Top 5 leadership theories and their application for students

by Bella Williams August 30, 2020

Leadership is an essential part of any business studies curriculum. A good entrepreneur must be a good leader with strong comprehension and decision-making skills. And leadership is not a quality one develops overnight. It requires hard work, patience, and a lot of perseverance to become a good leader.

Here are some of the top leadership theories that marketing students learn about as part of their syllabus. I will discuss the 5 main leadership theories relevant to times. This is different from the standard leadership theories you might have read about as mentioned in the image below. 

Transformational leadership

Transformational leadership was first introduced in the 1970s by the political sociologist James McGregor Burns. He identifies two distinct types of leadership, namely- transactional and transformational.

Transactional leadership is where the leader offers incentives to employees to influence their productivity. Transformational leadership requires the leader to motive the workforce with encouraging words and a personal connection.

Both of these leadership styles aim at improving the quality of work in an organization. However, they take different approaches to inspire the team.

In practical situations, students can justify transactional leadership as offering perks and monetary incentives. Transformational leadership is a more visionary and idealistic approach that thrives on transparent communication.

Practical application

In practical or real-life scenarios, transformational leadership is suitable for small-scale business holdings. This is because the workforce is small, and hence it’s easier to establish one-on-one communication with your team.

Transformational leadership also works for start-ups, where the founders take a personal interest in the recruitment process. Transactional leadership, on the other hand, is ideal for hierarchal organizations.

Employers can offer perks, bonuses, and incentives to keep the workforce motivated. This technique works best when you have a relatively large employee base. It spares the leader the time and trouble of having to personally interact with each member. 

Leader-member exchange theory

The Leader-member exchange theory or the LMX theory follows a more contemporary and realistic approach. It is a system that explains human relations and our ability to connect with other people in the team. According to the LMX theory, every organization has two main groups.

The first group is one that gets along with the leader. This group usually consists of high performing and compliant employees. These employees are likely to get promoted or receive incentives from the top management.

The other group is of people who either disagree or don’t approve of the leader. This group usually tends to disrupt and discredit the projects. Obviously, the second group is less likely to be promoted and might even leave the company.

Now, a good leader must try to include everyone in the decision-making process. It is his task to bring the entire team of board and ensure that they work well together.


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Practical application

The LMX theory works well in a homogenous organization. With this theory, the leader can identify the employees who support or disapprove of their leadership. It also puts the onus of responsibility on the employees as they must perform at par with the company standards.

With LMX theory, it is also more comfortable for the leader to define what brings the team together. Students can apply this theory to justify a diverse workspace that has people from multiple cultures and backgrounds.

Adaptive leadership

Adaptive leadership is another modern-day leadership style that is flexible, informal, and easy to implement. Adaptive leadership considers the changing and dynamic nature of the market and tries to customize the organization accordingly.

Both the leader and the employees must change with the changing times. This involves skill up-gradation, training programs, using better technology and more. The political and social scenario of the world also affects the in-house projects and workspace.

The adaptive leadership theory helps the leader identify the areas that need improvement. It is also a useful tool to outline the recurring issues in a company and deal with it rationally.

Practical application

Adaptive leadership is great for small and large-scale organization alike. It is one of the best ways to tackle repetitive issues in a company. The theory works well with all forms of hierarchies. Although, an adaptive leader cannot afford to be complacent with his job

The leader must be strong and dominant enough to impose their will on the workforce. The intention of the leader should be for the betterment of the company, though. Also, the more you adapt, the more you navigate through the obstacles.

Adaptive leadership is also very self-reflective, creating win-win situations for the leader and the company. It leads to empathy, bringing the entire team together towards a common goal. 

Strength-based leadership

Strength-based leadership depends solely on the calibre of the leader. It refers to the strategic abilities of the manager and his ability to manage the employee. As per this theory, the leader tries to motivate the employee to take a voluntary decision for the company.

These prospects of strength-based leadership are to ensure the long-term success of the brand. However, at the same time, you need to ensure the short-term or immediate financial stability of the company.

The leaders and executive managers aim to make the workforce flexible. It is quite similar to the adaptive leadership style, which prepares the company for recurring challenges.  

Practical application

Strategic leadership is the focal point of any company. The leader who follows this leadership style has to juggle between the present and future expectations of the organization. At one point, you consider the long-term success goals for the company. At the same time, you also ensure consistent cash flow in the project.

It helps the leader and the team understand the business environment at a micro and macro level. On the one hand, you need to reflect on the internal affairs of the company. The other side is where you consider the political and cultural changes in the market.

Servant leadership

Servant leadership theory is one that depends on the traditional hierarchy of an organization. However, instead of the team serving the leader, the manager works for the team. According to this theory, the primary purpose of the leader is to help the company.

It wouldn’t be wrong to call Servant leadership as a subversion of the current administration. The leader tries to make the workspace more inclusive and comfortable. His primary objective is to contribute to the development of the team.


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Practical application

A servant leader would be a good fit for a large-scale company that has a relatively large employee base. This leader is ideal for the position of an HR manager as they continuously think of the betterment of the team and not the organization.

A servant leader is, therefore, one who takes a personal interest in the well-being of the team. However, the leader cannot afford to hold any bias or prejudice against anyone in the company. A servant leader identifies the strong and weak members of the team to bring them together. He strives for an equal playing field.

History of Leadership

The idea of a good leader has evolved over the years. The social, cultural, and economic shifts in society affect our understanding of leadership.

Herbert Spencer, an English philosopher, introduced the Great Man theory. According to him, great leaders were born and not raised. The Great Man theory assumes that a good leader has some intrinsic qualities that set him apart from everyone else.

The Trait theory also believed that a good leader is a product of his circumstances. It also stated that the actions of a good leader positively affect his surroundings. However, this theory doesn’t hold much relevance to modern times.

Behavioural theory and contingency theories were other variants of the earlier perception of leadership. These theories also focused on the character traits of a good leader. Unfortunately, these theories had no scientific backing. There is no yardstick to measure how and what exactly makes a good leader.

Students can apply this theory to highlight the authority and superiority of the leader in an organization. You can then move on to justify how modern-day leadership is more flexible and de-centralized.

What makes a good leader?

A good leader, in modern terms, is someone assertive yet sensitive to people. Communication skills and situational analysis are the two significant aspects of any management. Students, in learning about leadership theories, can understand how the very idea of leaders changed over time.

Earlier, a leader was dominant and authoritative. His position was pre-determined and isolated from the team. Now, the organizations are more flexible with their approach. Especially new start-ups have an informal, relaxed, and de-centralized style where everyone has a say.

In today’s business scenario, a good leader must be democratic, emphatic, tolerant and yet affirmative in his decisions.

Quick links and references

Leadership theories literature review

Critically reviewing Transformational theory

The application of strategic theory

A practical example of adaptive leadership

The bottom line

Leadership has evolved over the years, bridging the gap between the employee and the employer. I hope that students have a better idea of leadership after reading these theories. I also tried to explain the practical application of these theories using real-life scenarios.

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