Skip to main content Accessibility help
×
Home

Understanding the elements and outcomes of executive wisdom: A strategic approach

  • Robert W Kolodinsky (a1) and Paul E Bierly (a1)

Abstract

The purpose of this paper is to: (a) offer rationale for the importance of an increasingly important organizational management topic – the wisdom of top managers – what we call executive wisdom; (b) develop a theoretical framework for the construct, including core components and outcomes, and (c) provide implications for practice. The research in several related literatures is reviewed and synthesized to provide the foundation for the development of this theoretical framework. Applying the extant literature on wisdom to the specific context of a top-level business manager, we argue that there are four foundational characteristics of executive wisdom: (1) Knowledge, developed by prior learning and experience, (2) moral maturity, (3) reflective strategic decision-making, and (4) ability to manage uncertainty. Executives possessing such characteristics are: (a) able to make enlightened strategic judgments that are (b) implemented as principled actions. The effectiveness of such implementation is contingent upon, among other moderators, the executive's leadership skills. We view each of the characteristics as necessary but not sufficient to possess and benefit from executive wisdom. The principled actions undertaken by those possessing executive wisdom will, when compared to other executives, have a greater likelihood of leading to valued outcomes indicative of organizational effectiveness, including enhanced stakeholder trust and loyalty, reputational capital, and stronger financial and social performance. We believe that the main arguments developed in this paper will help improve managers’ understanding of how to become a wise executive and to realize the benefits of doing so. From a theory perspective, this paper adds to the growing body of literature in a new and increasingly valued area of research.

Copyright

Corresponding author

Corresponding author: kolodirw@jmu.edu

Footnotes

Hide All

Deceased.

It is with profound sadness that my good friend, wonderful colleague, and co-author, Paul Bierly, passed away in July 2013, after a decade-long battle with cancer.

