Strategic Leadership and Organizational Learning

Strategic Leadership and Organizational Learning
Author(s): Dusya Vera and Mary Crossan

Source: The Academy of Management Review, Vol. 29, No. 2 (Apr., 2004), pp. 222-240
Published by: Academy of Management
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? Academy of Management Review
2004, Vol. 29, No. 2, 222-240.
STRATEGIC LEADERSHIP AND

ORGANIZATIONAL LEARNING
DUSYA VERA
University of Houston
MARY CROSSAN
University of Western Ontario
Adopting the strategic leadership perspective, we develop a theoretical model of the
impact of CEO and top manager leadership styles and practices on organizational
learning. We take a fine-grained look at the processes and levels of organizational
learning to describe how strategic leaders influence each element of the learning
system. Researchers have implicitly assumed transformational leadership ap
proaches to organizational learning. We challenge this conventional wisdom by

highlighting the value of transactional leadership as well.
Organizational learning has been proposed question: Wha? is the impact of top management
leadership style (transformational and transac

tional) on organizational learning? Building on
current theories of transformational and trans
as a fundamental strategic process and the only

sustainable competitive advantage of the future
(DeGeus, 1988). Unfortunately, despite the grow
ing interest in the topic, researchers have said
little specifically about the role of CEOs and top
actional leadership (Bass, 1985, 1998) and on

the 41 framework of organizational learning
(Crossan, Lane, & White, 1999), we develop a
management teams in implementing organiza
tional learning in their firms. Yet strategic lead

ership theorists (Hambrick & Mason, 1984) assert
that top managers are crucial to firm outcomes
because of the decisions they are empowered to
make and because, "ultimately, they account for
what happens to the organization" (Hambrick,

1989: 5). Although there is an implicit assump
tion that strategic leaders are the guiding force
behind organizational learning (L?hteenm?ki,
Toivonen, & Mattila, 2001), researchers have not
make explicit how strategic leaders impact
delineated the specific behaviors and mecha

nisms through which leaders impact learning.
While large budgets are being expended on

training, databases, and new "learning depart
ments" (Stewart, 1998), CEOs and top executives

lack guidance on how their actions facilitate or
hinder learning. Strategic leadership and organ
izational learning have largely remained dis
theoretical model and a set of propositions to

address this research question, and we describe
specific behaviors and practices of strategic
leaders that either facilitate or hinder organiza
tional learning.
We seek to contribute to the organizational
learning and strategic leadership fields by link
ing two developed streams of research that have
not been connected previously. In doing so, we
learning. We take a fine-grained look at the

processes and levels of organizational learning
to describe how strategic leaders influence each

of the elements of the learning system. In par
ticular, we note that researchers have implicitly
assumed transformational leadership ap
proaches to organizational learning, and we

challenge this conventional wisdom by high
connected fields of inquiry (Crossan & Hulland,
lighting the value of transactional leadership as
2002).
well.
We address this gap in the literature by inte
In addition, we introduce internal and exter
grating strategic leadership theory and organi nal contingency factors that influence top man
zational learning. Specifically, we address the agers' choice of leadership style and the type of
learning emphasized. Our integrative approach
We thank the editor, Devereaux Jennings, and the anony

mous reviewers for their insightful and constructive contri
butions to this paper.
provides a fresh perspective on transforma
tional and transactional leadership from which

we generate research propositions that have not
222
2004 Vera and Crossan 223
been considered previously. We also seek to gic leadership paradigm; thus, we do not focus
contribute to management practice through con
on the characteristics of the relationship be
tween leaders and their immediate followers
sideration of specific leadership requirements,
responsibilities, and challenges associated with but, rather, on how the dominant coalition of the
organizational learning.
firm influences the strategic process of organi
We begin with the theoretical context and an zational learning.
outline of the conceptual models in which we
The roles and behaviors of effective top man
anchor this paper. We then develop an integrat
agers differ considerably from those of middle
ing framework to describe and clarify the rela managers (Norburn, 1989). In most prior re
tionship between strategic leadership and or search, scholars have looked almost exclusively
ganizational learning. Finally, we present at small group leadership and made it applica
implications for theory and practice.
ble to middle and lower managerial levels (see
Bass, 1990, and Yukl, 1994, for reviews), but the
THEORETICAL BACKGROUND
Strategic Leadership
ories that describe the dyadic relationship be

tween supervisors and their followers ought not
be stretched upward. One branch of leadership

research that has, however, proven useful to the
Strategic leadership theory has evolved from study of CEO-level management is Bass's (1985,
the original upper echelons theory developed by 1998) framework of transactional/transforma
Hambrick and Mason (1984) to a study of not only tional leadership. Bass's framework was devel
the instrumental ways in which the dominant
oped within larger organizational contexts
coalition impacts organizational outcomes but
(Burns, 1978), and it has been successfully ap
also the symbolism and social construction of
plied to the study of top-level managers (e.g.,
top executives (Hambrick & Pettigrew, 2001). Lowe, Kroeck, & Sivasubramaniam, 1996). Can
Hambrick and Pettigrew (2001) note two distinc
nella and Monroe (1997) indicate that, together
tions between the terms leadership and strate
with advances in personality theory, transfor
gic leadership. First, leadership theory refers to
leadership and visionary leadership
leaders at any level in the organization, mational
theories can contribute to a more realistic view
whereas strategic leadership theory refers to the
of top management.
study of people at the top of the organization.
The definition of transformational and trans
Second, leadership research focuses particu
larly on the relationship between leaders and actional leadership styles builds on prior clas
sifications, such as relations-oriented versus
followers. In fact, this relationship has been ex
task-oriented leadership (Fiedler, 1967) and di
amined from many perspectives (House & Ad
rective
versus participative leadership (Heller &
itya, 1997): trait and style approaches focus on
Yukl,
1969).
In addition, transactional leadership
leaders (Bryman, 1986; Stogdill, 1948); informa
follows
House
and Mitchell's (1974) path-goal
tion-processing approaches and implicit theo
ries of leadership focus on followers (Lord & theory quite closely. And models of charismatic,
Maher, 1991; Phillips & Lord, 1982); sociological inspirational, or visionary leadership (House &
approaches and substitutes for leadership mod Shamir, 1993; Westley & Mintzberg, 1989) present
els focus on contexts (Kerr & Jermier, 1978; many similarities to transformational leader
Meindl, 1993); and contingency approaches, ship. Bryman, Stephens, and a Campo's (1996)
new leadership versus traditional leadership di
leader-member exchange theory, individualized
leadership models, and social constructionist chotomy extends the Bass model. Furthermore,
approaches (Fiedler, 1967; Graef, 1983; Graen & whereas novel notions of emotional (Goleman,
Scandura, 1987; Ho well, Dorf man, & Kerr, 1986;

