In discussion many people use the words leadership and management interchangeably, however, the diagram below summarises, in very broad terms, the differences between the concepts of leadership and management.
| Leadership |
Management |
| Motivation |
Organization |
| Encouragement |
Integration |
| Selection of Talented People |
Planning |
| Coaching and Training |
Measurement and Budgeting |
| Building Trust |
Development of People |
(Adapted from Maccoby, 2000)
There are many different theories of leadership and ways of promoting it. Examples include: trait theories; behavioural theories; contingency theories; transformational theories; and transactional theories. For a full description of these theories please follow: http://www2.fcsh.unl.pt/docentes/luisrodrigues/textos/Lideran%C3%A7a.pdf
There is no overall agreement on what leadership means or what it is. Ultimately, however, many agree that it involves influencing others to pursue a common purpose and to do so willingly.
Leadership Definitions
To accompany the many differing leadership theories, there, are also a wide variety of definitions of leadership, for example:-
Leadership is “a process whereby an individual influences a group of individuals to achieve a common goal” (Northouse, 2013).
Hosking and Morley (1991, p.240) interpret leadership as “a more or less skilful process of organizing, achieved through negotiation, to achieve acceptable influence over the description and handling of issues within and between groups.”
The systematic study of leadership offers the prospect of being able to develop an understanding of two things. Firstly, it helps to understand the character attributes and skills that leaders acquire, and which both they and others believe are necessary to improve the quality of leadership in an organisation. This is helpful not only to those responsible for leadership, but also to those who have to recruit leaders (and entrepreneurs) or who want to know how to work effectively with them. Secondly, it helps to understand the contexts in which different approaches to leadership are effective. Social enterprises are varied: small, large, rural and urban, in highly regulated and unregulated industries, growing rapidly, or not at all (Ridley Duff and Bull, 2016).
The Leader
Central to the field of social enterprise is the concept of the ‘social entrepreneur’, although the term is another that is used imprecisely, ambiguously and with a subtly different meaning to ‘entrepreneur’ than in the conventional business literature. Although social entrepreneurs are typically viewed as individuals who bring business and market based skills to the pursuit of social change, a social enterprise is not necessarily the vehicle through which such changes are pursued. As with the traditional entrepreneur, there is no universally accepted definition of the social entrepreneur. Indeed, Mason (2012) highlights the “seemingly endless definitional debate amongst academics” as to the precise nature and definition of social entrepreneurship.
Dees (1998) develops a somewhat idealised conception of the social entrepreneur as a bold and opportunistic change agent working to create and sustain social value, and working innovatively and adaptably to overcome resource constraints. Vega and Kidwell (2007) similarly view them as innovators, particularly in terms of applying solutions to social problems that have not been tried by either the commercial, public or voluntary sectors. They also differentiate between types of social entrepreneur, including those whose passion for the social cause inspires them to become entrepreneurial and ‘serial entrepreneurs’ who decide (or are persuaded) to apply their business skills to the solution of a social problem (Heinecke, 2014)
Haugh (2005) evaluates that traditional and social entrepreneurs and entrepreneurship, have not been well served by the many terms and definitions adopted by researchers and policy-makers. Smith et al. (2014) consider the social entrepreneur to be one who seeks to maximise social value or social capital from non-profit pursuits, creating economically sustainable solutions for social problems (Tracey and Phillips, 2007) and that social entrepreneurs can operate from within existing social enterprises, form new charities, community interest companies and/or non-profit enterprises of all descriptions (Smith et al., 2014). Although the literature often considers the social entrepreneur to be a sub-species of the traditional entrepreneur (Ernst, 2012, Smith et al, 2014), success for the social entrepreneur and the respective enterprise is measured not solely by cost-efficiency and profit (Stokes and Wilson, 2010) but by the extent to which the venture is achieving egalitarian and socially legitimate goals (Wickham, 2006). According to Jones et al. (2008), the traditional entrepreneur seeks private or shareholder gain, while the social entrepreneur seeks to enhance social value. For the social entrepreneur, society acts as the integral stakeholder for which gains are sought. Essentially, a social entrepreneur uses the same commercial techniques and strategy utilised by the traditional entrepreneur, but for the advancement or start-up of a socially oriented venture (Pomerantz, 2003). Social entrepreneurs can operate on their own or as a member of special projects created out of a larger organisation (Germak and Robinson, 2013). Importantly, although social entrepreneurship may share some of the characteristics of commercial entrepreneurship, social entrepreneurship is a distinct form of entrepreneurship (Smith et al., 2014, Austin et al., 2006) and as a result the personal motivation of the social entrepreneur and the personality traits are likely to be different.
