3. Theorizing Leadership: Emergence and Impact

Perfect information means that the actor is aware of all the relevant events that have previously occurred. This regards primarily the actions that other actors have chosen. Complete information, by contrast, means that the actor is aware of the strategies and payoffs (expected utilities) available to other actors and thus of all possible interaction outcomes.

This does not apply to formal elections, in which a leader must be appointed even if there is no actual demand for leadership. In this case, other factors come into play and the group may deliberately agree on a weak leader.

If all actors agree on what to do, there is no need for a leader since each actor could simply do what she wants without preventing the group from reaching its common goal. However, as pointed out in Sect. 2.​1, the fact that there is a common goal does not mean that everyone agrees on how to reach it. Only in the case of diverging preferences on how to achieve a common goal, a leader is needed. This leader usually employs strategies (Sect. 3.3) to persuade her followers of one particular way of reaching the common goal (see Kindleberger 1981: 243). This is even true for mere coordination problems. Take the example of traffic coordination: if there were no ex-ante rule determining on which side of the road to drive, traffic participants would have different preferences on whether to take the right or the left side. This would result in traffic chaos. In such a situation, in which all actors have a common goal (smoothly running traffic) but diverging preferences (left or right side), a leader deciding for one side would be highly welcome. By contrast, if all road users shared the same preference for one side ex ante (e.g. because of existing rules), there would be no traffic chaos and no leader would be needed.

This includes also the option of making others not do something they would otherwise do.

A slightly different classification is proposed by Derek Beach, who distinguishes between material, informational, and reputational resources, while conceptualizing institutional aspects as an external variable determining a leader’s impact (2005: 26–9).

This is why Principal-Agent theory forwards the thesis that latitude, shirking, and slacking of the agent is highest when the principals’ preferences are heterogeneous.

The three values of the independent variable thus are: convergence on the leader’s preferred outcome (strongest influence) ⇔ heterogeneity of preferences ⇔ convergence elsewhere (weakest influence) (see Sect. 3.4).

For methodological reasons, it is important to clearly distinguish between a leader’s institutional resources and her institutional constraint. While the resources refer to positive rights of agenda-management, decision-making, implementation, or evaluation, the institutional constraint describes the negative restraints a leader faces when trying to use her resources. For instance, Germany’s institutional resources are, among others, its voting weight in the Council; the institutional constraint is that a certain initiative has to go through the Council in the first place.

If preferences are completely homogeneous, the institutional constraint does not matter anymore because even if unanimity is needed to make a certain decision, all followers will agree. Only when a certain policy or institutional change is forbidden, which is the highest degree of institutional constraint, could one argue that even unanimity is insufficient for the respective decision to pass.

Young’s concept of entrepreneurial leadership refers only to individuals, though. Unlike this model, it does therefore not include composite actors.

This means, for instance, that interviewees were not asked about their status quo costs, but how they perceived the pressure for action in a certain situation.

The aggregate GDP determines a member state’s capacity to contribute to financial stability in the eurozone and to bail out other countries. Moreover, a member state’s current account balance indicates its saving potential, government bond yields reflect the credibility in the financial markets and thus the refinancing options, and gross public debt indicates the long-term solvency.