contingency theory of leadership case study

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The Contingency Theory of Leadership: A Focus on Fit

The contingency theory of leadership diverges from many other leadership theories in its assertion that leaders should fill roles that best suit their natural inclinations rather than trying to adapt their style to the situation. here’s a closer look at this intriguing and enduring leadership theory..

By Katie Shonk — on April 23rd, 2024 / Leadership Skills

When choosing our personal leadership style, we have many different models to choose from, including participative leadership , charismatic leadership , directive leadership , authoritarian leadership , paternalistic leadership , and servant leadership theory . Each leadership theory promotes a particular approach to running organizations, from involving employees fully in decisions to handing down directives. By contrast, the contingency theory of leadership argues that rather than adapting their style to the organization, leaders should fill roles based on how well they “match” the situation. Let’s take a closer look at the contingency theory of leadership . 

What Is the Contingency Theory of Leadership ?

The contingency theory of leadership , which emerged from numerous scholars in the 1960s, is rooted in the belief that earlier management theories had neglected the influence of situational factors, or contingencies, on organizations. Examples of contingencies include the state of the economy, the availability of trained labor, the organization’s culture, government policies and laws, the effects of climate change, and other factors. In a 1995 paper , Roya Ayman, Martin M. Chemers, and Fred Fiedler write that two main factors contribute to effective leadership: (1) attributes of the leader and (2) the degree to which the situation gives the leader power, control, and influence.

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In particular, the contingency theory of leadership distinguishes between leaders who are task oriented vs. relationship oriented. Task-oriented leaders focus primarily on ensuring that the tasks needed to meet particular goals are completed well and on time. These leaders tend to have a more autocratic, authoritarian, or directive leadership style. They also tend to manage projects effectively, but they can stifle creativity and leave employees feeling uninspired. Relationship-oriented leaders, by contrast, focus on building strong, lasting relationships with their employees and prioritize a healthy work culture. These leaders tend to have highly motivated, engaged employees, but tasks may run late and over budget. 

Rather than valuing one of these leadership styles over the other, the contingency theory of leadership asserts that leaders with different styles will succeed based on the level of control they have over the situation—known as situational control . 

Situational control has three components, according to Ayman and colleagues:

• Leader-member relations: the amount of cohesiveness in the work team and the team’s support for the leader. “Leader-member relations is the most important aspect of the situation,” they write, “because if the leader lacks group support, energy is diverted to controlling the group rather than toward planning, problem-solving, and productivity.” 
• Task structure: the clarity and certainty in tasks, goals, and procedures that allow leaders to confidently guide group activities. The more predictable and certain a task is, the greater the leader’s sense of situational control. 
• Position power: the amount of administrative authority that an organization grants a leader. Like task structure, position power contributes to a leader’s perceived situational control. 

Task-oriented leaders will be more successful in situations where they have high or low control, and leaders who are relationship oriented will be more successful in situations where they have moderate control, write Ayman and colleagues. 

What Contingencies Matter?

In a chapter on the contingency theory of leadership in the Handbook of Leadership Theory and Practice , Jay Lorsch posits that leaders’ personalities and style are shaped at a young age and difficult to change. As such, he argues, “the most important benefit of a modern contingency theory would be to enable individual leaders and those who select them to understand clearly what qualities leaders will need to succeed in different situations.” That is, leaders can be chosen to match the existing demands of the organization. 

Lorsch notes several contingencies that affect the ideal type of leader for an organization: 

• Followers’ expectations of their leaders , such as the degree to which leaders are expected to be involved in decisions and provide direction; their level of technical or professional competence; and the degree to which they bond with followers.
• Organizational complexity , including the size of the organization, which affects many factors, including the levers of power and influence available to leaders and the relative difficulty of conveying one’s message, competence, and charisma.
• International differences. Operating in a single location makes it easier for leaders to be known by their followers and to project their competence than operating in multiple, far-flung locations. Some leaders may excel at cross-cultural communication, while others will be challenged by it. 
• The organization’s tasks. The work of organizations tends to range from routine and repetitive (such as manufacturing established products) to innovative and novel (such as launching untested products). When tasks are certain and straightforward, a more directive leadership style is more effective; when tasks are uncertain, a more participative leadership style would be more suitable. 

In sum, the contingency theory of leadership emphasizes the value of ensuring the right “fit” among leaders, employees, and the organization as a whole, rather than assuming that leaders will be able to adapt their skills and tendencies to the demands of the situation. 

 What pros and cons do you see in the contingency theory of leadership when applied to the daily life of organizations?

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Fiedler’s contingency theory of leadership: Definition, examples

If you’re seeking the optimal way to guide your team and boost employee productivity, you might find yourself overwhelmed by the multitude of theories on the best leadership style. It can be challenging to discern which approach is truly the most effective. However, contingency theory proposes that there isn’t a single “best” leadership style — rather, the ideal approach depends on the specific situation.

Contingency theory prompts managers to consider various aspects of their employees and the current circumstances. Equipped with this understanding, you can modify your leadership style to elicit the most positive response from their team members.

Contingency theory definition

The core premise of contingency theory is that there’s no universally correct way to lead a team or make decisions. Instead, it advocates for a strategy that’s flexible and adaptable to the situation at hand.

Leaders who embrace contingency theory adjust their leadership style based on factors such as interpersonal relationships within the workplace or feedback from employees.

Origins of contingency theory

Contingency theory was first introduced by Fred Fiedler , a prominent researcher in organizational psychology during the 20th century. Rather than categorizing leaders as either bad or good, Fiedler’s contingency theory emphasized aligning necessary leadership traits with specific challenges.

Fiedler identified leaders as either relationship-oriented or task-oriented, asserting that success in leadership depended on how favorable the situation was. In essence, contingency theory suggests that numerous variables can alter the requirements of a scenario. Consequently, leaders need to adapt their style or delegate tasks to individuals with suitable skill sets to navigate these challenges effectively.

Advantages of adopting contingency theory

Contingency theory presents several advantages for managers. Given that product managers often collaborate with cross-functional teams , it’s crucial to understand how to effectively respond to a range of personalities and employee needs. Contingency theory can introduce the necessary level of adaptability for diverse situations.

Some other benefits include:

• Self-reflection — Contingency theory fosters self-reflection in leadership styles
• Situation focus — It tends to focus on the situation rather than the individual leader
• Leadership determination — It offers a straightforward way to determine who might be the best leader for a given situation
• Team awareness — It promotes awareness of team members and the situation
• Guidance — It provides clear guidance on what factors to consider when choosing a leadership style

4 types of contingency theory

Over time, four distinct contingency theories have been developed. While they all adhere to basic principles, each one exhibits slight variations.

Fiedler model

The Fiedler model is the original contingency theory. To apply it, a leader must possess situational awareness and understand their own leadership style.

The Fiedler model uses a scale known as the Least Preferred Coworker (LPC) as a guide to evaluate a coworker they find most challenging to work with:

A high score indicates that the leader is an HPC leader with a strong tendency toward being relationship-oriented — ideal for situations like conflict management and morale building. Conversely, a low score suggests that the leader is an LPC leader who is more task-oriented. These leaders are better suited for project management and logistical tasks.

Once you’ve identified your leadership style, it’s time to assess situational favorableness. This is determined by three variables that significantly influence a product manager’s ability to lead effectively:

• Leader-member relations — The extent to which a manager is liked by their team
• Task structure — The degree of organization of a task or process and whether it’s understood by the team
• Leader-position power — The amount of formal authority a manager has over their work

These characteristics determine situational favorableness. More favorable situations require task-oriented leaders, while less favorable ones benefit from relationship-oriented leaders.

Situational leadership model

Unlike Fiedler’s model, the situational leadership model allows leaders greater flexibility in adapting their approach based on circumstances. It focuses on the team’s maturity before determining an appropriate leadership style:

Maturity often refers to aspects such as team members’ experience, autonomy, willingness to take responsibility, confidence, and capability. This model outlines four leadership styles:

• Delegating style — Ideal for experienced and capable team members; this style involves assigning tasks or leading projects
• Participating style — Used when building confidence in team members; this style often involves one-on-one mentoring sessions where ideas are shared and collaboration occurs
• Selling style — Designed for team members who lack motivation or initiative; this style aims at persuading team members to complete their tasks
• Telling style — Beneficial for inexperienced team members; this approach involves giving directions and closely supervising them until they mature

Path-goal model

The Path-Goal model centers around employees and their individual goals. Leaders assist their team members in developing daily, weekly, or career goals and then collaborate with them to achieve those objectives. The aim of the Path-Goal model is to enhance employee motivation and productivity by fostering job satisfaction:

This approach requires leaders to be highly adaptable since they need to tailor their leadership style according to each individual’s needs. Leaders also need awareness of their employees’ skill sets and what areas may require coaching for success.

