Leadership in Business

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Leadership in
Business

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Table of Contents
Introduction.................................................................................................2
Comparison and Differences between the two theories..............................2
Conclusion...................................................................................................5
References..................................................................................................6

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Introduction
In today’s competitive business world, the importance of effective
leadership has grown since it allows companies to make sure that they
generate a competitive advantage in the market; however, each
leadership theory has separate characteristics that affect the decisions
taken by the management (Yukl, 2012). Two of the most common
leadership styles adopted by modern leaders include Transformational
leadership theory and Leader-member exchange (LMX) theory. There are
different characteristics of each of these theories which provide different
advantages and disadvantages to parties that rely on them in order to
manage their business operations. The thesis statement will argue that
transformational leadership theory plays a major role in the modern era
than compared to LMX theory since it allows leaders to change as per
adverse market conditions and focus on a diverse range of stakeholders’
interest. This essay will evaluate both of these theories in order to
compare and contrast their key advantages and disadvantages by
evaluating cases of real-world examples. Based on the evaluation of the
advantages and disadvantages of different theories, a conclusion will be
drawn to determine which is better between the two theories.
Comparison and Differences between the two
theories
As the importance of a high performing workforce has increased, it has
become important for the business leaders to make sure that they are
able to inspire organisational members that allow them to go beyond their
job description to achieve better results (Avolio and Yammarino, 2013).
This requirement has promoted the concept of Transformational
leadership that is founded on all levels of an organisation. These leaders
are considered as visionary, risk takers, thoughtful thinkers, inspiring and
daring and they lead employees through charismatic appeal. However,
sole reliance on the charisma of the leader is not enough to create
meaningful changes in the organisation based on which there are four