
a new organizational reality (De Wit and Meyer, 2004: 170).
According to De Wit and Meyer (2004), revolutionary change processes are those that
do not build on the existing status-quo but rather over throw it. It is a process where by radical
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and abrupt changes occur over a short time period (De Wit and Meyer, 2004). Also known as
transformational, revolutionary change might involve changing an organization‘s structure and
culture from the traditional top-down, hierarchical structure to a large amount of self-directing
teams (Ibid). Such a fundamental approach of strategic change is generally needed when
organizational rigidity is so deeply rooted that smaller pushes do not bring the firm in to
recognizable movement. Worth a mention due to its opposite-like nature to revolutionary
change, is evolution. De Wit and Meyer (2004) describe evolutionary change as a process
whereby a constant stream of moderate changes gradually accumulates over a long period of
time. The cumulative result can be large in each small change process; where by the current
firm is taken as a starting point that leads to constantly modifying aspects through extension
and adaptation (Ibid). Kaizen according to De Wit and Meyer (2004) is one of its most popular
examples, highly credited for incremental changes due to organizational learning.
3.5.3. The Business Process Re-engineering (BPR)
According to the Michael Hammer, Business Process Re-engineering (BPR) is the fundamental
reconsideration and the radical re-design of organizational processes in order to achieve drastic
improvement of current performance in cost, service, and speed (Hammer, 1997). We can not
really deny the fact that changes during this era is typically quite revolutionary due to the fact
that it washes away the existing status within the whole organization. As it will be discussed
later in this research, in modern day era, change is not only affecting organizations and
competitive companies, but we are also envisaging a paradigm shift in the social cultural
attitudes and behaviours towards change. Transformational leadership for this matter is central
and plays a huge role if an organization is in need of realizing success. It is however a point of
note that almost all the cases and references that will be covered during this research have a re-
engineering process background. On its part though, Business Process Re-engineering tries to
scrutinize (at least on paper, at first) the major parts and processes of the organization and then
integrates them in a more optimal fashion (Hammer, 1997).
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3.5.4. Steps that are a real test of competence
Source, own visualization: 2008.
In dire need for change, organizations need to follow the steps above. Although the need for
change is too much on the agenda for different organizations, the destination is always
unfamiliar as well as challenging to them. Along the difficult road, this process requires
transformational leaders to be on top of the game, in order to transform the organization. It has
nevertheless been proven by researchers that leaders who may not find any difficulties along
this journey will be tagged competent (Burke, 2002). In doing so therefore, leaders need to
assess the need for change and this can be achieved through finding the source of the problem.
It is certainly true that in order to advocate for change, there has to be satisfactory reasons from
which the basis of the initial process will be drawn. The second stage on the grid suggests that
organizations need to decide on the change that will have to occur by identifying the obstacles
which lie ahead of implementation (Burke, 2002). The third step would be the implementation
process in which managers would decide upon the choice of using either the top-down or
bottom-up procedure. Finally, the evaluation process of change comes into frame, after
implementation (Ibid). The evaluation is meant to measure the progress of the implemented
process through assessing the performance in the key indicators. According to my
understanding, leaders that go through all these steps unscathed will always be given credit.
However, it is highly dependent on the achieved results and the level of effects on the other
Assess need for
change
Decide on the
change
Implement
change
Evaluate
change
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parties involved. Hence organizations that boast of competent transformational leaders in
successfully architecting this process have a high survival chance within any competitive
business environment.
3.5.5. Models of organizational change
The various organizational models that do exist are based on an open system theory and come
from the world of organization development, meaning that they address what to diagnose for
change, and to some degree consider how to intervene so that organization change can be
implemented. These models represent an integration of content and process and have therefore
evolved from both practice and theory.
During this thesis research, the chosen cases of HP-Compaq and Volvo-Renault
mergers will be fit and evaluated basing on the Burke-Litwin model of organizational change,
which contains elements of transformational leadership, management, change, organizational
culture, etc.
3.5.6. The Burke-Litwin model
The roots of the Burke-Litwin model come from the organizational studies conducted by
Litwin and colleagues during the latter period of the 1960´s. For his part with Litwin, Burke
began collaborative work in the arena of organizational change consulting, to develop the
model further in the 1970´s and 1980´s. They did this first with Citibank, and later with British
Airways (Burke, 2002).
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Leadership
External
Environment
Management
Practices
Work Unit
Climate
Motivation
Individual &
Organizational
Performance
Organization
Culture
System
(Policies &
Procedures
Individual
Needs and
Values
Mission and
Strategy
Structure
Task Requirements
And Individual
Skills/ Abilities
feedback
feedback
Source: Burke, 2002: 199.
In accordance to Burke and Litwin (Burke, 2002), key to understanding change is the top half
section that consists of external environment, leadership, organizational culture, mission and
strategy, as well as individual and organizational performance. The top half of Burke and
Litwin model are drawn from the ideas and concepts of James McGregor Burns and his
distinctive description of transformational leadership. To Burns, transformational leaders are
ones that bring about change in the organization (Burns, 1978). On the opposite side are the
transactional leaders who are said to comprise the leader-follower relationship taken as a
transaction, i.e. in form of promotions, bonuses, etc. The direct interaction with the external
environment is the likely root cause of the changes in the transformational factors that
significantly require new behaviour from organizational members. In relation to this thesis
research therefore, a change in any of these transformational variables or organizational
dimensions will mean that the entire organization or system is affected and that the change is
discontinuous or revolutionary in nature, resulting in affecting the deep structure of the system.
Such a scenario usually requires visionary leadership.
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Burke (2002) argues that at the bottom half of the Burke and Litwin model are the
organizational dimensions that include management practices, structure, work unit climate,
systems, motivation, individual needs and values, task requirements and individual
skills/abilities, as well as individual and organizational performance (Burke, 2002). In this
bottom half though, transactional factors are clearly seen under this umbrella. Burke and
Litwin suggest that these factors are the ones that should be given consideration when under
continuous improvements, evolutionary or selective change processes.
3.5.7. The implementation process in particular
The implementation of organizational change is a phenomenon that has long been difficult and
problematic. Over time two approaches towards implementation have developed. These are;
the participative approach, which assumes that employee support, is a pre-requisite of change,
and; the unilateral approach which argues that if there is need for change, the first variable to
be changed is behavior, then followed by the attitudes of employees. In accordance to Wilfried
Kruger (1996), a study of different change episodes indicate that unilateral implementation
approaches are more effective than participative approaches. Nevertheless, in today‘s change
processes, while employee support is related to change success, it is the function of the change
type but not participative implementation. The content of implementation activities largely
depends on the depth of change, which is said to be evident where behavioral-social change
types generate more support from the employees than technical-structural changes (Kruger,
1996).
Kruger (1996), in De Wit and Meyer (2004) opines that the core problem of change
though, is the existence of various factual and personal barriers that have to be identified and
handled by implementation (De Wit and Meyer, 2004: 208). These barriers can be roughly
classified into company-wide barriers, management barriers, and employee barriers. As a point
to note for instance, Kruger (1996) reiterates that company-wide barriers may be embedded
within the imaginary sum of values shared by all company members, their mind-sets, as well as
behavioral patterns which form a backbone of the corporate culture. Usually, barriers arise due
to the fact that as the corporate culture gains more strength and effectiveness, creating changes
becomes one of the most difficult things to effect (De Wit and Meyer, 2004). On the other
hand, management barriers may lie in the field of problem awareness and problem solutions.
Problem awareness is often dealt with in the daily running of the business where urgent issues
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are dealt with as of when they happen instead of dealing with the important ones (Ibid). One
tricky situation is when a problem arises. Faced with this expert-doer syndrome scenario, the
expert tries to implement the previously successful solutions without realizing the changed
situations (De Wit and Meyer, 2004). In case of failure, there is a tendency of applying more
emphasis by the expert hence resulting into a vicious circle of effort, failure and
intensification—a situation in which if the neglect of the need for rethinking happens, the result
is an attitude barrier to change (Ibid). The employee barriers to change are another of the
mentioned barriers. Kruger (1996), states that this may occur when the middle and lower
management have to be thoroughly convinced about the need for change. Even when top
management Okayed the need for change, many other employees may be a barrier, which may
result in opposition.
Kruger’s Iceberg of Change Management
Kruger‘s Change Management Iceberg is a strong visualization of dealing with barriers to
change within an organization. This Iceberg model illustrates that transformational leaders
need to deal with a great deal of barriers if at all there is genuine need to communicate and
implement the unprecedented or once failed change in an organization.
Promoters
Hidden
opponents
Opponents
Potential
promoters
Acceptance
Issue
Management
Power
and Politics
Management
Management
of Perceptions
and Beliefs
BehaviourAttitude
negat
ive
positiv
e
negative
positive
Quality
Cost Time
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Source: De Wit and Meyer, 2004: 217.
Just as illustrated above, Kruger‘s model indicates that most leaders are issue managers. He
indicates that in order to have an overhaul with in the organization, managers only consider
achievements through three variables; reducing costs, focus upon good management of time,
and production of quality products for the final consumer (Kruger, 1996). However, beneath
the water surface lays management of perceptions and beliefs as well as the power and politics
management. It should be noted that the kind of arising barriers, and the form of
implementation management that is consequently sought depends on whether change is
revolutionary (radical) or evolutionary (incremental) (Ibid). In a move to further justify his
reasoning, Kruger states that hard issues such as information systems, processes, etc just
scratches the surface whereas soft issues such as values, mindsets, and capabilities, etc are
much more profound (De Wit and Meyer, 2004).