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There are four different leadership styles within the Path-Goal model:

• Directive clarifying leader — This type of leader provides explicit instructions on specific tasks they want their team members to accomplish. Teams with ambiguous or unstructured roles may benefit most from this type of leadership
• Achievement-oriented leader — Leaders who manage confident high-achievers may set high expectations and goals while encouraging autonomy at work
• Participative leader — These leaders solicit feedback from employees before making decisions — typically effective in small teams or when employees have vested interest in outcomes
• Supportive leader — Alongside productivity concerns, supportive leaders care about employees’ well-being and mental health — taking into account individual employee preferences

Decision-making model

The decision-making model focuses on how decisions are made, which ultimately determines the relationship between a leader and their team members:

This model outlines five leadership styles:

• Autocratic (A1) — The leader makes decisions independently without input from their team
• Autocratic (A2) — The leader makes decisions independently but gathers information from their team first
• Consultative (C1) — The leader makes decisions independently but gathers information from individual team members first
• Consultative (C2) — The leader makes decisions independently but frequently gathers information from team members before doing so
• Collaborative (G2) — A group discusses the situation collectively and makes decisions together through voting

How to apply the contingency theory of management

To implement the contingency theory effectively, a certain level of self-awareness and understanding of your team members is crucial. Here are some steps to follow when applying contingency theory as a product manager:

• Identify your leadership style — Use the Least Preferred Coworker (LPC) scale test to determine whether you’re more relationship-oriented or task-oriented. It’s also beneficial to observe how you naturally react in different work situations, especially how you adapt based on the task at hand, the team members involved, and other variables
• Seek feedback from your team — A potential drawback of contingency theory is that your perspective might be biased, leading you to overlook signs of an unfavorable situation. To counter this, ask your team members for their opinions on task clarity and their trust in management
• Improve situational favorableness — Enhance leader-member relations through open and transparent communication. Make tasks and processes clearer and more structured, and seek opportunities to increase your authority, such as pursuing higher-level positions
• Understand your employees — Knowing what your employees want to achieve in their careers is essential. As a product manager, being aware of individual employee goals and skill sets can help ensure their success
• Assess your situation regularly — Numerous factors can impact your workplace, including customer demand, changes in government policies, and other unpredictable challenges. Maintaining awareness of both external factors and the internal work environment can help you decide which leadership style will best promote productivity and boost morale among employees

What does contingency theory look like in practice?

Let’s consider a practical example of how contingency theory might be applied.

Suppose you’ve just been hired as a product manager at an established company. According to Fiedler’s model, leader-member relations would initially be poor because you’re new and haven’t yet built trust with the team. The task structure is high due to the company’s established nature, but your leader-position power is low as a junior manager.

In this case, adopting a relationship-oriented leadership style could help improve relations with your new colleagues while also paving the way for advancement within the company.

What are some limitations of contingency theory?

One critique of Fiedler’s model is that it suggests a leader who excels in one situation may struggle in another. This implies that changing leaders may be necessary — an option that isn’t always feasible or desirable. It doesn’t account for the possibility that managers can adapt their leadership style according to situational needs.

To address this issue, consider exploring other types of contingency theories to identify a leadership style that suits the specific circumstances you encounter at work.

While there are various types of contingency theories with differing approaches to team management, they all share common elements. Your leadership style will need to adapt based on the task at hand, employee behaviors, and the level of authority you hold in your position.

Being a great leader requires flexibility in your leadership style. Adapting to changing circumstances can help propel projects forward and keep employees motivated.

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Contingency Theory: Mastering Leadership Flexibility

And it’s no surprise. Even psychology has trouble identifying a universal set of traits to define and support effective leadership across various situations and contexts (Villoria, 2022).

The contingency theory of leadership recognizes the importance of a flexible style in response to key situational variables and factors (Fiedler, 1967).

In this article, we introduce contingency theory and its importance for mastering leadership flexibility and explore the importance of being tuned in to environmental needs.

Before you continue, we thought you might like to download our three Positive Leadership Exercises for free . These detailed, science-based exercises will help you or others adopt positive leadership practices and help organizations thrive.

This Article Contains

Unpacking contingency theory, taking a deep dive into fiedler’s model, 4 examples of contingency theory in application, exploring varieties in contingency leadership theory, common criticisms of contingency models, 7 practical tips for implementing contingency principles at work, contingency theory of leadership: its future in organizations, helpful resources from positivepsychology.com, a take-home message.

Organizations and businesses have seen dramatic changes in recent decades.

According to Harvard Business Review, in this evolving climate, the role of leaders is “no longer about getting others to follow them into the future” but to invite them “to co-create the future with them” (Hill et al., 2022, para. 8).

Behaviorist theories offer little instruction regarding what it takes to master leadership across multiple situations. In response, the contingency theory of leadership (CTL) emphasizes the situational variables effective leaders must contend with and what they will be shaped by (Villoria, 2022).

Contingency theory suggests that the effectiveness of a leader’s style depends on context and situation rather than a one-size-fits-all approach. A good leader must, therefore, remain flexible and adapt their approach as required (Villoria, 2022; Shenkar & Ellis, 2022).

Psychologist Fred Edward Fiedler’s (1967) contingency theory of leadership builds upon strategies born out of Douglas McGregor’s (1960) two opposing sets of assumptions concerning human motivation and behavior, known as Theory X and Theory Y (Villoria, 2022).

• Theory X This more traditional and widely held view of direction and control assumes most of us have a fundamental dislike of work and will avoid it where and when we can.
• Theory Y This theory takes a different stance and suggests that work is as natural as play and does not require coercion, control, bribes, or punishment (Pearson, 2020).

According to the CTL, the two theories shape leadership style. Leaders holding assumptions based on Theory X prefer an autocratic style, while those who maintain assumptions based on Theory Y are more participative (Villoria, 2022).

The CTL argues that the latter is a better, more effective style of leadership that can be developed in response to a series of situational variables rather than based on a set of unknown universal traits (Villoria, 2022).

Overall, the most effective leadership behavior seems to involve a high degree of concern for employees, achieving goals, and completing tasks efficiently (known as production; Villoria, 2022).

Check out Debbie Lovich’s video, which encourages more flexible leadership that supports the needs of staff members.

Following several years of research, Fred Fiedler (1967) outlined his contingency theory of leadership in A Theory of Leadership Effectiveness  (Miner, 2015).

Fiedler recognized that each workplace situation creates different leadership style requirements. He identified three situational factors that influence the situation and define the managerial task (Villoria, 2022).

• Leader–member relations How well do the manager and staff get along? A solid rapport between leaders and their team members is seen as positive, and a lack of trust or conflict is recognized as unfavorable (negative).
• Task structure How well structured is the job or task? Very well, not at all, or somewhere in between? If the work is clearly outlined with specific guidelines, it is positive, while ambiguous and unstructured procedures are deemed negative.
• Positive power How much authority or power does the leader have? Does the leader possess a high degree of control over resources and decision-making (positive), or is authority restricted and limited by a reliance on others or additional resources (negative)?

These situational variables combine to determine the appropriate leadership style and the favorability of the situation for the leader (Villoria, 2022).

We can score managerial situations on a continuum between favorable and unfavorable. A task-oriented style is better suited to the extremes, while a relationship-oriented approach fits the middle ground (Villoria, 2022).

“As the level of followers’ maturity increases, the leader should begin to reduce his or her task behavior and increase relationship behavior.”

Villoria, 2022, p. 2

Optimal results are most likely when the leader’s relationship with their members, the structure of the task, and their position of power have been identified, understood, and acted upon (Villoria, 2022).

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The contingency theory of leadership can be applied in several different settings, as the following examples demonstrate (Asana, 2024; G., 2018).

Tech start-up experiencing rapid growth

Situation : A tech start-up experiences rapid growth and must scale its operations quickly. While the team is highly skilled, it lacks clear direction due to the fast-paced nature of the environment.

Leadership style : Task-oriented, focuses on the nature of the work rather than being relationship oriented

Application : A task-oriented approach helps organize projects and define precise tasks that enable the team to focus, prioritize, and ensure the start-up can manage its growth effectively.

The leader focuses on efficiency and goal achievement that are aligned with the start-up’s need for structure and direction during this critical phase.

Nonprofit organization with volunteer staff

Situation : A nonprofit organization relies heavily on volunteers for community service programs. They come from diverse backgrounds and vary in their degree of commitment and skill.

Leadership style : Relationship oriented

Application : A relationship-oriented leader succeeds in this environment by building strong, trust-based relationships with the volunteers.

They focus on interpersonal connections, motivating and engaging the volunteers and fostering a collaborative and committed team environment that enhances the organization’s ability to serve the community.

Established corporation undergoing a merger

Situation : An existing corporation is undergoing a merger with another company. The process is complicated and involves integrating various cultures, systems, and processes.

Leadership style : Task oriented

Application : A task-oriented leader defines clear objectives, organizes the integration process efficiently, and focuses on achieving specific goals to navigate the complex merger. Their style ensures the merger is effectively executed while minimizing disruptions and maximizing synergies between the two companies.

