Leadership Approaches to Navigating Global Trade Volatility
Abstract
The COVID-19 pandemic has revealed an unfortunate truth: since the early 1990s, there has not been enough trust or cooperation between countries to make global trade a viable option. The growth of merchandise trade has greatly declined, with total trade expected to drop from a 9.8% growth rate in 2021 to -1.1% in 2023, with a modest recovery of 2.6% forecasted for 2024 [3]. The reasons for this are structural (e.g., increased competition due to geopolitical tensions, re-nationalisation of industrial policies, supply shocks due to climate change, erosion of WTO processes for dispute resolution) and suggest an era of ongoing uncertainty regarding trade. In this new volatile environment, the quality of organizational leadership has transitioned from "soft" metrics to "hard" performance metrics. Organizations led by executives who can synthesize real-time novel data, build adaptive cultures, and successfully execute organizational pivoting are much more resilient than those that rely only on procedure-based governance. Kotter (2012) has long posited that leading change requires two distinct structures (a traditional hierarchy for efficiency and an agile network structure for sensemaking and responding). His insight is particularly relevant today due to the anticipated disruptions to global trade. These contributions provide insights into leadership theory as a means of understanding the dynamics of global trade volatility. First, this paper contributes to the literature by situating the leadership literature within the context of trade volatility. Second, the author introduces the Leadership Framework for Trade Volatility Navigation (LFTVN), which consists of four levels of leadership (Sensing, Strategy, Execution, and Outcomes). Third, the author identifies six empirically supported leadership approaches with defined impacts and horizon levels (see Table 1). The author's argument is supported by a combination of Bass and Riggio (2006), Teece et al. (1997), Ivanov and Dolgui (2020), and current data from the WTO and the IMF [1][2][4][5].