Kruger‘s (1996) model further indicates that transformational leaders/ managers who
would play a role in influencing the implementation of change may have to conduct an
assessment upon the attitudes and behaviours of the organization‘s employees, hence
exercising competence. Within these attitudes and behaviours, are the four target groups of
promoters, potential promoters, opponents, and hidden opponents. As envisaged in the diagram
above, all the three dimensions (management of perceptions and beliefs, issue management,
and power and politics management) are assigned to the four target groups.
Opponents of change according to Kruger are negative in both their attitudes and
behaviour. In order to change their attitudes towards accepting change, they have to be
controlled by the management of perceptions and beliefs that may be in form of inducements,
incentives, etc. (De Wit and Meyer, 2004). On the other hand, promoters have both a positive
generic attitude and behaviour towards change. For promoters, a bit of persuasion may be
needed since they take full advantage of change and hence fully support it (Ibid). Hidden
opponents, as shown on the diagram, posses negative generic attitudes towards change
although their behaviours have a positive indication and support for change (Ibid). When faced
with such opportunists the management of perceptions and beliefs, supported by information
(issue management) is usually needed to change their attitudes (Kruger, 1996). Finally, as
shown on the diagram, potential promoters who have a generic positive attitude towards
change. However, for certain reasons, they are not fully convinced about this particular change.
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It is there fore noted that the power and politics management seems to be appropriate in dealing
with potential promoters.
De Wit and Meyer (2004) opine that dealing with change is a permanent task and
challenge for general management. Superficial issue management can only achieve acceptable
results at a level that is consistent with the acceptance that lays below the surface (De Wit and
Meyer, 2004). The base of change management is rooted in both the interpersonal and
behavioural dimensions, as well as the normative and cultural dimensions hence exposing it to
be subject to power and politics management, and the management of perceptions and beliefs
(Ibid).
As will be discussed later in this research, attitudes and behaviours had a big effect
towards the need to implement change in the selected cases and will be scrutinized in order to
find some useful results within the latter stages of the research.
3.6. The sense making process
―Common sense is the collection of prejudices acquired by age eighteen”
—Albert Einstein
3.6.1 Introduction
During the ever challenging process of change, transformational leaders are usually faced with
a number of crucial decisions to make, in order to see to it that they follow the right direction.
One of the most challenging scenarios is making proper sense of the changing situations,
coupled with making the right decisions in order to move into a desired direction. Modern day
organizations have to adjust to a number of the many dramatic changes that range from
fundamental restructuring to the revolutionary shifts in traditional values, just as it will be
envisaged in the empirical part regarding HP-Compaq merger, as well as Volvo-Renault
merger.
Weick and Kathleen (2005), argue that these required changes are largely attributed to
drastic changes in the way in which organizations respond to the scope of operation, i.e. the
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environment. Globalization and the resultant advancements in information technology are
some of the main contributors of modern organizational structuring, both of which pertain to
highly complex communication activities and considerations that have become part of the
organizations enactment with micro systems such as inter-organizational activities, as well as
macro systems such as trans-national synergies, strategic geographic positioning, etc (Weick
and Kathleen, 2005). This reflects the paradigm shift from traditionally closed operating
procedures to highly flexible and innovative contemporary organizations (Ibid).
In accordance to Verwey and Du Plooy-Cillers ( 2003), the main paradox is that
organizations do need existing paradigms in order to make sense of current situations and this
can trap organizations in current paradigms (Verwey and Du Plooy-Cillers, 2003). Note that
contemporary management theories such as Weick´s sense making reflect a deep restructuring
of core competence that values an organization‘s sense making process when dealing with a
situation like environmental equivocation( Weick and Kathleen, 2005).
3.6.2. An insight into the sense making process
In accordance to Weick (1995), the sense making process involves turning circumstances into a
situation that is comprehended explicitly in words and that serves as a springboard into action.
The seemingly transient nature of sense making belies its central role in the determination of
human behaviour, whether people are acting in formal organizations or elsewhere (Weick,
1995). Contextualizing Mills (2003) idea within this thesis research, the centralization of sense
making becomes an interesting subject because it is the primary site where meanings
materialize, on the road to inform, and constrain identity and action. (Mills, 2003) When we
say that meanings materialize, we mean that sense making is, importantly, an issue of
language, talk, and communication. In this incidence, situations, businesses, organizations, and
environments are talked into existence (Ibid). Weick and Kathleen suggest that the emerging
picture is one of sense making as a process that is ongoing, instrumental, subtle, swift, social,
and easily taken for granted (Weick and Kathleen, 2005).
Crucial to transformational leadership as of when change is taking place, sense making
clearly involves the ongoing retrospective development of plausible images that rationalize
what people are doing. Weick (1995) contends that while it is viewed as a significant process
of organizing, sense making unfolds as a sequence in which people concerned with identity in
the social context of other actors engage ongoing circumstances from which they extract cues
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and make plausible sense retrospectively, while enacting more or less order into those ongoing
circumstances (Weick, 1995).
3.6.3. Enactment, organizing, and sense making relationships
According to Warglien (2002), the preceding overview of early activities of sense making and
organizing that mobilize around moments of flux needs to be compressed if it is to guide
research and practice. One way to do that is to assume that ―a system can respond adaptively to
its environment by mimicking inside itself the basic dynamics of evolutionary processes‖
(Warglien, 2002: 110). Basing upon the sense making assumption, the basic evolutionary
process is one in which retrospective interpretations are built during interdependent interaction.
This frame work proposes that sense making can be treated as reciprocal exchanges between
actors (Enactment) and their environments (Ecological Change) that are made meaningful
(Selection) and preserved (Retention). However, Waglien (2002) reiterates that these
exchanges will continue only if the preserved content is both believed (positive causal linkage)
and doubted (negative causal linkage) in future enacting and selecting. It should hence be noted
that systems are able to benefit from the lessons learned, added to updating either their actions
or meanings in ways that adapt to changes in the system and its context. This will for that
matter only happen with ambivalent use of previous knowledge (Ibid).
Ecological
ChangeEnactment Selection Retention
Ongoing
updating
Retrospect
Extracted
cues
Identity
plausibility
Feedback of identity
on selection and
enactment
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Source: Weick 1979: 132.
My own analysis of the above diagram is that if leaders conceptualize organizing as a sequence
of ecological change; enactment; selection; and retention, with the results of retention feeding
back to all three prior processes, then the specific activities of sense making fits very well into
this more general progression of organizing. According to Weick and Kathleen (2005), the
reciprocal relationship between ecological change and enactment includes sense making
activities of sensing anomalies, enacting order into flux, and being shaped by externalities. The
organizing process of enactment incorporates the sense making activities of noticing and
bracketing (Ibid). These activities of noticing and bracketing, triggered by discrepancies and
equivocal tendencies in ongoing projects, begin to change the flux of circumstances into the
orderliness of situations. Weick (1995) opines that the close fit between processes of
organizing and sense making illustrate the recurring argument that people organize to make
sense of equivocal inputs, and enact this sense back into the world with the prime aim of
making the world more orderly (Weick, 1995).
3.6.4. Organized sense making through communication
Taylor and Van Every (2000) opine that communication is a central component of sense
making and organizing. In this particular incidence, we see communication as an ongoing
process of making sense of the circumstances in which people collectively find themselves and
of the events that affect them. To the extent that it involves communication, sense making
takes place in interactive talk and draws on the resources of language in order to formulate and
exchange through symbolically encoded representations of these circumstances. As this occurs,
a situation is talked into existence and the basis is laid for action to deal with it (Taylor and
Van Every, 2000).
In accordance to Weick (1995), the image of sense making as an activity that talks
events and organizations into existence suggests that patterns of organizing are located in the
actions and conversations that occur on behalf of the presumed organization and in the texts of
those activities that are preserved in social structures. Weick´s organizing for that matter
highlights the paradigmatic nature of organizations, as something that people accomplish
through a continual process of communication (Weick, 1995). The question of dualism
between communication and organizations represents a symbolically realized construction
produced by the interaction process of the organizations members and
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the micro system they occupy (Taylor and Robichaud, 2004). Littlejohn and Foss (2004)
suggest that these exact symbolically realized constructions emphasize the importance of
interlocked behaviour as they create, maintain, and are adjusted in accordance with the
normative competence that are necessary to reduce uncertainty (Littlejohn and Foss, 2004).
3.7. The effect of culture in the change process
“If we are to achieve a richer culture, rich in contrasting values, we must recognize the
whole gamut of human potentialities, and so weave a less arbitrary social fabric, one in
which each diverse human gift will find a fitting place.”
—Margaret Mead
3.7.1. Introduction
In my personal opinion, there is no doubt that culture plays a big role in the process of change.
Most transformational leaders experience and act towards change situations that are carried out
in different cultural backgrounds, a phenomenon that makes them outstanding after
successfully dealing with complex situations. A leader who may succeed in properly dealing
with the cultural issue would be tagged as competent. My argument is that common as it is
today, any expanding business in a territory that is not familiar, will always need to go by the
cultural rules, if they want to see some light at the end of the tunnel.
3.7.2. The definition of culture
According to Rogers and Thomas (1999), culture may be defined as the collective
programming of the mind which distinguishes one group or category of people from the other.
In other words culture can be defined as all the ways of life including arts, beliefs and
institutions of a population that are passed down from generation to generation (Rogers and
Thomas, 1999). Culture, which has been dubbed as the way of life for an entire society,
include codes of manners, dress, language, religion, rituals, norms of behavior such as law and
morality, and systems of belief as well as the art (Ibid). As will be discussed later, culture was
deeply embedded within the cases that have been chosen for analysis. That is why it will take
some centre stage in this thesis research.