Creative agency pitching for new business

Situation : A creative agency is getting ready to pitch for a significant new business opportunity. The team must develop innovative ideas and a compelling presentation to win the client.

Application : A relationship-oriented leader thrives by fostering a creative and collaborative team environment. They focus on interpersonal relationships and team dynamics and encourage open communication and idea sharing. Their goal is to enable the team to harness its creativity and develop a winning pitch.

These four examples highlight the flexibility and applicability of Fiedler’s CTL and why it’s essential to match leadership style to the situation and context.

In the article “Contingency Theory of Leadership,” Manuel Villoria (2022) outlines several theories and models beyond Fiedler’s that can be considered contingency leadership, including the following:

• Tannenbaum and Schmidt’s leadership continuum (1958) arose out of ongoing criticism that leadership exists at either of two extremes: autocratic and democratic. The model suggests leadership behavior appears along a continuum connected to the degree of subordinate participation and involvement in decision-making.
• Directing : Low-readiness followers require explicit instructions and specific directions.
• Coaching : Moderate follower maturity levels benefit from two-way communication, which builds confidence and motivation in the employee.
• Supporting : Followers who can make things happen effectively but are unwilling to take responsibility respond well to sharing decision-making with their leader.
• Delegating : High-maturity followers are ready to own tasks, competent, motivated, and can be delegated to.
• Adair’s action-centered leadership model (1973) sees action-centered leaders direct the job or task to completion, support and review the team members performing it, and coordinate and grow the team. Time and energy devoted to each aspect rises and falls according to the task’s nature, context, and timing.

Ultimately, each model emphasizes different factors and variables influencing leadership effectiveness across various situations and contexts (Villoria, 2022).

• Poor generalizability Such models are typically specific to the situation and context in which they were developed and may not be appropriate elsewhere. ​
• Degree of complexity They can be complex, difficult to understand, and challenging to apply in practice. ​Their complexity may make them less helpful for managers looking for practical guidance.
• Insufficient empirical evidence Contingency models are based on theoretical assumptions rather than empirical evidence. More research is needed to validate their effectiveness and understand the many factors involved.
• Overemphasis on situational factors Too much emphasis may be placed on situational factors, neglecting the importance and relevance of the leader’s traits and characteristics.
• A lack of clear guidelines Such models can appear vague and open to interpretation, making it difficult for leaders to know how, when, and where to apply them in practice.

Fiedler himself recognized the contingency leadership model as somewhat of a black box, meaning that it does not readily reveal the reasons behind the behavior it predicts (Miner, 2015).

While there are many approaches to implementing contingency theory principles in the workplace, the following practical tips support their execution and embedding (Villoria, 2022; Shenkar & Ellis, 2022; Miner, 2015).

1. Understand situational variables

Leaders must identify and understand situational variables within their work context and structure, including leader–member relations, task structure, and degree of power.

2. Maintain an adaptable and flexible leadership style

There is no single best way for managers to lead, so leadership style must remain contingent on the situation. ​Leaders must be flexible and adaptable and adjust their leadership style according to the needs and characteristics of the situation and their employees. ​

3. Recognize employee maturity

Understanding staff developmental levels (maturity) should determine the appropriate leadership style. ​Leaders must recognize their readiness and ability to take responsibility and tune their leadership style accordingly.

4. Balance task and relationship orientation

Leaders should balance their focus on achieving tasks and organizational goals with building positive team member relationships and supporting individual growth.

5. Build legitimacy and standing

The leader must communicate their capacity to meet others’ expectations (for example, their employees, senior management, and board members) while developing legitimacy. ​The focus should be on building trust, credibility, and a positive public image.

6. Take organizational and individual factors into account

Leaders should assess the level of institutionalization and power within their organization and their degree of responsibility and tune their leadership approach accordingly. ​

7. Recognize the limits of the CTL

While helpful in understanding and promoting positive leadership behavior, no single theory is appropriate for all situations. The leader must continuously assess their approach and change course when applicable.

As workplaces and business climates continue to evolve, robust and flexible leadership remains vital to organizational success. The CTL emphasizes the need to consider situational variables and tailor leadership approaches to specific and, often, dynamic contexts (Shenkar & Ellis, 2022).

In the future, there may be potential to integrate with other leadership theories, such as transformational leadership and servant leadership , to meet the continuing needs of public and private organizations (Villoria, 2022).

Research on the CTL in public management is less extensive. Therefore, there may be further opportunities as awareness and understanding of the public sector’s unique challenges and needs grow.

As such, more sophisticated models are required to improve the CTL’s practicality and tools for effective leadership in both the private and public sectors (Villoria, 2022).

17 Exercises To Build Positive Leaders

Use these 17 Positive Leadership Exercises [PDF] to help others inspire, motivate, and guide employees in ways that enrich workplace performance and satisfaction. Created by Experts. 100% Science-based.

We have many resources for managers, HR specialists, and team members wishing to develop group and leadership skills.

Articles you might find very useful include:

15 Best Leadership Books for Optimal Growth

• How to Use the Johari Window to Improve Leadership

Our free resources include:

• Visualize Success : Visualizing successful performance can help employees become more resilient to criticism and change.
• Confidence Booster : This exercise helps identify confidence-boosting activities and habits for use inside and beyond the workplace.
• Knowing When to Speak Up : The individual asks themselves a series of questions to help decide whether this is the right time to speak up regarding a concern.

More extensive versions of the following tools are available with a subscription to the Positive Psychology Toolkit© , but they are described briefly below:

• Using Guided Imagery to Envision Organizational Success

Within leadership, guided imagery can enhance problem-solving skills and performance, bolster confidence, alleviate work-related distress, and clarify organizational goals and challenges.

The following steps are typically performed within a group setting:

• Step one – Explain the power of a shared vision using vision stories and breakthrough statements.
• Step two – Guide the group through relaxation and visualization to imagine a successful future for their organization.
• Step three – Ask the group to write and share breakthrough statements.
• Leaders You Admire

Effective leadership is intrinsically linked to positive behaviors like consistency, integrity, and empathy.

This exercise helps individual clients and groups identify leaders they admire and explore their specific characteristics.

Try out the following steps:

• Step one – Identify and write down a list of positive leadership characteristics.
• Step two – Select one or more leaders that represent these qualities.
• Step three – Reflect on what you want to change or develop to move closer to how those leaders act and behave.

If you’re looking for more science-based ways to help others develop positive leadership skills, check out this collection of 17 validated positive leadership exercises . Use them to equip leaders with the skills needed to cultivate a culture of positivity and resilience.

Leadership is unique to each organization, context, and obstacle. As such, it can never be a one-size-fits-all approach.

There is no universal set of traits to define the ideal leader.

Fiedler’s contingency theory of leadership recognizes the necessity of remaining flexible in a leadership role and being aligned to situational variables and factors.

The three situational factors that shape leadership include leadership relations (how well staff and leaders get along), task structure (how well the task is structured), and positive power (the degree of authority the leader has).

Together, they shape the leadership style and the favorability of the situation.

While several criticisms exist, particularly regarding the CTL’s generalizability, complexity, and lack of empirical evidence, the approach successfully highlights the importance of flexibility and matching leadership style to the situation.

Understanding the CTL is vital for HR managers, business coaches, and developing leaders who wish to support organizational and employee growth and engagement effectively.

We hope you enjoyed reading this article. Don’t forget to download our three Positive Leadership Exercises for free .

• Adair, J. (1973). Action-centered leadership . McGraw-Hill.
• Asana. (2024, January 26). Fiedler’s contingency theory: Why leadership isn’t uniform . https://asana.com/resources/fiedlers-contingency-theory
• Fiedler, F. (1967). A theory of leadership effectiveness . McGraw-Hill.
• G., Denis. (2018, November). Fiedler’s contingency theory of leadership . Expert Program Management. https://expertprogrammanagement.com/2018/11/fiedler-contingency-theory/
• Hersey, P., & Blanchard, K. (1977). Management of organizational behavior: Utilizing human resources . Prentice Hall.
• Hill, L. A., Tedards, E., Wild, J., & Weber, K. (2022, September 19). What makes a great leader? Harvard Business Review. https://hbr.org/2022/09/what-makes-a-great-leader
• McGregor, D. (1960). The human side of enterprise . McGraw-Hill.
• Miner, J. B. (2015). Organizational behavior 4: From theory to practice . Routledge.
• Pearson, G. (2020). Remaking the real economy: Escaping destruction by organised money . Policy Press.
• Shenkar, O., & Ellis, S. (2022). The rise and fall of structural contingency theory: A theory’s autopsy. Journal of Management Studies , 59 (3), 782–818.
• Tannenbaum, R., & Schmidt, W. (1958). How to choose a leadership pattern. Harvard Business Review , 36 (2), 95–101.
• Villoria, M. (2022). Contingency theory of leadership. In A. Farazmand (Ed.), Global encyclopedia of public administration, public policy, and governance . Springer.

