Our aim of the project

Since the rise of the managerial capitalism[i], the coordination function of the market was more and more internalized by the corporation. The class of managers became professionalized and the corporation itself turned out to be the most powerful institution in our society. However, in order to camouflage their true power, many managers still speak of the “Efficient Market Hypothesis”.[ii] This market interpretation is not only still applied by managers but also by strategy theorists to nearly every situation as Ferraro et al. describe: “Numerous managers have 'borrowed’ this assumption, espousing philosophies and establishing systems that pit people and organizational subunits against one another, on the theory that the resulting increase in motivation and the unleashing of competitive forces of natural selection will produce the best both in people and in organizations.”[iii] But as mentioned above, during the last decade, this narrative of management ended up in numerous and enormous failures.

One of the consequences of these disasters is a serious questioning of which roles are to be expected of a leader when facing the challenges in a knowledge-based and networked society. Discussions about a new understanding of strategic management, as well as the role of leaders are taking place from this perspective, emphasizing the importance of the embeddedness of value creation in networks.[iv] With respect to this embeddedness, leadership is more than establishing and controlling the hierarchies of firms and fighting market competitors. Leadership is about unleashing the value creating potentials of interconnected stakeholders. The boundaries of firms and organizations are blurring. Leaders are searching for new ways of shared leadership in networks and corresponding new forms of governance systems.[v]

Moreover, doing business is not merely a fight for limited resources among rivals, but much more a constant endeavor for the discovery, development and improvement of non-limited resources such as knowledge and experience among firms and stakeholders.[vi] In a globalized and interconnected world, stakeholders are more often likely to form organizations like non-governmental organizations, interstate organizations or civil society organizations, in which they participate in value creating activities and thus complement the traditional partners in the value chain. These organizations have been increasingly professionalized and have gained organizational capability. We can speak of an extension of the unprofessional management of stakeholder organizations like NGO’s to a more professional leadership. A professional stakeholder leader class is emerging.

These leaders want to participate on an equal basis based on their values, knowledge and experience. These stakeholder organizations often receive or maintain their right to exist by serving the purpose of the human beings they represent. Consequently corporations and their stakeholders have to keep in mind that their purpose cannot be pushing self-interest but rather to serve society. Leaders have to act in responsible and sustainable manners.[vii] Based on these developments and considerations, it seems clear that leadership needs a new basic orientation.

From the Invisible Hand of the Market to the Visible Hands of the Leaders

We recall Chandler’s notion of "visible hand"[viii] as value today not being primarily created by the invisible hand of the market but by the active shaping of leaders. Not the invisible hand of the market leads to an overall increase in the welfare of society but the visible hands of the leaders of the firm and its stakeholders in network structures.[ix] Mutuality in value creation is the focus of such a new narrative of leadership. Mutuality implies that firm and stakeholders are contributing to value creation and are included in value distribution. Thereby, firms and stakeholders are seen as owners of their contributions. Mutuality induces superior forms of innovation, competition and the operation of firms and stakeholders, striving for solutions to complex projects, difficult issues or innovative products and services. Mutuality enhances benefits and reduces risks for the firm and its stakeholders embedded in the network, and therefore leads to superior value. This leads to an enhanced need to understand the leaders' roles from a new perspective. The aim of our research project therefore is to explore in depth narratives for firms’ and stakeholders’ leaders in mutual value creation in a knowledge based networked society.

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