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3.7.3. The famous Geert Hofstede´s cultural dimensions
There are some dimensions in culture that were suggested by one of the greatest writers and
authors in the field of culture— Geert Hofstede (De Wit and Meyer, 2004:37). Such
dimensions have been worth a mention in this research simply because the process of change is
from time to time affected by cultural values and norms.
Take an example of a company that is expanding in territories where the ways of
running business differ from how it is done in the original country. In this incidence, changes
come about due to the differences in time zones, beliefs of people, attitudes, the geographical
effects, as well as the political systems. Now, the fact is, many of these differences form up
what we may closely relate to culture and the only way to survive in such a different
environment is by adaptation –something that is really very challenging for leaders with
hypothetical definitions; ―transformational.”
De wit and Meyer (2004) argue that Hofstede‘s power distance Index measures the
extent to which the less powerful members of organizations and institutions such as families
accept and expect that power is distributed unequally. This represents inequality that is defined
from below, not from above. It suggests that a society‘s level of inequality is endorsed by the
followers as much as by the leaders (De Wit and Meyer, 2004). Such a view has got meanings
that are depicted from ethnocentrism—the degree to which individuals judge other cultures as
inferior to their own culture, as well as cultural relativism— which is the degree to which an
individual judges another culture by its context (Rogers and Thomas, 1999). For example,
Germany has a 35 on the cultural scale of Hofstede‘s analysis compared to Arab countries
where the power distance highly rockets at 80, and Austria where it is at a low 11. That means
that Germany is somewhat in the middle and does not have a large gap between the wealthy
and the poor but have a strong belief in equality for each citizen. Germans therefore have the
opportunity to rise in society. On the other hand, the power distance in USA is 40 on the
cultural scale, meaning that USA exhibits a more unequal distribution of wealth compared to
the German society. According to Hofstede, as the years go by, it seems as though the distance
between the wealthy and the poor grows larger and larger (De Wit and Meyer, 2004).
As another of Hofstede´s dimension; Individualism, is the degree to which people
prefer to act as individuals rather than members of the group. Collectivism, which is the degree
to which individuals are integrated into groups, is the opposite of individualism (Rogers and
Thomas, 1999). On the individualist side we find societies in which the ties between
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individuals are loose meaning that everyone is expected to look after one‘s immediate family.
Rogers and Thomas (1999) reiterate that on the collectivist side, there are societies in which
people from birth onwards are integrated into strong, cohesive in-groups, often extended
families with uncles, aunts and grandparents that continue to protect them in exchange of
unquestioning loyalty. According to Hofstede´s scale, nearly all the Western economies are
considered individualistic as compared to developing and poor economies which are
considered to be collectivistic.
Another of Hofstede´s cultural dimensions is masculinity versus femininity, which refers to the
distribution of roles between the genders. Masculinity may be defined as the degree to which
tough values like assertiveness, performance, success and competition, which in nearly all
societies are associated with the role of men; prevail over tender values like the quality of life,
service, care for the weak and solidarity, which in nearly all societies are more associated with
women‘s roles (De Wit and Meyer, 2004: 42).
Uncertainty Avoidance is another dimension that is meant to deal with a society‘s
tolerance for uncertainty and ambiguity. It ultimately refers to man‘s search for the truth. In
this case, uncertainty avoidance indicates the extent to which a culture programs its members
to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations
according to Hofstede are novel, unknown, surprising, and different from usual. Uncertainty
avoiding cultures try to minimize the possibility of such situations by setting strict laws and
rules, applying safety and security measures, etc (De Wit and Meyer, 2004:42).
Long-Term Orientation is the fifth dimension of Hofstede that was added after the
original four to try to distinguish the difference in thinking between the East and West. From
the original IBM studies, this difference was something that could not be deduced. Therefore,
Hofstede created a Chinese value survey which was distributed across 23 countries. From these
results, and with an understanding of the influence of the teaching of Confucius on the East,
long term vs. short term orientation became the fifth cultural dimension. Hofstede´s research
found that long term orientation consisted situations such as persistence, ordering relationships
by status and observing this order, thrift, and having a sense of shame whereas short term
orientation consists personal steadiness and stability, protecting your ‗face‘, respect or
tradition, reciprocation of greetings, favours, and gifts. The grid shows France with a 30 score,
compared to the West African state of Nigeria – 16 (De Wit and Meyer, 2004).
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As we shall envisage in some of the cases that will be dealt with in this thesis,
situations such as the Volvo-Renault merger had a deeply rooted culture problem that played a
role in the failure of the merger for the fact that changing an organization/ business that has a
deep relationship with the culture is so difficult to carry out. Similarly, the HP and Compaq
merger had a huge divide because of the fact that culture was deeply embedded within the
history of HP company—the corporate culture.
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4. THE CONCEPTUAL FRAME WORK
The conceptual frame work is an area that will outline the concepts that are going to be used in
relation to the findings of this research. Although not all the theories, models and concepts that
have been discussed in the theoretical frame work will be used in the final analysis, the
selected ones will be the back bone that leads to finding answers for the research issue.
One the concepts that will be discussed in line with leadership will be John Adair‘s
task, team, and individual. It was chosen due to the fact that all the chosen cases involved a
significant level of relation to the concept. Added to this concept, is Peter Drucker´s leadership
theory that highlights little if any difference between leadership and management by definition
(Drucker, 1999).
Another important area to be discussed in this research is the actors of change and their
behaviours, a reasoning that is got from Wilfried Kruger‘s Iceberg of change
The actors of change and their behaviours
Behaviour
Attitude
negative positive
negative
positivePotential
promoters
Opponents
Promoters
Hidden
opponents
Source: De Wit and Meyer, 2004: 210.
According to Kruger‘s Iceberg as cited by De Wit and Meyer (2004), the different
behaviours and attitudes can easily be managed using either the power and politics
management, or the management of perceptions and beliefs.
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Drawn from Kurt Lewin (1951) theories, the concept of democratic/Participative
leaders will also be used to gauge the level of democracy that availed when the selected cases
happened. According to Kurt Lewin, democratic leaders are ones that do encourage group
members to participate, while retaining the final say over the decision-making process to them-
selves—something that makes group members to feel engaged in the process, hence becoming
more motivated and creative.
The Burke-Litwin model of transformational leadership
Leadership
External
Environment
Organization
Culture
Mission and
Strategy
Individual &
Organizational
Performance
Source: W.Warner Burke, 2002: 202.
Depicted from Burns´ concept on transformational leadership, Burke and Litwin argued that
the above will be affected by changes caused by the direct interaction with the external
environmental forces and will as a consequence require significantly new behaviour from
organizational members (W. Burke, 2002).
Karl Weick´s (1995) sense making concept will also come into play, in trying to
analyze the cases towards the aim of getting the findings. In all the cases, we sill see the need
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of sense making, which originates from the leader‘s realizing, and communicating the vision to
the followers.
Geert Hofstede´s cultural dimensions as depicted from De Wit and Meyer (2004) will
also have an implication within the analysis and findings as seen from the perspectives of
cultural relativism and ethnocentrism.
In the next chapter, the empirical frame work and findings will be presented. A review of the
cases will highlight some interesting views, enabling me to make an analysis that is based upon
the background of the selected concepts.
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5. THE EMPIRICAL FRAMEWORK AND FINDINGS
The empirical frame work in this thesis research will be drawn against the back ground of the
reviews within the conceptual and theoretical frame works. This is aimed at coming up with
findings and conclusions for this research. As earlier indicated in the methodology section
(Chapter 2: 7), this thesis will build its empirical reasoning around secondary sources of
information and reviewed literature that will thoroughly be discussed later as this research
continues to take its course.
Data and information at my disposal comes from a couple of case studies that have
been studied by other researchers in their own different contexts. By applying the same
research design to every case, the research analysis will lead to the findings which will
therefore show a deeper understanding of the issue at hand, hence putting them into a context
to show, as well as throw some light upon the research issue at hand.
5.1. The guiding cases to the research
This research will be based upon two particular merger cases that represent the core values of
change and leadership
1. The HP( Hewlett Packard) - Compaq Merger case
2. The Volvo - Renault case ( failed merger)
The above cases were carefully chosen due to the fact that they will help to bridge the gap
between the selected theoretical frame of references and the results/ findings. Basing upon the
concepts/models with in the conceptual frame, the analysis would in the end lead to answering
the research issue.
5.1.1. Hewlett Packard and Compaq merger case
HP´s history and the merger developments
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The HP and Compaq is certainly one of the most talked about cases in the history of mergers
and acquisitions. This is due to the unprecedented chaos that marred the proceedings and road
map towards the completion of the merger that has even made scholars like my self to grow a
lot of interest, in getting to know what happened during this whole process. As a deep look into
the case is carried out, the proceedings that marred this case deserve a mention as understood
from a perspective. First and foremost, before going deep into the case, a brief description of
the history of HP will be mentioned here under. It should however be noted that instead of
Compaq, HP´s history takes centre stage because of the historical circumstances that surrounds
its foundation.
In 1938, two Stanford graduates in electrical engineering, William Hewlett and David
Packard, started their own business in a garage behind Packard‘s home, formalizing their
business into a partnership called Hewlett-Packard one year later. Incorporating in 1947, HP
began offering stock for public trading 10 years later and annual net revenue for the company
had grown from $5.5 million in 1951 to $3 billion in 1980. By 1997, annual net revenue
exceeded $42 billion making HP the world‘s second largest computer supplier (Hoopes, 2002).
