Abstract
This paper aims to detect the role that strategic leadership may exert on conglomerate diversification performance. Using an in-depth longitudinal study applied to Jack Welch’s two-decade-long strategic leadership at General Electric, we identify intriguing insights that are shown to be helpful for understanding and assessing the role of strategic leadership on the success of conglomerates. In particular, we illustrate how positive heterogeneity in the performance of conglomerate firms may originate from the role that effective strategic leadership exerts to circumvent the “conglomerate traps” (i.e., managerial complexity, resource misallocation, and structural inertia). By doing so, we tackle the paradox offered by the generalizability of econometric studies applied to diversified firms that are not able to explain why some conglomerate firms create exceptional value while others generally suffer from a diversification discount.
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