Meindl, 1993) focus on the nature of interactions
Boyatzis, & McKee, 2001), narcissistic (Maccoby,
among leaders, followers, and contexts. In con

trast to this micro focus, strategic leadership
research focuses on executive work, not only as
a relational activity but also as a strategic ac
tivity and a symbolic activity (Hambrick & Pet
Frost, Worline, Lilius, & Kanov, 2002) emphasize

the CEO's empathy and self-confidence as crit
ical determinants of firm performance, other re
tigrew, 2001). In this article we adopt the strate
2000), and compassionate leadership (Dutton,
search (e.g., Egri & Herman, 2000) has empha

sized that transformational leaders share all
these characteristics.
224 Academy of Management Review April
Burns (1978) represents transformational and
transactional leadership styles as the opposite
ends of a continuum. Bass (1985, 1998), however,
views them as distinct dimensions, which al

lows a leader to be transactional, transforma
tional, both, or neither. Transactional leadership

motivates individuals primarily through contin
gent-reward exchanges and active manage
ment-by-exception (Avolio, Bass, & lung, 1999).
while transactional leadership behaviors reflect

the roles of the internal process (coordinator and
monitor) and rational goal (producer and direc

tor) model (Egri & Herman, 2000). In addition,
Quinn's concept of "master managers"?leaders
adept at seemingly contradictory capabili
ties?is close to Bass's proposition that the best

leaders are those who display both transforma
tional and transactional behaviors.
Transactional leaders set goals, articulate ex
plicit agreements regarding what the leader ex
pects from organizational members and how

they will be rewarded for their efforts and com
Organizational Learning
There have been extensive reviews of the lit

erature on organizational learning and multiple
conceptualizations (e.g., Crossan, Lane, White,
& Djurfeldt, 1995; Easterby-Smith, 1997; Fiol &
Lyles, 1985; Huber, 1991; Levitt & March, 1988).
to strengthen an organization's culture, strategy,
and structure.
Many researchers agree that, despite the field's
Transformational leadership, in contrast, is growth and development since the 1990s, it still
charismatic, inspirational, intellectually stimu lacks consistent terminology and cumulative
lating, and individually considerate (Avolio et work (Simon, 1991; Vera & Crossan, 2003; Weick,
1991). One recent theoretical model, Crossan et
al., 1999). These leaders help individuals tran
al.'s
(1999) 41 framework of organizational learn
scend their self-interest for the sake of the larger
vision of the firm. They inspire others with their ing, attempts to unify our understanding of or
ganizational learning and to establish a clear
vision, create excitement through their enthusi
mitment, and provide constructive feedback to

keep everybody on task (Bass & Avolio, 1993b;
Howell & Hall-Merenda, 1999). Operating within
an existing system, transactional leaders seek
asm, and puncture time-worn assumptions

through their resolve to reframe the future, ques
tion the tried-and-true, and have everybody do
the same (Bass & Avolio, 1990). The Appendix
presents examples of the survey items included

in Bass's Multifactor Leadership Questionnaire
(MLQ), which measures transformational/trans
connection between strategy and learning.
Crossan et al. (1999) see organizational learning

as the process of change in thought and action?
both individual and shared?embedded in and
affected by the institutions of the organization.
The basic challenge of organizational learning,

they argue, is the tension between assimilating
actional leadership styles and serves as a sum new learning (exploration) and using what has
been learned (exploitation). Managing the ten
mary of the major traits of each.
sion between novelty and continuity is critical
In empirical tests using the transformational/
transactional framework, researchers have for firms' strategic renewal (March, 1991), posi
found a high correlation?in the neighborhood tioning organizational learning as a fundamen
of 0.7-0.8?between behaviors of transforma
tal strategic process and the principal means of
tional leadership and those of contingent re achieving strategic renewal.
Incorporating a multilevel view of learning,
ward leadership (e.g., Avolio et al., 1999; Bass &
Avolio, 1993b), indicating that both sets of be the 41 framework disentangles the processes
through which learning occurs in firms. As
haviors are likely to exist in the same individu
als in different amounts and intensities (Bass, shown in Figure 1, learning occurs at the indi
1998). This is consistent with Quinn's (1988) com
vidual, group, and organization levels, each in
peting values model, in which Quinn argues forming the others. These three levels of learn
that executives must develop "behavioral com ing are linked by four social and psychological
processes: intuiting, interpreting, integrating,
plexity" or the ability to play competing leader
ship roles simultaneously (Denison, Hooijberg, and institutionalizing (41). Within these pro
& Quinn, 1995). Transformational leadership be cesses, cognition affects behavior, and vice
haviors reflect the roles of the open systems versa. Mintzberg, Ahlstrand, and Lampel sum
(innovator and broker) and human relations (fa
marize the learning process embedded in the 41
framework:
cilitator and mentor) models defined by Quinn,
225
Vera and Crossan
2004
FIGURE 1
41 Framework of Organizational Learning
Group
Individual
Organization
Feed-forward learning flow
Individual
Group
Organization
I I Individual learning stock: Individual competence, capability, and

'-' motivation to undertake the required tasks
I G I Group learning stock: Group dynamics and the development of shared
*?-* understanding
Organizational learning stock: Alignment between the nonhuman

storehouses of learning, including systems, structures, strategy,
procedures, and culture, given the competitive environment
Feed-forward learning flow: Whether and how individual learning feeds
forward into group learning and learning at the organizational level
(e.g., changes to structure, systems, products, strategy, procedures, culture)
Feedback learning flow: Whether and how learning that is embedded in

the organization (e.g., systems, structure, strategy) affects individual and
group learning
Adapted from Crossan et al. (1999: 532).
Intuiting is a subconscious process that occurs at

the level of the individual. It is the start of learn
ing and must happen in a single mind. Interpret
ing then picks up on the conscious elements of
this individual learning and shares it at the
group level. Integrating follows to change collec

tive understanding at the group level and bridges
to the level of the whole organization. Finally,
institutionalizing incorporates that learning

across the organization by imbedding it in its
systems, structures, routines, and practices (1998:
212).
Note the distinction, shown in Figure 1, be

tween stocks and flows of learning within an
organization (Bontis, Crossan, & Hulland, 2002).
Learning stocks reside within each level (indi

vidual, group, and organization) and comprise
the inputs and outputs of learning processes. In
contrast, learning flows are the processes
through which learning moves from one level to

another. The feed-forward flow moves from the
individual and group to the organization
through the 41 learning processes: intuiting
interpreting, interpreting-integrating, and inte

grating-institutionalizing. At the same time, an
the literature (some exceptions are Shamir, 1995,

and Waldman & Yammarino, 1999), it is critical
analogous flow feeds back from the organiza
to the study of top leadership because of the

social distance between leaders and organiza
variation of processes: institutionalizing-inte
of CEO charisma?an important feature of
tion to the individual and group, forming a new
grating, integrating-interpreting, interpreting

intuiting, and institutionalizing-intuiting. The
tension between the feed-forward and the feed
back flows of learning represents the tension

between exploration and exploitation (March,
1991). The feed-forward process allows the firm
tional members. Researchers studying the effect
transformational leadership?have found that

charismatic leadership can either cascade from
higher to progressively lower echelons or can
bypass the hierarchy and reach directly to lower

echelons (Bass, Waldman, Avolio, & Bebb, 1987;
Pastor, Meindl, & Mayo, 2002; Yammarino, 1994).
to innovate and renew. The feedback process We build on models of charismatic leadership
(Waldman & Yammarino, 1999) to describe ways
reinforces what the firm has already learned
(Crossan et al., 1999) and ensures that organiza
tion-level repositories of knowledge (such as

culture, structures, systems, procedures, and
strategy) guide individual and group learning.
CONCEPTUAL FRAMEWORK
While previous research has suggested organ
izational learning as an important responsibil
ity of strategic leadership (e.g., Fiol & Lyles,
1985; Friedlander, 1983; Kiernan, 1993; Senge,
in which the dominant coalition affects organi

zational learning. The impact can be direct, via
interaction with the top management team