The company, which originally produced audio oscillators, introduced its first computer in
1966. And with a sky rocketing innovative drive, the company pioneered the era of personal
computing by introducing the first scientific, hand-held calculator in 1972. Hewlett-Packard
then introduced its first personal computer in 1980, making it to go a step further in its
innovative drive by introducing the LaserJet printer five years later which would become the
company‘s most successful product ever.
In 1956, Bill Hewlett, Dave Packard, and a handful of other HP executives gathered at
the Mission Inn in Sonoma, California, to create a set of values and principles to guide their
company. They subsequently created the six objectives that helped to shape a new kind of
company and ultimately became the foundation of what was known as the HP way. These six
objectives, which later became seven, are; recognize that profit is the best measure of a
company‘s contribution to society and the ultimate source of corporate strength; Continually
improve the value of the products and services offered to customers; Seek new opportunities
for growth but focus efforts on fields in which the company can make a contribution; Provide
employment opportunities that include the chance to share in the company‘s success; Maintain
an organizational environment that fosters individual motivation, initiative and creativity;
Demonstrate good citizenship by making contributions to the community; and Emphasize
growth as a requirement for survival ( Hoopes, 2002).
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Plans to acquire Compaq were announced on September 3, 2001 by HP´s CEO— Carly
Fiorina. The planned merger would be in terms of a stock transaction valued at US $25 billion.
Moments prior to the announcement, it was believed that the merger plans had grown out of a
telephone discussion between Fiorina and Compaq‘s CEO Michael Capellas in late June of
2001, and talks between the two companies appeared harmonious to say the least (Hoopes,
2002).
Unlike many other amalgamations, HP wasn‘t looking to squeeze Compaq for the best
price and then send its executives packing due to the fact that they wanted something in
relation to the merger of equals. To protect the deal, lawyers added a number of clauses that
would make it hard for either side to walk away— there would be a US $675 million break-up
fee if either side terminated talks without a better offer (Williams et al, 2001). The two sides
further agreed that no matter how much either stock rose or fell, there would not be a
renegotiating price. On her part as a leader, Fiorina travelled extensively around the country in
an effort to garner support for the merger from analysts, investors, and HP employees. Indeed,
it was suggested that HP and Compaq had put together plans for the amalgamation right from
the beginning, going through the post merger integration process – The Clean Room Operation.
The operation comprised 23 separate teams organizing every merger details from computer
system to human resource (Hoopes, 2002).
5.1.2. The Volvo and Renault merger case
History of the alliance and the failed merger
In 1990, the Swedish vehicle manufacturer Volvo AB and the majority state-owned (French)
vehicle manufacturer Renault established a strategic alliance by purchasing shares in each
other‘s automobile and truck divisions. Renault purchased 25% of Volvo Car Corporation and
45% of Volvo Truck Corporation, while Volvo purchased 20% of Renault's motorcar division
and 45% of Renault's truck division (Bruner and Spekman, 1998).
The two companies had an earlier history in relations. It had started in 1971 with a
components swap agreement and then went deeper when Renault purchased some equity
interest – a minority – in Volvo‘s capital in 1980. Those shares were sold in 1985 due to a
close bankruptcy for the French car maker and in 1989, the two CEO´s –Raymond Lévy
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(Renault) and Pehr Gyllenhammar (Volvo) discussed about a potential merger between the two
car maker firms. They publicly declared their intention of creating a joint-venture in
1990(Bruner and Spekman, 1998). The details of this association did not appear until the near
close of the year when it became clear that it was more a strategic alliance in its objectives than
a would-be simple cooperation.
Initially, there were some key factors that prompted the alliances between Volvo and
Renault. First and foremost, both companies had agreed upon a cross share holding by each
firm, coupled with an agreement to unwind the alliance. The terms meant that both companies
would hold shares in each other‘s parent company, thus permitting their CEO´s to sit on each
other‘s board of directors (cross shareholding)—an expression of strategic intent of Renault
and Volvo to co mingle their automotive business (Bruner and Spekman, 1998: 139). Yet
another reason that was ironed out was the equal division of management appointments to the
joint operating committees. The two companies had agreed on the creation of two alliance
headquarters in Paris and Gothenburg, with a choice of English being used as a language of
communication. Though Renault was several times larger than Volvo in cars, the partners
retained an equal voice in the alliance management. While brand loyalty was one of the factors
that were laid, both companies would gain from the synergies of the alliance, hence freeing
themselves to pursue downstream options separately (Bruner and Spekman, 1998).
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Strategic alliance and cross-share holdings as of Sept `93
AB VolvoRenault SA
VCC
VTB RVI
8% ¤
20%
75%
55%
45%
25%
45%
55%
VCC Volvo Restructured car operations
VTB Volvo restructured truck and bus operation
Renault SA Parent Company of the Renault Group
following conversion to a capital stock company
RVI Renault Vehicules Industriels SA
¤ Renault had acquired 8.24% of Volvo shares, and 10% of the votes
Source: Bruner and Spekman, 1998: 139.
In accordance to Bruner and Spekman (1998), noting all the developments between HP
and Compaq which had a highly committal alliance with good coordination, what should have
become one of the biggest and strategic European mergers became a surprising flop.
These developments will be further discussed while analyzing the cases for the required
findings.
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5.2. Case analysis and findings
5.2.1. The basis for motivation to carry out change processes
According to Hopkins (1999), it is not quite certain to be precise about the context around
mergers and acquisitions due to the fact that these operations are always part of the strategy.
There are several reasons driving two companies to merge or one to acquire another firm, and
hence it is observed that there is not one single reason, but a number of factors that explains the
context of such operations (Hopkins, 1999: 210). In accordance to Weston and Fred (2001),
thanks to the acquisition of new resources from another company, the merger can be seen as a
development motive that is meant to cope with the environmental changes. This development
motive usually has its roots from the advantages that synergies would have upon any two
companies that are leaders in their businesses. Some of these resources may either be tangible
(range of products, technological resources, etc) or intangible such as market power, skills and
competency (Weston and Fred, 2001: 84).
In a particular case, HP CEO Carly Fiorina justified the merger in her own way. Even
with the poor reception of the merger idea from Wall Street and industry analysts, Fiorina did
not back down. She argued that the merger would eliminate one player in an oversupplied
computer marketplace. It would also improve HP‘s market share across the hardware line and
double the size of HP‘s service unit. These were seen as essential steps in being able to
compete with the giant in the industry (IBM). In addition, Fiorina argued, the merger would
create a full-service technology firm capable of doing everything from selling computers and
printers to setting up complex networks (Lohr and Steven, 2001).
William and Molly (2001) argue that after HP and Compaq‘s marriage therefore, the
new company would have a new look within the hierarchy in which Carly Fiorina would be
chairman and CEO, while Michael Capellas would become president. All these changes would
mean that HP would reform the employment structure. The combined company would have
about 145,000 employees but the changes would mean that an initial workforce reduction of
15,000 employees would be in effect, although these job cuts would be against the traditional
HP way that was initially a nice tag in the company for a very long time (Williams and Molly,
2001).
Ready to pull off all the stops in an extended bid to win support from the cynics, Carly
Fiorina expressed her views with a strong notion that the merger would eliminate redundant
product groups and costs in marketing, advertising, and shipping, while at the same time
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preserving much of the two companies‘ revenues— a reason that was meant to put both
companies on another economic platform not only much desired for the future economic
strength, but also for a competitive position on the market share. To critics, Fiorina emphasized
that the chief driver for the HP-Compaq merger was competitive positioning where as to those
who questioned the chances that the merger would succeed, she pointed out that the
distinguishing characteristic of successful mergers is the focus on consolidation, not
diversification—exactly what HP planned to do after its merger with Compaq (Hoopes, 2002).
Further still, in a clear justification of the Business Process Re-engineering (BPR)
(Hammer and Champsy, 2003), which has been hinted on in the theoretical frame work. This
radical redesign of organizational processes in order to achieve drastic improvement of current
performance in cost, service, and speed was the very issue that Fiorina argued to sceptics who
resisted changes within the HP way. According to her, the HP way was always about creativity,
change, innovation and bold moves. Although she recognized that the HP way had become
something of a gentle bureaucracy of entitlement and consensus, she emphasized that the
important values of HP‘s culture were the very values that justified the merger (Williams and
Molly, 2001).
In my own depiction from all these timely developments within the history of HP &
Compaq, judging from her own words and thoughts about the motive to amalgamate two of the
leading companies within their respective categories or areas of specialization, Carly Fiorina
together with Michael Capellas did not only display a good sense of leadership, but also a
certain wave of good judgement that true transformational leaders need at the work place if
there is any chance of bringing about change within the organization. Both Fiorina and
Capellas showed great determination to lay out the vision and objectives that both these
companies would proudly carry as a team. A vision, according to how I perceived it, that
carried the waves of hope and strength for the sake of the companies. To this extent therefore,
these two leaders displayed a great deal of competencies that were meant to economically
transform their respective companies to greater heights. In accordance to what I can depict
from Burns (1978) arguments, Carly and Capellas displayed— a textbook character that true
transformational leaders should be able to display within any given challenging situation.
