Servant Leadership in Market-Oriented Organizations, Does that Make Sense? An Evaluation from an Economic-Organization Theory Perspective

  • Jakob Willem (Pim) Boven


This chapter examines whether servant leadership (SL) is at odds with the requirements of market-oriented organizations from an organizational economics (OE) perspective. I combine scholarly work from the field of leadership studies, OE, economic history and new institutional economy (NIE) in order to study the existence of a common ground between OE and SL. I briefly introduce SL by its key characteristics, antecedents and outcomes. Subsequently I give an introduction to OE and its shift from a rather general equilibrium theory to a model with building blocks of partial mechanisms emerging from NIE. Through the framework developed by Williamson (Journal of Economic Literature, vol. 38, no. 3, pp. 595–613, 2000), I am able to uncover and explicate macro- and micro-analytic reasoning with regard to decision making in organizations in conjunction with its institutional environment. Within this framework I demonstrate that there are analytic features which can be used to study SL and to assess whether it is at odds with market-oriented organizations from an OE perspective. I conclude that there are indications that in a Dutch context, SL meets the requirements of market-oriented organizations and can economically contribute from an OE perspective.


  1. Alchian, AA & Demsetz, H 1972, ‘Production, Information Costs, and Economic Organization’, The American Economic Review, vol. 62, no. 5, pp. 777–795.Google Scholar
  2. Avolio, BJ, Walumbwa, FO & Weber, TJ 2009, ‘Leadership: Current Theories, Research, and Future Directions’, Annual Review of Psychology, vol. 60, no. 1, pp. 421–449.Google Scholar
  3. Burlea, AS & Rainey, S 2013, ‘Servant Leader/Servant Leadership’, in SO Idowu, N Capaldi, L Zu & AD Gupta (eds), Encyclopedia of Corporate Social Responsibility, Springer Berlin Heidelberg, Berlin, Heidelberg, pp. 2120–2126.Google Scholar
  4. Coase, RH 1937, ‘The Nature of the Firm’, Economica, vol. 4, no. 16, pp. 386–405.CrossRefGoogle Scholar
  5. Coase, RH 1972, ‘Industrial Organization: A Proposal for Research’, in VR Fuchs (ed.), Economic research: retrospect and prospect, vol 3. Policy issues and research opportunities in industrial organization, National Bureau of Economic Research; distributed by Columbia University Press, New York, NY, pp. 59–73.Google Scholar
  6. Coleman, JS 1988, ‘Social Capital in the Creation of Human Capital’, American Journal of Sociology, vol. 94, pp. S95–S120.CrossRefGoogle Scholar
  7. Davis, JH, Schoorman, FD & Donaldson, L 1997, ‘Toward a stewardship theory of management’, Academy of Management. The Academy of Management Review, vol. 22, no. 1, pp. 20–47.Google Scholar
  8. Davis, LE & North, DC 2008, Institutional Change and American Economic Growth, Cambridge University Press, Cambridge (electronic WorldCat),
  9. Debreu, G 1959, Theory of value, John Wiley, New York.Google Scholar
  10. Demsetz, H 1973, ‘Industry Structure, Market Rivalry, and Public Policy’, Journal of Law and Economics, vol. 16, no. 1, pp. 1–9.CrossRefGoogle Scholar
  11. van Dierendonck, D 2011, ‘Servant Leadership: A Review and Synthesis’, Journal of Management, vol. 37, no. 4, pp. 1228–1261.Google Scholar
  12. Duyvendak, JW 2013, Sociale kaart van Nederland: over instituties en organisaties, 2e, geheel herz. dr. edn, Boom Lemma uitgevers, Den Haag.Google Scholar
  13. Foss, NJ 1993, ‘Theories of the firm: contractual and competence perspectives’, Journal of Evolutionary Economics, vol. 3, no. 2, p. 127.CrossRefGoogle Scholar
  14. Foss, NJ, Lando, H & Thomsen, S 2000, ‘The Theory of the Firm’, Encyclopedia of Law and Economics: Volume III. The Regulation of Contracts, 1 edn, vol 3, pp. 631–658.Google Scholar
  15. Furubotn, EG 1988, ‘Codetermination and the Modern Theory of the Firm: A Property-Rights Analysis’, The Journal of Business, vol. 61, no. 2, pp. 165–181.CrossRefGoogle Scholar
  16. Gibbons, R & Roberts, J 2013, The handbook of organizational economics, Princeton University Press, Princeton, N.J. (electronic, Ebook Library,
  17. Greenleaf, RK 1977, Servant leadership: a journey into the nature of legitimate power and greatness, Paulist Press, New York.Google Scholar
  18. Greif, A 1989, ‘Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders’, The Journal of Economic History, vol. 49, no. 04, pp. 857–882.CrossRefGoogle Scholar
  19. Grossman, SJ & Hart, OD 1986, ‘The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration’, The Journal of Political Economy, vol. 94, no. 4, p. 691.Google Scholar
  20. Hart, OD 1995, Firms, contracts, and financial structure, Clarendon lectures in economics, Oxford University Press, Oxford.Google Scholar
  21. Hermalin, Benjamin E 2013, ‘11. Leadership and Corporate Culture’, The Handbook of Organizational Economics, viewed 2018-05-20t15:01:46.353+02:00, Scholar
  22. Hodgson, GM 2013, From pleasure machines to moral communities: an evolutionary economics without homo economicus, University of Chicago Press, Chicago.Google Scholar