(close leadership), or indirect, via middle and
lower management's attributions to the CEO
and the top executives (distant leadership)
through symbolic, ideologically based visions,
sagas, and storytelling.
Need for a Combined Leadership Style
1990; Ulrich, Jick, & Von Glinow, 1993), most of

this work is prescriptive in nature and says little
The fundamental premise of our model is

based on a contingent view of leadership: at
certain times organizational learning processes
thrive under transactional leadership, and at
teams contribute to learning. For example, Ben

nis and Nanus (1985) and Sri vast va (1983) locate
organizational learning squarely in the camp of
leadership, and they argue that, in order to be
other times they benefit more from transforma
about leadership styles or specific practices

through which CEOs and top management
able to respond to tomorrow's challenges and

opportunities, strategic leaders must initiate a
process that enhances day-by-day learning.
However, there is no discussion of the underly
tional leadership. Particularly in times of
change, these processes make evident the need

to alter the firm's institutionalized learning?a
task best suited to transformational leadership.
In times of stability, organizational learning
processes serve to refresh, reinforce, and refine
current learning?a task best suited to transac
ing leadership processes. Crossan and Hulland tional leadership. However, this contingent
(2002) present an exploratory study in which characterization presents a very gestalt view of
the dominant processes in an organization.
they start to delineate leadership behaviors as
sociated with learning, choosing to develop a More accurately, every organization faces the
challenges of both change and stability (Tush
new approach rather than build on prior leader
man & O'Reilly, 1996). An ideal strategic leader
ship models. Our intent is to build on prior re
would be able to identify?and exercise?the
search in both leadership and organizational
leadership behaviors appropriate for the cir
learning to propose explicit relationships be
tween the two.
cumstances. An effective CEO, for example,
In our model of strategic leadership and or would recognize when feed-forward or feedback
ganizational learning, we consider close and learning is called for, or when a particular
distant leadership processes on the part of the learning stock needs to be developed, and what
CEO and the top management team that foster type of leadership style would best accomplish
that objective.
the development of the stocks and flows of
There is evidence that leaders may possess
learning. Although the distinction between
both transactional and transformational behav
close and distant leadership is not prominent in
iors. Recent research has suggested that trans

formational leadership builds on transactional
leadership and, in particular, on contingent re
ward behaviors (Avolio et al., 1999). Shamir

(1995), for example, notes that by consistently
honoring transactional agreements, CEOs build
trust, dependability, and an image of consis
tency among organizational members. These
can contribute to the high levels of trust and
respect associated with transformational lead
ers. In addition, a leader may excel at transfor
mational behaviors but may choose transac

tional behaviors when needed; this is Quinn's
(1988) concept of a "master manager."

Furthermore, given the speed and complexity
of today's competitive environments, strategic
leaders need to be "ambidextrous" (Tushman &
O'Reilly, 1996)?that is, they need the capacity to
simultaneously implement diverse courses of

action: incremental and discontinuous innova
tion, exploration and exploitation, flexibility
and control, and feed-forward and feedback
learning. This is also consistent with Rowe's
may communicate with this move not only their
commitment to learning but their intent to
achieve the leadership profile needed for organ

izational learning.
The previous arguments lead to our first prop
osition about the impact of strategic leadership
on organizational learning.
Proposition 1: Leadership of organiza
tional learning requires strategic
leaders to frequently perform roles in
volving both transformational and

transactional leadership behaviors,
albeit under different conditions.
In the next sections we present propositions

linking transactional/transformational leader
ship styles to the flows and stocks of learning.
Ideally, strategic leaders would pursue the de
velopment of high levels of the learning stocks
and flows across the organization. In practice, a
misalignment between learning stocks and

flows may lead, for example, to high levels of
individual or group learning and a low level of
the feed-forward flow (Bontis et al, 2002). This
situation would suggest that there is a learning
(2001) description of strategic leaders who

combine managerial leadership?sensitive to
the past?and visionary leadership?future bottleneck and that learning is not being ab
oriented.
The ability to adapt leadership styles, how
ever, differs across CEOs, because they differ in
their values, orientations, and preferences, as

well as in their effectiveness as transactional or
transformational leaders.1 Two characteristics
of emotional leadership (Goleman, 1998)?self

awareness and self-regulation?would particu
larly help strategic leaders to assess their own
ability to adapt their moods and behaviors to
the needs of the situation. The ideal leader
sorbed by the organization. We next discuss the

mechanisms that top executives pursue to facil
itate organizational learning flows and stocks.
Strategic Leadership and Learning Flows
We argue that managing organizational
learning requires top executives to be both

transformational and transactional but that
these leadership behaviors play different roles
in the processes of exploration (feed-forward
might recognize his or her limitations and share

learning) and exploitation (feedback learning).
the leadership of organizational learning with On the one hand, transformational leadership,
colleagues in the top management group. Thus,
as the term suggests, best suits situations in
we argue that the next-best solution to having volving a change to the existing order of insti
an ambidextrous CEO would be seeing this ca

pacity ensconced in the top management team
and making allowances for the integration pro
cess. Researchers have suggested that diverse

leadership styles within the dominant coalition
might serve as well as an ambidextrous CEO

(Kendall, 1995). Firms that have incorporated the
chief learning/knowledge officer position (Stew
art, 1998) within their top management teams
1 We thank an anonymous reviewer for this insight.
tutionalized learning (the firm's strategy and

routines, for example). Transactional leader
ship, on the other hand, is appropriate for situ

ations involving current learning and its institu
tionalization, reinforcement, and refinement.
Feed-forward learning flow. Within the 41
framework (Crossan et al., 1999), the feed

forward flow may begin with individuals' intui
tive insights and experiences. These, after being
filtered through individual perceptions and
shaped through group conversations, emerge as

shared understanding and may, in time, become
top management, they are motivated to offer

their ideas (Bass, 1998). For example, Shrivas
tava (1983) relates how leaders designed a par
ticipative learning system by forming ad hoc
are conditions under which top executives' committees to resolve all strategic and manage
transformational and transactional leadership ment control problems. Through these commit
tees, participation in decision making was insti
behaviors positively impact the feed-forward
tutionalized. In contrast, in a scenario where a
flow of learning.
In the case of transformational leaders, their
suggestion box initiative or a brainstorming ef
fort leads to solutions not considered and never
agenda commonly includes both the creation of
implemented at the organization level, learning
a vision of change and the institutionalization of
change (Tichy & Ulrich, 1984). As part of this from individuals and groups is not institutional
ized, and members stop generating ideas. An
agenda, transformational CEOs encourage indi
example is Argyris and Sch?n's (1978) descrip
vidual and group learning by motivating follow
tion of a situation where top management re
ers to question assumptions, be inquisitive, take
"intelligent" risks, and come up with creative fused to listen to or comprehend important neg
observations (Bass, 1998). Transformational ative performance feedback from middle or
integrated into a sense of collective action. Fi