Footnotes

References

Hide All
Alsop, R. J. (2004). The 18 immutable laws of corporate reputation: Creating, protecting, and preparing your most valuable asset. New York, NY: Free Press.
Ardelt, M. (2003). Empirical assessment of a three-dimensional wisdom scale. Research on Aging, 25(3), 275324.
Avolio, B. J., Bass, B. M. (1995). Individual consideration viewed at multiple levels of analysis: A multi-framework for examining the diffusion of transformational leadership. Leadership Quarterly, 6, 188218.
Baltes, P. B., Staudinger, U. M. (1993). The search for a psychology of wisdom. Current Directions in Psychological Science, 2, 7580.
Baltes, P. B., Staudinger, U. M. (2000). Wisdom: A metaheuristic (pragmatic) to orchestrate mind and virtue toward excellence. American Psychologist, 55(1), 122136.
Barna Research Online. (2002). Americans speak: Enron, WorldCom and others are result of inadequate moral training by families. Retrieved from http://www.barna.org/barna-update/article/5-barna-update/78-americans-speak-enron-worldcom-and-others-are-result-of-inadequate-moral-training-by-families
Barnard, C. I. (1938). The functions of the executive. Cambridge, MA: Harvard University Press.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99119.
Barrick, M. R., Mount, M. K. (1991). The big five personality dimensions and job performance: A meta-analysis. Personnel Psychology, 44, 126.
Bartunek, J. M., Louis, M. R. (1988). The design of work environments to stretch managers’ capacities for complex thinking. Human Resources Planning, 16(7), 1322.
Bartunek, J. M., Trullen, J. (2007). The virtue of prudence. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 91108). Thousand Oaks, CA: Sage.
Bass, B. M. (1990). Bass & Stogdill's handbook of leadership: Theory, research, and managerial applications. New York, NY: Free Press.
Bass, B. M., Steidlmeier, P. (1999). Ethics, character and authentic transformational leadership behavior. The Leadership Quarterly, 10, 181218.
Bazerman, M. H., Tenbrunsel, A. E. (2011). Blind spots: Why we fail to do what's right and what to do about it. Princeton, NJ: Princeton University Press.
Becker, B., Huselid, M. (1998). High performance work systems and firm performance: A synthesis of research and managerial implications. In G. Ferris (Ed.), Research in personnel and human resource management (pp. 53101). Stamford, CT: JAI Press.
Bennis, W. (1999). The leadership advantage. Leader to Leader, 12, 1823.
Beyer, J. M., Nino, D. (1998). Facing the future: Backing courage with wisdom. In S. Srivastva & D. L. Cooperrider (Eds.), Organizational wisdom and executive courage (pp. 6597). San Francisco, CA: The New Lexington Press.
Bierly, P. E., Gallagher, S. (2007). Explaining alliance partner selection: Fit, trust and strategic expediency. Long Range Planning, 40, 134153.
Bierly, P. E., Kessler, E. H., Christensen, E. W. (2000). Organizational learning, knowledge, and wisdom. Journal of Organizational Change Management, 13, 596618.
Bierly, P. E., Kolodinsky, R. W. (2007). Toward a wisdom-based approach to strategic management. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 6188). Thousand Oaks, CA: Sage.
Birren, J. E., Fisher, L. M. (1990). The elements of wisdom: Overview and integration. In R. J. Sternberg (Ed.), Wisdom – Its nature, origins and development (pp. 317332). New York, NY: Cambridge University Press.
Birren, J. E., Svensson, C. M. (2005). Wisdom in history. In R. J. Sternberg & J. Jordan (Eds.), A handbook of wisdom: Psychological perspectives (pp. 331). New York, NY: Cambridge University Press.
Blattberg, R. C., Hoch, S. J. (1990). Database models and managerial intuition: 50% model +50% manager. Management Science, 36, 887900.
Boal, K. B., Hooijberg, R. (2001). Strategic leadership research: Moving on. Leadership Quarterly, 11, 515549.
Boyatzis, R. E. (2007). Emotional and social intelligence competencies are wisdom in practice. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 223242). Thousand Oaks, CA: Sage.
Brewer, L., Chandler, R., Ferrell, O. C. (2006). Managing risks for corporate integrity: How to survive an ethical misconduct disaster. Mason, OH: Thomson.
Brown, S. C. (2004). Learning across campus: How college facilitates the development of wisdom. Journal of College Student Development, 45, 134148.
Brugman, G. M. (2006). Wisdom and aging. In J. E. Birren & K. W. Schaie (Eds.), Handbook of the psychology of aging (6th ed., pp. 445476). Amsterdam, Netherlands: Academic Press.
Burleson, B. R., Caplan, S. E. (1998). Cognitive complexity. In J. C. McCroskey, J. A. Daly, M. M. Martin, & M. J. Beatty (Eds.), Communication and personality: Trait perspectives (pp. 233286). Creskill, NJ: Hampton Press.
Callahan, D. (2004). The cheating culture: Why more Americans are doing wrong to get ahead. Orlando, FL: Harcourt.
Callahan, D. (2006). The moral center: How we can reclaim our country from die-hard extremists, rogue corporations, Hollywood hacks, and pretend patriots. Orlando, FL: Harcourt.