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A Contingency Theory Approach to Understanding Small Retail Business Continuity During COVID‐19

Michelle childs.

1 The University of Tennessee

2 Lenoir‐Rhyne University

Christopher Sneed

Small retail businesses are particularly vulnerable to turbulence caused from the COVID‐19 pandemic. To consider what actions retailer owners/managers can take to maneuver during such trying times, this study investigated leadership qualities associated with managing during times of crisis. Through in‐depth interviews with 12 small retail leaders, thematic data analysis revealed an emergence of contingent leadership, including an internal focus on cash flow and employees and an external focus on preserving key stakeholder relationships. Retail leaders displayed a resilient mindset, showing passion, agility, innovation, and relationship development. A conceptual model is proposed to further illustrate findings from the study.

INTRODUCTION

Small businesses are particularly vulnerable to turbulence caused by the COVID‐19 pandemic. While no businesses are immune to the pandemic’s effects, small businesses are most threatened due to their limited resources and their potential lack of planning and preparation for disaster (Josephson et al., 2017 ). Research is limited on the long‐term or lasting impacts of COVID‐19 on small businesses. However, early evidence indicates that the pandemic has been widely disruptive to business continuity and that businesses which are influenced by change in consumer behavior, especially retail businesses, are most at risk (Fairlie, 2020 ). Fairlie’s ( 2020 ) early research at the onset of the COVID‐19 pandemic indicates a bleak outlook for small businesses. Using Bureau of Labor Statistics (BLS) data, Fairlie ( 2020 ) shows that the number of small businesses plummeted from 15.0 million in February, 2020, to 11.7 million in April, 2020. This decrease of 3.3 million active business owners (22%) was the largest decrease considered on record. Retail businesses are the most fragile given the mandated operational restrictions and physical distance guidelines (Dua et al., 2020 ).

While Fairlie’s ( 2020 ) research highlights that small retail businesses are severely at risk according to employment statistics, there is no clear understanding of retail businesses that are able to thrive during this trying time and how owners are able to maneuver business continuity. Some recent research indicates that leadership qualities of the owner/manager play a strong role in business continuity during the COVID‐19 pandemic (Blattner et al., 2021 ; Lombardi et al., 2021 ); however, this research is limited to businesses outside of the US (e.g., Lombardi et al., 2021 ) and research on workplace culture (e.g., Blattner et al., 2021 ). Therefore, the purpose of this research is to explore in depth the experiences of small retail leaders during COVID‐19 particular to their qualities and strategies associated with managing during times of crisis. This understanding can provide rich practical information to small retail business owners and managers on strategic direction as part of crisis and contingency planning.

Contingency theory (Fiedler, 1951 ) is used as a lens to understand leadership qualities and strategies of small retail leaders during the COVID‐19 pandemic. Contingency theory explains how leadership decisions and actions are contingent on the internal and external determinants based on situations that are present. Given the unexpected nature of the COVID‐19 pandemic, contingency theory provides a framework to shed light on the responsive and flexible nature of small retail business leaders.

To provide an in‐depth analysis of the experiences of small retail leaders, this study utilizes a qualitative approach (Matthews et al., 2019 ). This method provides rich information to advance the understanding of characteristics of business owners during the current crisis. Understanding leadership characteristics specific to the small retailer provides insights and builds a deeper understanding of these leaders. Fan and Zhan ( 2020 ) stress the recent and urgent need to be equipped for the COVID‐19 disaster. Therefore, this study explores small retail business responses as the COVID‐19 pandemic crisis unfolds and it provides discovery of small retail business leaders’ actions taken during business uncertainty. By exploring the onset and the early periods of the COVID‐19 pandemic, emerging data can aid in preparing for future crises.

CONCEPTUAL FRAMEWORK AND LITERATURE REVIEW

Contingency theory.

Contingency theory of leadership, first introduced by Fiedler ( 1951 ), is fundamentally concerned with organizational leadership and decision‐making and helps to explain leadership decisions and actions which are contingent on any internal and external determinants in a particular situation. In essence, decisions that are made by contingent leaders are flexible in nature and present adaption to current situations as they arise. Thus, leadership characteristics are dependent on contextual factors and there is no “one size fits all” style of leadership (Blanchard, 2008 ). Instead, contingent leaders seek to have a rational understanding of the situation that arises and adjust their behavior, subsequently assuming a leadership style that is most appropriate for the situation at present (Bates, 2016 ).

Internal factors are factors that exist within an organization (e.g., resources, experience) and external factors occur outside the organization (e.g., natural disasters, changes in consumer trends); both are part of the decision‐making process for contingent leaders. In an effort to understand organizational change, contingency theory has been utilized in several research studies to understand leadership behavior (Park, 2020 ; Vidal et al., 2017 ; Williams et al., 2017 ) and it is useful to understand small business leaders as their essential role centers on growth and survival (Dunne et al., 2016 ). The terrorist attacks of September 11, 2001, and the resulting impacts on tourism and the travel industry serve as examples of how disasters can impact business operations and, in turn, managerial responses. For example, this catastrophic event had severe impacts on air travel, lodging, and tourism, which have been well documented in the literature (Goodrich, 2002 ; Korstanje, 2011 ; Paraskevas & Arendell, 2007 ). Most importantly, given the unprecedented nature of the COVID‐19 pandemic, contingency theory helps shed light on leadership responses during an unexpected disaster.

Small Business Leadership Responses to Disasters and the COVID‐19 Pandemic

While some businesses can capitalize on disasters, such as the COVID‐19 pandemic (e.g., online shopping, remote learning; McKinsey, 2021 ), small businesses (i.e., <500 employees; Small Business Association, 2016 ) are seen as particularly vulnerable during times of crisis when compared to larger businesses (i.e., >500 employees; Josephson et al., 2017 ; Zhang et al., 2009 ). Larger businesses often have a greater pool of financial resources that can be devoted to a disaster recovery plan, whereas small business lack this luxury in resources (Zhang et al., 2009 ). Unfortunately, the impact of disasters on small businesses is a growing concern given the increased prevalence of natural disaster occurrences over the last five decades (Ritchie & Roser, 2018 ).

Literature on business responses to disaster indicate that several factors may influence small business continuity when struck by disaster. The nature of the disaster (i.e., large or sudden) can halter business continuity and future growth opportunities (Klomp & Valckx, 2014 ) either directly through loss of revenue or equipment (Ritchie & Roser, 2018 ) or indirectly by decreased property values or sustained environmental damages (Asgary et al., 2012 ). Responses to disaster may also be burdened by costs associated with infrastructure and essential items, which lowers small business owners’ capacity to rebuild following disaster (Amadeo, 2018 ). While firm characteristics, such as size, resources available, and financial conditions, are important factors in how businesses respond and recover from unexpected disasters (Marshall et al., 2015 ), recent literature emphasizes the influence of business owner characteristics or leadership qualities in post‐disaster business recovery (Morrish & Jones, 2020 ).

Research within the hospitality sector stresses the importance of particular leadership qualities that can help small businesses in weathering and overcoming the turbulence of the COVID‐19 pandemic on business operations (Lombardi et al., 2021 ). Specifically, researchers found that when confronted with trauma or stress, leaders can benefit a business by providing nurturing behavior and organizing key resources to help the business flourish (Lombardi et al., 2021 ). Overall, research indicates that when leaders tend to invest their time and resources in creating a work environment that is resilient pre‐disaster, they can more easily pivot to focus on big‐picture strategies within the organization.

Similarly, in their case study within the food service industry, authors indicate that a key to business continuity during the COVID‐19 pandemic was a leader with high morale which fostered a strong company culture (Blattner et al., 2021 ). Moreover, Liguori and Pittz ( 2020 ) suggest practical and tactical responses for navigating COVID‐19 risks based on collaboration, nimble problem solving, and a relentless focus on customers, while staying connected to the entrepreneurial ecosystem. Therefore, building on these sparse and early research streams, it is vital to further explore small retail leadership qualities that contribute to sustaining business continuity during the COVID‐19 pandemic. Deeper research provides important implications for small retail leaders in overcoming future crises where overall business disruptions occur. Therefore, the following research question guides this qualitative research: What are the experiences of small retail leaders during COVID‐19 particular to their qualities and strategies associated with managing during times of crisis?

Following IRB approval, an exploratory qualitative research study was conducted to investigate small retail business leaders during COVID‐19. Qualitative research helps to shed light on the phenomenon and is a common methodology among social sciences when a lack of understanding occurs (Rashid et al., 2016 ). Through this qualitative approach, researchers took an inductive approach and captured an in‐depth understanding of specific experiences as participants shared their personal points of view of first‐hand situations and worked to make general observations (Kvale, 2006 ).

