Competitiveness Review: An International Business Journal

Exploring the role of leadership in territorial strategies for competitiveness

Jos Luis Larrea, Mari Jose Aranguren, Jesus Valdaliso,
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Jos Luis Larrea, Mari Jose Aranguren, Jesus Valdaliso, "Exploring the role of leadership in territorial strategies for
competitiveness", Competitiveness Review: An International Business Journal , doi: 10.1108/CR-10-2016-0065
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 Exploring the role of leadership in territorial strategies for competitiveness

Introduction

The notion of territorial strategy is currently undergoing a boom in popularity, as the launch of
Research and Innovation Smart Specialization Strategies (RIS3) in Europe clearly proves (Foray,
2013, 2014; McCann and Ortega-Argils, 2015, 2016). One of the critical and underemphasized
elements in the development of territorial strategies is the role of leadership and, particularly,
individuals in this process. As Valdaliso and Wilson (2015: 244) conclude, the who and the
how of territorial strategy become preliminary key questions to be addressed and solved
before reflections around what for and the what are able to take place in earnest. In the
research on RIS3, where the development of the entrepreneurial discovery processes with the
participation of the quadruple-helix actors is central and governance scenarios become more
complex, the human factor and the role of leadership is a key issue (Aranguren et al., 2015).
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And the same goes for the related field of innovation policy studies (Flanagan and Uyarra,
2016).

This paper focuses on this key issue: the role of leadership and, particularly, individuals in the
development of territorial strategies for competitiveness. The first section presents the critical
elements for shaping territorial competitiveness strategies emphasizing the need for further
development in the who dimension. Section two presents the methodology of the research,
focused on life experience and first person action research. The third section presents the
case study of an individual who has worked in high positions of responsibility in the
government, in the private sector and at the university in the Basque Country (one of the
European regions with the longest tradition on territorial strategy and competitiveness issues)
from the 1980s until now. Section four deals with the impact of life experience on the
individuals discourse and thinking about competitiveness. The main lessons of life experience
for leadership are discussed in section five. Finally, the last section presents the key findings
and conclusions about the role of leadership in territorial strategies.

Territorial strategy: deepening in the who

Territorial strategy is a concept that has remained under conceptualized in the literature on
economics. Although strategy is an old concept it was not until the 1990s that it was first
applied at the level of territories translating concepts mainly from the business field. Navarro
et al. (2014), and Ketels (2015) provide a conceptual framework that identifies the key
elements that a regional strategy needs to take into account in order to make it useful for
strategic and policy analysis. Translating from the business literature, Navarro et al. (2014)
propose a holistic framework differentiating three main dimensions: the objectives of the
strategy or the what for; the content of the strategy or the what and the process of the
strategy or the how and the whoi. Valdaliso and Wilson (2015) conclude that although this
differentiation among the different elements of a territorial strategy makes sense for the sake
of a better analytical insight, a key finding of the empirical cases in their book has been that
the how/who question, in particular, is always strongly related to and conditions the what
for and the what question. But despite the relevance of the how/who question on
territorial strategy, these dimensions remained underdeveloped and scarcely analyzed
(Aranguren and Larrea, 2015).

The debates about territorial strategy appeared with more intensity applied at regional level in
both the economic literature and the policy arena due to the launch of RIS3 by the European

1
 Commission, which aim to encourage European regions to build their own strategy based on
specialized diversification and smart upgrading (Foray, 2013 and 2014; McCann and Ortega-
Argils, 2015 and 2016). As it happens on the issue of territorial strategy, on the RIS3, one of
the main weaknesses is the need to go deeper into the characteristics of the leadership (or the
who) to facilitate the new governance modes that the key process of Entrepreneurial
Discovery Process (EDP) of RIS3 demands (Aranguren et al., 2015)

In fact, the concepts of territorial strategy and RIS3 are evolving through practice and dialogue
with a strong sense that the practice is racing ahead of conceptual and empirical
understanding in the academic arena. So, we are at a moment when practitioners and
academics need to cross more effectively to generate improvements in the development of
territorial strategy. This is the feeling also in the development of RIS3 in Europe at this moment
(Valdaliso and Wilson eds., 2015; Aranguren et al., 2015). So, reflecting on processes of
territorial strategy development from practice would show some learning for its further
conceptualization and understanding. Focusing this reflection on the who or leadership issue
of territorial and RIS3 strategies is the aim of this paper.
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Case studies on different territorial levels across the world have stressed the outstanding role
of some individuals (politicians, policy entrepreneurs) to initiate or catalyze the process of
designing and implementing a strategy (Porter et al., 2013, Porter and Miller, 2003, Porter et
al., 2013 and 2016; Costamagna et al., 2015; Valdaliso et al., 2014; Valdaliso, 2015; Tangkjaer
and Jonsson, 2015). However, the role of individuals is taken for granted, it has never been
deeply analyzed and questions such as what is required in terms of leadership to develop
territorial strategies or RIS3 are critical.

In practice, territorial strategy tends to be the result of a combination of both deliberate and
emergent processes. Sotarauta (2004) transferred the distinction between deliberate and
emergent strategies introduced by Mintzberg (1992, 1994) to debates on territorial strategy.
Deliberate strategies are in line with what might be termed a classical view of territorial
strategy, whereby a written plan is formulated, committed to and then executed. Emergent
strategies, on the other hand, form spontaneously from the development of patterns in an
array of diverse processes, which require alignment.

Each type of process, deliberate or emergent, requires different types of leadership. Although
leadership is generally associated with the individual as leader and theories suggest attributes
which propel an individual to lead a group of followers (Zacarro, 2007), leadership has also
been defined as a process whereby an individual influences a group of individuals to achieve a
common goal (Norhouse, 2013: 5). So, leadership can be emergent, where authority is
assumed or afforded within the group to an individual, but also to a set of individuals (Bentley
et al., 2016: 4). This changes the focus on leadership by an individual leader to leadership by a
collective. As Bentley et al. (2016: 4) emphasize Leadership such as this, rather than being
transactional, is transformational since leaders are charged with identifying the need to
change, creating a vision to guide the change through inspiration and executing the change in
tandem with committed members of the group.