Cannella, A. A. Jr, Monroe, M. J. (1997). Contrasting perspectives on strategic leaders: Toward a more realistic view of top managers. Journal of Management, 23, 213237.
Carter, J. (2005). Our endangered values: America's moral crisis. New York, NY: Simon and Schuster.
Ching, C., Holsapple, C. W., Whinston, A. B. (1992). Reputation, learning, and coordination in distributed decision-making contexts. Organization Science, 3(2), 275297.
Cialdini, R. B. (2001). Influence: Science and practice (Vol 4). Boston, MA: Allyn and Bacon.
Collins, J., Porras, J. (1994). Built to last: Successful habits of visionary companies. New York, NY: Harper Business.
Cook, S. D. N., Brown, J. S. (1999). Bridging epistemologies: The generative dance between organizational knowledge and organizational knowing. Organization Science, 10, 381400.
Covey, S. (1990). Principle-centered leadership. New York, NY: Simon and Schuster.
Covey, S. R. (2004). The 8th habit: From effectiveness to greatness. New York, NY: Free Press.
Csikszentmihalyi, M., Nakamura, J. (2005). The role of emotions in the development of wisdom. In R. J. Sternber & J. Jordon (Eds.), A handbook of wisdom: Psychological perspectives (pp. 220242). New York, NY: Cambridge University Press.
DeNisi, A. S., Belsito, C. A. (2007). Wisdom and human resource management. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 261273). Thousand Oaks, CA: Sage.
Detert, J. R., Treviño, L. K., Sweitzer, V. L. (2008). Moral disengagement in ethical decision-making: A study of antecedents and outcomes. Journal of Applied Psychology, 92, 374391.
DiFonzo, N., Bordia, P. (1998). A tale of two corporations: Managing uncertainty during organizational change. Human Resource Management, 37, 295303.
Digman, J. M. (1990). Personality structure: Emergence of the five-factor model. Annual Review of Psychology, 41, 417440.
Dollinger, M. J., Golden, P. A., Saxton, T. (1997). The effect of reputation on the decision to joint venture. Strategic Management Journal, 18, 127140.
Dreyfus, H. (1990). What is moral maturity? A phenomenological account of the development of ethical expertise. Retrieved from http://socrates.berkeley.edu/~hdreyfus/rtf/Moral_Maturity_8_90.rtf
Dunne, J. (1997). Professional judgment and the predicaments of practice. European Journal of Marketing, 33, 707720.
Eclles, R. G., Ioannou, I., Serafeim, G. (2012). The impact of a corporate culture of sustainability on corporate behavior and performance. Harvard Business School Working Paper 12-035. Retrieved from http://www.hbs.edu/research/pdf/12-035.pdf
Eisenhart, K. (1998). Making fast strategic decisions in high velocity environments. Academy of Management Journal, 32, 543576.
Elm, D. R. (2003). Honesty, spirituality, and performance at work. In R. A. Giacalone & C. L. Jurkiewicz (Eds.), Handbook of workplace spirituality and organizational performance (pp. 277288). New York, NY: ME Sharpe.
Erikson, E. H. (1950). Childhood and society. New York, NY: Norton & Company.
Ferris, G. R., Blass, F. R., Douglas, C., Kolodinsky, R. W., Treadway, D. C. (2003). Personal reputation in organizations. In J. Greenberg (Ed.), Organizational behavior: The state of the science (2nd ed., pp. 211246). Mahwah, NJ: Lawrence Erlbaum.
Ferris, G. R., Davidson, S. L., Perrewé, P. L. (2005). Political skill at work: Impact on work effectiveness. Mountain View, CA: Davies-Black Publishing.
Ferris, G. R., Perrewé, P. L., Douglas, C. (2002). Social effectiveness in organizations: Construct validity and research directions. Journal of Leadership and Organizational Studies, 9, 4963.
Fombrun, C. J. (1996). Reputation: Realizing value from the corporate image. Boston, MA: Harvard Business School Press.
Fombrun, C. J., Shanley, M. (1990). What's in a name? Reputation building and corporate strategy. Academy of Management Journal, 33, 233258.
Forsyth, D. R. (1992). Judging the morality of business practices: The influence of personal moral philosophies. Journal of Business Ethics, 11, 461470.
Freeman, R. E., Dunham, L., McVea, J. (2007). Strategy, wisdom, and stakeholder theory: A pragmatic and entrepreneurial view of stakeholder strategy. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 151177). Thousand Oaks, CA: Sage.
Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., de Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge, England: Cambridge University Press.
Fry, L. W. (2003). Toward a theory of spiritual leadership. The Leadership Quarterly, 14, 693727.
Fukuyama, F. (1995). Trust – The social virtues and the creation of prosperity. New York, NY: Simon and Schuster.
Gentile, M. C. (2010). Giving voice to values: How to speak your mind when you know what's right. New Haven, CT: Yale University Press.
Giacalone, R. A., Jurkiewicz, C. L. (2003). Handbook of workplace spirituality and organizational performance. Armonk, NY: ME Sharpe.
Gilovich, T., Griffin, D., Kahneman, D. (2002). Heuristics and biases: The psychology of intuitive judgment. Cambridge, England: Cambridge University Press.
Gioia, D. A. (2007). Interpretive wisdom. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 277294). Thousand Oaks, CA: Sage.