Data Collection and Analysis

The sample for this study consisted of 12 small retail leaders in the Southeastern United States. According to Crouch and McKenzie ( 2016 ), this number of participants allows for researchers to have in‐depth and extensive exploration of experiences and behaviors. The participants in this study varied in their personal characteristics, experiences, and general retail operations (Table  1 ). The Southeast was chosen due to its proximity to the study authors’ home institutions. Additionally, the southern United States was anticipated to be hit especially hard in terms of death and economic loss due to the COVID‐19 pandemic (Vestal, 2020 ). At the time of initial data collection, the state was under a state of emergency order. Social distancing and mask wearing were encouraged. Some of the most stringent COVID‐19 business restrictions were lifted mid‐May before data collection (TN Office of the Governor, 2021 ). Respondents reflected on their responses to the COVID‐19 pandemic during a time of restrictions, including the closures for non‐essential businesses, restrictions on indoor dining, and mask wearing. Small retail leaders were recruited through convenience sampling using the researchers’ business connections and the researchers proceeded with snowball sampling for additional interviews. This sampling technique allowed researchers to sample from a diverse range of small retail businesses with varying years in business, number of employees, and leader gender. Given the exploratory nature of this research, the sample size and method for establishing reliability and validity are in line with recommendations (Denzin, 2017 ; Hodges, 2011 ). Previous researchers have applied this method to understand challenges faced by business owners (Ha et al., 2020 ).

Participant Descriptions

Data were collected through interviews that lasted between 40 and 75 min each and were conducted and recorded via Zoom with the participants’ consent. Using a semi‐structured interview protocol, participants were first asked, “can you tell us about your business” (McCracken, 1988 ) and the researcher proceeded to more detailed questions, including: “can you walk us through your experiences and how you had (or are having) to pivot your business during the COVID‐19 crisis?”, “What strategies did you implement that worked well (not well)?”, and “ How would you describe your leadership style when having to pivot during COVID‐19?”. Data were collected from June, 2020 to December, 2020. During this period of time, businesses were actively responding to the pandemic given the prevalent nature of the virus in the community.

Upon completion of each interview, audio data were transcribed verbatim and pseudonyms were used to maintain confidentiality of the participants. Following Spiggle’s ( 1994 ) systematic approach to qualitative research interpretation, transcripts were manually analyzed independently by two researchers through an iterative process. Transcripts were manually coded for common meanings and themes that emerged from the collection of interview data. This included a back‐and‐forth process between the interview transcripts to compare, contrast, and group themes according to common experiences. Researchers discussed their manual interpretation of the data to refine themes and achieve internal consistency of the interpretive data (Van Manen, 1990 ). The iterative process continued until data saturation was reached in the thematic analysis and no new data were collected.

INTERPRETATION

Participant personas.

Interestingly, participants varied in their general disaster response, with some “hoping [the pandemic] would just be temporary and it wouldn’t last very long” (AT) and others taking a long‐term view in “transitioning from a brick‐and‐mortar shop to an online store” (YH). Participants were eager to meet consumers’ rapidly changing needs by quickly ordering masks (KH) for in‐store shopping and bundling products together as kits or baskets to create a unique offering (NB). While some participants approached their disaster responses by playing it “day‐by‐day” (AM), others “wanted to try to be proactive about what could happen” (NR) and placed “themselves on a [increased] schedule” (VJ) to actively respond to consumers’ needs. Interestingly, none of the participants reported having a disaster management plan prior to the pandemic and, surprisingly, none of the participants felt the need to develop a disaster management plan to address future business disruptions.

Emergence of Contingent Leadership

As the COVID‐19 pandemic unfolded, actions taken by the small retail business leaders suggest the emergence of contingency leadership traits whereby leaders adjusted to contextual factors of the pandemic to manage internal and external factors during much uncertainty. Both internal factors within the organization (e.g., resources, experience) and external factors outside the organization (e.g., natural disasters, stakeholders outside the organization, and changing consumers) were continuously balanced as leaders worked to sustain their businesses.

Internal Focus

Participants shared their early experiences of adjusting their internal resources (product inventory, finances, and labor) to adapt to the constraints of the pandemic as it began. AM, a brewery owner, explained the actions taken to sustain their supply chain with the proper inventory of materials used in production of craft beers:

We knew that there was going to be a problem with the supply of those 32‐ounce cans and the lids…We needed to try and track down a pretty good supply. The factory manager and I about in a week tracked down at least half a pallet, which is about 1200 cans out of Charlotte. We jumped in a truck and drove to Charlotte and completely loaded the truck up and drove back. That kept us going.

In addition to an internal focus on supply change needs, participants also discussed steps taken to support strained financial structures. KH explains:

Moving forward, [we] have private investors, so that's also nice to have their support. That's helpful…I kind of have them to fall back on but also, I had savings… I've cut some expenses and I've stopped paying myself to build up the savings account back up.

YH shared financial decisions needed to respond to the business slowdown, “I had to break my lease, which was hard for me because I know that was a commitment that I made, and I didn't see another path.”

For many retailers, balancing labor needs and reducing staff while balancing business needs was a primary concern. NR shared changes implemented to support shortened work hours while strengthening on‐line support:

Our store hours are shortened. I only have eight people here every day, which is crazy. Because I'm used to having about 20 people here a day. Because we'll do some overlapping shifts. Especially our most labor‐intensive department…When we realized what was going to be happening, and we still had trucks coming too…I was receiving our goods and just kind of organizing things and keeping them squared away. We kind of came up with our game plan as far as servicing the guest online.

Focusing on decisions for the internal areas of maintaining production, changing in‐store operations, modifying the capital structure, and focusing on employee retention were common themes among participants.

External Focus

Recognizing that key external stakeholders (e.g., customers, investors, and suppliers) played a vital part of their business survival, participants provided insights on actions taken to bolster these business relationships. Discussing revised payment terms with their suppliers, NR explains:

A lot of our vendors let us cancel orders or not have to pay them right away. For example, last week, they were telling us this big chunk [of payments due]… [With] the money that has been coming in from our stores being open, we were able to write a significant check to pay those vendors [after normal due dates].

Ultimately, to protect key stakeholders, primarily investors, some retailers had to make tough decisions. KH explained the temporarily closing of her store ahead of the required shutdown:

I just decided to close the shop, one because people were not thinking about buying clothes and vacations are getting cancelled, contracts are getting canceled, everything was getting canceled… People were just not buying clothes and going to events.

These small retail leaders spent significant time understanding and responding to their customers’ changing buying habits. AM explains how their business responded to customer shifts in demands for buying in volume and curbside delivery:

So, we were able to curbside, which would be us to leave with the beer in a keg. We can fill kegs as well…they definitely started wanting more since a lot of people are staying in…I've even gone and set up a kegerator at a friend's house…We can actually leave the premises, walk it [the keg] to the car, and deliver it to them there.

Additionally, as the pandemic created more in‐store restrictions, these small retail business leaders responded to changing customer shopping behaviors. Discussing a shift to curbside pick‐up for older demographic customers, YH explains:

We even allowed them to come curbside and pick up things. If they didn't want to come to the store, we had their contact info. We would just fix the order up and just run it out to their car and hand it to them and they were on their merry way. That worked really well because a lot of my customers are older. A lot of them have their health compromised.

The foresight in shifting to changing customer needs was prevalent and provided an understanding of how these small retail businesses continued to support their customers’ needs.

Moreover, community partners became more important as small retail leaders adjusted to the “new” environment with more collaborative effort between parties. KH shared the importance of starting their store in her hometown and how the community, in turn, supported their store. KH explains:

I wanted to have a store where I kind of grew up in my community. So, it's been good. That's been definitely been a great thing through all this, is that I feel like my community has really supported me and kind of been the foundation.

Strengthening the external relationships with suppliers, investors, customers, and ultimately the local community suggests a type of reciprocal goodwill that extends beyond tangible benefits with community support. Importantly, the research indicates that the tenets of contingency theory were supported in that retail managers successfully balanced internal and external needs while also adapting to circumstances of the pandemic in real time while underlining their responsiveness.

Resilient Mindset: Passion, Agility, Innovation, and Relationships (P.A.I.R.)

In line with the participants’ contingent leadership, research findings indicate that participants displayed resiliency and responded to crisis by standing firm to adversity and found creative means to overcome the challenges presented. Further extending the interpretation, a conceptual model was developed that highlights the resilient mindset of the small retail leaders in what we are calling the P.A.I.R . model. Pandemic retail leaders exhibited traits that were necessary to perform beyond the day‐to‐day tactical needs. The model highlights the factors required during crisis and suggests that the resilient mindset is a deeper pursuit of maintaining business success through the combination of passion, agility, innovation, and relationships (see Figure  1 ).

Conceptual model: P.A.I.R. – passion, agility, innovation, and relationships.

Small retail leaders continued to display passion for their businesses even during the crisis. This passion embodied a sense of entrepreneurial spirit, tenacity, and drive when dealing with the issues presented day to day. KH expresses their drive to succeed:

What kept me motivated was that it's a dream of mine. That was kind of the easy part. [I] just kind of kept pushing. Keep faith and, you know, pushing on and just keep posting fun new stuff… just trying to keep focus and remind myself that this isn't going to last forever, hopefully.