nally, coherent collective actions may take root,
become routines, and grow into institutionalized
plans and formal systems. We argue that there
CEOs value effective communication as a

means of fostering individual and group partic
ipation. They encourage individuals to break
through learning boundaries and to share their
learning experiences both within and across de
partments. By being accessible, asking for input,
and serving as "fallibility models" (Goleman et

al., 2001), transformational CEOs create positive
attributions toward the transfer of learning, and

by promoting and exhibiting these behaviors to
the top management, they help these behaviors
cascade to lower levels of management (Wald

man & Yammarino, 1999). Top-level executives
who are available and who manage by walking
around convey a clear message about the value
of others' opinions. By explicitly requesting con
tributions from members at different manage
lower levels. Over time, lower levels learned not

to report unpleasant results. Thus, power differ
ences hinder learning when individuals sup
press or deny their own resources and expertise,
or when leaders impose or proclaim theirs

(Friedlander, 1983).
While transformational leadership fosters
feed-forward learning when the current order of
routines is changed, we now make a corre
sponding case for transactional behaviors and

the role they play in the institutionalization of
learning. Entrepreneurial companies, because

they generally lack routines and standard pro
cedures, require no overhaul of current routines
in order to institutionalize learning. They simply
need to codify current practices and put routines
in place. Transactional leadership's focus on
ment levels, these leaders help create an envi control, standardization, formalization, and effi
ronment of information sharing. And by ciency (Bass, 1985) is best suited for these tasks.
Summarizing our argument so far, we arrive
admitting their shortcomings, they foster a
learning orientation that signals to other firm at the following propositions.
members that errors and concerns can be dis
cussed openly (Goleman et al., 2001).
If transformational leaders' focus on institu
tional change facilitates the learning flow from

the individual to the group, it plays an equally
critical role facilitating the learning flow from
the group to the institution. Leaders' methods
include assigning special task forces, planning
meetings, and intervening in team building

(Tichy & Devanna, 1986). They establish mecha
nisms that enable individuals and groups to

participate in strategy and to influence values,
structures, procedures, systems, and products.
When people understand where they and their

groups fit into the larger pattern envisioned by
Proposition 2a: Transformational lead

ership will have a positive impact on
feed-forward learning that challenges
institutionalized learning.
Proposition 2b: Transactional leader

ship will have a positive impact on
feed-forward learning that reinforces
institutionalized learning.
Feedback learning flow. Feedback learning

relates to the way in which institutionalized
learning (culture, structures, systems, proce
dures, and strategy) affects individuals and
groups. This flow is about refreshing and rein
forcing learning?ensuring that routines are not

neglected or forgotten so that the organization
can continue to produce and perform (Crossan et
al., 1999). Actions making up the institutionaliz
ing process feed back to individuals and groups
by creating a context through which they inter
stored in the firm's culture, structure, strategy,
procedures, and systems (Waldman, Ramirez,

House, & Puranam, 2001). Transactional CEOs
emphasize existing values and routines, focus
on increasing efficiency in current practices,
and usually produce only incremental changes
pret subsequent events and experiences. This

in institutionalized learning. For the sake of ef
process involves changes in cognition and be
ficiency, transactional leaders foster rule-based
havior, as individuals and groups continue to ways of doing things (Bass, 1998). They stimulate
make sense of prior routines when contexts
the flow of learning from the organization to
shift. Firms that lack feedback learning "fail to
individuals and groups by assigning a strong
remember"; their members disregard past learn value to organizational rules, procedures, and
past experiences (Friedlander, 1983). In addition,
they provide organizational members with for
mal systems (such as diagnostic or control sys
Feedback learning also operates in situations tems) and training programs that disseminate
ing, and, since routines fail to provide guidance,

individual learning is driven entirely by the con
text.
where a newly institutionalized routine needs
to be communicated (horizontally and vertically)
to the organization so that all members, not

just the ones who developed the routine, will
learn and use it. This describes the situation of
"new hires" who, being unfamiliar with the

firm's repository of learning, use orientation pro
grams, procedure manuals, and direct observa

tion of organizational practices and values to
acquire the necessary current organization
level learning.
We move on to consider how transactional/
transformational leadership affects feedback
learning, arguing that certain top management

behaviors have a positive impact on this flow.
Transformational leadership is the style best
existing learning to guide future actions and

decisions (Shrivastava, 1983).
Summarizing the previous arguments, we of
fer the following.

feedback learning that challenges in
stitutionalized learning.

feedback learning that reinforces in
stitutionalized learning.
Strategic Leadership and Learning Stocks
Having looked at the impact of leadership
suited to "selling" a strategic vision for change

or a new order of routines (Tichy & Ulrich, 1984).
styles on the flows of learning, we turn to how
learning because they are effective communica

tors who can mobilize commitment to the firm's
learning stocks. At the individual level, strate
Transformational CEOs facilitate feedback
vision and inspire organizational members to

work toward its realization (Egri & Herman,
2000). They steadfastly explain their vision and
keep members up to date with important infor
mation. When new routines are established,

transformational CEOs motivate individuals to
overcome resistance to change, abandon self
interest in the cause of the firm, adopt the new
institutionalized learning, and make sense of it
when environments change.
Whereas transformational behaviors facili
tate feedback learning in a context of change,

transactional behaviors refresh and refine cur
rent learning. This maintenance role is instru
mental in motivating organizational members to
use and take advantage of existing learning
transactional/transformational leadership af
fects individual, group, and organizational
gic leaders create learning opportunities by

promoting such mechanisms as continuous
improvement, competence acquisition, experi
mentation, and boundary spanning (Ulrich et al.,
1993). In addition, in order to provide fertile

