Muhammad Yunus - An Entrepreneurial Leader Analysis With Strategic Implications

10/16/2014
Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

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Subject:
Banking industry (Officials and employees)

Leadership styles (Analysis)
Authors:
Butzloff, Peter R.
Greif, Toni B.
Pub Date:
03/01/2007
Publication:
Name: International Journal of Business Research Publisher: International Academy of Business and Economics Audience: Academic
Format : Magazine/Journal Subject : Business, international Copyright : COPYRIGHT 2007 International Academy of Business and Economics
ISSN: 1555-1296
Issue:
Date: March, 2007 Source Volume: 7 Source Issue: 2
Topic:
Event Code: 540 Executive changes & profiles Computer Subject : Banking industry
Product:
SIC Code: 6021 National commercial banks; 6022 State commercial banks; 6029 Commercial banks, not elsewhere classified
Organization:
Company Name: Grameen Bank Bhaban
Persons:
Named Person: Yunus, Muhammad
Geographic:
Geographic Scope: Bangladesh
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Accession Number:
178900203
Full Text:
ABSTRACT
It is important to strike a sense of balance in how social entrepreneurship may be approached in the human care by which leadership learning
is distilled. A best practice concept is suggested to international business that may be shared with others. Many of the leading entrepreneurial
leadership models are evaluated to explain Muhammad Yunus' leadership behavior with regard to empowerment of the poor through the
transfer of human capital used to overcome one type of market failure. Key concepts in entrepreneurial leadership theory are explained in
terms of their increasing importance to implementing sustainable technology in the context of the globalization of professionalism in the real
world. Opportunities for improvement for Muhammad Yunus as a leader are diagnosed and recommendations from examples in the literature
help to synthesize an expanded social entrepreneurial strategy.
Keywords: Leadership Style, Social Entrepreneurship, Entrepreneurial Strategy, Sustainable Technology Adoption, Humanitarian
Professionalism, Best Practice.
1. INTRODUCTION
A Social-Ecological Taxonomy of Entrepreneurial Leadership is developed in the context of the empowering leadership style of Muhammad
Yunus, a professor of economics and banker in Bangladesh, using leadership models in the context of environmental and social economic
systems. The systems school of thought was founded by Thorstein B. Veblen, also an economist, who argued mathematical treatments of
economic systems must mirror the interconnectedness and competition of ecological systems from the level of individual actors to that of the
largest organizations and political systems, (Veblen, 1898). His first fundamental principle points to a lack of ecological sustainability in
conspicuous consumption (Veblen, 1899). The second principle is that economies are founded on the well being of women as family
http://www.freepatentsonline.com/article/International-Journal-Business-Research/178900203.html
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caretakers, as all will suffer if they remain in continued poverty or effective enslavement. Much of the social entrepreneurship of Yunus
therefore targeted women to help overcome systemic problems in present-day developing economies (Yunus, 1999).
2. LITERATURE REVIEW
In the 'Connective Leadership Model,' women are predisposed to be best at achieving societal goal alignment with environmental
sustainability in modern organizations because they are natural stakeholder-mother figures (Lipman-Blumen 1992). This model exemplifies
ecological-economic leadership, but it is indeed unfortunate for the human race if such traits and behaviors can only be exhibited by the
females of our species. Evidence of general systems-based leadership has been identified (Starik and Rands, 1995). A systems connection to
the ecology and the environment is the most common base in the dynamics of businesses (Starik and Markus, 2000). A gender-generic
version of the ecological leadership model has been developed (Ramus and Steger, 2000), and organizational case studies have found
evidence of such leadership (Bansal and Roth, 2000). At least at present, environmental and ecological leadership behaviors are primarily
expressed in non-profit business sectors (Egri and Herman, 2000).
A code of ethics based on impacts to the biosphere (Taylor, 2001) has been formulated to guide firm-based environmental sustainability. The
purposeful direction of national political ideology was viewed by Taylor as playing an essential top-down policy role by evaluating the
reasonable carrying capacities of local ecosystems through shared global ecological stewardships. A spirit based sustainable leadership style
that synthesizes individual moral and spiritual contexts from the bottom up (Bannerjee, 2001) will also help to focus firms on global
externalities. Such leaders of the highest spiritual and moral character are found among our poorest and most marginalized of indigenous
peoples (Trosper, 2002). Meanwhile, a systems based theory of 'Ecozoic' Leadership (Brakebill, 2005) attempts to tie these views together
using political skills and leadership characteristics based on earth-centered principles much like those set out for governments (Taylor, 2001).
The Ecologic-Economic model of leadership (Hezri and Dovers, 2006) combines each of the frameworks of spirit, ideology, and competitive
economics in the context of moral and political interactions by abstracting stakeholder interests and shareholder requirements. In addition, a
systems process approach was recently used to explicitly model leadership for efficiency and creativity with innovation (Galanakis, 2006).
Complexity Leadership Theory (Schreiber and Carley, 2006) now synthesizes environmental systems models with executive leader behavior
within dynamic business cycles bounded by the framework of economic, social, political, temporal, and ecological variables that alter leader
responses locally and globally over time. This is an organic, participative leadership model with a dynamic network structure of adaptive
learning. Complexity Leadership Theory proposes that decentralized egoistic expressions tend to increase organizational tensions, while
altruistic leader decisions focused on promoting social interactions through human capital empowerment tend to lessen those tensions.
Complexity leadership theory embodies the essential systems of the leadership taxonomy shown in Table I, as each requires leader traits,
characteristics, and skills with a similar nomenclature and hierarchy of abstraction. Systems based leadership has many potential nodes of
interaction, thus it is by nature resilient. Systems resilience theory encompasses social learning, social memory, leadership, organizational
transformation, and adaptive legislation to bring dynamic balance back into economic, ecological, and political systems which fall out of
equilibrium over time (Folke, 2006). Pioneering individuals such as Muhammad Yunus are critically important to facilitate lasting change within
complex systems as 'resilience agents' of revolutionary transformation, by acting to repair global market failures.
The core characteristics of entrepreneurial leaders are best provided in the exhaustive national database studies (Reynolds, Carter, Gartner,
and Greene, 2004), (Baum and Locke, 2004). Education level and work experience as human capital assets in prior sole proprietorships were
the two most significant positive indicators of nascent entrepreneurialism in the US. A third indicator is age, as older people are less able to
accept entrepreneurial risk. Rising ecological pressures will favor the highest educated leader of any age group or leadership style as global
competition and sustainability requirements increase (Brakebill, 2005). The importance of individual leadership to the global entrepreneurial
process (Mendenhall, 2006) was clarified by Mendenhall:
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Ventures leveraging diverse educational and national cultures will increasingly be brought together, (Mumford et al., 2002). Our new global
leaders must be able to direct this diverse social power to assist traditionally marginalized peoples. One way to do this is by providing
economic opportunities that enable the poor and the powerless to change their circumstances, especially where governments and traditional
non-profit organizations fail to accomplish it.
In thinking that increases the understanding of social entrepreneurship, some have focused on social relationships between leaders and
followers (Reicher, Haslam, and Hopkins, 2005). Others support the concept of self-sacrifice (De Cremer and van Knippenberg, 2005) as an
operationally independent entrepreneurial leadership characteristic at statistically separate variance from trust and shared goals. Social selfsacrifice has also been defined as when individuals set up new approaches to specific problems outside the scope or boundaries of public
and governmental social services while also incurring great personal economic sacrifices (Hemingway, 2005). In this view, self-sacrificing
values drive social entrepreneurial behavior on a personal level to overcome any organizational constraints that act to limit their potential,
because a sense of responsibility requires these individuals to take control of any opportunity to make a change that benefits and empowers
people, while challenging a current system that may act to limit people. The social entrepreneur can also be viewed in terms of interpersonal
relationships deliberately cultivated to be useful in global and cross-cultural contexts (Sen, 2007). The task of the social entrepreneur has also
been defined in terms of the ability of a leader to create or distribute social value in the face of few capital assets by employing innovations in
ways others have not been able to see (Peredo and McLean, 2006).
A business leader implements organizational socialization by use of personality traits such as adaptability, resilience, willingness to take risks,
as well as habits that reflect a need for achievement such as continuous learning, a personal philosophy such as an egocentric desire for
achievement, altruistic behaviors that engender trust in others, and the ability to regulate internal and expressed emotions (Cross and
Travaglione, 2003). More abstractly, emotional intelligence (EI) can be thought of as either task or relationally oriented (Kellett, Humphrey, and
Sleeth, 2006). EI enables leaders to meld diverse technical expertise and creative problem-solving skills within a dynamic work environment.
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Testing for both trait emotional intelligence and the 'Big 5' personality traits, it has been found that conscientiousness is the single most
important EI trait associated with entrepreneurial success (Chamorro-Premuzic, Bennett, and Furnham, 2007). Other studies conclude that the
adaptive strengths of 'trait EI' in a leader are enabled by their deliberate variation in the context of the work environment (Sevdalis, Petrides,
and Harvey, 2007), thereby establishing a fundamental premise of trait EI theory that differentiates it from those that view EI as a behavior.
Internal conflict promotes the expression of heightened creativity (Hoegl and Parboteeah, 2007). When both positive and negative affect EI
individuals are present in a heterogeneous top management team, this has been found to generate a creative conflict that favorably reduces
the 'ignorance threshold' point at which opportunities are deemed to be sufficiently known (Barsade et al., 2000). Known opportunities then
allow better group exploitation (Choi, Levesque, and Shepherd, 2007).
3. THE INTERSECTION OF LEADERSHIP THEORY WITH THE BEHAVIOR OF ENTREPRENEURIAL LEADERS
The following dimensions determine the intersection of leadership characteristics and entrepreneurial fit (Markman and Baron, 2003): Self
efficacy, opportunity recognition in economic cognition; perseverance, social and human capital in tacit and explicit knowledge and skills; and
social skills in emotional intelligence as well as in humanistic intelligence. In reviewing the different cognitive approaches individuals with
creativity may bring to a business, entrepreneurs may use 'concept specialization' as well as 'conceptual combination' as their generic formula
or mechanism for new venture creation (Ward, 2004). Synergies between the entrepreneurial plan and basic human capital must exist to bring
that plan to fruition.
Emotional intelligence moderates interpersonal conflicts and threatening actions (Williams 2007) in terms of imagining possible outcomes
from the viewpoints of others, altering the perceived perspective of situations, and enabling corrective behavior in small groups over moderate
time scales. It may be difficult to keep the peace between or within organizations over greater numbers of more diverse people. The currently
available and validated instruments measuring entrepreneurial global leader competency has been summarized (Mendenhall, 2006).
One study shows that personal humility and productive narcissism in the form of introverted and skittish behavior characterizes the best
organizational leaders (Harrison and Clough, 2006). They refine the intersection between individual leadership characteristics with
organizational entrepreneurship to be when this leader is fanatically in love with the chosen field or project of endeavor; because of this
synergy, all things become possible. In addition, one significant common practical behavioral element in most leaders of small business is
their kindness to workers and business partners (Thakur, 1999). The entrepreneur is therefore more than an economic manager of resources
who takes advantage of opportunities. To be a successful innovator of ideas, the entrepreneur is characteristically and generally kind. Thakur
revitalizes our perception of classical stakeholders and shareholders by showing how this more fundamental level of interaction takes place.
Self-efficacious, risk-taking, innovative, competitive, and proactive entrepreneurs as well as their firms will depend more and more on their
multicultural foundations to remain aggressively competitive (Lee and Peterson, 2000). It has been suggested that 21st century firms will be
characteristically multi-cultural because they will be formed at the outset as global entities, thereby requiring culturally intelligent managers
(Bruton, Lohrke, and Lu, 2004). To achieve global leadership success in the future, entrepreneurs will increasingly need to use cultural
intelligence to moderate their confluent application of emotional intelligence, analytical intelligence, and leadership skills (Alon and Higgins,
2005). Leaders who are able to make cosmopolitan social links and associations between countries, cultures, and languages will therefore be
most able to make global opportunity evaluations. In this international context, significant multi-stakeholder and shareholder interactions are
increasingly important to address greenhouse gas emissions and global warming issues (Vergragt and Brown, 2007).
Any business is capable of both making a profit for themselves and leveraging a positive contribution to their community (Wallace, 1999). A
connection exists between altruism and egotism in a business context, therefore a taxonomy for a Politically Economical Person (PEP) has
been created (Soderbaum, 1999). Nevertheless, any leadership vision can become diluted in a sufficiently large organization, which therefore
explains a key political dimension of variability in organizational performance (Berson, Shamir, Avolio and Popper, 2001). The entrepreneur
may be driven by cultural values, a country of origin context, a personality type, or various kinds of knowledge (Shook, Priem, and McGee,
2003), but it is difficult to know the extent of personal or business change any leader-entrepreneur may undergo to successfully manipulate
their business environment into a positive outcome.
The connection between altruism and egotism in a business leadership context has been more recently explored (Sosik and Dinger, 2007) to
find that self-monitoring behavior provides a key understanding in the synthesis of entrepreneurial behavior with leadership behavior. Their
Table I indicates those leader vision themes that correspond well with organizational leadership visions found elsewhere (Berson, Shamir,
Avolio and Popper, 2001). The most significant conclusion of both these study results is that the personal ego of he entrepreneur is satisfied by
external organizational control together with individual altruism as an internal organizational control, which is consistent with the mechanism of
resiliency theory in the systems approach to leadership.
The entrepreneurial leader must increasingly face global paradigm shifts as it relates to 'creative destruction' of firms in the business cycle. The
criteria for a paradigm 'revolution' must include: wide applicability, significant cost reductions, and large new market creation (Buttel, 1989).
Buttel also suggests these criteria must affect the social and technical relations of the world economy in a step change of revolutionary
transformation in organizations, causing a ripple effect throughout global industries and societies.
An organization's political or associative social activity interacts with its methods of information use to make decisions so that the sum of both
these processes must be applied in the same direction to constructively enhance organizational performance (Thomas, and McDaniel, 1996).
Organizations express entrepreneurial behavior in terms of the intervals between periodic changes of their business process, including
changes between the various types of those processes (Das and Van den Ven, 2000). The executive adjustment of the pace of organizational
change to meet the pace of technological and market change has been conceptualized as a process of 'entrainment' (Ancona, Goodman,
Lawrence, and Tushman 2001). Market changes and product innovation are therefore tied to the business and technical knowledge of the
individual entrepreneur as the emergent small businesses leader may need to change direction quickly to seize an opportunity (Park, 2005).
Model taxonomy of entrepreneurial leadership (Lant and Mezias, 1990) has been based on three classical strategies: adaptive (new to the
global population), imitative (new to the firm), and fixed (no innovation required). Highly adaptive firms that scan the market are most likely to
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identify what needs to change. Both strategy and structure are under the direct and cognizant control of the entrepreneurial leader. If measures
are not taken early to preserve a system of checks and balances with an ethical intent, then the firm may loose the ability to maintain an ethical
vision over the long term (Keijzers, 2002). Ethics in this process should be seen as an evolving dialog that provides a clear description of intent
to all parties involved (Ackoff 1987).
The leaders in a growth industry, however, have little place for possible misdirection in the exploration of innovations. They have likely just
emerged from a cash-flow problem, and to stay competitive they need to improve efficiency or risk returning to the days of low cash-flow. Here,
professional networks are important political and transformative aids in the growth phase of the business cycle (Tagliaventi and Mattarelli,
2006).
The seminal work of Low and Abrahamson provides a major contribution to the intersection of business context and leadership (Low and
Abrahamson, 1997). This contribution has been modified to produce Table II for consistency with the social-economic-ecologic leadership
taxonomy developed in Table I. Jargon for the business context: movements, bandwagons, and clones, was replaced by the more transparent
nomenclature: emergence, growth, and maturity, respectively. This formulation leans heavily on past socio-economic systems behaviors
coupled with trait EI theory. In addition, the taxonomy of Low and Abrahamson considered entrepreneur network dispersity and density as a
fixed category. This perception was altered to reflect the recent understandings developed above for human capital recognition in spiritual or
charismatic leadership.
Next, the category of confidence building behavior suggested by Low and Abrahamson was used to develop the self-actualizing skills
category in essentially the same organizing process for the proposed social-economic-ecologic taxonomy. Similarly, the strategy and structure
category was found to be a specific type of marketing skill. Low and Abrahamson provide no explicit dimension for creativity in the organizing
process, yet it is generally accepted that leader creativity plays a great role in the emergence and maturity business contexts.
4. MUHAMMAD YUNUS: A LEADER PROFILE
At a time when Muslims are stereotyped, dehumanized, and feared as hopeless fanatics, Professor Muhammad Yunus of Bangladesh has
emerged to become a spiritual leader of extraordinary vision for peaceful but radical economic revolution. His pioneering social
entrepreneurship began with the applied advancement of economic systems theory to assist the poor (Mumford and Licuanan, 2004),
(Galanakis, 2006). Yunus has directed the seeding of competing and evolving micro-finance banks in multiple countries and cultures. His
organic change initiatives characterize an amazingly dynamic 'resilience perspective' (Folke, 2006). By leading his Bank to support
ecologically sustainable solutions, Yunus embodies networked action in a systems theory context, as developed here with the taxonomy of
ecological leadership in Table I.
Muhammad Yunus is the leader and founder of the pioneering Grameen Bank (Yunus, 1999) that has a global presence in many poor
countries, and is even exporting that economic technology to serve the poor of wealthy nations including Indian tribes in the US and Canada,
and even as far away geographically and culturally as Finland and Norway through global outreach programs (Conlin, 1999). The
microfinance concepts successfully developed by Yunus capture a market failed by traditional banks that refused to lend to the poor due to a
blind reliance on asset capital rather than human capital (Bond and Rai, 2006). Market imperfections "provide significant opportunities for the
creation of radical technologies and innovative business models" [to] "establish the foundations for an emerging model of sustainable
entrepreneurship" (Cohen and Winn, 2007, p. 31).
The pursuit of entrepreneurial profit can exist within an ethical leadership framework (Dempsy, 2000) in the context of social entrepreneurship
(Seelos and Mair, 2005), (Peredo and McLean, 2006), (Sen, 2007). This type of leadership behavior was shown by Professor Muhammad
Yunus in his spiritual guidance for radical and pioneering change in banking by his sensitive use of loan marketing to disadvantaged women,
while addressing their political realities. Often these small business loans help provide goods and services to larger firms, which is a good
market practice (Filson and Gretz, 2004). His personal values and methods are intimately tied to a confluence of moral imperatives and ethical
revenue capture, where all sides benefit through the production of capital (Hemingway, 2005), thereby resulting in the empowerment of the
poor. According to Gray (1992, p. 401):
The Grameen Bank's profile as a lending organization is best described as an institution focused on financing sustainable ecological
applications of technology (Barua, 2001), (Biswas, Bryce, and Diesendorf, 2001). Grameen Bank also has a focus on environmental and
political change to promote democratic principles (Amin et al., 2003), (Bayes, 2001). Yunus directed his bank to require immediate and
dynamic local adaptations in lending strategies and repayment schedules in the face of natural disasters on multiple fronts (Yunus, 1999),
demonstrating his ability to lead others by being adaptable, as the concept of leader adaptability has been clarified (Harrison and Clough,
2006). Yunus' applies emotional intelligence (Cross and Travaglione, 2003) to moderate interpersonal conflicts and threatening actions
(Williams, 2007) in the face of natural disaster. Yunus was always able to imagine possible outcomes from the viewpoints of others while he
helped them to alter their own perspective of various dire situations (Yunus, 1999). In particular, Yunus uses his personality to express the
spiritual behavior and moral qualities of a leader (Parameshwar, 2005). His ecological innovations, especially those that produced a banking
profit, arose from how he formed a bridge of strategy between his banking firm and the external stakeholders (Van Kleef and Roome, 2007);
this leadership aspect is a key part of the taxonomical profile of ecological leadership developed in Table I. Yunus' leadership therefore
demonstrates the sustainable systems skills which fit the proposed ecological-economic leadership taxonomy.
Professor Muhammad Yunus' pioneering exploitation of worldwide inequities in the financing of credit to poor people rests in large part on his
efforts to socially emancipate women treated as property (Yunus 1999) in the harsh realities of third-world countries (Schuler, Hashemi, and
Riley, 1997) by the complementary use of cultural intelligence and emotional intelligence skills (Alon and Higgins, 2005). The authenticity of
Yunus' concern and kindness for others is reflected in the Thakurian depiction of such a leader (Thakur, 1999). This authenticity primarily
reflects Yunus' firm belief in people to empower themselves, and is the key motivating element of his leadership style. Yunus is also able to
use social relations to network the expertise of others; these skills demonstrate political leadership behavior (Mumford et al., 2002).
4.1 Practical Application of Entrepreneurial Leadership Theory and Concepts to Actual Events
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Yunus's own approach to leadership in the Grameen Bank organization is to charismatically influence the poor to empower themselves in
grass-roots efforts, identify the natural leaders who become most personally involved in helping others, and then provide these people with
capital resources to expand that work elsewhere in a system of moral trust in the delegation of financial authority, Yunus (1999). He loves to
tell stories, and this method of using social skills to create shared meaning is clarified by Downing (2005). As a leader, Yunus convinces
people not only to cooperate in light of what they know, but motivate them to make every reasonable effort to do so. As a visionary
entrepreneur, he imagines an achievable way to exploit finance as potential for profit, and learns from his mistakes. Yunus discovers that
moral support groups are crucial for repayment success (Yunus 1999, p. 62), revises his accounting system (ibid, p.70), realizes young people
are his best resources (ibid, p. 100), and acts to implement that vision through external and internal networks (ibid, p. 250) to leave all parties
in a much better economic and ecological position than when he arrived.
Yunus effectively grasps and inspires those who have seen or experienced great pain and suffering at some point in their lives, and utilizes
this as a turning point in theirs, just as it was a turning point in his own. Yunus (1999) states: "First, I believe the best way to inspire a new
worker is to let her see firsthand the real-life problems of the poor. I wanted Nurjahan to have her heart toughed by the reality of poverty." (p.
80). He arouses the personal empathy of ordinary people. They then reach a transformative point as they see by their own actions they need
no longer continue to bear the suffering of others. By acting, others may then relieve their own suffering memories of exposure to that
experience. According to Borstein (2004, p. 240):
"at some moment in their lives, social entrepreneurs get it into their heads that it is up to them to solve a particular problem ... the person takes
decisive action ... and ... from that point on ... seem to cut off other options for themselves.
This is exactly what happened to Yunus during the drought of 1974 in Bangladesh. His life became so focused on solving the problems of that
country, that by remaining in Bangladesh after that point, his own wife left and divorced him because she was not willing to embrace the kind of
lifestyle in which he continuously placed himself. If charity truly begins at home, then Yunus tended to place his own first wife outside of it. This
is where Yunus does not fit the Ecologic-economic profile. This is not because he did not believe in the empowerment of women, but because
his inner motivation to help most people, especially including women in general, was far greater than his particular devotion to any one person
who demanded large changes in his behavior and country of residence that were inconsistent with who he feels he is, and what he feels he
must do with his life.
A conceptually salient theory of entrepreneurship that includes a mission of societal and ecological value together with one of profit was
proposed by Dean and McMullen (2007). Their taxonomy of entrepreneurship intersects each abstraction indicated by the ecologicaleconomic leadership taxonomy developed here. Especially notable is the role of new enterprise to address government and institutional
market failures. Their concept of anti-property forms a key part of this rationality, which they term 'resource non-excludability'. Their collective
'commons' comprises globally shared property concepts such as atmospheric carbon reduction, global energy sustainability, and global
biodiversity conservation. Each of these features characterise Yunus' entrepreneurial approach and typical Bank funding priorities.
Yunus challenges the policies of the International Monetary Fund on the global stage, and this strongly couples with how he sees
opportunities to expand microfinance in places that the World Bank has or intends to create a foothold. Yunus has also been an outspoken
international critic of the policies of the World Bank (WB), where he at first single handedly, and then later with increasing international support
from the United Nations, uncovered the way that the poor were suppressed by the granting of monies, equipment, and manpower to the ruling
hierarchy, thereby reducing the opportunity for meaningful social change from the lowest levels up.
It is critically important for a leader to have positive feedback from the global community. Yunus ability to self-empower women and their
families is exemplified by the housing program of Grameen Bank, where these structures were designed by the people who would live in them
and request financing to build them. These structures won the International Aga Khan Award for Architecture in 1989, and later, the World
Habitat Award in 1997. It called international attention to global-scale entrepreneurial leadership by the poor, in projects that can be used to
serve the poor elsewhere. These awards in turn affected Yunus by reinforcing his confidence and providing him global legitimacy, which he
then used to justify the scaling up of his funding levels to expand his program to other nations.
4.2 Yunus's Creative International Entrepreneurship
By remaining a professor of economics, Yunus perpetually retains his ability to act from a fresh perspective, and is able to separate himself
from the past, unlike most entrepreneurs who have a deep daily involvement coupled with their personal stake and investment in their
company. This makes Yunus more aware of ethical obligations, and grants him unusual flexibility in maintaining an international image when
exporting microfinance to other countries. Yunus expressed an ability to "self-correct some apparent inflexibility in Grameen Bank" (Borstein,
2004, p. 234) which surfaced after many years of success. In an act of due diligence he then opened Grameen Bank II in 2002 to compete with
his own first bank. Now he uses a completely retrained staff to better target adaptability in borrowers needs, effectively reversing many of his
own previous policies and ideas in a competing organization. It should be noted here that a dearth of network contacts within an emergent
industry causes a serious handicap for further industry development (Aspelund, Berg-Utby, and Skjevdal, 2005). By serially creating so many
different micro-financial banking institutions worldwide, Yunus effectively negates this most critical industry-resource scarcity weakness.
Yunus has especially recognized the relation of ethics to societal transformation in the adaptive changes he encouraged as he exported
microfinance to the Philippines. His ethical branding of microfinance as a familiar product with known functionality enhanced its' legitimate
business context (Madhok, 1997). This context familiarity reduced a significant part of the transaction costs associated in relations with
traditional banks. Even the World Bank that Yunus criticized eventually funded his efforts due to the suddenly shared perception of a legitimate
international social value unobtainable by any other comparable institution.
Yunus creatively and personally cultivates external alliances with global organizations. For example, he works with Responsibility for Ending
Starvation Using Legislation to endorse and support changing existing laws in wealthy nations that needlessly oppress poor people there. He