Similarly, VJ explains their motivation as an entrepreneurial leader:

I would say I am naturally a leader. I like doing my own things. At first, I wasn’t sure I would do something like this. I wasn’t opposed to it since I had seen businesses starting up through my life. I think it chose me in a way.

Furthermore, small retail leaders explained their need to keep the situation in perspective while maintaining personal balance. VJ expounds:

The most stressful part of it is learning how to juggle a lot at once and figure out which ball you can drop with limited time. You need to make time for yourself. That was stressful to me because sometimes I want to sit and relax but I want to work. (You must) separate yourself.

In addition to upholding their passion, small retail leaders focused on agility as part of their resilient mindset.

Small retail leaders sought out ways to respond quickly as business needs changed during the pandemic. This involved gathering necessary data, processing it, and creating meaningful actions. In explaining ways in which information processing occurred, AM submits:

It was just (processing) as much information as we can. We would push out for everyone to see and read questions. If we could find the answer, if we didn't have the answer, try and find it. That's just kind of what we've always done. We'll try and find out what's going on.

NR explains how her company reacted to local safety guidelines imposed, “I would send the resources to the leadership team and use that information. Outside of (store) I just communicated with my other neighbors and kept being patient with them. My neighbors were the biggest help.”

Beyond passion and agility, the small business owners/managers incorporated innovation across many internal and external practices.

Small retail leaders exhibited a number of innovative practices with their COVID‐19 responses. A constant flow of ideation, creation, and delivery of new solutions for their businesses and customers persisted. Internal innovation centered on technology, practices, creative thinking, and services. In explaining new ways of thinking and communicating, CT expounds:

It’s been incredibly challenging for me working from home and communicating with everyone…I trust my markets team to work out what they need, and I touch base. We do Tuesday morning staff meetings. That’s the only time we are all kind of together in a sense. We are redoing everything we have to do and how we do it.

Likewise, SA explains adopting a new online retail format:

Once I made the decision, it was easy for me to be decisive about it. I wanted to bring my customers along with me to my new format entirely… it's almost like it gave me the push to do what I really kind of wanted to do anyway [move to an online format].

The research highlights the technology shift which, for many, included launching their store websites, “That was like the biggest blessing because just having that and at least having a presence online, gave me a little bit of income” (KH).

Relationships

Sustaining relationships makes up the last part of the resilient mindset. Small retail leaders expressed a variety of ways in how this occurred. Specifically, VJ discussed an approach to understand their customers more deeply, “You learn more about what you like and the psychology behind consumers buying habits.” Moreover, AM brings forth the importance of community in supporting small business. AM explains:

People are really looking for a local product whether it is beer or produce or a farmer’s markets. If it can be made local there is a lot of support behind it. That really helps out and gives us a tie to the community and city as well.

In all cases, the reciprocal nature of small business and community support was important. AM summarizes:

I know one thing that we've heard, and I will say it constantly, but we've heard it definitely, more than a handful of times was from the old customers and new customers alike, that they felt very comfortable coming here that they said they had been to some other places, and they were really appreciative of our efforts.

In summary, the key components of passion, agility, innovation, and relationships make up the small retail leader resilient mindset.

Research shows that small retail leaders are constantly moving through these areas (passion, agility, innovation, and relationships) to steer their businesses through crises. Their passion for their businesses, agility in solutions, innovation in finding new ways to operate, and sustaining relationships were intangible traits of resiliency across internal and external functions. This research helps support how leaders incorporated shifts in small retail businesses during the pandemic to survive. Leaders learned something new and looked at the pandemic as an opportunity to enrich their organizational competencies (Lombardi et al., 2021 ).

DISCUSSION AND CONCLUSIONS

Based on a variety of business leader personas included in the data, it was clear that although participants attempted to reach their changing customers through a variety of strategies and retail channels, all participants relied on their contingent leadership. In other words, retail leaders acted with in‐the‐moment decision‐making abilities to tackle changes in business operations as a result of the pandemic. Surprisingly, small retail leaders did not have a disaster management plan and most expressed a lack of future need for one. In line with previous literature (Ha et al., 2020 ), it is possible that owner/managers’ naïve outlook toward future disasters may occur due to their in‐the‐moment focus on day‐to‐day operations. As disasters are expected to increase over time (Ritchie & Roser, 2018 ), it may become necessary by law to implement a mandatory disaster management/action plan for all businesses. Such is the case in California where each business is responsible for developing and disseminating an Injury and Illness Prevention Program (IIPP) to all employees upon hire (California Department of Industrial Relations, 2021 ).

Interestingly, findings indicated that resilient leaders during the COVID‐19 pandemic were contingent leaders. That is, small retail leaders were rapidly attuned to internal and external contextual factors that were incorporated into their decision‐making during the pandemic. While there seems to be no specific best way to lead an organization during times of disaster or crisis, it is important for leaders to respond to unforeseen circumstances in a contingent manner (Bates, 2016 ). With a rational understanding of the COVID‐19 pandemic, small retail leaders in this study were flexible in their leadership style to best handle the situation specific to their small business. Internally, small retail leaders focused on store inventory, financial resources, and employees as key elements for business continuity. Based on findings, it is recommended that small retail leaders develop and adopt these qualities and strategies to enhance business continuity. While outside the scope of this study, it is possible that U.S. Federal Unemployment subsidies and the Paycheck Protection Program (PPP) loans to small businesses may have influenced small business owners’ internal responses. That is, additional financial support may have provided a luxury for small business owners to focus on product and people, with a possible reduction in anguish for the financial state of operations.

Importantly, small retail leaders had a strong focus on maintaining employee cohesion and safety, often commenting on their desire to physically protect employees from the virus while also maintaining their employment and income. While this may be challenging, it is recommended that small retail leaders focus on these aspects of relationship building. Aligned with previous disaster literature during the COVID‐19 pandemic, business continuity was complemented with leaders’ high morale and strong company culture (Blattner et al., 2021 ; Lombardi et al., 2021 ). In this case, prioritizing employees’ needs as an internal resource is fundamental to business continuity in times of disaster and crisis.

In terms of external contextual factors, small retail leaders focused on supporting the needs of external stakeholder relationships, including customers, investors, and suppliers, to assist in overcoming business turbulence during the COVID‐19 pandemic. As seen by the participants, and recommended for retailers, long‐standing relationships were a cornerstone of capacity‐building for business continuity, despite the obstacles. Similar to previous research findings on small business disaster recovery (Ha et al., 2020 ), small businesses during the COVID‐19 pandemic prepared for disaster and recovery through strong business‐to‐business (e.g., small business to vendor) relationships and local community connections with customers. For instance, small retail leaders reported a smooth transition to decreased or delayed inventory through respectful relationships with vendors while understanding customers’ shifting requirements for quick response. All respondents expressed their desire to pivot for customer needs, whether related to customer safety or product needs for acquisition. Thus, despite any business continuity disturbance caused from disaster or crisis, it remains vital for small retail leaders to focus on the changing needs of their target customers.

Contributing to the literature on small business leadership responses to disaster, particularly during the COVID‐19 pandemic (e.g., Blattner et al., 2021 ; Lombardi et al., 2021 ), the conceptual model based on findings of this research highlights the key components that small retail business leaders can foster as a strategy to lead during times of disaster and crisis. Across participants, it was clear that small retail leaders led with a strong passion for their work, showing affection toward their customers and employees. This passion fostered a strong endurance regardless of the obstacles small business owners/managers faced. Leaders also possessed a quick agility that allowed small businesses to remain receptive and reactive to the changing needs in the marketplace. Small retail leaders were receptive to the new normal experiences that allowed them to remain innovative and creative in their business strategy. With this innovative skillset, small retail business leaders utilized technology at hand and creatively offered products and services catered to the changing customer during the COVID‐19 pandemic. Furthermore, relationship‐building remains fundamental to overcoming turbulence and maintaining business continuity in times of disaster and crisis. This points to the notion that small retail business resilience is built through community support spanning across employees, vendors, and local customers. Notably, small retail business leaders should seek to continually foster their passion, work to develop agile responses, embrace innovation, and sustain and advance their close relationships across businesses and customers to contribute to the small retail leaders’ resilient mindset.

Limitations and Future Research

Participants in this study were conveniently sampled. As such, the sample included a majority of small retail business leaders that led micro (<10 employees; Small Business Association, 2015) small businesses and were primarily in their infancy in development (i.e., the majority of businesses were open less than 5 years). Businesses with these characteristics may experience an increased lack of resources (e.g., employees, accumulated knowledge), which may have influenced their resilient mindset and thus the findings of this study.