Depicted from Bruner and Spekman (1998), a few thousand miles away from the
developments at Silicon Valley (HP´s home), there had happened the proposed Volvo &
Renault merger, in the midst of the European continent. While enjoying good relations that had
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been created by the strategic alliance, and the growing confidence and trust in the alliance
future, Volvo‘s CEO Pehr Gyllenhammar and Jean-Louis Schweitzer, who became Renault‘s
CEO in 1992, were still looking forward for more integration. The two leaders therefore saw
the merger issue as an obvious way of continuing their relation with the claim that it had
always been the aim of the strategic alliance (Bruner and Spekman, 1998). These two top
executives pointed out three main reasons for the merger: First, it would represent a
competitive advantage in terms of market share because the two companies would have
become the second biggest players in the truck market and the sixth in the car industry. The
second argument was related to cost cutting objectives in terms of procurement, R&D and
production. Finally another reason was related to the aim of achieving a substantial financial
strength, a platform that would carry a lot of weight since this would represent a competitive
edge and readiness to survive any would-be upcoming forces of winds and storms (Ibid).
As far as I am concerned, all these notions and rhetoric are a reminder of the fact that
whenever humans want to achieve something in their lives, they always tend to go an extra
mile for the cause of their needs— the same routes that Gyllenhammar and Schweitzer took.
Surely these developments showed that change is not an easy phenomenon within our societies
to architect, because it brings along with it a mixture of good feelings and emotions. It is
therefore the role of transformational leaders to communicate the vision that is meant to go
down well with the followers. On their side therefore, Gyllenhammar and Schweitzer did what
ever they could to see to it that their message stretched along all the involved parties. Not only
did they do that on their part, but they also did it competently although to the Swedish party, it
could not go down well due to the fact that it touched a nationalistic nerve. But all in all, to
wrap up all the initial stages, credit is deservedly given to those transformational leaders on
their part for showing strength and the courage for passing on the message to their followers.
5.2.2. An overview of transformational leadership in due course of
the merger
According to studies done by Tichy and DeVanna, transformational leadership involves
recognizing the need for change that is on the verge of happening to any given organization.
On the part of organizations and individuals, there is always a tendency of being comfortable
with the status quo hence resulting in resistance of change (Tichy and DeVanna, 1986: 1990).
Such tendencies were deeply rooted within sections of the hierarchy straight to the bottom of
HP and Compaq during the push for their amalgamation. One incidence was when Walter
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Hewlett the eldest son of one of the co-founders, and David Packard, son of another co-
founders rejected Fiorina´s call for the merger to go ahead. Due to this, the merger which had
also been given thumbs up by Compaq‘s CEO—Michael Capellas, was on a brink of failure at
this particular moment in the history of both companies. In accordance to a similar argument
by Bruner (1999), the Volvo-Renault merger received rejection from Volvo‘s share holders
when Pehr Gyllenhammar, chairman of Volvo's board of directors, and Louis Schweitzer,
chairman of Renault‘s supervisory board announced the plan to merge the two companies 6th
September 1993. Most importantly though, the CEO`s from both ends had comprehended the
need to break from the original alliance into a merger— a move that would change the
organization‘s structure into a positively viewed direction (Ibid).
Theoretically, much has been written about qualities and types of leadership (Bass and
Avolio, 1994; House, 1996; Conger and Kanungo, 1998). According to Bass though, theories
of transformational leadership and organizational change emphasize that change is
accomplished through the leader‘s implementation of a unique vision of the organization (Bass,
1985). Adding to such a theory, Bass and Avolio argued that the achievement of such a
milestone would be done through powerful persuasive, personal characteristics, and actions
designed to change internal organizational cultural forms and substance (Bass and Avolio,
1994). Other theorists such as Tichy and DeVanna kept on pumping up the rhetoric that for the
change process to go ahead, it requires the transformational leaders to create a vision, which
acts as a conceptual road map for where the future of the organization will be headed (Tichy
and DeVanna, 1990: 128). A vision according to them is not constructed by a single leader, but
as a result of bringing together the differing view points within an organization.
In both of these selected cases that portray a clear route to change, their leaders—
Fiorina and Capellas, as well as Gyllenhammar and Schweitzer from HP & Compaq and Volvo
& Renault respectively, embarked on walking the talk instead of talking the talk— meaning
that they took a route toward action, for a perpetuated good cause for change within their
companies. As cited by Bruner and Spekman (1998), and Hoopes (2002) respectively, although
these changes were opposed, these leaders had tried their best to strategize and employ good
leadership and management in a dire need for change to take place. It is there fore seen that
transformational leaders are change agents who have the responsibility of pointing out how
change in the environment could positively or negatively affect the organization‘s operation.
As a matter of reflection, as argued by Hoopes( 2002), after envisaging a would-be rejection of
calls for change within the company, Fiorina (HP´s CEO) tirelessly got on board the fast
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moving commuters around the state, garnering support for the merger. As a transformational
leader therefore, Fiorina displayed a high degree of competence and appropriate behaviour
when she rallied calls that successfully changed the status quo in the organization, at a time and
stage that was appropriate in the transformation process.
In accordance to Tichy and Devana (1986), the above behaviour by Fiorina is
tantamount to saying that transformational leaders have to break down old structures and
establish new ones, which may be deep within the political, social, economic, and
technological aspects. By showing competencies, they need to find appropriate followers to
implement new ideas—such as the creation of new coalitions of employees who will be
compatible with the new vision, hence helping individuals find new roles, as different
structures are designed to enhance the new direction for the organization. This was proven
when Fiorina and Capellas undertook the task of developing an appealing vision for the future
of the company, which provided both a strategic and motivational focus, as well as a clear
statement of purpose for both companies.
However, not all these actions illustrate the values for competence because although
Fiorina managed to communicate the vision to the rest of the board members, and the other
stake holders, she did not carry all of them on board for a common agreement. There was an
underestimation of the power and influence that other members had over the future of the
company. In other words, these events showed a lack of competence in portraying Fiorina and
Capellas as a source of inspiration. This draws a conclusion that although transformational
leaders may be truly committed to communicating the vision, they may at the same time fall
quite further down in the inspirational pecking order— a sign that exposes some loopholes in
the performance measurements on their part. As a point of reflection therefore, these dark spots
with in the turn of events could be attached to a number of factors, some of which may be the
nature of leader‘s attitudes and behaviours towards others.
5.2.3. An insight on organizational sense making as a roadmap
towards implementing change
Depicted from my point of view, organizational sense making is a very crucial element for
change agents since it involves employing smart thoughts that should be spot-on when making
decisions, which are meant to be a guide line to the organization‘s daily business and future.
Transformational leaders are ones that easily excel in being proactive when making decisions
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such as organizational change— a tag that I would use as a reference to leaders who think
outside the box when making important decisions.
Regarding the mentioned mergers, on the part of leaders Carly Fiorina (HP) and
Michael Capellas (Compaq), as well as Pehr Gyllenhammar (Volvo) and Louis Schweitzer
(Renault), there are various questions that came along the way, showing strength in the leaders´
sense of judgement, decision making, and being flexible. While I contextualize the unfolding
events, questions such as how does change come to be an event for organizational members?
What does change mean? Etc, came up. In the context of everyday life, when leaders have
something incomprehensible to confront, their unawareness has the force of bringing that exact
event (change) into existence. Continuously, when leaders then ask themselves of what they
should do, this added question has the force of bringing meaning into existence (Weick, 1995).
This means that leaders hope it is stable enough for them to continue acting into the future, as
well as having the sense that they remain in touch with the continuing flow of experience.
This sense of judgement and flexibility was rich when the original purpose of the phone
conversation between Fiorina and Capellas, who had met at a policy meeting in Washington 18
months earlier, was to discuss a possible licensing agreement (Hoopes, 2002). However, their
conversation led to a discussion of competitive strategy and the idea of a merger between the
two companies was broached. By July 2001, the basics of the deal had already been hammered
out, and by the first week of September 2001, the merger had been approved by the boards at
both companies. Hoopes (2002) opines that still in dire need of defending her stand for the
cause of change, Fiorina made numerous travels to campaign for change and create a positive
image against the fast growing number of opponents from investors and employees of the two
companies. As a result of all this, the announcement of the deal had caused stock prices for HP
and Compaq to fall significantly in the months following the deal‘s announcement (Hoopes,
2002).
Changing focus onto the amalgamation proceedings that took place in Europe, although
the price of the B shares of Volvo AB fell to 402 Sek following the announcement of the
merger, Volvo issued important information to the shareholders to explain the proposal and
hence convening an Extraordinary General Meeting of Shareholders on November 9, 1993 to
vote on the merger. (Bruner and Spekman, 1998) As Pioneers of such moves, Pehr
Gyllenhammar and Louis Schweitzer saw the need of acting upon the need that pretty much
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looked strategic considering the performance of their different brands, although their desires hit
the thick rock/ failed (Ibid).
My analysis on such an issue is that from the above proceedings transformational
leaders make sense of the ongoing circumstances within the organization when they
communicate as well as implement the strategies, which they think are the best for the future
survival of the organization. The extent to which transformational leaders portray themselves
as game changers with words of wisdom surely has limits because during the process of
handling those daunting tasks such as communicating the vision of the organization to the rest
of the stakeholders such as employees, customers, legal authorities, environmentalists, etc.,
they at most times fall short of swaying followers that may need a little more convincing to
jump onto the wagon. This, in this case may be due to fear of the unknown, since some people
have a tendency of asking a question like if it is not broken, why fix it? That is why I may say
that much as transformational leaders may be competent in making sense of the situation by
making organized communication, as human beings, they can never be 100% perfect in
competently inspiring the remaining number of the uninspired.