Glück, J., Buck, S. (2007). Looking back across the lifespan: A life story account of the reminiscence bump. Memory and Cognition, 13, 19281939.
Goleman, D. P. (1995). Emotional intelligence: Why it can matter more than IQ for character, health and lifelong achievement. New York, NY: Bantam Books.
Gomes-Casseres, B. (2005). Outsource, don't abdicate. CIO Magazine, 19(1), 3639.
Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(Winter Special Issue), 109121.
Greenberg, J. (1990). Looking fair versus being fair: Managing impressions of organizational behavior. In B. M. Staw & L. L. Cummings (Eds.), Research in organizational behavior (Vol. 12, pp. 111167). Greenwich, CT: JAI Press.
Greene, J. A., Brown, S. C. (2009). The wisdom development scale: Further validity investigations. International Journal of Aging and Human Development, 68(4), 289320.
Greider, W. (2003). The soul of capitalism: Opening paths to a moral economy. New York, NY: Simon & Schuster.
Hamel, G. M., Prahalad, C. K. (1994). Competing for the future. Boston, MA: Harvard Business School Press.
Hannon, J. M., Milkovich, G. T. (1996). The effect of human resource reputation signals on share prices: An event study. Human Resource Management, 35, 405424.
Heaton, D. P., Schmidt-Wilk, J., Travis, F. (2004). Constructs, methods and measures for researching spirituality in organizations. Journal of Organizational Change Management, 17, 6282.
Hollander, E. P. (1958). Conformity, status, and idiosyncrasy credit. Psychological Review, 65, 117127.
Hosmer, L. T. (2008). The ethics of management (6th ed.). New York, NY: McGraw-Hill.
Jensen, M. C. (2002). Value maximization, stakeholder theory, and the corporate objective function. Business Ethics Quarterly, 12, 235256.
Jordan, J., Sternberg, R. J. (2007). Wisdom in organizations: A balance theory analysis. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 319). Thousand Oaks, CA: Sage.
Kahneman, D., Tversky, A. (Eds.). (2000). Choices, values, and frames. New York, NY: Cambridge University Press.
Karelitz, T. M., Jarvin, L., Sternberg, R. J. (2010). The meaning of wisdom and its development throughout life. In R. M. Lerner & W. F. Overton (Eds.), The handbook of life-span development (Vol. 1: Cognition, Biology, and Methods, pp. 781837). Hoboken NJ: Wiley.
Kasser, T. (2002). The high price of materialism. Cambridge, MA: MIT Press.
Kessler, E. H., Bailey, J. R. (Eds.). (2007). Handbook of organizational and managerial wisdom. Thousand Oaks, CA: Sage.
Khandwalla, P. N. (1998). Thorny glory: Toward organizational greatness. In S. Srivastva & D. L. Cooperrider (Eds.), Organizational wisdom and executive courage (pp. 157204). San Francisco, CA: The New Lexington Press.
Klein, G. (2003). Intuition at work: Why developing your gut instincts will make you better at what you do. New York, NY: Currency Doubleday.
Kohlberg, L. (1969). Stages in the development of moral thought and action. New York, NY: Holt, Rinehart and Winston.
Kohlberg, L. (1983). The psychology of moral development. New York, NY: Harper and Row.
Kolb, D. (1984). Experiential learning: Experience as the source of learning and development. Englewood Cliffs, NJ: Prentice-Hall.
Kreps, D. M., Wilson, R. (1982). Reputation and imperfect information. Journal of Economic Theory, 27, 253279.
Kunzmann, U., Baltes, P. B. (2003). Wisdom-related knowledge: Affective, motivational, and interpersonal correlates. Personality and Social Psychology Bulletin, 29, 11041119.
Lawrence, P. R. (2007). Institutionalizing wisdom in organizations. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. 4360). Thousand Oaks, CA: Sage.
Lennick, D., Kiel, F. (2005). Moral intelligence: Enhancing business performance and leadership success. Upper Saddle River, NJ: Wharton Business Press.
Life Application Bible. (1991). New living translation (2nd ed.). Wheaton, IL: Tyndale House Publishers.
Limas, M. J., Hansson, R. O. (2004). Organizational wisdom. International Journal of Aging and Human Development, 59(2), 85103.
Malan, L. C., Kriger, M. P. (1998). Making sense of managerial wisdom. Journal of Management Inquiry, 7(3), 242251.
Mathieson, K., Miree, C. E. (2003). Illuminating the invisible: IT and self-discovery in the workplace. In R. A. Giacalone & C. L. Jurkiewicz (Eds.), Handbook of workplace spirituality and organizational performance (pp. 461474). New York, NY: ME Sharpe.
Maxwell, J. C. (2003). There's no such thing as ‘business’ ethics: There's only one rule for making decisions. New York, NY: Warner Books.
McKee, D. (2003). Spirituality and marketing: An overview of the literature. In R. A. Giacalone & C. L. Jurkiewicz (Eds.), Handbook of workplace spirituality and organizational performance (pp. 5775). New York, NY: ME Sharpe.
McKenna, B., Rooney, D., Boal, K. B. (2009). Wisdom principles as a meta-theoretical basis for evaluating leadership. The Leadership Quarterly, 20, 177190.
Meacham, J. A. (1983). Wisdom and the context of knowledge: Knowing that one doesn't know. In D. Kuhn & A. Meacham (Eds.), On the development of of developmental psychology (pp. 111134). Basel, Switzerland: Karger.