ground for new ideas, CEOs and top managers
create a rationale for "intelligent failure" in
their organizations (McGill & Slocum, 1993).
Strategic leaders' control orientation also af
fects individual learning (Snell & Man-Kuen
Chak, 1998; Winter, Sarros, & Tanewski, 1997)
by potentially limiting employees' freedom to
significantly change the nature of their work
activities. At the group level, top managers may
design structures and communication infra
structures that provide incentives to individuals
to share their ideas, practices, and experiences confidence within the team (Boehnke, DiStefano,
DiStefano, & Bontis, 1997).
(Friedlander, 1983). Strategic leaders affect
While transformational leaders foster individ
group learning by encouraging teamwork, trust,
cross-training, heterogeneity, and connectivity,
ual and group learning in a context of change,
transactional leaders do so within a context of
as well as productive meetings, confrontation
when viewpoints differ, and conflict as an op stability. Transactional leaders reinforce the
portunity for learning (Friedlander, 1983).
mastery of current learning and the develop
We now look at individual and group learning ment of the necessary competencies to do one's
job. They motivate individuals to exploit current
in light of the transactional/transformational
learning by concentrating on getting tasks done
leadership model. Transformational leaders,
and exercising convergent thinking. Leaders
through change-oriented and challenge-seeking
behaviors, promote the growth of individual and communicate organizational norms and values;
group learning by inspiring organizational pay attention to deviations, mistakes, or irregu
larities; and take action to make corrections.
members within a change-positive environment.
First, transformational leaders are intellectually They encourage groups to meet organizational
stimulating?they motivate individuals to re
goals through more efficient interactions within
frame problems, take risks, and approach old and across departments and by fostering con
situations in new ways. These leaders encour versations that seek incremental improvements
age innovation and double-loop learning (Argy in current ways of doing things. Within organi
zations that do not undergo significant or con
ris & Sch?n, 1978) through a democratic/consid
erate style and an open approach to decisions stant change, individual and group learning are
more reactive than proactive. They focus on
and problems. Second, transformational leaders
are individually considerate, providing individ knowing what clearly works and how to keep
the system running (Bass, 1985).
uals with support, mentoring, and coaching.
The difference between the learning opportu
When creating new learning opportunities,
these leaders pay attention to individuals' nities provided by transformational and trans
unique needs for achievement and growth. actional leaders is that the former emphasize
Third, transformational leaders inspire individ
experimentation, risk taking, punctuated
uals and groups by instilling meaning and chal change, and multiple alternatives, whereas the
latter focus on prior logic, incremental change,
lenge in their work. Their own individual learn
ing motivates others to learn. Fourth, because efficiency, safety, and continuity (Bass, 1985).
transformational leaders tend to be charismatic,
The impact of the transactional/transforma
tional leadership styles on learning at the or
they are natural role models whom individuals
ganization level is consistent with the effects we
identify with, emulate, and learn from. Along
side charisma is usually a single-minded dedi suggest at the individual and group levels. Or
cation to the firm's vision and purpose?a trait ganization-level learning represents the trans
lation of shared understandings and collective
that could negatively influence individual-level
action
into new products, procedures, systems,
learning (Nahavandi, 1993), limiting its scope
structures,
and strategies (Crossan et al., 1999).
but not its depth.
In addition, transformational leaders encour Although individuals may move on, these non
human repositories of learning endure, repre
age conversations within and among groups,
fostering cooperation in order to achieve inte senting what authors have referred to as organ
ization al memory (Huber, 1991; Walsh & Rivera,
grated goals (Bass, 1985, 1998; Yukl, 1994). They
1991). Crossan et al. (1999) explain that although
take advantage of their team members' diverse
backgrounds and experiences and establish the processes of intuiting, interpreting, and in
mechanisms for effective conflict resolution.
tegrating are fluid and continual, the institution
Transformational CEOs believe that groups alization of changes in systems and routines
with diverse expertise and backgrounds are occurs less frequently in organizations. As noted
more creative and learn more than homoge previously, transformational leaders focus on
neous groups. By sharing information, providing
feedback, using individual members' skills, and
removing obstacles to team performance, trans
formational CEOs increase trust and self
managing and institutionalizing radical
change, whereas transactional leaders seek ef

ficiency goals and incremental evolution of the
status quo. In other words, transformational
leadership is most effective in renewing prod

ucts, processes, and structures by capturing on
going individual and group learning, while

transactional leadership is most effective in re
inforcing, refining, or taking advantage of the
firm's current routines and memory assets.
individual-, group-, or organization
level learning that challenges institu

tionalized learning.

individual-, group-, or organization
level learning that reinforces institu
tionalized learning.
Strategic Leadership and Organizational

Repositories of Learning
tinct aspects of the internal environment and,
thus, create cultures that are either open or

closed and structures that are either loose or
tight. The most effective leaders?those who
adapt their transformational and transactional
behaviors to each situation?are able to create
ambidextrous organizations (Tushman &
O'Reilly, 1996), which can simultaneously be

both open and closed and loose and tight. Am
bidextrous organizations are equally hospitable
to exploration and exploitation. They preserve
local autonomy, support risk taking, and build
control systems that ensure local responsibility
and accountability (Tushman & O'Reilly, 1996),
while a common vision and a core set of rules

and values act as glue to hold it all together.
We begin our discussion of internal context
with organizational culture. A firm's culture de

termines "how people do things here" and im
poses great challenges on dissenters. Culture

influences learning through reward systems
Organization-level learning is more than the designed to favor organizational curiosity,
formalization of practices into routines. Reposi
discourage complacency, and increase experi
tories of learning need to be aligned with one mentation (Hedberg, 1981). Researchers have
another in a coherent way so that the culture,
suggested that a company can have a "learning
systems, structures, and procedures support the orientation"?one that includes commitment to
strategic orientation of the firm, given the com
learning, open-mindedness, and a shared vision
These elements, which represent the organiza

tion's internal context or inner environment
(Hedberg, 1981), strongly influence individual
"learning culture"?one that values continuous

orientation, and accountability (Popper & Lip
tween individuals, and dynamics of groups. The

inner environment affects the learning process
in the sense that some environments are more
& Slocum, 1993; Sinkula et al., 1997) and how
petitive environment (Crossan et al., 1999).
cognition and behavior, social processes be
(Sinkula, Baker, & Noordewler, 1997)?or a
learning, valid information, transparency, issue
shitz, 1998).
The creation of a learning culture depends on
the strategic leader (Hurley & Huit, 1998; McGill
conducive to learning than others, making well that leader can balance transactional and
learning more or less likely to occur. At the same
time, the learning process can bring about

change to the inner environment (Argyris &
transformational behaviors, authoritarian and

participative systems, and task and relationship
orientations (Schein, 1992). Strategic leaders

who choose transactional behaviors will work
We see a similar reciprocal relationship within within the current culture and follow existing
leadership. Leadership may be constrained by norms, rules, and procedures. In this sense,
transactional cultures reinforce institutional
the inner environment, but strategic leaders can
also affect and shape aspects such as the firm's
ized learning and can be described as closed
culture, strategy, and structure (Bass, 1985, 1998; and rule bound (Nahavandi, 1993). Transforma
Duncan & Weiss, 1979; Nahavandi, 1993; Schein,
tional leadership behaviors, in contrast, allow
1992).
top executives to adapt the organizational cul
In the following paragraphs we discuss the ture and realign it with the new vision, when
impact of transactional/transformational lead needed. Transformational cultures can be de
ership on the organization's internal context and scribed as open and flexible (Bass & Avolio,
its relationship with learning. We argue that
1993a); it challenges institutionalized learning
different leaders (either highly transformational
by motivating employees to try new ways of
or highly transactional) tend to emphasize dis doing things.
Sch?n, 1978; Fiol & Lyles, 1985; Hedberg, 1981).
Organizational structure serves as another re

pository of learning. An organization's structure
reflects the attempt to divide tasks among mem
bers and arrange the coordination of their dif
ferent task activities (Mintzberg, 1974). Strategic
leaders may directly determine their firm's