Personal Motivation of the Leader
The nature, background, motivation and development of social entrepreneurs have been the subject of a variety of research projects. As individuals they tend to hold a dual identity as both entrepreneurs and activists, their motivations are often shaped by family background and past working experience.
Research into the motivations of social entrepreneurs tends to be anecdotal and/or in the form of case studies, as in the case of the SEDETT project, but suggests a variety of underlying motives that are often community-orientated and sometimes ideological, and evidence suggests that social entrepreneurs act decisively to fill market gaps left by the private and public sectors. (Peattie and Morley, 2008))
Sharir and Lerner (2006) found that social entrepreneurs shared some motivations with their mainstream counterparts (relating to personal fulfilment, independence and creativity) but also tended to have relatively unique motivations linked to personal rehabilitation, community contribution or affiliation. (Peattie and Morley, 2008)
An emerging social trend with the potential to generate social entrepreneurs is that of ‘downshifting’, the adoption of a less pressurised and materially intensive lifestyle in search of an improved quality of life. This typically involves the exchange of a conventional high-earning career towards a more personally rewarding form of activity, and there is an opportunity to attract ‘downshifters’ with strong business skills and experience towards a role in social entrepreneurship. (Peattie and Morley, 2008))
Personal Traits of the Social Enterprise Leader
Ernst (2012) maintains that successful social entrepreneurs possess the same entrepreneurial personality traits as their traditional counterparts (i.e. risk-taking propensity, innovativeness, need for achievement, need for independence and pro-activeness), along with an aspiration to solve issues of a social nature. This pro-social personality, Ernst argues, exhibits higher levels of empathy and a sense of social responsibility than do the personalities of traditional entrepreneurs.
Leadbeater (1997) asserts that social entrepreneurs are more creative than their traditional counterparts, particularly regarding the management of their enterprise. Their creativity maybe born of necessity due to the limited funding and resources many social entrepreneurs face. Leadbeater argues that the abundance of charities and social enterprises with flat open management structures, which subsequent work has identified as a hallmark of a highly innovative and “learning” entrepreneurial organisation, Burns, 2012; Farooq, 2012; Örtenblad,2004 support this claim.
In terms of personality traits, social entrepreneurs tend to be energetic, persistent, confident and inspirational as people and have characteristics including empathy, moral judgment , a high degree of perceived self-efficacy, and a strong social support network. (Peattie and Morley, 2008)
Leadership Styles in Social Enterprise
A key challenge for those working in and working with SE’s is how to help others to be aware of the diverse range of abilities and cultural assumptions that influence their leadership style. Those who acquire leadership roles are often charged with developing, controlling and excluding people, with nurturing an environment where conversations can take place as well as curtailing conversations that put organisational survival at risk (Ridley Duff and Bull, 2016). They are expected to be inspiring, to prioritise, to decide on and give meaning to situations and to direct the organisation towards its social objectives (Smircich and Morgan, 1982).
Respondents in the project were asked about their leadership style and they considered that the following had influenced their leadership style:-
- Feelings
- Personality/ characteristics and
- Previous experience/volunteering/education
For example
“to your history, your feelings, to your personality. I realize to be different from my predecessors. The leadership also depends on the historical moment, the social context etc. There is a time to consolidate and another, like the present, in which we need more democratization and participation. This is the phase of co-responsibility: promote competence of the others is necessary and making sure that from these skills born something new.” (Italy)
Previous experience and education included working in banking, being a doctor, working in the prison service, working as a factory manager and being a business consultant. Examples include:-
“As far as my professional experience is concerned, it’s very diverse. And I use it here, working for the cooperative. My first learned profession is a visual artist but I am also a special education teacher, a graphologist, I organised conferences, worked as an assistant at a university, etc.” (Poland).