In this regard Collinge and Gibney (2010) distinguish between purposive (direct leadership
from government policy) and spontaneous governance (indirect leadership that creates the
conditions -incentives, structures, etc.) for complex governance relationships to flourish. While
purposive leadership predominates in the traditional practice of government-led plans, in a
more process-oriented approach to territorial strategy leadership required for spontaneous
governance takes on greater importance. In particular, a greater degree of systemic leadership

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 is required that is capable of somehow bringing together the different individual leaderships
that may be established not just by government actors, but by a range of other actors in their
own domains (firms or clusters, universities, etc.). This coincides with the recent
acknowledgement of the significance of collaborative leadership for territorial strategies
underlined by Sotarauta (2009 and 2010) when he affirms that as regional scenarios become
more complex, regional development relies more heavily on leadership and network
management.

On the process based approach, Aranguren and Larrea (2015) go deep into the how/who
question and argue that three of the strategy schools identified by Mintzberg et al. (1998)
the learning, cultural and power schools are particularly relevant for how territorial strategy
takes place. The key premise of the learning school is that strategy-making must above all
take the form of a process of learning over time, in which, at the limit, formulation and
implementation become indistinguishable (p. 208). In the case of the cultural school the
strategy formation is based on shared beliefs and understanding and this takes place in the
context of conflicting interests that will inevitably lead to the types of political behaviors
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analyzed by the power school.

For the ongoing process of learning that is necessary for the aims, content and process of a
territorial strategy, leadership requirements will be diverse. A region is a complex system and
the knowledge necessary to develop its strategy is distributed among different actors.
Therefore, territorial strategy cannot be led by one individual leader but by different leaders
that should come together in the development of a multiplicity of partnerships that respond to
different strategic challenges and opportunities and guide the evolution of the strategy as a
whole. As Aranguren et al. (2015) underline, there are different roles to play within this.
Leaders with a systemic vision are needed to create the interaction spaces and inspire
involvement in those spaces; leaders with an understanding of processes and with the ability
to nurture all-important trust and reciprocity are needed to manage those spaces in ways that
facilitate the emergence of opportunities and the generation of a shared vision; and leaders
with knowledge of specific fields (sectors, technologies, scientific fields, product markets) are
also needed to identify specific opportunities from combining regional capabilities, and to
galvanize the right set of actors in developing them.

Their reliance on each other and their necessary configuration to generate a territorial strategy
point to the concept of shared leadership that has become popular in the leadership literature
(Conger and Pearce, 2003; Fletcher and Kaufer, 2003; Pearce and Conger, 2003). According to
Pearce and Conger (2003: 1) shared leadership is a dynamic, interactive influence process
among individuals in groups for which the objective is to lead one another to the achievement
of group or organizational goals or both.

But considering the role of actors in taking decisions, a question arises about who makes the
decision, an individual or a collective. Decisions could be taken by a leader (such as elected
mayors in cases of city development), but often this leader is part of a group of leaders and
his/her decisions are informed by and executed by a range of actors engaged in the process of
collaborative governance of city development. Territorial development leadership, therefore,
is exercised by individuals through a process of collaborative governance (Bentley et al., 2016:
5).

For the emergence of shared leadership or collaborative governance in a region, as Aranguren

et al. (2015) underline, individual leaders need to establish the region as a frame of reference
for their thinking and their decisions, alongside an already existing frame of reference (their
firm, university, government department, etc.). Stough (2001: 35) defines territorial leadership

3
 as the tendency of a community to collaborate among sectors (different groups) in a
sustainable and decisive way to increase the economic outcome of a region. This implies that
formal leaders find themselves representing places as well as / rather than organizations
(Gibney, 2011: 616), and would suggest that a dualism in reference frame, and the ability to
effectively manage that dualism, is a key characteristic of the individual leadership required for
territorial strategy-making. Moreover, it seems likely that a certain indirect leadership or
spontaneous governance (Collinge and Gibney, 2010b) on the part of government should play
a role in creating the conditions whereby such dual leaderships can emerge and thrive.

Methodology
As underlined in the previous section, the concepts of territorial strategy and RIS3 are evolving
through practice and dialogue with a strong sense that the practice is racing ahead of
conceptual and empirical understanding in the academic arena. This gap requires that practice
and the academic world should be combined more effectively in order to improve their
development.
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This paper tries to contribute with some findings on the question of what is required in terms
of leadership to develop territorial strategies. The paper identifies this gap and research
questions at the intersection between the literature on territorial strategies, RIS3 and
leadership and on the experience as external researchers of one of the authors in the
implementation processes of the RIS3 of the Basque Government.

The paper is based on one case of life experience analysis (the case study) of an individual that
has played key roles in the government, in the private sector and at the university in the
Basque Country (one of the European regions with the longest tradition on territorial strategy
and competitiveness issues) from the 1980s until now. This person is developing his PhD based
on his life experience and first person action research methodologies. One of his key
characteristics is the search for balance between theory and practice as a researcher of the
reality in which he has conducted his career (Costamagna, 2014), projected in the concept of
praxis (Freire, 1992). This relationship between a way of interpreting reality and practice
consequent on a transforming action (Rossato, 2012) is constant of his life experience.

The methodology of this paper tries to learn from the leadership on territorial strategies
experience in practice of this person to contribute to the gap in the literature on the role of
individuals on territorial strategies. Therefore, and based on this case study, this paper
attempts to address the following research questions:

RQ#1: How leadership is influenced by theory and, the other way around, how theory is
transformed through leadership?

RQ#2: What characteristics of leadership are most important in order to implement

successfully territorial strategies for competitiveness?

The life history is centred on the individual subject and has as a core element the analysis of
the narration about his life experiences. Some authors speak of biographical methods:
biographies, autobiographies, life histories and oral histories (Creswell, 1998). In the
construction of the life experience the time delimitation, the contexts, the key elements in
each stage and the sources of information are fundamental aspects.

As regards time delimitation, the life history may be centred on a period of the existence of
the subject or on an aspect of his existence (Bertaux, 1997). In this case, the analysis is

4
 concentrated on the professional experience, ordered chronologically in phases (Yin, 2009), as
can be observed in Table 1. Contexts are fundamental for the validity of the study (Herr and
Anderson, 2005), but here, due to lack of space, we only make reference to the territorial
strategies at each stage. Finally, at each stage a reflection is made of the key elements of the
characteristics of leadership in the drive for territorial strategies.