structure through straightforward decisions
about its type and elements, or they may do so

indirectly through the way information is used
and shared and through informal networks and
political activities (Duncan & Weiss, 1979; Miller,
1996; Mintzberg, 1974).
formance. Examples include best-practices da
tabases, after-action reviews, and R&D units.
Strategic leaders make use of systems and
procedures that help achieve their goals of ad
aptation and efficiency, respectively. On the one

hand, transformational behaviors are conducive
to the implementation of formal management
systems as defined by Shrivastava (1983). To

systematize activities within formal manage
ment systems (strategic planning or environ
mental scanning, for example), the organization
Organizational forms influence learning be

cause they shape how firms seek and process
information about key uncertainties (Cohen,
draws on individual learning, standardizes the

ways in which this learning can be used, and
makes it available for use by other individuals
and groups in the organization (Shrivastava,
1966), favored by transactional leaders, are

highly centralized, formalized, and standard
bureaucratic learning systems (Shrivastava,
structures enable individuals and groups to
an elaborate set of procedures and regulations
tensive set of coordination mechanisms, such as

cross-unit committees, integrator roles, shared
databases, and matrix structures (Daft & Huber,
cause they can evolve to incorporate new learn

ing and because of their innate flexibility and
ability to handle judgmental and intuitive types
of subjective learning (Shrivastava, 1983), formal
systems are suited to capture new learning gen
1991). Mechanistic structures (Burns & Stalker,
ized. Reinforcing current routines, mechanistic
1983). On the other hand, we argue that transac

tional leadership assists the implementation of
1983). Bureaucratic learning systems consist of
learn more effectively from their experience to control the flow of information among organ
izational members.
(Carley, 1992). In contrast, transformational
The principal distinction between formal and
leadership has been associated with organic
structures (Burns & Stalker, 1966), which are bureaucratic systems is their degree of rigidity
adaptive, decentralized, and conducive to an ex and their treatment of subjective knowledge. Be
1987; Gupta & Govindarajan, 1991). Within or
ganic structures, learning is disaggregated, and

communication is often lateral. Members recog
nize their interdependence and are willing to

share information to achieve the firm's vision
erated by CEO-led change processes. In con

trast, bureaucratic learning systems, being
rigid, highly objective, and bound to rules and

regulations, are unresponsive to organizational
Slater & Narver, 1995). Strategic leaders with members who want to share their perspectives
both transformational and transactional behav or frames of reference with one another. Bureau
cratic systems efficiently communicate existing
iors need to adapt the firm's structure to accom
modate both mechanistic and organic features procedures and regulations defined by the
transactional leader. Again, in ambidextrous or
and, thus, simultaneously facilitate the rein
ganizations, the dominant coalition can tap into
forcement of institutionalized learning and the
both transformational and transactional leader
development of new learning.
ship styles and can implement different types of
Other important parts of the organization's in
ternal context are systems and procedures. Just systems and procedures to promote the rein
as learning can be institutionalized in systems forcement of institutionalized learning and the
and procedures, systems and procedures can be development of new learning.
and sustain its effectiveness (Fiol & Lyles, 1985;
institutionalized to promote learning (Daft & Hu
ber, 1987). Researchers have described organi

zational learning systems (Shrivastava, 1983)
and mechanisms (Popper & Lipshitz, 1998) as
formal, informal, cultural, structural, or proce

dural arrangements that allow organizations to
systematically collect, analyze, store, dissemi
nate, and use information relevant to their per
Finally, all organizational repositories of
learning (culture, structure, systems, and proce

dures) need to be aligned with the firm's strat
egy. In other words, the learning generated by
individuals and groups that is embedded in the
nonhuman aspects of the organization should

be consistent with the firm's vision and goals
(Crossan et al., 1999). And, as learning influ
enees the firm's strategy, so too does strategy

influence the firm's learning by providing a
boundary to decision making and a context for
the perception and interpretation of the environ

ment (Fiol & Lyles, 1985).
We have suggested that, on the one hand,
highly transformational leaders tend to encour

age open cultures, organic structures, adaptable
systems, and flexible procedures?attributes
that facilitate the implementation of change and
challenge institutionalized learning. This type
of internal context is characteristic of firms with
aggressive strategies and a high potential for

growth and innovation. We have also proposed
that highly transactional leaders, on the other
hand, tend to encourage closed cultures, mech
anistic structures, rigid systems, and procedures
that facilitate the reinforcement and refinement
of institutionalized learning. Organizations with

this type of internal environment usually select
conservative strategies.
Using Miles and Snow's (1978) typology of

business-level strategy, Nahavandi (1993) ar
CONTINGENCIES
Fundamental to the 41 framework of organiza
tional learning is the premise that organization
al learning is a critical process for firms' strate
gic renewal (Crossan et al., 1999). In this section
we further explore transformational and trans
actional leadership styles' distinct effects on or
ganizational learning by incorporating three

contextual variables in our model. These vari
ables, both external and organizational, fre
quently trigger strategic renewal (Huff, Huff, &
Thomas, 1992) and, consequently, affect the
leadership style required and the type of learn

ing pursued under different circumstances. Al
though in prior work scholars have suggested
contingency variables related to transactional/
transformational leadership (e.g., Keller, 1992;
Nahavandi, 1993; Pa war & Eastman, 1997; Wald
man et al., 2001; Waldman & Yammarino, 1999),
they have not looked at the joint effects of con
tingency factors and leadership style on organ
izational learning.
gues that transformational leaders will choose a
prospector or an analyzer position, whereas

transactional leaders will select a defender
strategy. These strategic decisions, all outputs
Environment
viduals the desire for new challenges and op
because they need to meet the requirements of a

changing environment (Huff et al., 1992). We ex
pect that highly turbulent and uncertain envi
ronments will favor the emergence of transfor
achieve efficiency.
We summarize our discussion of how transac
ganizations are more receptive to transforma

tional behaviors and, in particular, to charis
of learning, are what shape ongoing learning. A

prospector strategy is likely to promote in indi
Firms pursue a renewal strategy essentially
portunities, along with the habit of flexibility

when acquiring new learning. In contrast, a de
fender strategy is likely to promote risk aversion mational leadership. Research has shown that,
in individuals and to create incentives to
in contexts of crisis, anxiety, and high risk, or
tional/transformational leadership behaviors matic behaviors (e.g., House, Spangler, &

affect the internal organizational context and Woycke, 1991; Waldman et al, 2001). Because
they generate a collective feeling that some
the consequent impact on learning.
Proposition 5a: When aligning the or
ganizational repositories of learning,
transformational leadership will fos
ter (a) an open culture, (b) an organic
thing must be done to deal with external prob

lems (Waldman & Yammarino, 1999), turbulent
and uncertain environments allow transforma
tional leaders great latitude for discretion. In

these conditions, transformational leaders en
structure, (c) flexible systems and pro
hance individuals' self-confidence and self
strategy.
efficacy, help them to see the environment as a

source of opportunity, and encourage them to
cedures, and (d) a prospector-like
Proposition 5b: When aligning the or

ganizational repositories of learning,
transactional leadership will foster (a)
engage in feed-forward learning processes.

