The article being reviewed is Strategic Shared Leadership and Organizational Dynamic Capabilities by Christos N. Pitelis and Joachim D. Wagner. It was published in volume 30 of The Leadership Quarterly journal in 2019. Its purpose is to analyze literature and concepts regarding strategic decision-making in the context of shared leadership and its impact on the dynamic capabilities of an organization.
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Dynamic capabilities (DC) is the ability of an organization to create, modify, and extend its resource base by predicting, shaping, and acting on opportunities while mitigating threats through best possible practices. This approach known as the dynamic capabilities view (DCV) is dependent on the human resources of an organization, particularly those in leadership and managerial positions. Strategic leaders which include the top executives, as well as those who directly report to them, are the organization’s dominant coalition responsible for primary decision-making. Strategic Shared Leadership (SSL) involves a deliberate sharing of strategic decisions between the dominant coalition and a small group of strategic leaders.
The authors note that (DCV) is often criticized for lacking consistency in nature and definitions. There are multiple questions and issues regarding the function of firm hierarchy and leadership in DCV and the difference between individual and organizational DC. This relationship is largely not researched as well as the capabilities of DCV to reliably and competently generate change.
The authors suggest that SSL sharing of decision-making between the dominant coalition enables organizational dynamic capabilities (ODCs) by transferring individual DCs, transforming and creating new ones, and reconsidering their placement within an organization. As a result, it should theoretically improve organizational effectiveness and cognition by mediating leadership relationships and enhance co-created ODCs that are meant to enable change through prediction, opportunity, and reconfiguring. The presence of SSL allows the concept to be an active participant and predictor of emerging ODCs, thus introducing a level of stability to unpredictable change since ODCs have the capability of predicting and mitigating threats to the business.
Recommendations and Implications
For most DC-related literature, there is a consensus that it is applicable under all levels of environmental dynamism, while this study supports the idea that it is most effective under high environmental dynamism. Furthermore, the authors conjecture that SSL benefits may not exceed costs in some industries, where there is a limit to diversifying. However, considering most large firms have diverse portfolios, SSL may replace traditional vertical leadership in the context of sustainable competitive advantage (SCA). The focus on the dominant coalition inadvertently downplays the role of base employees and middle managers, but strategic leaders have a greater influence in the context of ODCs.
Finally, it should be considered that the SSL concept is a top-down, bottom-up approach while traditional shared leadership is a common bottom-up concept, thus SSL may be difficult to implement in professional practice firms.
Although the concept of SSL and ODCs is not widely popular or utilized, this study has a lot of utility of both, contributing to literature as well as providing a framework for organizational structure and management. A significant limitation to the study is the complex integration of SSL into vertical leadership which is commonplace in most firms around the world. It requires a reexamination of vertical leadership in itself, an “enlightened” form as the authors note into order to facilitate SSL integration by focal leadership. Furthermore, there are a lot of risks in SSL adoption including high coordination costs, intra-organizational conflict, strategic dissent and diffusion of responsibility among others.
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The concept has the potential of adoption in the UAE, where many companies are government-owned, thus having a more horizontal leadership style rather than Western counterparts. SSL may serve as an effective framework for effectiveness and diversification of interests as the firms, government, and the economy as a whole is currently undergoing rapid restructuring and innovation from its traditional oil roots.