As was evident throughout the pandemic, COVID‐19 had varying levels of community spread differing across states, cities, and communities. Additionally, this study collected data over a period of 7 months. During the period of the COVID‐19 pandemic, there were changes in local, state, and federal mandates and societal upheaval was heightened with issues related to Black Lives Matter (BLM), all increasingly collective shocks to social, political, and economic systems. Thus, the findings of this study must be contextualized. Due to the nature of this study, we did not investigate whether retail business size, type, or product category influenced small business responses or if there were retailers that may have benefited from the COVID‐19 pandemic. An investigation of characteristics of different business and leaders, and if these characteristics encouraged business prosperity during the COVID‐19 pandemic, would be worthy of future investigation. Furthermore, researchers failed to survey participants’ business financial status (e.g., revenue, profit, and liquidity etc.) during the time of data collection. An understanding of the effectiveness of leadership qualities may be linked with financial outcomes. Lastly, the model developed from this study should be further refined and developed through additional qualitative interviews with other small business owners and through quantitative research. A mixed methods study would help to strengthen the leadership and retailing literature while also helping to refine a model that could be applied to understanding leadership in the context of future disasters.

AUTHOR CONTRIBUTIONS

Childs and Sneed collaborated to plan the study and interviewed the research participants. Childs and Turner conducted the data analysis and were lead authors for the writing of the manuscript. Childs, Turner, Sneed, and Berry contributed to revising the article for publication.

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• Fiedler’s Contingency Theory: Why leade ...

Fiedler’s Contingency Theory: Why leadership isn’t uniform

Fiedler’s Contingency Theory states that, for a leader to be effective, their leadership style must fit the situation. Using this model, you’ll identify your own leadership style, assess the situation that requires leadership, and determine whether you’re the right leader. In this piece, we further break down the theory, teach you how to apply it to become a better leader, and provide examples of the theory in action.

Fiedler argues that it’s difficult to change how you lead, so understanding your leadership style is essential for serving your team. To help you better comprehend your style of leadership and make the best decisions for your company, we break down Fiedler’s model.

What is Fiedler’s Contingency Theory?

Fiedler’s Contingency Theory, also known as Fiedler’s Contingency Model or Fiedler’s Theory of Leadership, states that there is not one best style of leadership. Rather, the most effective leadership style for any given situation is one that aligns with the situation at hand.

The theory was developed in the 1960s by Austrian psychologist, Professor Fred Fiedler. He studied leaders’ personalities and characteristics and came to the conclusion that leadership style, since it is formed through one’s life experiences, is incredibly difficult, if not impossible, to change.

For this reason, Fiedler believed the right leader must be chosen for each job based on their skill set and the requirements of the situation. In order to best match leaders with situations, each leader must first understand their natural leadership style. Then, they need to evaluate whether their leadership style is right for the situation. To put it simply, Fiedler determined that a leaders’ ability to succeed rests on two factors:

Natural leadership style

Situational favorableness

What are the elements of fiedler’s contingency model.

As you’ve probably realized, Fiedler’s Contingency Theory is pretty simple. All it requires is a comparison of one’s leadership style with the demands of the situation. Let’s take a closer look at how the model breaks down these factors.

Leadership style

To help you determine your leadership style, Fiedler developed the Least Preferred Coworker (LPC) scale. The scale asks you to describe the coworker you least prefer to work with. 

The more positively you rate your least preferred coworker on a variety of different criteria, the more relationship-oriented you are. The less favorably you rate them on the same criteria, the more task-oriented you are.

Essentially:

If you’re a high LPC leader, you’re a relationship-oriented leader.

If you’re a low LPC leader, you’re a task-oriented leader.

Relationship-oriented leaders are great at building relationships, facilitating team synergy , and managing interpersonal conflict. Task-oriented leaders tend to be skilled at organizing projects and teams to accomplish tasks efficiently and effectively .

The rationale behind these two leadership styles is pretty straightforward:

Rating your least preferred coworker favorably means that you see the best in people—even those who you wouldn’t necessarily choose to work with.

Rating your least preferred coworker unfavorably suggests that you struggle to see their contributions, since you value efficiency and effectiveness over other attributes.

There isn’t one “right” way to lead. While task-orientation may be preferable to the organization at large, teammates themselves tend to prefer relationship-orientation. In fact, 79% of people who quit their jobs cite a lack of appreciation as a primary reason for leaving.

Next, Fiedler’s model requires you to assess the situation at hand. Situational contingency theory, also known as situational leadership, states that every situation that requires leadership is different and requires a specific type of leader. The favorability of a situation depends on how much influence and power you have as a leader.

Situational favorableness is determined by three variables:

Leader-member relations

Task structure

Position power

Leader-member relations are all about trust. Does your team trust you as a leader? The more they do, the higher your degree of leader-member relations and the more favorable the situation is.

Task structure refers to the clarity of the tasks required to complete a project. Higher task structure results in a more favorable situation. The more clear-cut and precise tasks are, the higher the situation’s task structure, whereas the vaguer they are, the lower the situation’s task structure.

Finally, position power refers to the authority you have over your team as a leader. If you can reward them, punish them, or tell them what to do, your position power is high. As you can imagine, higher position power makes the situation more favorable.

How to apply Fiedler’s Contingency Model for effective leadership

Now that we’ve established a basic understanding of Fiedler’s Contingency Theory, you can determine what type of leader you are and start applying the model.

The following section will walk you through how to determine your natural leadership style and understand the situation at hand. According to Fiedler, only then can you be an effective leader and make the best decision in each situation—lead or delegate.

Step 1: Understand your leadership style

In order to identify your natural leadership style, we return to the LPC scale. It’s time to bring to mind the person you least prefer working with. Copy the chart below into a separate document and use it to mark the score that best fits how you’d describe your least preferred coworker.

Remember, understanding your leadership style is highly beneficial to you and your team. While you may want to be generous with your answers, it’s important to respond honestly for the most accurate understanding of your leadership style.

Least preferred coworker (LPC) scale

Negative                          Score                    Positive

Unpleasant            1   2   3   4   5   6   7   8       Pleasant

Rejecting                1   2   3   4   5   6   7   8       Accepting

Tense                       1   2   3   4   5   6   7   8       Relaxed

Cold                         1   2   3   4   5   6   7   8       Warm

Boring                     1   2   3   4   5   6   7   8       Interesting

Backbiting             1   2   3   4   5   6   7   8       Loyal

Uncooperative      1   2   3   4   5   6   7   8       Cooperative

Hostile                     1   2   3   4   5   6   7   8       Supportive

Guarded                 1   2   3   4   5   6   7   8       Open

Insincere                 1   2   3   4   5   6   7   8       Sincere

Unkind                    1   2   3   4   5   6   7   8       Kind

Inconsiderate        1   2   3   4   5   6   7   8       Considerate

Untrustworthy      1   2   3   4   5   6   7   8       Trustworthy

Gloomy                   1   2   3   4   5   6   7   8       Cheerful

Quarrelsome         1   2   3   4   5   6   7   8       Harmonious

Determining your LPC score

Now that you’ve filled out the test, add up every number you marked to calculate your LPC score. Interpret your score as follows:

If you scored 73 or above (a high LPC score), you are a relationship-oriented leader.

If you scored 54 or below (a low LPC score), you are a task-oriented leader.

If you scored between 55 and 72, you have the qualities of both a relationship-oriented and a task-oriented leader. Deciding which style fits you better will take further exploration through other leadership theories.

Step 2: Assess the situation

In order to assess situational favorableness and determine leadership effectiveness in a specific environment, Fiedler poses three questions.

On a scale of one to 10, with 10 representing the highest value,

Are leader-member relations good and trustworthy (10) or poor and untrustworthy (1)? 

Are the tasks at hand clear and structured (10) or confusing and unstructured (1)?

Is your authority and influence over your team strong (10) or weak (1)?

Don’t solely rely on your own judgment of the situation. Ask group members to anonymously answer these same questions and calculate the average of all answers to best understand the situation’s favorableness. Seeking your team’s insight is a great way to empower them and improve team morale .

Step 3: Decide whether you’re the leader for the job

Now that you have a grasp on your leadership style and the favorableness of the situation, you can determine whether you’re the right leader for the situation. 

If you’re a task-oriented leader , you’re the best fit to tackle highly favorable and highly unfavorable situations. The extremes are where you’ll serve your team best.

If you’re a relationship-oriented leader , your style is best suited to lead in situations with moderate favorability.

The table below breaks down all of the different instances when each leadership style is the best fit.

Now for the trickier situations. If you’re a task-oriented leader in a moderately favorable situation or a relationship-oriented leader in a highly favorable or unfavorable situation, your leadership style likely isn’t the right fit for the situation. If this is the case, don’t panic—there are ways to make sure that your team is still set up for success.

Step 4: Consider delegating to the right leader

According to Fiedler, leadership style is fixed and cannot be changed. This means that if a leader’s style isn’t right for a situation, that leader may need to delegate leadership to the right person.