Within turbulent environments, transforma
tional leadership best motivates organizational
structure, (c) rigid systems and proce

dures, and (d) a defender-like strategy.
and adopt new institutionalized routines
a closed culture, (b) a mechanistic
members to overcome their resistance to change

through feedback learning.
In contrast, when environments are stable,
transformational leaders' charisma can be

somewhat dysfunctional (Waldman et al., 2001).
If individuals do not perceive the need to
change, they seem to reject the transformational
leader's vision, and their satisfaction and com

mitment decrease. We expect also that the con
verse holds true: stable environments foster
transactional leaders who focus on strengthen
ing existing structures, culture, and strategies,
and who pursue efficiency by exploiting and
refining current ways of doing things.
Proposition 6a: In turbulent and uncer

tain environments, transformational
leadership will have a positive im

pact on feed-forward and feedback
learning.
Proposition 6b: In stable and certain

environments, transactional leader
feedback learning.
Prior Firm Performance
Poor performance is a source of strategic re

newal because it is associated with stress aris
performance will foster transformational leader
ship and motivate feed-forward and feedback

learning processes to enable and implement
change. Firms experiencing major difficulties
and disappointments are more likely to preserve
healthy levels of doubt, debate, and diversity
(Miller, 1993)?all basic elements of transforma

tional leadership. Through feed-forward learn
ing processes, transformational executives en
courage organizational members to reassess
their standards and challenge current assump
tions and mental models; through feedback
learning processes, they communicate their vi

sion for change and reinforce the use of new
practices.
Proposition 7a: When firms are per

forming poorly, transformational

learning.
Proposition lb: When firms are per

forming well, transactional leader
feedback learning.
Stage of Organizational Life
ing from the apparent limitations inherent in the

Strategic renewal has also been associated
current firm strategy (Huff et al., 1992). We build
on Miller's (1993) "architecture of simplicity" the with the "natural evolution" of organizations
(Hurst, 1995; Quinn & Cameron, 1983). We argue
ory to argue that successful firms generally lack
that a firm's leadership and learning require
the motivation to pursue new and more complex
strategies. Instead, they tend to rely on transac ments vary according to the distinct challenges
tional leadership and feedback learning to posed by each stage of organizational life. Lack
"simplify" their value propositions. According to
Miller (1993), success brings the danger that
firms will become more "simple" by focusing on

a single goal, a single strategic activity, a single
department, or a single world view. Associated
with extreme transactional leadership, this kind
ing rules and norms, the birth stage is often

chaotic and ambiguous (Nahavandi, 1993), and
leadership is usually a "one man show" (Adizes,

1979). The strategic leader exercises great influ
ence, working to boost morale, encourage broad
employee involvement, and facilitate both ex

of simplicity can lead to monolithic cultures, perimental and feed-forward learning. Transfor
systems, and processes that thwart the organi mational behaviors are best suited to this stage.
Transactional leadership behaviors become
zation's ability to adapt to complex environ
ments. In successful organizations, managerial more important as organizations grow. Leaders
learning is frequently biased in favor of what quell chaos and ambiguity by formalizing and
seems to work (Levitt & March, 1988; March, 1991;
standardizing current ways of doing things
Miller, 1993). Extreme reliance on feedback
through feed-forward learning. As we discussed
learning may lead to mastery of pre-established

standards and to specialization in a limited set
earlier, transactional leadership is best suited
In contrast, poor performance typically makes
knowledge for the first time. In addition, when

firms reach maturity, they rely on well-estab
lished procedures and norms, both cultural and
of skills.
organizations more receptive to changes in the

status quo (Boeker, 1989). We expect that poor
to entrepreneurial firms that must establish rou
tines, assimilate learning, and institutionalize
structural, to influence employee behaviors.
Control, goal setting, productivity, and efficien
cy?all are emphasized with a transactional
leadership style. Also, transactional behaviors
foster feedback learning to reinforce and refine

current routines and develop activity programs
that replicate earlier successes.
those best able to function in both transforma

tional and transactional modes. Both leadership
styles are effective in facilitating organizational
learning, albeit in different situations.
One of the primary contributions and implica
tions of this article for both researchers and

managers is to reinforce the value of transac
Finally, on reaching their decline phase, firms

tional leadership in organizational learning. We
may be rigid and shortsighted. If they are un have observed a tendency to equate organiza
able to take drastic actions to adapt to changing
tional learning with only the feed-forward pro
circumstances, they do not survive. As noted cesses of exploration, which suggests a need for
above, change-oriented transformational lead more transformational leadership behaviors.
ership can often remedy a firm's poor perfor However, this perspective misses much: the full
mance. The most successful firms are those with
breadth of organizational learning, the require
a top management team that can achieve re
ment to extend learning to the far reaches of the
newal without instigating a crisis. They are able organization, and the need for leadership to re
to trigger a process of "creative destruction" that
fresh and reinforce institutionalized learning.
sets the stage for a new cycle of birth and As Paul-Chowdhury (1999) found in her study of
growth (Hurst, 1995).
financial institutions that failed to learn from
Proposition 8a: For firms in the birth
stage, transformational leadership

will have a positive impact on feed
forward learning.
Proposition 8b: For firms in the growth
and mature stage, transactional lead

feed-forward and feedback learning.
Proposition 8c: For firms in the de

cline/revival stage, transformational

learning.
loan loss cycles, when transactional leadership

is absent, organization members do not benefit
from learning that has been institutionalized.
Furthermore, our model does not simply
match transformational leadership with feed

forward organizational learning processes and
transactional leadership with feedback learn
ing processes. We have discussed conditions
under which transformational and transactional
leadership styles play a role in both exploration

and exploitation. There are a number of contin
gencies that need attention, each with implica
tions for both research and management. Future
empirical research will be needed to assess the
role of these contingency variables as modera
tors of the relationship between leadership

styles and learning. In addition, we encourage
MANAGEMENT
researchers to acknowledge the role of transac
tional leadership and to consider a more fine
The central contribution of this work is a
grained
view of the relationship between lead
model that integrates and extends two estab
lished frameworks in the management litera ership and organizational learning. Although
ture (Bass, 1985, 1998, and Crossan et al., 1999) to we have focused on the positive effects of trans
propose a theoretical link between two previ formational and transactional leadership on
ously disconnected constructs: strategic leader learning, the scope of this paper does not allow
ship and organizational learning. While there us to discuss how, when used out of context, the
two leadership styles could have negative or
has been an underlying assumption about the
less positive effects on learning.
role of strategic leaders in organizational learn
IMPLICATIONS FOR RESEARCH AND
ing, in this paper we offer insight into how spe
To advance this line of investigation, re
cilitate and promote the development of stocks
searchers will need to address several empiri

cal issues related to the challenges of measur
ing, the most effective strategic leaders will be
As noted, prior research has revealed a strong

correlation between transformational and con
cific leadership styles and mechanisms can fa
and flows of learning. Moreover, we conclude

that, in order to manage organizational learn
ing transactional/transformational leadership.
tingent reward behaviors, which suggests con

cerns about discriminant validity. Addressing
this point, in a recent re-examination of the MLQ
survey, Avolio et al. (1999) discuss the impor

tance of considering hierarchical models with
higher-order factors underlying the first-order

leadership dimensions. By including two corre
lated higher-order factors to represent the trans
formational and transactional contingent re
ward leadership factors, the authors reduced the
a positive impact on organizational learning
and, hence, firm performance.
To conclude, this study provides researchers

in organizational learning and strategic leader
ship with a preliminary map of how these two
fields are related, and of the important chal
lenges and responsibilities that are associated
with the leadership of organizational learning.
Practice has taken the lead and enthusiastically
embraced the need for firms to learn. Theory has
latent correlations and enhanced the discrimi yet to enlighten the work of practitioners with a
nant validity between higher-order factors. In more instrumental and comprehensive view of
addition, when testing the effects of transaction

al/transformational leadership on outcome vari
ables such as learning or performance, hierar
chical regression can be used to understand the

effect that transformational leadership "adds"
to the effect of transactional leadership (e.g.,
Waldman et al, 2001).

In future theoretical work, researchers will
need to address whether transactional/transfor
the role of strategic leaders in the strategic pro
cess of organizational learning.
APPENDIX
MLQ: SAMPLE SURVEY ITEMS2
Transformational Leadership
Charismatic leadership
mational leadership behaviors encompass the
Makes everyone around him/her enthusiastic
full range of behaviors required to manage or
about assignments
ganizational learning. Providing initial insights
I have complete faith in him/her
on this question is Collins' (2001) concept of
Encourages
me to express my ideas and
Level 5 leadership. This leadership "builds en
opinions
during greatness through a paradoxical combi
Inspirational motivation
nation of personal humility plus professional
Is an inspiration to us
will" (Collins, 2001: 70) and is evident in firms
that have moved from "good" to "great." Collins'
model suggests that Level 4 corresponds to a
transformational style, and Level 3 corresponds

to a transactional style. On reaching the top of
the hierarchy, a leader has mastered the capa
bilities of all lower levels and must develop new
ones unique to Level 5.
Although this recent theoretical work points to
a possible missing factor in transformational

and transactional leadership, we believe that
the record and strength of research to date pro

vide a strong foundation and rationale for fur
ther work. As noted, previous studies on trans
actional/transformational leadership have
developed reliable and valid instruments and

have already established critical research links
to areas such as training. Bass (1985, 1998) es
tablished that transactional and transforma
tional leadership behaviors can be learned
through training programs. This, of course,

holds an important message for management.
Individuals can develop transformational and
transactional behaviors, and, as we have ar
gued here, these leadership behaviors can have
Inspires loyalty to him/her

Inspires loyalty to the organization
Intellectual stimulation
His/her ideas have forced me to rethink some
of my own ideas, which I had never ques
tioned before
Enables me to think about old problems in
new ways
Has provided me with new ways of looking at
things, which used to be a puzzle for me
Individualized consideration
Gives personal attention to members who
seem neglected
Finds out what I want and tries to help me get it
You can count on him/her to express his/her

appreciation when you do a good job
Transactional Leadership
Contingent reward
Tells me what to do if I want to be rewarded

for my efforts
2 Source: Bass (1985, 1998).
There is a close agreement between what I

am expected to put into the group effort and
what I can get out of it
Whenever I feel like it, I can negotiate with

him/her about what I can get from what I
accomplish
Management by exception?active
Asks no more of me than what is absolutely
essential to get the work done
It is all right if I take initiatives but he/she
does not encourage me to do so
Only tells me what I have to know to do my job
Leadership for extraordinary performance. Ivey Busi

ness Quarterly, 61(4): 56-63.
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organizational learning system by aligning stocks and
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Dusya Vera is an assistant professor of strategic management at the C. T. Bauer

College of Business at the University of Houston. She received her Ph.D. in business
administration from the Richard Ivey School of Business at the University of Western
Ontario. Her research interests are in the areas of improvisation, organizational

learning, strategic leadership, and strategic virtues.
Mary Crossan is an associate professor of strategic management and the Donald K.

Jackson Chair in Entrepreneurship at the Richard Ivey School of Business. She re
ceived her Ph.D. in business administration from the University of Western Ontario.
Her research interests are in the areas of organizational learning, strategic renewal,
improvisation, and strategic leadership.

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Strategic Leadership and Organizational Learning

Author(s): Dusya Vera and Mary Crossan

? Academy of Management Review

2004, Vol. 29, No. 2, 222-240.

STRATEGIC LEADERSHIP AND

system. Researchers have implicitly assumed transformational leadership ap

proaches to organizational learning. We challenge this conventional wisdom by

leadership style (transformational and transac

as a fundamental strategic process and the only

actional leadership (Bass, 1985, 1998) and on

management teams in implementing organiza

tional learning in their firms. Yet strategic lead

what happens to the organization" (Hambrick,

behind organizational learning (L?hteenm?ki,

Toivonen, & Mattila, 2001), researchers have not

make explicit how strategic leaders impact

delineated the specific behaviors and mecha

While large budgets are being expended on

ments" (Stewart, 1998), CEOs and top executives

izational learning have largely remained dis

theoretical model and a set of propositions to

learning. We take a fine-grained look at the

to describe how strategic leaders influence each

assumed transformational leadership ap

proaches to organizational learning, and we

connected fields of inquiry (Crossan & Hulland,

lighting the value of transactional leadership as

learning emphasized. Our integrative approach

We thank the editor, Devereaux Jennings, and the anony

provides a fresh perspective on transforma

tional and transactional leadership from which

2004 Vera and Crossan 223

ories that describe the dyadic relationship be

be stretched upward. One branch of leadership

Scandura, 1987; Ho well, Dorf man, & Kerr, 1986;

Boyatzis, & McKee, 2001), narcissistic (Maccoby,

among leaders, followers, and contexts. In con

Frost, Worline, Lilius, & Kanov, 2002) emphasize

tigrew, 2001). In this article we adopt the strate

2000), and compassionate leadership (Dutton,

search (e.g., Egri & Herman, 2000) has empha

224 Academy of Management Review April

Burns (1978) represents transformational and

transactional leadership styles as the opposite

ends of a continuum. Bass (1985, 1998), however,

views them as distinct dimensions, which al

tional, both, or neither. Transactional leadership

gent-reward exchanges and active manage

ment-by-exception (Avolio, Bass, & lung, 1999).

while transactional leadership behaviors reflect

monitor) and rational goal (producer and direc

adept at seemingly contradictory capabili

ties?is close to Bass's proposition that the best

Transactional leaders set goals, articulate ex

plicit agreements regarding what the leader ex

pects from organizational members and how

There have been extensive reviews of the lit

mitment, and provide constructive feedback to

asm, and puncture time-worn assumptions

tion the tried-and-true, and have everybody do

the same (Bass & Avolio, 1990). The Appendix

presents examples of the survey items included

connection between strategy and learning.

Crossan et al. (1999) see organizational learning