5.2.4. The decision making paradox in a democratic set up
According to what I have realised over the years, one of the biggest advantages that most
people and organizations in developed economies have over the majority of developing
economies is the level of democracy and organisation there is. Most people have clear rights to
express their views and thoughts, freedom of speech, legal access, voting rights, and many
more rights that a human being should have for their voices to be heard, on planet Earth.
That argument leads to the fact that during the most challenging moments of decision
making, the HP-Compaq as well as the Volvo-Renault mergers hit headlines for different
reasons. In accordance to Bruner and Spekman (1998), after the announcement of the would-be
Volvo-Renault merger by Pehr Gyllenhammar— chairman of Volvo's board of directors,
together with Louis Schweitzer— chairman of Renault's supervisory board, the proposed
merger terms meant that Volvo would contribute its automobile and truck corporations to the
merger, while its parent company Volvo AB remained independent. In contrast, Renault would
contribute all its operations to the merger. Two new companies would therefore be formed:
RVC, a holding company and RVA, an operating company. Renault would own 51% and
Volvo AB 49% of the holding company RVC. In turn, RVC would be one of four shareholders
of the operating company RVA. The share ownership structure of the operating company RVA
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would mean that the French government would own 46.36%; RVC 35%; Volvo AB 17.85%
and Renault employees 0.79 % (Bruner and Spekman, 1998).
Democracy at its best therefore was the reason as to why on the 6th
September 1993, the
share holders of Volvo, represented by Aktiespararna, the Swedish Shareholders' Association
(SSA), issued a statement supporting continuing collaboration between Volvo and Renault, but
concluding that a commercial valuation of the proposed merger was difficult to assess, since
Volvo had presented neither profit-based nor valuation-based information (Bruner and
Spekman, 1998). The Swedish Shareholder Association had also noted that the information that
was presented to Volvo‘s shareholders failed to prove that a merger was the best and most
appropriate option for the two companies, questioning the advantage of a merger over an
ongoing strengthening of the strategic alliance between the two companies. Because of this, the
merger failed flatly. The same applies to HP and Compaq, whose employees and investors´
voices of resistance were democratically heard, although the deal to merge went through.
Viewing these developments through a clear glass, such decisions meant that there was
a democratic style of leadership—an indication that decision making was based upon
encouraging group members to participate. In this particular kind of leadership, leaders
retained the final say over the decision-making process which makes group members to feel
engaged in the process, hence becoming more motivated and creative.
A clear analysis of such developments justify the issue of whether transformational
leaders are competent in what they do, as of when the process of change is round the corner,
due to the fact that however much the circumstances may require the opposite, they make sure
that followers have all the information about where their freedom lays. Nevertheless, not only
does democracy work when all factors are constant, but also when there is need to absorb the
message coming from the cynics on the opposite side of embracing the waves of change. My
understanding shows that depending on the political situation in a given economy, most
transformational leaders display a high degree of ability and performance towards outlining
and getting ready for democracy to take its course. To some extent however as were in both
cases, the leader‘s display of propaganda tactics and rhetoric that is meant for opponents to
make choices accordingly has always threatened the course of democracy, which is really a
sign of selfishness and incompetence because it doesn‘t truthfully appeal to a large group.
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5.2.5. Proponent’s desire to un- scratchily walk the talk of change
For any transformational leader in an organizational set up, there is always a desire to
translucently walk a fine line. In accordance to Burns (1978), the resulting need to
communicate the vision of the organization to the anxious followers stems from the motivation
that grows within the leader prior to the announcement of the big plans. In addition to Burns
(1978) work, I opine that not only does that desire depend upon the leader‘s motivation, but
also the extent and diversity of the task at hand. It is therefore certain that different situations
regarding change such as the political, social, economic, legal, etc have always been tackled
using different situational approaches.
Before going deep in the topic of change and its implications, there are quite a number
of areas/ circumstances that are worthy of note. Basing upon the Burke-Litwin model of
change, these may include the external environment, leadership, organizational culture, mission
and strategy, as well as individual and organizational performance (Burke, 2002). As explained
in the theoretical part, the top half of The Burke and Litwin model are drawn from the ideas
and concepts of James McGregor Burns and his distinctive description of transformational
leadership in which he describes transformational leaders (change agents) as ones that bring
about change in the organization (Burns, 1978). The link between change and leadership is
being made by some prominent theorists and one of them is Adair, who argues that there is a
complimentary element between the task at hand, the team, and the individual. In his theory,
Adair illustrates that there is no correct style of leadership, and that this notion of leadership
depends on the task at hand i.e. the challenge that will be faced by the leader, the people in the
team that will effect the realization of the task, as well as the individual character of the leader,
who has a multiplicity of roles such as communication, delegation, strategize, etc. In his
elaboration, Adair clearly states that if at any one point anything happened to one of the
mentioned variables, then the rest will also be affected since they are intertwined and work best
together (Adair, 1996).
Within this particular thesis research, the analysis on Fiorina´s leadership during the
task of merging HP and Compaq, the most vocal resistance came from members of the
Hewlett-Packard families, including dissenting board member Walter Hewlett who argued that
the amalgamation would create a bloated PC business, hence diluting Hewlett-Packard's
lucrative printing business (Williams and Molly, 2001). Similar waves of resistance were faced
by Pehr Gyllenhammar from the Volvo shareholders, against a proposed merger with the
French giants—Renault. For that matter, one of the circumstances that surrounded the Volvo-
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Renault merger was that since Renault was owned by the French government, there was fear
that they would be entitled to hold a golden share, granting the French government the right to
approve or veto any takeover or sale/purchase of a large block of shares. On top of that, the
French government would retain this golden share even after the privatization of Renault. In all
fairness, this sceptic ideology remained in the minds of the Swedish shareholders, and it was
therefore one of the reasons as to why the proposed merger was rejected (Bruner and Spekman,
1998). This shows that there was no complementary relation between the task at hand, the
team, and the individual—citing the fact that the French government may be regarded as a
huge entity that psychologically threatened the ownership rights of the Swedish shareholders.
Putting all these stories in context, had the CEO´s of the mentioned companies
succeeded in persuading those who were pessimistic, it would have been a perfect answer
Adair‘s theory. But the resistance justifies that Adair‘s theory of the task, team, and individual
are meant to be complementary if an organization is to achieve its strategic goal. In yet another
popularized theory on leadership, Peter Drucker suggests that there is little if any difference
between leadership and management by definition. To Drucker, leadership is not about a list of
attributes, as no two leaders will exhibit the same list, nor is it about charisma or some king-
like quality. It is therefore all about delivery of performance, just like management (Drucker,
1999). The author reiterates that effective leaders do not blame others of their wrong doing;
instead they should be aware that it is their responsibility to take care of whatever happens for
the good of the organization.
While working tooth and nail to see through Fiorina and Capellas´s proposed
amalgamation between computer giants Hewlett-Packard and Compaq, events took a new twist
in the face of the two CEO´s when Walter Hewlett, son of one of HP's founders, filed a court
suit alleging irregularities in how shareholders voted on the deal. This suit raised issues about
the process by which Hewlett-Packard solicited votes for the approval of the proposed merger.
According to the suit, Deutsche Asset Management, a unit of Deutsche Bank with 1.31% of
HP's shares at the end of last year, was originally planning to line up 25 million shares against
the merger. But at the last minute, it changed direction giving 17 million votes in favour of the
deal supposedly out of the fear of losing HP's business in the future. In a strongly worded
response though, HP dismissed the allegations as baseless and rendered them untrue, while
getting ready for a spirited defence against the so called false accusations (Hoopes, 2002).
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Having a closer look upon the above analysis, the proceedings are not in harmony with
Peter Drucker´s (1999) suggestion that trust in leadership is very important and must be
earned. Leaders should have the trust, which would make them look good examples towards
their followers. Although followers are not meant to believe whatever leaders say or do, at least
they should believe that leaders mean what they say, for the good of the organization (Drucker,
1999). Transformational leaders should for that matter be in position to convey the message
that is full of trust to their followers, which would in the end create a fit between the followers
and the created vision, added to the needs of all the key players in the organization that is on
the brink of change. If at any given point a leader communicates a message that falls short of
the trustworthy seal of approval, he/ she would be rendered undependable— a tag that is on the
opposite side of being reliable or competent. This therefore shows that not all transformational
leaders are good in what they do. However much the vision is well communicated to the
followers, the concept of being transformational may lack a strong base if attributes such as
honesty, trust and being reliable are missing. Having these attributes in play will therefore
always be of an added advantage i.e. it will put the icing on the cake.
5.2.6. Calls for transformation as a precursor to resistance
According to Kruger‘s (1996) argument, whenever change looms around the corner, there will
always be resistance towards it. People who are always cynical towards change have different
reasons as to why they choose to take that stand. Citing from Bass‘s (1985) argument, through
idealized influence, transformational leaders therefore are the ones who should have the mettle
to see to it that opponents are convinced to have a paradigm shift from their cynical ideologies
to having faith and belief. The implementation of organizational change is a phenomenon that
always finds huddles and problems along the way. Basically, there have always been two
developing approaches towards the implementation process. One of them is the participative
approach that assumes that employee support is a pre-requisite of change, and the other one is
the unilateral approach which argues that behavior must be changed first, followed by attitudes
of employees. For this matter, Wilfried Kruger‘s (1996) study of different change episodes
indicates that unilateral implementation approaches are more effective than participative.
According to this great academician, the implementation activities content largely depends on
the depth of change, which is evident where behavioral-social change types generates more
support from the employees than technical-structural changes (Kruger, 1996).