Meacham, J. A. (1990). The loss of wisdom. In R. J. Sternberg (Ed.), Wisdom: Its nature, origins, and development (pp. 181211). New York, NY: Cambridge University Press.
Meeks, T. W., Jeste, D. V. (2009). Neurobiology of wisdom: An overview. Archives of General Psychiatry, 66, 355365.
Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization Science, 5, 1437.
Petrick, J. A., Scherer, R. F., Brodzinski, J. D., Quinn, J. F., Ainina, M. F. (1999). Global leadership skills and reputational capital: Intangible resources for sustainable competitive advantage. Academy of Management Executive, 13(1), 5869.
Pfeffer, J. (2003). Business and the spirit: Management practices that sustain values. In R. A. Giacalone & C. L. Jurkiewicz (Eds.), Handbook of workplace spirituality and organizational performance (pp. 2945). New York, NY: ME Sharpe.
Polanyi, M. (1966). The tacit dimension. London, England: Routledge & Kegan Paul.
Porter, M. E., Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 6277.
Price, T. (2003). The ethics of authentic transformational leadership. Leadership Quarterly, 14, 6781.
Putnam, R. D. (2000). Bowling alone: The collapse and revival of American community. New York, NY: Simon and Schuster.
Reichheld, F. F. (1996). The loyalty effect. Boston, MA: Harvard Business School Press.
Rooney, D., McKenna, B. (2007). Wisdom in organizations: Whence and whither. Social Epistemology, 21, 113138.
Schein, E. H. (1996). Three cultures of management: The key to organizational learning. Sloan Management Review, 38, 920.
Schwerin, E. (1998). Transformative research and teaching. In S. Woolpert, C. D. Slaton, & E. W. Schwerin (Eds.), Transformational politics (pp. 91118). New York, NY: State University of New York.
Senske, K. (2004). Personal values: God's game plan for life. Minneapolis, MN: Augsburg Books.
Simon, H. A. (1987). Making management decisions: The role of intuition and emotion. The Academy of Management Executive, 1(1), 5764.
Spender, J. C. (1996). Making knowledge the basis of a dynamic theory of the firm. Strategic Management Journal, 17(Winter Special Issue), 4562.
Staudinger, U. M. (2001). Life reflection: A social-cognitive analysis of life review. Review of General Psychology, 5, 148160.
Staudinger, U. M., Glück, J. (2011). Psychological wisdom research: Commonalities and differences in a growing field. Annual Review of Psychology, 62, 19.1119.27.
Staudinger, U. M., Maciel, A. G., Smith, J., Baltes, P. B. (1998). What predicts wisdom-related performance? A first look at personality, intelligence, and facilitative experiential contexts. European Journal of Personality, 12(1), 117.
Sternberg, R. J. (1990). Wisdom: Its nature, origins, and development. New York, NY: Cambridge University Press.
Sternberg, R. J. (1997). Managerial intelligence: Why IQ isn't enough. Journal of Management, 23, 475493.
Sternberg, R. J. (1998). A balance theory of wisdom. Review of General Psychology, 2, 347365.
Sternberg, R. J. (2000). Intelligence and wisdom. In R. J. Sternberg (Ed.), Handbook of intelligence (pp. 631649). New York, NY: Cambridge University Press.
Sternberg, R. J. (2003). Wisdom, intelligence, and creativity synthesized. New York, NY: Cambridge University Press.
Sternberg, R. J. (2008). The WICS approach to leadership: Stories of leadership and the structures and processes that support them. Leadership Quarterly, 19, 360371.
Streufert, S., Swezey, R. W. (1986). Complexity, managers, and organizations. New York, NY: Academic Press.
Thompson, C. M. (2000). The congruent life: Following the inward path to fulfilling work and inspired leadership. San Francisco, CA: Jossey-Bass.
Treviño, L. K., Brown, M., Hartman, L. P. (2003). A qualitative investigation of perceived executive ethical leadership: Perceptions from inside and outside the executive suite. Human Relations, 56, 537.
Treviño, L. K., Hartman, L. P., Brown, M. (2000). Moral person and moral manager. California Management Review, 42(4), 128142.
Wang, P., Chan, P. S. (1995). Top management perception of strategic information processing in a turbulent environment. Leadership & Organization Development Journal, 16(7), 3343.
Webster, J. D. (2007). Measuring the character strength of wisdom. International Journal of Aging and Human Development, 65(2), 163183.
Webster, N., McKechnie, J. (Eds.). (1961). Webster's new twentieth-century dictionary of the English language, unabridged. New York, NY: The Publisher's Guild.
Weick, K. E. (1998). The attitude of wisdom: Ambivalence as the optimal compromise. In S. Srivastva & D. L. Cooperrider (Eds), Organizational wisdom and executive courage (pp. 4064). San Francisco, CA: The New Lexington Press.
Weick, K. E. (2007). Foreword. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of organizational and managerial wisdom (pp. ixxiii). Thousand Oaks CA: Sage.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5, 171181.
Yasai-Aradekani, M. (1986). Structural adaptations to environments. Academy of Management Review, 11, 921.

Keywords

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed