"Examining the Lack of Application of Path Goal Theories of Leadership in Corporate Panama".

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By: Dr. Dallas Kratzer

Term Paper

Presented by:

Navarro, Adrián

May 14, 2006

"Examining the Lack of Application of Path Goal Theories of Leadership in Corporate Panama".

Since 1903, after Panama's independence from Colombia, corporations have played a vital role in the country. It was after the establishment of the first banks (Citibank & Chase Manhattan Bank in 1904) that the Panamanian society experienced the hassles and huddles that come with corporate management. Since then, the Panamanian corporations have tried to deal with these problems facing managers across the country. However, the development of corporate culture and philosophy regarding leadership has been overlooked, to say the least. Even today, in Panama, there are no formal studies regarding the behavior of leaders in corporations in the country.

This paper analyses the Leadership Path Goal Theory, and the Leader Member Exchange theory in contrast with their application in Panama's Banking Industry. Also, includes a discussion of the deficiencies managers at Towerbank (a local bank private bank) faced during the application, execution, and pursue of a goal. At the end, we present an introspective view of the of the leadership concepts learned, adapted to our lives, and the possible changes they will make in our daily business lives.

The first Leadership Theory that we will discuss is The Path Goal Theory (PGT). As we have analyzed in class and our findings, we can state that Leadership theories, seen from the perspective of motivation, and Goal Pursuance within a group, is susceptible to constant changes, development, and radical evolution. Having said that, Path Goal Theory can be described as the constant evolution of the Expectancy Theory which translates into the ability of the leader to inject motivation into his/her subordinates based on the ability to create a picture clear image of the Goal at hand, validation on the subordinates capabilities to perform the tasks at hand, and the rewards to be obtain once the Goals are met.

Before we can continue dissecting the Path Goal Theory, it is important to note that evolution has taken its token on the Path Goal Theory. Recent studies have derived a latter theory called the Hope Theory (HT) which is also based on Positive Psychology. Positive Psychology is interested in the study of the drivers that has made individuals, societies, and civilizations to prosper and Flourish (Helland & Winston, 2005). The interrelation of the Positive Psychology, the Hope Theory, and the Path Goal Theory is a very symbiotic one. On one hand the PGT is based on a broader scope of action, mainly because PGT is concerned with the interaction of three major factors: Leader behavior, Subordinate Characteristics, and Task Characteristics. Instead of defining each one of them, we will say that PGT has to do with the interaction and assessment of the best combination of the three possibilities in order to achieve the best possible outcome. These interactions among the realms of possible courses of action all have HT at the back bone of them, regardless of the situation. PGT is not a locked down theory that makes Leaders walk a thin line. Instead, it permits leaders to move, given them lost of wiggle room to adjust to different situations, and different subordinates' characteristics.

The PGT recognizes 3 different types of leaders' behaviors. The Directive Leadership Behavior can be compared to a dictatorial regime in which the leader gives clear instructions to the subordinates in order to accomplish a specific task. By this, the leader sets standards of best practices within the organization for the subordinates to follow. This type of approach is best used when there is an ambiguous task, or just the rules are too unclear and complicated for the subordinates to see the big picture. However, the characteristics of the subordinates play a role in...
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