“I was a business manager, general manager of IT companies. Multinational companies, very structured. The centrality of the human resource, of the person, is aimed at profit. All the key investments are the resources. All you invest in people will come back to money. The first aim is to make a profit from the people. In this context, where the goal is not to make money but the human being, the social, the difference is always the people. This setup is not “choose the super men and super women” but we need some very motivated people in key positions to pull in everything else. The others, initially driven, at some point turn on and become, themselves, the thrust of someone else. It is a process. The involvement of the phenomenon begins by those who are able to inspire the desire to get involved. Stir up desire to get together, the whole is a key point. Alone you can do nothing. Any attempt to break the sociability goes against the person, maybe promotes economy but not the person. (Italy)
An initial reluctance to hand over management responsibility was noted, however, this reluctance had changed over time, as the organisation had developed.
The leaders of the social enterprises which were involved in the SEDETT project were asked about their leadership style. All perceived their leadership styles to be democratic and participative, even in the larger organisations. Such approaches are concisely summarised by the following quotations:-
“It is a very democratic and participatory leadership. It really is one person, one vote. None is worth more than someone else’s.” (Spain).
“I find that if you go authoritarian with them it’s very difficult.” (Ireland).
“In my everyday work, I am trying to be an example for employees in terms of professionalism and performance, responsibility and taking decision, perseverance in achieving its mission, passion and dedication, respect for employees and others, openness to innovation and development. I think it’s very important for people to believe in their mission and to follow you unconditionally, to be part of the organization’s strategic planning and vision on the medium and long term. I am continually investing in human resource development, because the most precious thing we have in the organization are THE people, and progress is given by continuing education.” (Romania).
The descriptions used by the organisational leaders, resounds with the concept of autocratic/democratic leadership styles. This theory recognises two distinct styles of leadership:
- Autocratic Leadership – someone who likes to centralise and control. They derive their power from their position of authority and control.
- Democratic Leadership – someone who delegates authority, encourages participation and empowers employees. They derive their power from their personal qualities and team members’ respect.
These two leadership styles are not necessarily mutually exclusive. Skilled leaders will blend the use of authority and empowerment of their team to different degrees appropriate to the situation. Some situations, such as an emergency, require quick decision making in an autocratic style. On the other hand, there are times when a more consultative or democratic approach may be better suited, e.g. when reviewing quality initiatives.
| Style |
When best to use it |
Strengths |
Weaknesses |
| Autocratic |
Best used in crises where decisions must be made quickly and without dissent. |
Incredibly efficient – decisions are made quickly, and work gets done.
|
People resent being treated in this manner. Often leads to high levels of absenteeism and high staff turnover. |
| Democratic |
Most suitable when working in a team is essential and when quality is more important than efficiency or productivity. |
Team members have high job satisfaction and are more productive as they are involved in decisions. Staff are engaged and creativity is encouraged. |
Decision-making can be slow. Hinders situations where speed or efficiency is essential. Team members may not have expertise to provide high-quality input. |
(Aberdeen University, https://www.abdn.ac.uk/develop/managers/leadership-styles-299.php)
Heinecke, (2014) suggested that the effectiveness of the social entrepreneur is rated significantly higher by team members when they show a more ethical, transformational and empowering leadership, and effectiveness is perceived as lower if they show more autocratic leadership behaviour. However, as social enterprises grow and develop it may be necessary for the leader to alter/modify this democratic and participative approach.
Evolving Leadership Style
The results from a report by the Schwabb Foundation (Heinecke, 2014) evaluates that there is an important leadership behaviour that is underdeveloped in many social entrepreneurs; transactional leadership. Transactional leadership – often associated with the more managerial side of running the organization – is important to provide followers with guidance and to manage the organization in an effective way. Management guru Peter Drucker is not the only one who emphasizes the need to go from the personal leadership of the founder to management run systems and processes at a certain stage of organisational growth.
Similarly, the Schwabb results suggest that transactional leadership has a positive association with the intention of the leader to stay with the organization, the commitment to the organization and the satisfaction with their own competence and the people they work with. Also, giving positive feedback as part of transactional leadership was related to a higher perception of effectiveness of the social entrepreneurs in the study. The diagram below, maps Social Entrepreneurs onto the spectrum of transactional and transformational leadership and Social Entrepreneurs clearly lean towards the transformational side of the spectrum.
Schöning (2008)
Research by Deloitte (2013) also recognised a shift in the social enterprise sector from ‘social entrepreneurs’ towards ‘social enterprise leadership’. Many of the participants in the Deloitte study evaluated that there had been a step change in the social enterprise leadership debate, as the sector had matured, with emphasis moving away from the ‘founding and or maverick social entrepreneur’.