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In accordance to Lohr and Steven (2001), as both HP and Compaq had been hurt by
price wars in the computer industry, the merger seemed at least to Fiorina and Capellas—the
perfect way for the new company to differentiate itself and to become more competitive.
However, initial scepticism was met by investors and employees of the two companies, causing
stock prices for HP and Compaq to fall significantly in the months following the deal‘s
announcement. Critics of the merger cited a long list of problems with the deal. Some of these
opponents believed that rather than accelerating growth, merging the two companies would
simply create a bigger company with bigger problems (Lohr and Steven, 2001). To other
opponents of the amalgamation, there was belief that competitors would try to swoop in and
get solution providers and customers to switch allegiances and product lines. Some had also
wondered how HP would hold onto loyal Compaq customers if the Compaq logo were to
completely disappear (Ibid). All this being said, as more resentment grew though, others
worried about the difficulty of blending the two large organizations and their workers (Hoopes,
2002).
Conceptualizing Kruger‘s (1996) model, a strong visualization of dealing with barriers
to change, the relation of transformational leadership with Kruger‘s Change Management
Iceberg model illustrates that transformational leaders need to deal with a great deal of barriers
if at all there is genuine need to communicate and implement the unprecedented or once failed
change in an organization (Kruger, 1996). Clearly bringing his message home, Kruger
indicates that transformational leaders/ managers who may play a role in influencing the
implementation of change may have to conduct an assessment upon the attitudes and
behaviours of the organization‘s employees, hence exercising competence. Looking closely at
the HP and Compaq case therefore, there were a lot of opponents and hidden opponents
towards the need for an amalgamation that would lead to change. For instance On September 3,
2001, Walter Hewlett had initially voted with the rest of HP‘s board in favour of the proposed
merger, with great concern about how the deal would impact his family‘s charities (Lohr and
Stevens, 2001). But just days before the vote, he learned that the merger agreement called for
unanimous board approval in order to ensure the best possible shareholder reception. Hewlett
had a belief that the board would find a way to approve the merger regardless of how he voted,
and that is why he initially cast his vote in favour of the deal. However, as stockholder
rejection would be one of the few ways to terminate the deal, Hewlett‘s announcement—that
he, along with his sisters and the William and Flora Hewlett Foundation, would vote their
combined 5% stake against the deal came as a heavy blow to Fiorina, Capellas, and other
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proponents of the merger (Hoopes, 2002). Although the HP board had succeeded in getting
Hewlett‘s signature, they had failed to win genuine support for the deal. With his name and the
huge stake he and his family had as shareholders, Hewlett‘s disapproval of the deal not only
posed a serious threat to the deal itself, but also the future of the main force behind the deal—
Carly Fiorina.
Another opponent of the merger was David Packard, who issued a statement siding
with Hewlett in opposition to the deal. In a statement, Packard, chairman of the Packard
Humanities Institute, stated that he would vote the Institute‘s holdings (1.3% of HP‘s shares
outstanding) against the deal (Williams et al, 2001). Although he emphasized that he was not
speaking for other family members or for the David and Lucile Packard Foundation, his
decision to oppose the merger left the deal on even shakier ground than before. With the
Packard Humanities Institute opposing the deal, chances that the David and Lucile Packard
Foundation would also decide to vote its 10.4% stake against the deal seemed more probable
than ever ( Williams and Molly, 2001).
In relation to Kruger‘s (1996) model, momentum for the opposition of the proposed
Volvo and Renault merger grew from the Swedish side when the two auto mobile makers
disagreed while carrying out the P4 Project which was meant to create a new common platform
that would have supported the development of a high-end executive car. As many as 200 to
300 engineers were occupied by it, facing a lot of difficulties in achieving their objectives.
Proud of their styling, and their engineering and safety, the French and the Swedes respectively
were concerned about the type of engine that would be used. French engineers favoured a
front-wheel drive car, while and the Swedes strongly defended the use of a rear-wheel drive,
similar to the German cars. In the unfolding events at last, Volvo‘s purchase of a V6 engine
from Mitsubishi with whom they had a joint-venture did not go down well with the French
(Bruner and Spekman, 1998).
Kruger‘s (1996) model as explained conceptually and theoretically illustrates that
opponents of change are negative in both their attitudes and behaviour. In his sharp and well
understood solution, Kruger underlines that such people‘s attitudes towards change could be
best controlled by the management of perceptions and beliefs. In real life therefore, such
perceptions and beliefs may be in form of inducements, incentives, etc. Similarly, hidden
opponents as depicted from Kruger‘s Iceberg of change model are ones that have negative
generic attitudes towards change, although their behaviours have a positive indication and
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support for change. While motivating his argument therefore, Kruger once again clarified that
in case any manager is faced with such opportunists, the best approach to such a situation is
again through the management of perceptions and beliefs, supported by information (issue
management) to change their attitudes (Kruger, 1996).
The analysis of the above developments show us that the proponents of change (Fiorina
and Capellas) in the Hp-Compaq case flatly failed to convince the family members due to the
fact that they lacked political competencies. In any given organization that has a democratic
setup, it is always visibly seen that the rules of the game have to come into play for
transformational leaders whenever there is need for change, as it was envisaged in the HP-
Compaq case. Fiorina especially, since the family members had tagged her undependable a
character, it showed that she did not tally quite well with the politics that surrounded the Hp-
Compaq merger. Although the merger went through which was a good sign to her side, the lack
of political competencies missed in her appeal and that is why she was later sacked as CEO of
HP. Added to that, since theories about transformational leaders show that they are charismatic
and influential, its not certain that they will convince every one that is under their control—a
belief that this research has found. All the leaders in these change phenomena lacked the
negotiating competencies that are meant to convince the rest of the group members for the
desired change in the organization.
5.2.7. Resistance as depicted from the cultural perspective
“A nation's culture resides in the hearts and in the soul
of its people” -Mahatma Ghandi
It is surely of no wonder that culture played its role when both the mentioned merger
cases were taking place. As cited by Hoopes (2002), corporate culture was purely rich within
the HP and Compaq merger, where as the nationalistic culture was truly embedded within the
circumstances that surrounded the proposed Volvo and Renault merger, as cited by Bruner and
Spekman (1998).
As seen from the cultural perspective, ethnocentrism—which is a commonly used word
in circles where ethnicity, inter-ethnic relations, and similar social issues are of concern, is the
degree to which individuals judge other cultures as inferior to their own culture (Rogers and
Thomas, 1999). Similarly, it is a feeling within individuals who think that one's own group's
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ways are superior to others, or rather judging other groups as inferior to one's own. This feeling
usually leads to false assumptions about cultural differences due to the fact that people use
their cultural norms to make generalizations about other people‘s cultures and customs. As for
the case of business management though, such generalizations lead to misjudgement of other
people, hence affecting cooperation, communication, and good coordination.
As mentioned above, there is no wonder that cultural values played a significant role
within the Volvo and Renault merger to the extent that the support for the merger in Sweden
was clearly insufficient in expecting a true commitment with Pehr Gyllenhammar‘s objectives
from Volvo‘s stakeholders. The proposal touched a nationalistic nerve (in the Nordic country,
as the brand of Volvo was considered as a national symbol by the Swedes (Bruner and
Spekman, 1998: 143). As a consequence of the decline in support, Volvo‘s share price started
to decline dramatically. To put more petrol in the fire though, even Swedish workers
announced that they would vote their shares against the proposal, which therefore led Volvo‘s
top executives to urge the board to drop the merger proposal after a meeting in their CEO‘s
house in November, which led to 25 of them to sign a letter rejecting the merger. Finally,
affected by all this pressure, the board withdrew the proposal on December 2, 1993. On
February 17, 1994, after Volvo changed its board of directors and coming up with a new
strategy on selling all non-core assets by 1996, Renault and Volvo declared the dissolution of
the strategic alliance (Bruner and Spekman, 1998). But prior to the cancellation of the merger,
there always were some incidences and wrangles that created unease, especially from the
Swedish side. For instance reports in some newspapers stated that in times of conflict, Renault
engineers usually slipped back from speaking English (agreed language) to French, something
that led the Swedes to perceive it as a way of rejection. Yet another point that created un-ease
was that Renault, the largest shareholder in Volvo AB, appeared to be using its status to
influence a decision on a merger with itself—the sort of levelling and internal bickering that
led to a potential conflict of interest (Bruner, 1999).
Cultural change challenges from the HP and Compaq merger were largely based on
HP´s engineering and compromise, where as Compaq had a hard-charging sales culture. These
cultural values were deeply rooted within both companies at a corporate level. For instance one
of the sources of this deep corporate culture had origins from 1956, when Bill Hewlett, Dave
Packard, and a handful of other HP executives gathered at the Mission Inn in Sonoma,
California, to create a set of values and principles to guide their company. The six objectives
that this small group subsequently created, not only helped shape a new kind of company, but
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also ultimately became the foundation for what came to be known as The HP Way (Hoopes,
2002).
Relating to the famous Geert Hofstede, the three specific dimensions of
transformational leadership— charisma, individualised consideration and intellectual
stimulation (Hofstede, 1980a, 1991) have been examined in relation to differing culture values
maintaining that all three dimensions would be congruent, more easily facilitated, and as well
as more easily transmitted to followers in collectivist cultures than in individualist cultures
(Jung et al. 1995). The dimensions however seem not to tally pretty well with what happened at
Silicon Valley, since the American Culture is individualistic (Hofstede, 1991). According to
Walter Hewlett, Carly Fiorina had exaggerated the importance of scale in the computer
business, arguing that rather than make the company more competitive, the merger would
expose HP to the brutal, low-profit PC business, and significantly dilute the value of the
company‘s lucrative printing business (Williams et al, 2001). Following Hewlett‘s lead was
Packard – the oldest son of the other late co-founder, who also claimed that Fiorina‘s high-
handed management and her efforts to reinvent the company ran counter to the company‘s core
values as established by the founders. From this, he cited massive layoffs as an example of this
departure from HP‘s core values, arguing that although the founders never guaranteed job
security, they never developed a premeditated business strategy that treated HP employees as
expendable (Hoopes, 2002).