works to advocate the permissible export of microfinance banking concepts to the US, Canada, the UK, Germany, Japan, and Australia. It is
presently still the appalling law in these countries, including the US, that welfare recipients are "not allowed to borrow money from any
institutional source." (Yunus, 1999, p. 185). This humble Bangladeshi shows us how wealthy societies continue to oppress the poor on their
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own soil.
The theory of social capital comprises a critical framework for our present understanding of social entrepreneurship (Woolcock, 1998). A key
influence of Globalism is the expanding social context of social capital from within the firm, (De Carolis and Saparito, 2006), to those political
and social norms outside of it (Becker and Ostrom, 1995), (Miller and Rose, 1995). The implications of skilled entrepreneurial leadership on
the social aspects of organizations to help the poor, and bring about social change, are only now seeping into the minds of the technically
competent. The funding of sustainable technologies under the direction of Yunus through Grameen Bank micro-financing and industry
approvals have indeed been initially adamant, but keeping up the pace of that commitment will require the introduction of social entrepreneurs
of a totally different caliber and knowledge base, to touch on every other kind of professional expertise. Why should the poor have to rely on
the poorly educated for technical assistance? Yunus was able to accept initiatives different from his own to complement his own organizational
efforts in the past. We have every reason to expect others will soon appear outside of his own micro-financial context to lend far-reaching and
complementary levels of expertise and human capital.
By his successes, Yunus has made himself a focal point to transfer new ideas and technologies to the poor in underserved markets. The next
level of due diligence is to effectively bring strange and recently developed high technologies normally associated with the projects of the rich,
and implement them to meet real human needs for the suffering poor. Imported technologies will be critical to this effort. This effect may even
help mitigate some of the more dramatic international failures that most modern companies face with respect to international purchasing
(Quintens, Pauwels, and Matthyssens, 2006). Microfinance may therefore be only the first of many types of strategic plans to help the poor in a
range of unusual solutions.
Innovative technologies may be developed using company resources in parallel rather than sequentially to provide early input to the
development process, thereby reducing development risk by use of a social strategy (Sykes and Dunham, 1987). Such a development strategy
is quite consistent with a social entrepreneurship philosophy where all stakeholders provide essential diversity in determining the most ethical
and mutually rewarding decision on how implementation should proceed. Social capital and social entrepreneurship are therefore
complementary. Technology creates such diverse levels of social capital, however, that serious ethical questions of the future will arise
concerning the allocation of the available technology or its development to the problems of the day. Leadership will be required to make the
correct selection when serious harm must be avoided to protect large populations. Yunus appears to have this type of discretion.
Yunus has a profound ability to gauge human nature and use the ethical process to question and change his own assumptions when faced
with undeniable new facts. Yunus eventually comes to a fundamental realization that his only valid assumption remaining is that the poorest
peoples inevitably have the most highly developed moral and ethical sense of all human beings in their respective societies. His tacit
knowledge of moral values in poor people allowed him to expand and alter the application of microfinance throughout the world in completely
different cultural contexts, climates, and races of people. His charismatic leadership style helped him to recognize the socially transferable
value of people as trust could replace currency as collateral. Furthermore, Yunus was trained at the doctoral level in economic theory. He had
the skills to apply his theoretical knowledge to make connections utilizing human capital value to obtain economic worth over time, and did
much to develop micro-finance banking (Leederwood, 1999). Yunus' cognitive ability to translate accounts is known in the scholarly literature
as "Translation Theory", and is about converting between similar levels of abstraction in parallel taxonomical classes (Creed, Scully, and
Austin, 2002, Table I).
What Yunus did differently from traditional banking institutions is to reconsider the holding of cash or objects convertible to cash as collateral
for loans as the only form of security. This transaction works well in an affluent urban environment where people move often, identity is not
secure, and individuals may easily leave areas of jurisdiction to avoid repayment. The exclusive use of cash basis collateral in developing
countries is now seen to be an issue of the deprivation of the opportunity to create wealth for the seriously needy by the historical policies of
the exceptionally greedy; this context and possible outcomes have also been previously explained (Weston 1968). It is this institutional
paradigm of incipient financial market failure that was so creatively addressed by Yunus (Yunus, 1999).
Muhammad Yunus was the first American trained economist to study poverty that was able to show conclusively that microfinance requires an
evolving context. "The process through which people become poor changes, as do the means to alleviate poverty.... the means used to reduce
poverty had to be changed and refined constantly to keep up with changes in poverty dynamics" (Dowla and Barua, 2006, p. XV).
Yunus began his Grameen Bank by trial and error in the observation of the ethical process in those he served. He began to find that a coborrower mutual support structure was essential to create self-identity by joint self-empowerment through moral support of those with a similar
economic status. The bank staff provided the training voice to allow clients to extend that people-centric philosophy of image building through
the discovery of mutual self-worth. Weekly peer-level meetings fostered acceptance and self-encouragement along with reminding each
participant of their joint expectations in their shared loan responsibility, thus the value of living social capital replaced the value of cash as
security. Three social values were used in Yunus' value translation theoretic approach to create the non-collateral group securities concept: (1)
Rural value of place (2) Shared value of responsibility and (3) Motivational value of survival in the face of abject poverty.
Yunus called his bank of microfinance "Grameen", which translates to mean 'rural' (Yunus, 1999), but it can also mean a village in a rural
setting (Dowla and Barua, 2006). Grameen was not created to be an urban bank, nor was it envisioned to be able to function as a bank for
nomadic peoples. Without the rural value of place, none of the other values would be so well tied to securities within the Grameen framework.
It is also important to remember that the very real threat of death by starvation or exposure contributes a significant motivation that might not
otherwise exist for loan repayment. Grameen loans, like rural memories, are long term; none are forgiven or forgotten. This motivation is
reinforced by the transformational practices of the finance officers who are trained in the charismatic leadership style to enable clients to see
the long-term value of their own worth and their own abilities.
Social entrepreneurism "in the absence of an ethical imperative would probably never have been discovered by the free market." (Borstein,
2005, p. 26). Social entrepreneurs thus require a free market economy to exist, a source of value to exchange with others, an ethical
imperative that can not be well or sufficiently met by the existing market system, and an under served or marginalized clientele whom they may
serve. "In the end, business and social entrepreneurs are very much the same." (Borstein, 2004, p. 239). As the reality of micro-finance
demonstrates, the social entrepreneur may either operate directly from the exchange of social values, or through another medium of exchange
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that can be translated into a social value.
The social entrepreneurial leadership approach of Yunus was always, and still is, that of charismatic change leadership in the special form of
ecological leadership. The fundamental approach of Yunus was the realization that poor people are highly moral in nature, far more so than
rich people. Yunus' bank was different only in the units of collateral value from that of private sector enterprise. He was able to magnify the
perception of static value in fixed agrarian populations to their land and to their neighbors by distributing it among five economic peers jointly
contracted to share the loan responsibility if any of the others failed to do so. Yunus used a few inflexible but simple rules for group loans that
were easy to understand.
Suddenly, a flood in 1988 left most of Bangladesh under water for 14 weeks. The population became significantly and permanently
redistributed and reduced by forces of nature. Family and villages were wiped away, and Yunus assumptions of fixed localities and
relationships were overturned at once. The new challenge required a drastically new approach, now that the entire business environment was
changed. Yunus then acted as an ethical change leader (Bass and Steidmeyer, 1999) to produce dramatic organizational change in the
manner of the teleological model (van den Ven and Poole, 2005) in this large well established bank in the early 2000's. He realized his
banking system was to blame, not the people. This acknowledgement allowed a resource of new leaders to arise through altruistic
empowerment (Fry, 2003).
Each local bank branch was offered the choice to remain or switch over from the old rigid rules to new flexible rules with the switch from group
to individual loans. The need was greatest where most former networking connections were lost. The result of the change significantly altered
the organizational culture of that branch. The new training program created a 'learning organization' in a hierarchy that was flat and consisted
of reforming networks (Trice and Beyer, 1991); this allowed those bank branches to implement adaptive innovations to meet their own
challenges. The new organization was called Grameen II. All failing branches that made the micro-financial paradigm change, survived. Yunus
participated with all members to formulate a complete reinvention of the strategic business response and design intent. The importance of an
executive mandate for strategic design (Minzberg, 1990) was initially modeled in the early work of Minzberg in the context of punctuated
change known as the 'Lewin model' paradigm. The transition was made by some, but not all branches of Grameen Bank. This open-ended
option constitutes a departure from the complete 'Lewin model' paradigm, because both solutions, the Grameen I group loan policies and
Grameen II individual loan policies co-existed side-by-side, offering competing solutions to alleviate poverty. The resulting dramatic recovery
of the Grameen Bank demonstrates Yunus' faith in the power of ordinary people to do what is right, especially when they are not forced to do
so using a rigid or inflexible system. Yunus' change leadership abilities demonstrate that an ethical process of change accepted by some bank
branches as needed was able to yield overall positive results for all parties in a mutually beneficial outcome.
4.3 Opportunities for Leader Improvement with Recommendations
Yunus' legitimacy, and to a great extent that identity is accorded to him by his clientele (Burstein, 2001), and arises from his own sympathy and
empathy for the people he empowers through micro-financial social entrepreneurship. The real power of Yunus as a leader exists in trust built
from the ethical process of involving clients and bank members at all levels. Yunus' approach is ultimately in discovering how people can
leverage each other's moral strengths to help themselves out of poverty, but even leaders with the best of intentions have human flaws and are
capable of weakness. Due to past personal affronts concerning his banking concept legitimacy, Yunus later turned down and spoke out
against the World Bank and others who supported the ruling hierarchy in developing countries. This constitutes a political failure caused by a
curious lack of EI traits toward the wealthy and powerful, as Yunus seems to prefer his EI traits be expressed for the poor. By these actions, he
unintentionally hurt those whom he was trying to help, as well as those who thought they were trying to be helpful to him and his cause. Kind
wealthy people do exist and do deserve respect. This leader needs to reflect more on accepting the wealthy and powerful in their own context,
perhaps by encouraging their participation in an ethical dialog with a focus on the legitimacy of their own sympathy for others.
Yunus has had limited success in exporting microfinance to the class of homeless poor in the US, Europe, Australia, and other wealthy
nations. The potential vulnerability of entrepreneurial organizations when they enter poorly known markets points to a need for their leaders to
react quickly (Green, Covin, and Sleven 2007), and often this reaction time may depend on the leader's personal orientation. Yunus fails to
focus timely leadership skills to implement service in wealthy countries during cycles of economic downturn (Delre et al., 2007). His cultural
intelligence fails to adapt his vision of long term value capture to market any type of long term micro-financial services where cultural mindsets
are endemically short-term (Maine, Probert, and Ashby, 2005). Yunus finds yet another fundamental wall against helping the poor when his
informal style is confronted with expectations of formal contract negotiations most often found in the wealthy nations (Hall and Lobina, 2007).
Even if Yunus has left significant opportunities requiring much more effort (Ahmed, 1998), he is likely to be only the first significant modern
leader to demonstrate that an advanced education can be used to radically change social conditions for the poor. Globalism makes it
increasingly less likely that other highly skilled experts must be forced into a subservient life dedicated to improving the empires of the rich.
Soon, an emboldened influx of diverse social capital may revolutionize social entrepreneurship by those who learn about and are
emboldened to follow the pioneering efforts of Yunus. Those who follow should, however, take more care to enlist complementary professional
leaders with fundamentally different and varied professional expertise to better implement multiple kinds of social change to better help the
poor overcome the variable dimensions and dynamic conditions that contribute to poverty.
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AUTHOR PROFILES:
Dr. Toni B. Greif earned her Ph.D. in Human & Organizational Development from The Fielding Graduate University. She is core faculty of
Business and Technology at Capella University, and has an extensive background in banking as well as having served on numerous non-
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profit boards of directors, most recently as a CEO and founder of a privately held residential mortgage company. Dr. Greif consults in the areas
of leadership and strategic analysis for entrepreneurs.
Dr. Peter R. Butzloff earned his Ph.D. in Materials Science from The University of North Texas. Currently he is Director of Research and
Development at Bal Seal Engineering. Dr. Butzloff is also the co-founder of an unrelated private company specializing in sustainable
materials, and hopes to direct this to humanitarian applications in products for disaster relief aid. He is also a student learning complementary
business and leadership skills at Capella University.
Peter R. Butzloff, Capella University, Minneapolis, Minnesota, USA
Toni B. Greif, Capella University, Minneapolis, Minnesota, USA
It has only been recently, mainly within the past five years, that
social scientists have begun to conduct research with the aim of
delineating the competencies that constitute the construct of
global leadership.... Developing global leadership competencies
involves fundamental human transformation; it does not involve
adding incrementally new techniques to one's managerial skill
portfolio.
It would seem that a major part of the process of radically

rethinking the world must begin from the role that economics has
played ... to adequately address either changes to accounting in
general, and protection and enhancement of the environment in
particular.
TABLE I
LEADERSHIP TAXONOMY
Class of
System
Political
Subject
Sensibility
Behavior type
Marketing
Entrainment skills
Behavior
Market
sensitivity
Cultural
sensitivity
Ecological
Humanisic
Empathy
Spiritual
Institutional
Collective
choice
relations
Economic
Sustainable
Shareholder
Stakeholder
Profit
Cost
opportunist
sensitivity
Moral opportunist
Loves nature
Likes animals
Adaptablity
Actor-participator
Adaptive
Visionary
learner
Charismatic
Network
creator
Conscientious
Social
Socialization
Humanistic
Personal
Intelligence
humility,
Social norm
Productive
shaper Cultural
narcissism
Intelligence
Self-efficacy
Perseverance
Self-sacrifice
Continuous
knowledge
Tacit
Education
Explicit
Personal
knowledge
Reinvention
Cognitive
creativity
Innovative
Recombines
concepts Sees
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opportunity
Class of
System
Events,
Sensibility
Atribute
Political
Marketing
Style seer
Ecological
Humanisic
Environment
Adapt to
Spiritual
sensitiviy
regulations
Economic
Shareholder
Efficient
Sustainable
Stakeholder
Naturalist
Adaptablity
Value sharing
Social
Socialization
actions
Adjusts pace,
Trusting
Empowers
Trusted
human capital
Altruistic
Cross cultural
Egoistic
First child,
Trait EI
Early role
models
Self-efficacy
High achiever
Self-sacrifice
Self-starter
Cognitive
Risk-taking
creativity
Specialist
TABLE II
SYNTHESIS OF ENTREPRENEURIAL LEADER BEHAVIOR IN THE
BUSINESS CONTEXT
Emergence
Leadership
behavior and
Growth
Informal structure,
Strong vertical
1 or 2 levels
hierarchy of few levels,
skills
extended horizontal
level. Formal structure.
Economic,
Shareholder
Cash-flow problems,
Productivity growth.
Uncertainty and
Resources limited.
legitimacy issues
Human Capital
2 or more boundary
Diffuse ties in one
Adaptability
spanning network
industry network cluster
clusters, a few
but strong ties.
Social and
self-actualized
skills
EI, humanistic,
Action based risk taker.
charismatic, empowering,
Developer of financial
Visionary, ethical and
capital. Credentialed,
moral. Developer of
cuturally inelligent
human capital.
Cognitive
Product or service driven
creativity
innovation on 1 or 2
Performance driven and

