Theoretical Foundations on Corporate Strategy, Strategic Leadership, and Organisational
Performance
Name
Liberty University - Lynchburg, VA
BUSI 101 - Introduction to Business
2022
Theoretical Foundations
The theoretical descriptions of this study, exercise the concepts and abstract principles of the
Resource-based theory, the institutional theory to organization structure and the Fielder’s
Leadership Contingency Theory in regards to the influence on corporate strategy, organization
structure, strategic leadership, and performance in cognizance to the applied characteristics and
use.
Resource-Based View
The concept of corporate strategy is anchored on the resource-based theory. The background of
this theory is often found in earlier studies Coase (1937), where importance is stressed on firm
resources and its effects on firm performance. Penrose (1959) acknowledged the significance of
resources to a firm’s competitive position in affirming that these resources should be extensively
used and the generated valuable services are readily available to the organization. Resources
comprise all assets, capabilities, organizational processes, firm attributes, information,
knowledge controlled by a firm that enables it to implement strategies that increase its efficiency
and effectiveness (Peretomode, 2012). This model is associated with the study by Priem and
Butler (2001) who claim that sustainable competitive advantage is acquired from strategic assets.
A firm achieves extraordinary performance by sustaining a competitive advantage over its rivals
through the implementation of a unique value-enhancing strategy. The concept of competitive
advantage is obtained from industry analysis, strategic organizational leadership and firm
structure in the form of resource benefits and strategies.
Priem and Butler (2001) criticize this theory in stating that the competitive advantage of a firm
based on owning unique resources from its competitors may not last for eternity since their rivals
may copy them in the long run. Robinson and Mital (2012) demonstrate how the viability of a
firm’s advantage position focuses on how easily its resources may be replaced or copied. (Pearce
et al., 2012) show how competitive advantage is sustained over time in allowing us to grasp the
level through which competitive advantage in firms is achieved through its resources.
Institutional Theory
Organization structure is pegged on the Institutional theory. Institutional theory is a commonly
accepted theoretical posture that accentuates organizations as social-cultural systems, and it
focuses on the broader and more irrepressible aspects of social structure. It considers the
processes by which structures, including arrangements; rules, standards, and routines as
authorized guidelines for social behavior (Arneson, 2011). Distinctive segments of institutional
theory clarify how these components are made and adjusted after some time. The accentuation
on institutional theory is regularly seen from the administrative viewpoint. The better legal
environment supports the appropriation of good organization structure (Anon, 2004).
The primary thought of institutional theory is that the organizations are presented and connected
to external environment accordingly; Organization structure ought to guarantee that, there is an
unmistakable connection between the organization and environment in line with the objectives
and goals. The institutional theory asserts that organizational structures and procedures are
adopted because critical external institutions prefer them. Institutional networks are not merely
control and co-coordinating mechanisms for economic transactions; they socially construct rules
and beliefs for conformity and reward.
Contingency Theory of Leadership
Strategic Leadership is based on the Fielder’s Leadership Contingency Theory. Fielder (1967)
that purports that the degree of efficiency of a manager relies on the leadership style they adopt
and the characteristics of the surrounding circumstances which ultimately defines the diverse
leadership style requirements or solutions to address various situations. These solutions depend
on the influences that impact the state surrounding an organization (Bolden et al. 2003).
There have been little advancements on this theory outside organization theory and leadership
theory. Development of trait-based theories of leadership was caused by the dissatisfaction of
this perspective in regards to operation. In other words, the level of confidence of junior staff to
their manager, the level at which a task is designed, and the formal authority controlled by a
manager profoundly influenced a leadership situation, (Fielder, 1967).
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