The case of life experience presented here is one of first person action-research (Reason and
Bradbury, 2001; Reason and Torbert, 2001; Torbert 2001; Marshall, 2001) and this is
understood not as just another methodology for research but as a strategy for change
(Greenwood and Levin, 2007). The option of this type of research is influenced by the
philosophical tradition of pragmatism which leads one to understand that thought is also
action (Karlsen and Larrea, 2014), and is accompanied by qualitative methodologies, suitable
to place value on the life experience on which it is based.

One of the limitations of first person action-research is related with subjectivity. In order to
overcome it, two strategies are used. On the one hand, a permanent effort is made to achieve
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objectivity, basing life experience on documented facts. Thus, as sources of information to

support the facts narrated, we have employed published articles and books; presentations at
conferences, congresses, round tables; interviews, parliamentary speeches and those of other
kinds belonging to the person analysed here (see Appendix). As Flick points out (2007), access
to experience, interactions and documents mark the life experience and allow data to be used
which are sufficiently rich and documented so as to sustain the reflection and the conclusions
of the study. On the other hand, the analysis of the life experience has been contrasted with
the other two co-authors, with the role of external parties in the research.

This case of life experience is a qualitative investigation. It is difficult to find a definition

accepted by the majority of qualitative researchers (Flick, 2007), but an attempt is always
made to understand how people construct the world surrounding them, their activity or what
occurs to them in significant terms and which enable them to learn (Costamagna, 2014).
Qualitative research is pragmatic, interpretive and based on the experience of people
(Marshall and Rossman, 1999). This practical and interpretive nature is characteristic of
research, with the result that qualitative research constitutes a suitable methodology
(Maxwell, 1996).

Life experience description: leadership positions (and styles) in the government, the business
sector and the university

After his initial training stage and a brief spell at university, the life experience of Jos Luis
Larrea (JLL) between 1980 and 2013 has moved between the regional government, the private
business sector and the university, in each case, in positions of high responsibility and with a
profile of personal commitment in the service of the Basque Country. Between 1980 and
1995, he occupied different positions of technical and political responsibility in the
Department of Education (1980-1987) and the Treasury (1987-1995) of the Basque
Government. Between 1995 and 2013, his main activity was concentrated on the business
sector as CEO and/or Chairman of two large regional companies, Ibermtica (1995-2013) and
Euskaltel (1996-1999), but this he combined with his involvement at the University as
councillor of the University of Deusto (1995-2013), Chairman of Orkestra-Basque Institute of
Competitiveness (2006-2011) and Honorary Chairman of Orkestra (2011 onwards) (see Table
1).

[Insert Table 1 here]

5
 He joined the Basque Government in 1980, initially with technical responsibility for economic
planning and programming of universities and research, until 1984 (stage 2), and from then
until 1987, in positions of great political responsibility as Director and Vice-Minister (stage 3).
The Basque Country had at that time a very underdeveloped university system concentrating
basically on teaching and with very little capacity and resources for research and technology
transfer. JLL's responsibilities in this Department were principally concerned with the scope of
planning and educational administration at all levels.

His work in this Department was a reflection of what was happening in the regional
government itself, which had begun to operate in 1980 and which in the course of that decade
progressively took on powers and competences transferred by the central Government. This
element of the construction of a structure of self-government is one of the central aspects of
the economic strategy of the Basque Government in the 1980s (Valdaliso, 2015). During stage
3, the exercise of leadership became a permanent challenge. The educational administration
needed a management model (Larrea, 1985), with definition of organisational structures and
the creation of procedures. Leadership was shown in the demonstration of know-how and was
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accompanied by the social projection derived from political responsibility, something

inevitable in a public position.

In 1987, he became Vice-Minister at the Department of the Treasury of the Basque

Government with the challenge of solving the deep institutional crisis between the Basque
Government and the State regarding the Economic Agreement, on the one hand; and of
consolidating the leadership of the regional Government vis--vis the provincial councils, on
the other. The peculiar institutional architecture of the fiscal system of the region, which had
the widest powers in the matter of taxation and spending anywhere in the European Union,
made it indispensable to coordinate and cooperate between institutions at different territorial
levels: the provincial councils, the Basque Government and the central Government (Zubiri,
2010). The importance of cooperation reinforced the role of leadership. The bilateral relations
with the State through the system of the Economic Agreement presupposed principles of
equality, not unilateral imposition and shared leadership (Larrea and Lambarri, 1991). The
exercise of this role required political and institutional leadership of a special complexity, in a
model in which power was widely distributed. It could not be based on the authority derived
from the hierarchy and required activating trust and conviction in a shared manner.

Between 1991 and 1995, he took on the role of Treasury Minister, a responsibility which, apart
from its facet as manager of the regional government's budget, involves clear political
leadership. The Department of the Treasury was fundamental in the institutional framework of
the regional government. During these years, furthermore, in the context of an economic crisis
and in view of the challenge of Spain's entry into the European Single Market, the Basque
Government started up, as pioneers in Europe, a new policy of competition inspired by the
thesis of Michael Porter (Valdaliso, 2015). The leadership of that new policy was shared. It
started from the ideas on competitiveness and clusters that the Industry Minister and Vice-
President, Jon Azua, had (with a close relationship with Porter), but putting it into operation
demanded powerful executive leadership with the budgetary support that came from the
Department of the Treasury (shared and coordinated leadership). The scenarios of cooperation
extended at this stage to a wider set of actors and relationships within the Basque Country,
with the State and with the European Union. In each case, the profile of the cooperation was
different (bilateral, multilateral), but always based on negotiation and not on imposition.
Leadership at this stage involves knowing how to delegate specific tasks and responsibilities,
concentrating on a role of creator of relationships, which knows how to listen to the rest and
bear them in mind. It was a relational and cooperative style of leadership.

6
 From 1995 onwards, JLL left political activity, the result of a personal decision which arose
from a consciousness of the culmination of a professional stage in the public sector and the
call of the private sector as a new field for the development of the Country and its
competitiveness. He went into the business sector, as CEO and Chairman of Ibermtica, the
most important Basque company in ICTs. Between 1996 and 1999, he combined that position
with the Chairmanship of Euskaltel, a new telecommunications operator in the Basque
Country. His work here consisted of transforming a project into a company, with a
management structure and a well-defined product and market strategy. At the end of 1999, he
left Euskaltel on a voluntary basis to concentrate exclusively on Ibermtica, as Executive
Chairman of the company up to 2013. His activity here from the year 2000 onwards is mainly
involved with a question which was also relevant on the regional Government's strategy
agenda: the transition to a new competitive stage based on innovation and a commitment to
the information and knowledge society (Valdaliso, 2015). Within Ibermtica, JLL started up the
Ibermtica Institute of Innovation (i3B), taking the management on himself. The essence of
the management was not different in the private sector from the way it had been in the public
sector but the organisational culture and the ways of doing things were different.
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Furthermore, the intense technological and regulatory change in the ICT sector meant that the
exercise of leadership went from a more administrative profile to a knowledge-management
and chaos-governance profile (Larrea, 1999b, 1999e, 2000). It became necessary to have a
leadership which governed, not only administered, based on values and not on rules which
was able to activate the forces of cooperation and which faced up to the challenge of
reflection and action (Larrea, 2001b), a cooperative leadership which listens and searches for
consensus (Larrea, 2005b). The experience of leadership at Ibermtica was also faced with a
situation of deep business crisis, due to the Argentina crisis (2001), where the company had a
significant presence and to the technology sector crisis (2002). It was a harsh experience due
to the decisions on employment adjustments which had to be taken and at the same time it
was enriching since leadership is clearly shown in overcoming critical situations.

During all that stage in the private sector, JLL acted in positions of responsibility at the
University, as a member of the Governing Council of the University of Deusto and as Chairman
of Orkestra-Basque Institute of Competitiveness, a knowledge centre in the service of regional
competitiveness supported by the regional government, firms and the university. The initiative
of the creation of the Institute in 2006 started with two highly significant figures in the Basque
Government in the first half of the 1990s, Jon Azua and himself, who had been the persons
responsible for the launch of the new strategy and policy of competitiveness of the
Government during those years (Porter et al., 2016). JLL's leadership now had a doing
component (Larrea, 2011), with a powerful cooperative component which worked to build
basic consensus between different actors (Larrea, 2010).

The experience and consciousness of territorial competitiveness

Throughout the life experience, competitiveness is seen from different angles, responsibilities
and sensibilities, which makes a profoundly felt consciousness arise of its importance for the
territory. The concept and the dimensions of the competitiveness of the individual co-evolved
with the positions of leadership throughout his life experience and with its own general and
intellectual context of the policies and strategies of competitiveness which are dominant at
every moment.

In the first few years (stages 2, 3 and 4) the concept of competitiveness is linked with
economic and social progress in the territory although there is not yet a formal discourse on
competitiveness. His work in the Department of Education made him conscious of the key role

7
 of the university, training professionals, developing research and contributing to the
development of society, and of the importance of R&D carried out by the research centres
(technological and non-technological), companies and other bodies although this activity also
depended on another Department of Government, that of Industry, with which it worked
closely. The articulation of one's own Treasury with the system of Economic Agreement was
understood to be vital to developing a strategy of competitiveness in the service of economic
and social progress in the territory, which inspires public policy and the construction of the
Treasury model, which belongs to everybody and which demands concerted action of social
actors - both public and private.

In stage 5, competitiveness is the reference of the action of the government regarding the
Treasury, finance and economic policy. Furthermore, the process of construction of the Single
Market in Europe involved a particularly significant challenge: it is the challenge of
competitiveness in the economic order, the challenge of social cohesion, the pathway of
progress (Larrea, 1991a). Competitiveness was not the responsibility only of companies and
the private sector, it also required a new Public Administration, more efficient and rational
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(Larrea, 1991c, 1992a and 1993). The concept of competitiveness developed has a marked
social accent (Larrea, 1994a). This component of competitiveness in solidarity was one of the
central objectives of the strategies of competitiveness of the Basque Government in the 1980s
and 1990s (Valdaliso, 2015).

Starting with his joining the business sector, the emphasis was gradually transferred towards
such factors as technology, quality, knowledge and globalisation and their role in the strategies
of competitiveness in companies. Although innovation appears key to competitiveness, the
focus in the 1990s was on quality, something which also happened in the strategies of
competitiveness of the Basque Government in that decade (Valdaliso, 2015). The company
confronts competitiveness by placing value on technology and giving pride of place to
knowledge (Larrea, 1998a, b). The strategies of competitiveness based on differentiation
appear self-evident (Larrea, 1996b), as well as public-private collaboration (because not only
companies compete but also governments and their institutions, Larrea 1996c) and the
dialogue between the local and the global.

From the year 2000 onwards, innovation became the main driving force in strategies of
competitiveness deployed in the Basque Country (Navarro et al., 2014; Valdaliso, 2015).
Competitiveness is expressed in terms of cooperation and solidarity, far from destructive
competition (Larrea, 2005b), anchored in social references and the public sector, as a
challenge which transcends companies and is projected towards governments, not only in
their regulatory facet but also as service providers (Larrea, 2001a). Reflection on
competitiveness incorporates the idea of sustainability, with a focus on process and not on
events, which will be important to understanding a business and organisational culture in the
long term. The formulation of the importance of competitiveness and its relationship with
innovation comes from the presentation of the innovation model in order to compete (Larrea,
2005b, c).

His participation on the Board of the University of Deusto responds to the interest in the role
of the university in society (Larrea, 2005d), and its commitment, companies and public
institutions with the economic and social transformation through the forms of public-private
collaboration. In this area, the most outstanding piece of work was the gestation of Orkestra-
Basque Institute of Competitiveness, between 2004 and 2006, and the chairmanship of this
organisation once it was created in 2006 until 2011 and since then its honorary chairmanship.
His experience at the head of Orkestra is of special importance for the construction of thought
on competitiveness and innovation. It was a matter of creating an institution which would

8
 generate knowledge on competitiveness but at the same time would help the territory to be
more competitive. There was no institution of this nature elsewhere. The challenge as the
Chairman was to make possible a form of work which would make theory and practice, the
generation of knowledge and the leading role in transformation processes compatible.
Orkestra was created so as to be the main active proponent of competitiveness from an open
and shared standpoint: it is not a question of replacing anybody or of monopolising the
debate on competitiveness (Larrea, 2007). From the time it was put into operation until
today, Orkestra has given the Basque Country a common language and a common conceptual
model with which to understand competitiveness and its challenges (Porter et al., 2016). In
particular, the reports on Competitiveness in the Basque Country, published every two years
since 2007, have served to analyse the competitive position of the region and the main
challenges for the different actors involved (Orkestra, 2007, 2009, 2011, 2013 and 2015).

Lessons from life experience for leadership

Lesson 1: The multi-level dimension of leadership

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The formulation of leadership expressed throughout life experience, in a close relationship

with competitiveness, projects its multi-level dimension with clarity. It is a matter of a doing,
transforming leadership, which is manifested at the individual level with the result that the
individual factor is the most relevant but it is projected at the organisational and territorial
level. This raises the multi-level dimension: the individual, organisational and territorial
dimension.

The organisational dimension is basic to the extent that the exercise of leadership at the
individual level is projected in organisations in which the individual carries on his activity. It
presents different levels, according to the profile of the organisation in question: the most
immediate working team, a certain organic unit of an organisation, a directorate or a
departmental area, a company within a business group. It is constructed from different
individuals who act in cooperation.

The territorial dimension has to face a different perspective, which underlines the relevance of
considering itself as an expression of the organisational dimension. In this regard, governments
appear to respond to the organisational expression of the territory but, in practice, they are a
part of the social organisation, not the totality. Public institutions, from the point of view of
the territorial dimension, aim to lead and govern the organization which responds to the
objectives and needs of the territory. For this purpose, they should encourage an
organization which responds to the territorial dimension and which incorporates public
institutions, companies, universities and research centres and the civil society as a whole, all
the economic and social actors who are active in the territory. They may have shared
objectives (positive) or opposite (negative) or indifferent (neutral) with regard to others. So
constructing the organization which aligns all the organisations which operate in the territory
is a complex task because this kind of organisational structure is weak in terms of internal
cohesion and governance. For this reason, it is necessary to insist on the importance of the
triple helix (Etzkowitz and Leydesdorff, 1997, 2000) or the need to articulate processes of
entrepreneurial discovery.

The activity in the regional government, especially in the Treasury Department, which required
collaboration and negotiating with different institutions at various levels (Provincial councils
and local authorities in the Basque Country, with the central Government in Spain, with the
European Commission in Europe) reinforced in JLL the importance of this territorial dimension.
The idea of the size and scale at which the competitiveness and innovation processes arise is

9
 expressed in the process of institutional design (Larrea, 1992b, 1994b). The level of the system
with reference to the most immediate team of collaborators, that with reference to the
organisational/institutional aspect defined by the organization (department, government,
company), and the level of territorial projection (local, territorial, regional, state, above state
level) appears clearly.

During his first few years in the private sector, the emphasis was again on people as the basic
unit of reference. To a large extent, the public management tended to be focussed on the
articulation of public policies in which the social, systemic and organisational approach plays a
very significant role, running the risk of losing sight of what is really the fundamental role of
each individual in their materialisation. In the company, the consciousness of the role of the
individual arises with a special force. Companies depend on the knowledge of their
professionals (Larrea, 1998b), who are key in constructing an open and shared company
(Larrea, 1999d) to deal with the new requirements of competitiveness in a scenario of
profound change (Larrea, 1999a, e). The scenarios of globalisation and the opening of the
debate between the local and the global are going to be very topical (Larrea, 1997a).
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At stage 7, he took an important conceptual step when he formulated in terms of systems of

innovation the knowledge derived from the practical experience, making clear the importance
of the actors of innovation at different levels (individual, teams, organisations, territories),
starting from the person and reaching the whole of society, which takes us to the multi-level
dimension (Larrea, 2005b). At stage 8, the conceptual approximation which is made to the case
of the entrepreneur (individual level) and the university-company cooperation (organisational
and territorial levels) (Larrea, 2008), as well as the concept of fractality in innovation systems,
which is an expression of the multi-level dimension, reinforce that multi-level dimension of the
analytical model of innovation developed. Finally, at stage 9, an effort is made to apply that
analytical model to systems of innovation of a different nature (extensibility of the application
of the model) and to different scales (going more deeply into the multi-level dimension of the
model).

Lesson 2: The commitment to the individual and the collective objective

The commitment to the individual and the collective objective belongs to al levels although it is
more precise to speak of the individual commitment observed from the person who, also,
forms part of an organisation (collective commitment). However, in all cases, the personal
factor must be underlined because it is people who lead processes and project and construct
values. Transforming leadership will be successful if it is based on ethical values of respect for
others and of commitment to one's own objective (individual) and the collective. This duality
between the individual and the collective is in accord with the personal position and the
represented one.

Throughout life experience, respect for others and the search for balance between the
personal and the collective is made very clear from its origins. In stage 2, the personal
commitment with the divulgation of knowledge and academic activity is an expression of this
balance, when socialising knowledge acquired on the individual plane. His incorporation into
the regional government increased progressively his consciousness of the importance of the
public sector for economic development and social progress (Larrea, 1991a). Thus, in stage 3,
the personal commitment to the creation of a new Administration, which is efficient and in the
service of the citizen, is understood. Thought on competitiveness is an expression of the
commitment to economic and social progress. These experiences, which were intensified at
stage 4, configured a professional activity which was focussed on the search for the
transformation to the service of personal and collective progress. Stage 5 is key from the point

10
 of view of the value of the collective and of the personal commitment to individual and
collective progress. The concept of competitiveness has a marked social accent.
Competitiveness and social cohesion look for the best possible equilibrium between business
development and the professional development of people (Larrea, 1994a).

At stage 6, the start up of a new company called Euskaltel was an expression of the equilibrium
between the public (collective) and the private (individual), linking the logic of business
development to its social dimension and to its contribution to socio-economic development.
The formulation of the public-private collaboration, which reflects this equilibrium and
responds to a systemic vision of reality, is fundamental to the economic and social
development of the territory (Larrea, 1996c; 1997b). This boost to public private collaboration
is, on the other hand, a constant in the action of the regional government during those years
(Valdaliso, 2015).

Stage 7 puts the emphasis on the person: technology must be at the service of the person and
not the other way round (Larrea, 2003), and emphasises the importance of social processes:
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The development of people, of their economy and of their society will occur in a gradual
manner, in search of balance and full of contradictions (Larrea, 2003). The expression of
competitiveness in terms of cooperation and solidarity is from this stage, far from destructive
competition (Larrea, 2005b). At stage 8, the creation of Orkestra is evidence of the
commitment to individual and collective objectives. Another manifestation of this
commitment arises at stage 9 with his joining Real Sociedad Bascongada de los Amigos del Pas
and Jakiunde, the Basque Academy of Sciences and the Arts.

Lesson 3: Systemic vision and consciousness of his own role in the system

The systemic vision involves a permanent reflection on the contexts and their importance,
about the whole of the system in which one finds oneself and about the position and role
played in it. Vision and consciousness may be preached both from the individual setting, when
it is a matter of one person within an organisation, and from the organisational point of view,
when it is a matter of an organisation which forms part of another larger one. But it is specific
people who lead those processes, thus the importance of the human factor, which is often
not taken sufficiently into account. Relational leaders, who articulate shared leaderships, have
a systemic and holistic vision which enables them to identify the concrete demands of the
process at every moment (Aranguren et al., 2015). The systemic vision on the part of the
actors who take on the transforming leadership role, both at the personal and the institutional
level, is related with the values and with the search for equilibrium between the individual and
the collective, and it is this that gives consistency to the shared leadership that is necessary for
governance.

Life experience is rich in the holistic and systemic projection about the reality in which the
function is carried out and to which it is necessary to contribute from each person's position.
His entry to the regional government involved the need to deal with problems of a global and
social nature from a holistic viewpoint (all-encompassing). The approach in terms of systems
and models made possible a minimally intelligent dialogue with the different social actors. The
approach to public policies was made from a point of view of a systemic nature, with a holistic
and integrating vision, and an intense modelling activity (stages 2 and 3).

His incorporation to the Treasury Department (stage 4) involved a systemic approach and the
permanent application of models, given that the functions of Vice-Minister are identified with
setting the basis and the conditions for things to happen and be carried out, in many cases, by
third parties. During stage 5, clusterization processes, revision of sectorial public expenditure

11
 and reform of the administration were dealt with. The references to the Basque financial
system are constant (Larrea, 1991b) and give sense to the models of social intervention
translated into public policies. Furthermore, the systemic vision is projected at different levels
and incorporates the relationships between them. This means that each of them must accept
and become conscious of the system (vision of the system) and of the position that he
occupies within it, as well as of the relationships established between its different levels.

At stage 6, the importance of contexts within the systemic vision is stressed. A change of
paradigm is given with the Information Society (Larrea, 1999c). Becoming conscious of the
system framed in its contexts, its multi-level nature and the reflection on the position and the
role that one plans in it are fundamental to the exercise of leadership.

At stages 7 and 8, the importance of the contexts and becoming conscious of the personal
position within the system is reinforced. The approaches to the Economic Agreement as a
subsystem within the social system (Larrea, 2001a) express a holistic and systemic vision. At
these stages, the modelling of a system of innovation arises. Society as a social system faces
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the challenge of innovation (Larrea, 2005a) and requires a model of innovation to compete
(Larrea, 2005b, c). That modelling ends up being reflected in two books (Larrea, 2006 and
2010). The reflection on the role of contexts is also projected on the need to bear in mind the
personal position which one has in the system (the consciousness of ones role).

Conclusions

As we said previously, one fundamental challenge of territorial strategies is linked with the
human factor. The exploration of the role of leadership as a basic expression of that human
factor is fundamental to understanding the scope and materialization of territorial strategies.
The case of life experience analysed makes clear the importance of the person for the
articulation of the strategies of competitiveness and especially the role of leadership.

Specifically, three main conclusions can be extracted from this case study. The first refers to
the importance of leaders learning from their own process of leadership and co-evolving with
the need for transformation which requires territorial strategies at every moment. There is not
a single style of leadership for all needs of transformation of territorial strategies, but rather
according to their evolving objectives and their content, the leadership of people needs to be
changed and adjusted. In the 1980s, when it was necessary to create the structures necessary
for the regional government and administration, the leadership of JLL was made clear in his
know-how (closer to what Collinge and Gibney (2010) call Purposive leadership). However,
since the 1990s, the boost of strategies of competitiveness based on clusterization (firstly
concentrating more on quality and then on innovation and knowledge) has required another
kind of more shared leadership, and in JLL's life history, it can be observed how his leadership
has evolved towards a more shared leadership, learning to delegate tasks and responsibilities
and concentrating more on the role of creator of relationships, for which the activation of trust
was key (approaching more closely what Pearce and Conger in 2003 called shared leadership).

The second conclusion refers to the importance that there should be not only an alignment
between the what for or the vision of competitiveness which it is desired to boost in the
territory and the objectives or vision of the people who are leading this strategy but that
furthermore these leaders should have a commitment to the individual and collective
objective. This is a matter of the importance of having leaders with dual reference
frameworks (Stough, 2001; and Gibney, 2011). The strategies of the Basque Country since
1980 have been characterised by seeking competitiveness in the service of economic and
social progress (competitiveness in solidarity) and the thoughts on competitiveness of JLL

12
 presented in section 5 are totally aligned with that objective. But, above and beyond this, JLL's
leadership is characterised by the constant commitment not only to the individual objectives
but also the collective ones. This commitment has been set down throughout his professional
career in which the exercise of powers in the service of the public administration and of
government responsibilities have been key to understanding the role of the social, of the
common, beyond the individual objectives (personal or those of specific represented groups).
The experience in the private sector confirms this approach.

The third conclusion refers to the fact that there are at least three key features for the
generation of shared leaderships, which are fundamental, above all at the stages of
development based on innovation and knowledge: the individual and collective commitment,
the systemic vision and the consciousness of one's own role in the system and the multi-level
dimension of the leadership (see figure 1).

[Insert Figure 1 here]

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At the competitive stages based on innovation and knowledge, territorial strategies, rather
than plans developed by governments (top down), are living processes which are built with the
participation of different actors. It is usual to emphasise the four helixes (businesses,
government, universities and knowledge centres, and civil society) to refer to these processes,
but there is a significant variety of typologies within each helix, as well as substantive
differences deriving from different sizes (Pierre and Peters, 2000). This variety of actors
involved makes the articulation of the processes of governance and leadership especially
delicate and makes it necessary to articulate a shared leadership. The existence of multiple
actors who participate without responding to a hierarchical structure makes clear demands on
the model of governance of the processes and requires the articulation of a shared leadership
(Martnez and Palazuelos-Martnez, 2009); the more so in regional scenarios which become
more and more complex. A new complexity which cannot be controlled but can be influenced
playing a key role in leadership (Sotarauta, 2009, 2010).

The articulation of a shared leadership is intimately linked with the human factor and with the
importance of values, especially in the search for balance between individual and collective
commitment. The literature on leadership reflects this kind of leadership, which is of special
interest in the processes of entrepreneurial discovery (Conger and Pearce, 2003; Fletcher and
Kaufer, 2003; Pearce and Conger, 2003). The variety of actors involved projects a space of
diversity which requires leadership in cooperation (Klijn et al., 2010). The existence of some
shared values by the actors involved is one of the keys to making possible the articulation of
the leadership. It is the people who take part in the process who project and construct values
through their attitudes and behaviour. The experience lived in the stages in the regional
Government, especially in the Treasury department, makes clear the need and the difficulties
of articulating shared leaderships. In a model of fiscal federalism such as the Basque Country,
both in the facet of the relationship with the State and in its internal aspect, institutional
cooperation is key and requires shared leadership, based on different models of governance
and of multi-lateral and bi-lateral relations. This need is also experienced in the ambits of
public-private collaboration (where the experience of Orkestra is highly significant), business
relationships and internal relationships of any organisation.

Another of the fundamental characteristics for the generation of shared leadership which life
experience makes clear is the need to have a systemic vision and a clear consciousness of the
role which is performed in the system in order to be able to articulate leaderships of a
transforming nature on the part of the actors involved in the territorial strategies, both at the
personal and the institutional level. The systemic vision and the consciousness of his own role

13
 in the system are configured as the mortar which gives consistency to a shared and
transforming leadership capable of articulating the necessary governance in a process of
design and development of a territorial strategy. The relational leaders, committed to the
transformation and who articulate shared leaderships have a systemic and holistic vision which
allows them to identify at each moment the specific demands of the process, in the context of
the general vision. The systemic vision necessary for leadership (Aranguren et al., 2015) and
the permanent consciousness of the role that it is necessary to play in the system makes it
possible to identify and establish the most suitable relationships at every moment.

And, finally, the third key element for the construction of shared leaderships is the multi-level
dimension of leadership. It is specific people who lead the processes and they do so on an
individual basis, as representatives of the collective actors involved or as both things at the
same time. When these people lead processes of development of territorial strategy, apart
from the framework of reference of the organisation that they represent they should have a
territorial reference framework the development of which they are attempting to promote.
The fact that leaders make this multiplicity of reference frameworks their own facilitates the
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generation of shared leaderships and provides a boost to the strategy of competitiveness in

the territory.

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 i
See also the different chapters included in Valdaliso and Wilson (Eds.) (2015) for further theoretical
development of this framework and its application to a set of regional cases from around the world.
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18
 Table 1. Life experience stages

STAGE CHRONOLOGICAL CHARACTERISTICS CLASSIFICATION OF THE

PERIOD
0 1956-1978
1 1978-1980
2 1980-1984
3 1984-1987
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STAGE

Personal background.
Initial training.

Scholarship holder (university)
Academic.

Teacher, Operational research (Deusto
University)

Expert in economic planning and
Planning Universities and
programming of universities and research.
research. Department of Education,
Universities and Research (Basque
Government)

Director of Studies, Budgets and
Public management of
Educational Administration (Basque Education, Universities
Government) and Research.

Vice-Minister for Educational Planning

and Administration (Basque

4 1987-1991
5 1991-1995
6 1995-2000
7 2000-2005
8 2005-2011
9 2012-2013
Government)

Vice-Minister of the Treasury (Basque
Government)

Chairman of Ikastola Olabide
(Teaching Cooperative)

Minister of the Treasury and Finance
(Basque Government).

Minister of Economics and the
Treasury (Basque Government).

CEO and Chairman of Ibermtica.

Chairman of Euskaltel (1996-1999)

Councillor of the University of Deusto.

Chairman of Ibermtica

Councillor of Banco Guipuzcoano.

Councillor of the University of Deusto.

Chairman of Ibermatica

Councillor of Banco Guipuzcoano.

Chairman of the Basque
Competitiveness Institute-Orkestra.

Head of the Ibermtica Innovation
Institute.

Councillor of the University of Deusto.

Chairman of Ibermtica

Head of the Ibermtica Innovation
Institute.

Councillor of the University of Deusto.

Honorary Chairman of Orkestra.

Friend and Member of the RSBAP.

Member of Jakiunde.

Public Management at
the Treasury.

Political leadership and
public management in
Economics, the Treasury
and Finance.

Leadership and business
management in the field
of ICTs (Scenario of
Development).

Leadership and business
management in new
economic scenarios
(Crisis).

Leadership and business
management in scenarios
of competitiveness and
innovation.

Business and Social
Leadership and
Management in scenarios
of crisis and innovation.

Management of end of
cycle.

Source: prepared by the authors.

 Figure 1: Keys for shared leadership development

Systemic vision
Commitment to
and consciousness
the individual
of one's own role
and collective
in the system
objective

Shared
Leadership
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Multi-level
dimension of
leadership

Source: authors elaboration.

 Appendix. References from the life-experience of JLL

Larrea, J.L., (1985) Hezkuntz fluxuak eta Unibertsitateko irakaskuntza Euskadin (los flujos
educativos y la Enseanza Universitaria en Euskadi), in Intxausti, J. (dir., eds) Euskal Herria.
Errealitate eta egitasmo. Realidad y proyecto, Tomo II, San Sebastin: Caja Laboral Popular.
Larrea, J.L. and Lmbarri, C. (1991) El Concierto Econmico, Coleccin Cuadernos Autonmicos
n16 (1 Edicin). Oati: Instituto Vasco de Administracin Pblica (IVAP).
Larrea, J.L. (1991a) Euskadi en el camino del progreso, Expansin (especial 5 Aniversario),
May 1991.
Larrea, J.L. (1.991 b) El Sistema financiero vasco. Perspectivas para una dcada. Ekonomiaz,
20, .
Larrea, J.L. (1991c) Una reflexin sobre el ahorro desde la Administracin Pblica, Lecture given
in Bilbao, 30 October 1991. Bilbao: Bilbao Bizkaia Kutxa (BBK).
Larrea, J.L. (1992a) Administracin Vasca y Convergencia, Expansin, 2 June 1992.
Larrea, J.L. (1992b) El sector financiero vasco: Anlisis y perspectivas, Lecture given in Curso
sobre Adaptacin bancaria a la Unin Econmica y Monetaria de los Cursos de Verano de la
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UPV/EHU, San Sebastin.

