STRATEGIC LEADERSHIP IN GLOBAL BUSINESS ORGANIZATIONS: BUILDING TRUST AND SOCIAL CAPITAL

Abstract

To function effectively in both the near and distant future, leaders in global organizations must understand, develop and exercise trust and social capital. The competitive landscape in the new millennium necessitates that firms develop strategic flexibility. To do so, they must continuously renew their knowledge stock and produce innovations. To implement these strategies, leaders must build effective relationships among members and units in the organization. This relational capital is based on trust and eventually leads to the development of internal social capital. Leaders must also build effective relationships with external constituencies. This is often accomplished through strategic alliances. Similarly, leaders must build mutual trust among alliance partners that over time leads to the development of external social capital. When employees trust leaders, they are more likely to be committed to the organization’s goals, willing to develop firm-specific knowledge and likely to exercise creativity. Likewise, partners in trusting alliances are more likely to transfer knowledge, and contribute to a firm’s innovation. These actions are important in global organizations, but difficult to achieve.

Citation

Hitt, M.A., Keats, B.W. and Yucel, E. (2003), "STRATEGIC LEADERSHIP IN GLOBAL BUSINESS ORGANIZATIONS: BUILDING TRUST AND SOCIAL CAPITAL", Advances in Global Leadership (Advances in Global Leadership, Vol. 3), Emerald Group Publishing Limited, Leeds, pp. 9-35. https://doi.org/10.1016/S1535-1203(02)03002-2