  23. Jensen, MC & Meckling, WH 1976, ‘Theory of the firm: Managerial behavior, agency costs and ownership structure’, Journal of Financial Economics, vol. 3, no. 4, pp. 305–360.Google Scholar
  24. Jensen, MC & Meckling, WH 1979, ‘Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination’, The Journal of Business, vol. 52, no. 4, p. 469.Google Scholar
  25. Jones, GR & Hill, CWL 1988, ‘Transaction Cost Analysis of Strategy Structure Choice’, Strategic Management Journal, vol. 9, no. 2, p. 159.Google Scholar
  26. Joskow, PL 1985, ‘Vertical Integration and Long-Term Contracts: The Case of Coal-Burning Electric Generating Plants’, Journal of Law, Economics, & Organization, vol. 1, no. 1, pp. 33–80.Google Scholar
  27. Joskow, PL 2008, ‘Introduction to New Institutional Economics: A Report Card’, in É Brousseau & J-M Glachant (eds), New Institutional Economics: A Guidebook, Cambridge University Press, Cambridge.Google Scholar
  28. Knight, FH 1921, Risk, uncertainty and profit, Series of reprints of scarce tracts in economic and political science/London school of economics and political science; no. 16; Series of reprints of scarce tracts in economic and political science; no. 16, Houghton Mifflin, Boston [etc.].Google Scholar
  29. Mäntysaari, P 2012, Organising the Firm: Theories of Commercial Law, Corporate Governance and Corporate Law, Springer, Berlin.Google Scholar
  30. Marshall, A 1890, Principles of economics, Macmillan, London.Google Scholar
  31. Marshall, A 1920, Industry and trade: a study of industrial technique and business organization; and of their influences on the conditions of various classes and nations, 3rd ed. edn, Macmillan, London.Google Scholar
  32. Nelson, RR & Winter, SG 1982, An evolutionary theory of economic change, Belknap Press of Harvard University Press, Cambridge, Massachusetts.Google Scholar
  33. North, DC 1990, Institutions, Institutional Change and Economic Performance, Political Economy of Institutions and Decisions, Cambridge University Press, Cambridge.Google Scholar
  34. North, DC 1991, ‘Institutions’, The Journal of Economic Perspectives, vol. 5, no. 1, pp. 97–112.CrossRefGoogle Scholar
  35. North, DC 1994, ‘Economic performance through time’, The American Economic Review, vol. 84, no. 3, p. 359.Google Scholar
  36. North, DC & Thomas, RP 1973, The rise of the Western world: a new economic history, Cambridge University Press, New York.Google Scholar
  37. Parris, DL & Peachey, JW 2013, ‘A Systematic Literature Review of Servant Leadership Theory in Organizational Contexts’, Journal of Business Ethics, vol. 113, no. 3, pp. 377–393.Google Scholar
  38. Penrose, ET 1959, The theory of the growth in the firm, Blackwell, Oxford.Google Scholar
  39. Rotemberg, J & Saloner, G 1998, Visionaries, managers, and strategic direction, Working paper/Division of Research, Harvard Business School; 98–118; Working paper (Harvard University. Graduate School of Business Administration. Division of Research); 98–118, Division of Research, Harvard Business School, Boston.Google Scholar
  40. Samuelson, PA 1947, Foundations of economic analysis, Harvard economic studies; 80; Harvard economic studies; 0073-0505 vol. 80, Harvard University Press, Cambridge, Massachusetts.Google Scholar
  41. Sen, Ae 1987, On ethics and economics, The Royer lectures; The Royer lectures, Blackwell, Oxford.Google Scholar
  42. Simon, HA 1991, ‘Organizations and Markets’, Journal of Economic Perspectives, vol. 5, no. 2, pp. 25–44.CrossRefGoogle Scholar
  43. Stiglitz, JE 1985, ‘Information and Economic Analysis: A Perspective’, The Economic Journal, vol. 95, pp. 21–41.CrossRefGoogle Scholar
  44. Tadelis, S & Williamson O.E. 2013, ‘4. Transaction Cost Economics’, The Handbook of Organizational Economics, viewed 2018-05-20t21:21:03.453+02:00,
  45. Teece, DJ, Pisano, G & Shuen, A 1997, ‘Dynamic Capabilities and Strategic Management’, Strategic Management Journal, vol. 18, no. 7, pp. 509–533.Google Scholar
  46. Thompson, S & Valentinov, V 2017, ‘The neglect of society in the theory of the firm: a systems-theory perspective’, Cambridge Journal of Economics, vol. 41, no. 4, pp. 1061–1085.Google Scholar
  47. Veblen, T 1904, The Theory of Business Enterprise, Transaction books, New Brunswick, New Jersey.Google Scholar
  48. Wernerfelt, B 1984, ‘A Resource-Based View of the Firm’, Strategic Management Journal, vol. 5, no. 2, p. 171.CrossRefGoogle Scholar
  49. Wernerfelt, B 1995, ‘The resource-based view of the firm: Ten years after’, Strategic Management Journal, vol. 16, no. 3, pp. 171–174.CrossRefGoogle Scholar
  50. Williamson, OE 1971, ‘The Vertical Integration of Production: Market Failure Considerations’, The American Economic Review, vol. 61, no. 2, pp. 112–123.Google Scholar
  51. Williamson, OE 2000, ‘The new institutional economics: Taking stock, looking ahead’, Journal of Economic Literature, vol. 38, no. 3, pp. 595–613.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Jakob Willem (Pim) Boven
    • 1
  1. 1.Theological University KampenKampenThe Netherlands

Personalised recommendations