Transformational Leadership’s Risks and Shortages When a Company Faces the External Crisis

Abstract

With the development of uncertainty and connection of the world, companies increasingly face challenge and crisis from the external environment, which possibly becomes the catalyzer of the failure. Given that the crisis and challenges are difficult to identify and solve timely, there is one kind of leadership style to help companies effectively react to the external uncertainty and challenges, which is called transformational leadership. However, the implement of transformational leadership failed to help Virgin Australia out but leads to the file of bankruptcy with a mixture of factors. Noticing that the transformational leadership in Virgin Australia promotes the company’s reform in product line stretching but increases the financial burden of the company, we focus on the risks and shortages of transformational leadership like neglect of improvement of risk management and organizational resilience to contribute to making up for gap in research. Finally, we propose some solutions to reduce the risks of transformational leadership and supplement the risk management of the enterprise.