The importance of strategic leadership in strategy implementation in a chemical industry

Abstract

The global economy is a major irrevocable event whose existence has already had a major influence on organisations today and has created a new competitive landscape in which events change constantly and unpredictably (Ireland & Hitt, 1999). The creation of sustainable competitive advantage is the universal objective of all companies (Campbell & Alexander, 1998). Ireland and Hitt (1999) believe that being able to exercise strategic leadership in a competitively superior manner will facilitate the organisation's efforts to earn superior returns on its investments. The objectives of this study are to assess the perceptions of executives and managers of a South African chemical organisation on the importance of strategic leadership in strategy implementation, and to determine whether there is a difference in the perceptions of the different occupational groups. This research explores the concept of strategic leadership and the components that are key to effective strategic leadership. A literature review revealed that the following five components are key to effective strategic leadership practices: determining the firm's purpose and vision, exploiting and maintaining core competencies, developing human capital, establishing strategic control, and emphasizing ethical practices. The research also explores the concept of strategy implementation, focusing mainly on managerial issues central to strategy implementation. These are: annual objectives, policies, organisational culture, organisational structure, and incentives. The emphasis of the study is on the importance of the role played by strategic leadership during the implementation phase of strategic management processes. This research makes use of a cross-sectional survey design that consists of the total population of 13 group executive team, 25 group management team, and 50 strategic business unit (SBU) executives, and a sample of 412 managers randomly selected using the stratified random sampling technique. The ILC questionnaire was adapted and used to assess the opinions of participants on the importance of strategic leadership in strategy implementation on a five-point scale. The results obtained indicate that all participants perceived strategic leadership to be important in strategy implementation. Across the strategic leadership components, developing human capital was perceived as being the most important component, exploring core competencies as the second most important, determining the firm's vision as the third, establishing strategic control as the fourth, and emphasising ethical practices as the least important component. It could be concluded that the executives and managers of the chemical organisation perceived 'developing human capital' as the most important component because of their current belief that investment in capital equipment is often overemphasised and that the primary opportunity to improve productivity is through investment in human capital. The results of the comparison of means per occupational group indicated a practically significant difference only between the group executive members and the group management team. It could be concluded that the group executive members of the chemical organisation feel very strongly about the importance of proper leadership, especially when it comes to putting strategy into action. The non-existence of a practically significant difference among group executives and the other three leadership groups, and among the three groups themselves, indicates that the leadership of the chemical organisation recognise the importance of strategic leadership in the implementation process. The limitations of this study are as follows: The findings of this study are limited by the unique nature of the sample, which restricts generalisation to other industries. The study focused on the perception of respondents regarding the importance of strategic leadership for strategy implementation in general only, and not on the extent to which respondents perceive their organisation to be using strategic leadership practices when implementing their strategy. This could have provided valuable information to management as well as critical focus areas when planning to close the gap. The questionnaire also did not provide for the respondent to report the 'as is" versus "should be" on strategic leadership practices during strategy implementation.