Larrea, J.L. (1993) Claves y determinantes de la competitividad de las empresas y del Sector
Pblico, Lecture given in VII Congreso de la Asociacin Espaola de Contabilidad y
Administracin de Empresas, Vitoria-Gasteiz.
Larrea, J.L. (1994a) Administracin y Empleo, Estrategia Empresarial, 1-15 February 1994.
Larrea, J.L. (1994b) La actividad financiera de las instituciones del Pas Vasco. El sistema
financiero vasco. Lecture given in Programa Master en Hacienda y Finanzas Pblicas de la
UPV/EHU, Sarriko-Bilbao.
Larrea, J.L. (1996a) Hacienda Vasca: de la Regulacin al Desarrollo Corporativo en Red Lecture
given in Programa del Diploma y Master en Hacienda y Finanzas Pblicas, de la Universidad
del Pas Vasco y el Instituto Vasco de Administracin Pblica, Sarriko-Bilbao.
Larrea, J.L. (1996b) Globalizacin, Corazn, Alianza y Tiempo, Boletn del Circulo de
Empresarios Vascos n16, octubre de 1996, Bilbao: Circulo de Empresarios Vascos.
Larrea, J.L. (1996c) Sector pblico, sector privado y corporacin, La Gaceta de los Negocios, 14
October 1996.
Larrea, J.L. (1996d) El sistema del Cupo dentro del Concierto Econmico, Lecture organized by
the Real Sociedad Bascongada de los Amigos del Pas (RSBAP), in Madrid, published in 1997
in El Concierto Econmico Vasco, pp 104-123, Madrid: RSBAP.
Larrea, J.L. (1997a) De la denominada aldea global a la aldea local, La Gaceta de los
Negocios, 3 March 1997.
Larrea, J.L. (1997b) La cooperacin entre sector pblico y empresa privada, un reto en
evolucin, Harvard Deusto Business Review, July 1.997. Bilbao: Ediciones Deusto.
Larrea, J.L. (1998a) Las telecomunicaciones como factor de competitividad, Informacin
(Cmara de Comercio, Industria y Navegacin de Bilbao), 2 September 1998.
Larrea, J.L. (1998b) Las empresas y el conocimiento, Evolucin n2, October 1998, Donostia-
San Sebastin: Grupo Ibermtica.
Larrea, J.L. (1999a) Globalizacin, Nuevas Tecnologas y nuevas formas de organizacin, in
Desafos socio-tecnolgicos del siglo XXI, pp 19-23, Madrid: Editorial Amrica Ibrica.
Larrea, J.L. (1999b) La empresa compartida, Archivos del Presente (Revista latinoamericana de
temas internacionales), April-June 1.999, pp 193-203, Buenos Aires: Fundacin Foro del Sur.
Larrea, J.L. (1999c) La revolucin de las Tecnologas de la Informacin y de las Comunicaciones,
Boletin del Circulo de Empresarios Vascos n28, October 1.999.
Larrea, J.L. (1999d) Empresa abierta, empresa compartida, Euskotek, Revista de la red de
Parques Tecnolgicos de Euskadi n 4, 1999.
 Larrea, J.L. (1999e) La empresa compartida: de administrar cosas a gobernar el caos, Direccin
y Progreso, n 168 Monogrfico sobre El directivo del siglo XXI, November-December 1999,
Madrid: APD.
Larrea, J.L. (2000) Tecnologa y sociedad del Conocimiento, Lecture given in Cluster del
Conocimiento, San Sebastin, 6 June 2000.
Larrea, J.L. (2001a) Hacienda, Concierto y Sociedad, in Coleccin de Ensayos. Euskal Herria
ante los retos del III Milenio. Reflexiones sobre el Concierto Econmico Vasco. Donostia-San
Sebastin: RSBAP.
Larrea, J.L. (2001b) Proyecto empresarial y empresa: la eternidad posible, Expansin, 24 July
2001.
Larrea, J.L. (2003) La sociedad de la informacin: De la revolucin a la desilusin?, Boletn
del Crculo de Empresarios Vascos, n 43, October 2003.
Larrea, J.L. (2005a) La sociedad de la informacin y el reto de la innovacin, Estudios
Empresariales n 117, Donostia-San Sebastin: Facultad de CC EE y Empresariales- ESTE.
Larrea, J.L. (2005b) Una aproximacin a los retos de la economa y la sociedad vasca (2.005).
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Tensin creativa en tiempos de bonanza, Lecture given in the General Assembly of Cebek,
Bilbao, 4 May 2005.
Larrea, J.L. (2005c) Un modelo de innovacin para competir, Expansin, 21 May 2005.
Larrea, J.L. (2005d) Innovacin, universidad y cooperacin, El Diario Vasco, 18 July 2005.
Larrea, J.L. (2006) El desafo de la innovacin. De la Sociedad de la informacin en adelante,
Barcelona: Editorial UOC.
Larrea, J.L. (2007) El Instituto Vasco de Competitividad: Agente activo en el reto permanente
de la competitividad, Boletn del Crculo de Empresarios Vascos n55, January 2007.
Larrea, J.L. (2008) El desafo de la innovacin y la cooperacin universidad-empresa Lecture
given in Foro Conocimiento e Innovacin, Intellectus (IADE-CIC), XVIII Sesin Plenaria, Madrid,
6 March 2008.
Larrea, J.L. (2010) Teora (imperfecta) de la innovacin, Madrid: Ediciones Pirmide-Grupo
Anaya, S.A.

Larrea, J.L. (2011) Las pymes y el reto de innovar en tiempos de crisis, Lecture given in Foro
del Conocimiento e Innovacin Intelectus, IADE (Universidad Autnoma de Madrid). XXIII
Sesin Plenaria, Madrid, 25 November 2011.