imitative projects.
projects. Perceived
Venture capital changes
opportunity changes
direction.
direction markedly and

rapidly.
Stakeholder
Skills
Product or service
Globalization driven
driven innovation
projects.
on 1 or 2 moral issues.
Maturity
Leadership
behavior and
skills
Weak vertical hierarchy

of many levels, limited
horizontal levels. Mixed
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informal and formal
structures
Economic,
Shareholder
Loss of market share,

wide range of products
or services
Human Capital
Many strong ties in
Adaptability
industry network cluster
Social and
Social norm
self-actualized
setter, Transactional
skills
leader. Risk-averse.
Highly experienced.
Cognitive
Little or no creativity
creativity
or innovation.
Stakeholder
Skills
International accord
changes direction of
entrepreneurial cycles
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Copyright 2007 Gale, Cengage Learning. All rights reserved.
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Date: March, 2007 Source Volume: 7 Source Issue: 2

Company Name: Grameen Bank Bhaban

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Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

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Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

It would seem that a major part of the process of radically

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

hierarchy of few levels,

Diffuse ties in one

industry network cluster

Action based risk taker.

Visionary, ethical and

Product or service driven

Performance driven and

Venture capital changes

direction markedly and

Weak vertical hierarchy

Muhammad Yunus: an entrepreneurial leader analysis with strategic implications.

Loss of market share,

Many strong ties in

industry network cluster

Copyright 2007 Gale, Cengage Learning. All rights reserved.

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