Firm-centric view

Interconnected leadership

Recent events, such as the financial crisis or the oil spill in the Gulf of Mexico made evident that interconnectedness is the key feature of today’s reality. In interconnected networks, managers who one-sidedly pursue their own interest can miss opportunities or even create considerable damage that is potentially greater than it was in a less connected world in the past.[i] It can also be illustrated by the recent dramatic case of the Fukushima I nuclear plant in Japan: It is most evident that the management group of Tepco, narrowly focused on cost-cutting, has completely underestimated the possible consequences of such an underinvestment, resulting in externalities which have to be absorbed by the society and nature at large.

In such settings, a firm-centric perspective narrowly focusing on the dyadic level of interactions between independent actors, has to be revised. In contrast, a network perspective[ii] shifts the focus of attention to the cooperation, as it is clear that managers cannot always dictate and control their interactions with stakeholders.[iii] This perspective proposes a new understanding of stakeholder networks by making a difference between having and being a stakeholder. The focus on cooperation shifts the understanding of stakeholder relations from the idea that managers control relations towards dialogue and exchange between firms and stakeholders in collaborative engagement.[iv] It involves increasing interaction in networks, which are characterized by trust, openness and respectful treatment.[v]

In view of the challenges mentioned in the paragraphs above, the question arises as to how leadership should be understood.

(Sachs & Rühli (2011), Stakeholders Matter - A New Paradigm for Strategy in Society, Cambridge University Press)

back