Still, another culturally rooted reason for the opposition to the merger was that family
shareholders, who often have large holdings in the family‘s company, disliked risk more than
most other investors. For the families of HP founders William Hewlett and David Packer
therefore, the incentive to preserve wealth rather than to create it was especially as strong as
their HP stocks finance donations to numerous worthy causes. These causes include the
Packard Humanities Institute, the David and Lucile Packard Foundation, and the William and
Flora Hewlett Foundation (Williams and Molly, 2001).
According to Rogers and Thomas (1999), right to the opposite side of ethnocentrism is
cultural relativism, which is the degree to which an individual judges another culture by its
context. This may mean having the view that individual beliefs and values systems are
culturally relative. In other words, no one ethnic group has the right to say that their particular
system of beliefs and values are in any way superior to others. In this particular context, what‘s
right for one culture might be wrong for another because there is no absolute standard of right
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and wrong used to compare and contrast morally contradictory cultural values (Rogers and
Thomas, 1999). Cultural relativism on its part leads to creation of good communication,
coordination, and cooperation. That is why to an extent, in accordance to Bruner and
Spekman´s (1998) opinion, The French government showed good leadership when they invited
major shareholders of Volvo AB to Paris to meet with Renault supervisory board chairman
Schweitzer, although the Swedish Shareholders Association were not included in the
delegation due to their staunch opposition to the merger. In another attempt though to try to
bridge the visible gaps, the French Minister of Finance Edmond Alphandery and Minister of
Industry Gerhard Longuet wrote to Volvo‘s Chief Executive Officer (CEO) Soren Gyll and
Chairman of the Board of Directors Gyllenhammar emphasizing that the French government
would not use the golden share against Volvo. The French Premier Edouard Balladur also
provided an additional guarantee that Renault would be privatized within one year following
the completion of the merger (Bruner and Spekman, 1998).
In my own view, it is certainly incredible to write off Geert Hofstede´s cultural
dimensions. What ever the case anyway, as a proponent of the Hofstede´s views, the strong
belief is depicted from the notion that as long as anything is variable, just like– behaviour and
attitudes are, then any conclusions could also either stand in favour of such views or stand
against them, until proven otherwise. Depending on what perspective it is viewed, such
concepts could really be good for education, since it leads to continued debates.
A personal comment from such happenings is that since culture is a very important
phenomenon in all societies, considerations should be carefully made when dealing with
situations that are attached to it. It is surely true that culture is rich in religion, politics, human
beings, businesses, tribes, management, education, etc. For sure, the list is endless. Now that
this fact is known, transformational leaders should there fore be prepared to face the challenges
that come with it. According to my own frame of reference that is extracted from cues of past
experiences, culture is surely a strong rock that can not easily crack because not only is it
embedded within people‘s beliefs, but also in their norms and values. Conclusively,
transformational leaders that face resistance from their followers due to cultural values will be
termed as lacking the skills and abilities to persuade that exact demographic for a common
cause.
The analyses of the cases produced a finding that when dealing with cultural issues,
there is no need of being divisive or make trouble for personal gains. Instead, leaders need to
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be calm, restrain necessarily, and slowly monitor the developments in a given situation. To a
certain extent, most transformational leaders lack the international social-cultural knowledge
of how to deal with people from different backgrounds. This exact element has led to the cause
of many problems in society because however successful transformational leaders may be in
their field of competence, they will lack the ability to have a great command if they do not
have inter-cultural knowledge as well as the value towards the culturally rich corporate
organizations for the goal of reaching out to a diversified target group.
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6. CONCLUSION AND VISION
6.1. The research conclusion
As human beings living on planet earth, the changes as well as challenges that we face and
expect are very broad. As it has been researched by different practitioners and researchers, the
processes of change have happened in our daily lives, schools, churches, in politics, in
businesses, in human growth, the environment, as well as many other areas that have been
transformed. Although the elements of change differ from one another, the most important
aspect that is worth mentioning is that the onus is heavily on the leader‘s side to see to it that
these changes are well managed to the tune of their liking, as well as their follower‘s desires.
Thus going this far however, it means that as change agents, to be branded as transformational
puts them on an apex, against all the odds to lead by example for the cause of change. As part
of the game therefore, communicating the vision, delegation, motivation, etc come into play for
the followers to react positively to the message. Now, the more such duties and tasks walk a
fine line then the better for the leaders because as a matter of compliment, their names would
have an initial appearance within the record books for being dependable, competent, and all the
wonderful name tags any one in such a position would dream of. However, as discussed in this
research, the reverse is true for ones that are viewed from the opposite perspective.
Transformational leaders have to thoroughly prepare a background that links their leadership
and the change that lingers around the corner.
While trying to answer the extent to which transformational leaders employ the
required competencies, this research was based on the available methods that were needed to
screen out some results. The use of secondary sources to find out if there were any positives as
well as negatives during the course of these change processes was employed. Literatures from
books, articles, journals, as well as websites were the main sources. In my view though, the
findings showed that for any transformational leaders to be competent, there would be need to
tackle the most important areas in change such as gathering information about the cultural
values of people and organizations, being able to be politically involved, making sense of
crucial situations, weighing the economic situation, analyzing the technological strengths, and
envisioning the geographical location. However, all these processes are never easy to achieve
because of the up hill task that is involved. And the findings showed that these mentioned
uphill tasks were in place along the political, social-cultural, economical, technological, as well
as many other aspects.
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To sum up all the above, the research carried out on the selected cases yielded results
which showed that to a certain extent, although transformational leaders exercise competence,
there is a reasonable number of shortcomings during the process of implementing change.
6.2. The vision for future research
The vision and implications for future research was emanated from the findings as well as the
interesting cases that were dealt with in this thesis research. The areas below left me with
nothing but the motivation to do more research.
One of the areas that could be of interest is the self factor in the organization or
company. Due to the fact that all organizations are run by leaders whose attitudes, values,
ideologies, beliefs, as well as cultures are different, there is need to find out whether most top
leaders make the vast majority of decisions in an egocentric manner, under the pretext to
achieve the organization‘s vision and common values.
The gender issue in leadership and management is another area that would be worth a
target for future research. Surely, this is a topic that I am sure would produce a lot of findings
and answers because of the higher chance that unlike attributes like behaviour that can easily
be variable, gender is a constant. The role of women in particular would be a topic of
consideration, in search for a gender balance.
The transfer of knowledge to developing countries would also be a topic to consider for
future research. Due to the imbalances there is between developed and developing countries,
there would be the need to outline the motives for knowledge transfer, the pros and cons, as
well as the extent to which it could best be done.
Another area that has created huge interest is the strategic positioning, particularly in
Africa. When business minded people talk about companies making huge sums of money,
there is always a question as to why. In a modern ―dog eat dog‖ era therefore, having a huge
cake on the market share would mean strategic expansion to markets and economies where
resources are in abundance, and that is Continent Africa. So, if fast developing countries like
China are taking up the opportunities, it would be similarly good if The West followed the
lead, or increased the effort. For that matter, research aimed at this would involve finding the
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competitive areas, added to the strategies that could be put in play since there is a cultural
difference
“As for accomplishments, I just did what I had to do as things came
along” —Eleanor Roosevelt
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APPENDIX
Appendix 1:
Table 1: Elements of difference and Complementary between Volvo and Renault
VOLVO RENAULT Home country/ region Swedish; Scandinavian; Anglo-Saxon French; Latin; Continental Europe
Language Swedish; English dominant 2nd
language French
Ownership Investor-owned State-owned
Size/position Small niche-player in small cars, Large, broad product line player.
In heavy trucks weak in heavy trucks
Core values and Safety, Engineering Styling, Cost management
Competencies
Management Structure Decentralized; easy flow of information centralized; formal flow of
Information
Market orientation Scandinavia, North America, Asia Continental Europe
Source: Bruner and Spekman, 1998: 138
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Appendix 2:
Table 2: The Share Price Indicator, 1998—2007.
Source: Deal Journal, 2007
The Change Process:
An Insight in Transformational Leader’s Competencies
C
Appendix 3:
Table 3: The vote for various institutions in the HP-Compaq Merger
Source: Luisa Beltran, 2002(CNN/Money)
The Change Process:
An Insight in Transformational Leader’s Competencies
D
Appendix 4
Table 4: Leadership of the combined company
Carly Fiorina,
chairman and CEO
Webb McKinney and
Jeff Clarke,
integration office
Michael Capellas,
president
Bob Wayman,
chief financial officer
Vyomesh Joshi,
printing and imaging
Duane Zitzner,
access devices
Peter Blackmore,
IT infrastructure
Ann Livermore,
services
Source: Hoopes, 2002.
The University of Kalmar
The University of Kalmar has more than 9000 students. We offer education and
research in natural sciences, technology, the maritime field, social science,
languages and humanities, teacher training, caring sciences and social service.
Our profile areas in research are: biomedicine/biotechnology, environmental
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we have research proceeding in most subject areas of the University.
Since 1999, the University of Kalmar has the right to accept students in
postgraduate studies and to examine doctors within the subject area natural
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