While it can be challenging to admit that your skillset isn’t right for a situation, there’s no shame in delegating leadership to someone else. In fact, delegation is necessary for effective leadership. If you’re a manager, consider promoting someone on your team with the opposite leadership style to supervise the team wherever needed. Alternatively, if you’re overseeing a cross-functional project, see if one of the cross-functional team members is a better fit for the situation.

Step 5: Try changing the situation

Another way to ensure that your team is set up for success if your leadership style doesn’t fit the situation at hand is to try to change the situation. Here are a few ways to align situational favorableness with your skillset:

Improve leader-member relations. If it would help the situation to improve leader-member relations, try focusing on your transparency with the team or entrusting team members with new responsibilities. 60% of leaders worry about how their team perceives transparency. By improving it wherever possible, leaders can feel confident that their team members will trust them, which in turn improves leader-member relations.

Level up task clarity. Are tasks unclear simply because that’s the nature of the job, or are there processes that can be cleaned up a bit? Try outlining tasks to make them easier for your team to accomplish.

Increase your authority. If more power and influence could help you lead better, try formulating an argument to present to upper management. You may come out of it with a promotion to a more senior role.

Examples of Fiedler's Contingency Theory

We’ve mostly been discussing Fiedler’s model in theory. Let’s take a look at some real-world scenarios that will help clarify what it might look like in an organizational setting.

Case study 1: Startup co-manager challenges

Imagine you’ve just been hired as a co-manager of a startup tech company. The team of 12 has been working together for a little over a year. The current manager hired you to help improve the company's strategy.

Leader-member relations are poor. As a new manager brought into an already tight-knit team, there’s bound to be some friction and distrust.

Task structure is low. The company is still considered a startup, and you were hired to help establish some structure. At this point, everyone helps out with everything.

Leader position power is weak. There’s another manager with more authority who could veto your decisions, especially as they pertain to the team.

According to Fiedler’s Contingency Theory, this scenario calls for a task-oriented leader. The situation is highly unfavorable and a relationship-oriented leader would have a very hard time getting anything done.

Case study 2: Leading a graphic design team

Say you’ve recently been promoted to the new role of Head of Graphic Design at your design agency. You’ve been working here for five years and your promotion was largely due to your team’s praise.

Leader-member relations are good. You’ve built a solid relationship with your team over the years—so solid, in fact, that they wanted you to take on a more senior role.

Task structure is decently high. While your team has a decent amount of creative control over their product, the agency has been operating for a while, so tasks and processes are outlined pretty clearly.

Leader position power is weak. You’ve been promoted to a more senior role where you can better assist your team with your expertise, but you aren’t in a management role that can hire or fire.

According to Fiedler’s Contingency Theory, this scenario calls for a relationship-oriented leader. The situation is moderately favorable but you don’t quite have the power to enact significant change.

Pros and cons of Fiedler’s Contingency Theory

There is plenty of valuable insight that can be taken from Fiedler’s Contingency Theory, but it’s important to remember that it’s just one theory. It shouldn’t be given supreme authority to determine leadership fit and should be supplemented with additional resources.

Advantages of Fiedler’s Contingency Model

Advantages of Fiedler’s Contingency Theory include:

It provides a simple way to determine when a leader’s skills are most and least impactful.

It encourages leaders to practice self-awareness, an essential quality for making decisions for a team.

It takes the situation into account, branching beyond many leadership theories that solely focus on the leader themselves.

It’s straightforward—LPC and situational favorableness are both relatively easy to calculate.

Limitations and criticisms of Fiedler’s theory

Criticisms of Fiedler’s Contingency Theory include:

It’s far too rigid. If you can’t change the situation at hand, the theory states that the only option you have is to give up leadership.

It’s unclear what leaders who fall in the middle range of the LPC test should do. The theory essentially just says to “figure it out.”

Self-assessment isn’t always reliable. Even when we try to be self-aware when completing the LPC test, our egos and biases have a way of interfering, even subconsciously.

The theory may discourage leaders who are doing a fine job, especially if they perceive their leadership style and situation to be at odds when they actually aren’t.

Comparing Fiedler's Contingency Model with other contingency theories

Fiedler's Contingency Theory is a theory of leadership effectiveness that explores how different leadership styles perform in different situations. While these contingency theories share the basic premise that effective leadership depends on the interplay between the individual's leadership style and the situation, they differ in their specific focus and approach.

According to Fiedler's Contingency Model of leadership, it is crucial to match the leader's style to the situation's favorability, which is dependent on leader-member relations, task structure, and position power. Let's compare Fiedler's theory with three other notable situational leadership models: Situational Leadership Theory, Path-Goal Theory, and Decision-Making Contingency Theory.

Fiedler's Contingency Theory vs. Situational Leadership Theory

Paul Hersey and Ken Blanchard's Situational Leadership Theory focuses on adjusting leadership style to the maturity and readiness of followers in various situations. In contrast, Fiedler's theory places a strong emphasis on the necessity of matching the leader's style to the situation's favorability, which depends on leader-member relations, structured tasks, and position power. While both theories recognize the need for flexibility in the leadership role, Situational Leadership Theory places more emphasis on the follower's characteristics, whereas Fiedler's theory prioritizes the situational factors in the work environment.

Fiedler's Contingency Theory vs. Path-Goal Theory

According to Robert House's Path-Goal Theory, effective leaders help their followers achieve their goals by giving them the guidance, encouragement, and resources they need in various circumstances. This theory focuses on how leaders can motivate followers by clarifying the path to achieving goals and removing obstacles. In contrast, Fiedler's Contingency Model of leadership is less concerned with the leader's actions and more focused on the match between the individual's leadership style and situational favorableness. While both theories acknowledge the importance of the situation, Path-Goal Theory places more emphasis on the leader's behavior in influencing follower motivation and performance.

Fiedler's Contingency Theory vs. Decision-Making Contingency Theory

Decision-Making Contingency Theory, also known as the Vroom-Yetton-Jago Model, focuses on how leaders should involve their team members in decision-making based on the characteristics of the particular situation. This theory provides a framework for determining the appropriate type of leadership and level of participative decision-making based on factors such as decision quality, commitment, and time constraints. While both Fiedler's theory and Decision-Making Contingency Theory consider situational factors, the latter is specifically focused on the decision-making process and the level of participation required from team members.

How to implement Fiedler's Contingency Theory

Implementing Fiedler's Contingency Theory in the workplace requires a thorough understanding of the model and its practical applications. Here are some tips to help you effectively apply the theory in your leadership practice and become the best leader for your team:

1. Assess your leadership style using the least preferred coworker scale to determine whether you are a task-oriented or relationship-oriented leader, two key characteristics of leaders according to Fiedler's model.

2. Analyze the situational favorableness by considering the three key factors: leader-member relations, task structure, and position power. This will help you understand the work environment and the level of situational control you have.

3. Match your leadership style to the particular situation based on the favorability assessment. Task-oriented leadership is more effective in highly favorable or unfavorable situations, while relationship-oriented leadership performs better in moderately favorable situations.

4. Be prepared to adapt your leadership approach if the situation changes or if you find yourself in a mismatched scenario. This may involve delegating to a more suitable leader or working to modify the situational factors, especially in the context of project management.

5. Regularly evaluate the effectiveness of your leadership approach and seek feedback from your team members to ensure that you are achieving the desired outcomes and proving the value of Fiedler's Contingency Model of leadership.

By understanding the key differences between Fiedler's Contingency Theory and other situational leadership models and by following these practical tips for implementation, you can harness the power of this theory of leadership effectiveness to enhance your leadership skills and drive better results for your team and organization.

Put your team’s success first with Fiedler’s Contingency Theory

Fiedler’s Contingency Theory of Leadership serves as a great reminder that leadership isn’t uniform. If your team isn’t performing as well as it should be, it might not mean that you aren’t a good leader. Rather, your natural leadership style might not be what’s best for your team’s needs at the moment.

FAQ: Fiedler’s Contingency Theory

What are the three elements of Fiedler's Contingency Model?  

Fiedler's Contingency Model consists of three elements: leadership style (task-oriented or relationship-oriented), situational favorableness (determined by leader-member relations, task structure, and position power), and the matching of leadership style to the situation for optimal effectiveness.

What is Fiedler's Contingency Theory assumption?  

Fiedler's Contingency Theory assumes that an individual's leadership style is relatively stable and difficult to change. Therefore, the key to effective leadership is finding the right match between the leader's style and the situation, rather than trying to change the leader's style to fit the situation.

What is an example of contingency theory of leadership? 

An example of Fiedler's Contingency Theory in action would be a task-oriented leader who excels in a highly favorable situation, such as leading a team of experienced and motivated employees on a well-defined project with clear goals and deadlines. In this situation, the leader's focus on task completion and directive approach are likely to lead to success.

How does Fiedler's theory differ from other leadership theories? 

Unlike other leadership theories that focus on the leader's actions or follower characteristics, Fiedler's Contingency Model emphasizes the importance of matching the leader's style to the specific situation for optimal leadership effectiveness.

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