Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What does the Contingency theory suggest about leadership?

1. There is a single best leadership approach

2. Leaders should adapt based on the work situation

3. Leadership is only effective when it is transactional

4. Leadership traits are innate and cannot be developed

The correct answer is: Leaders should adapt based on the work situation

The Contingency theory of leadership emphasizes the idea that the effectiveness of a leader's style is contingent upon the specific circumstances and context in which they operate. This perspective suggests that there isn’t a one-size-fits-all approach to leadership; instead, leaders must assess the unique characteristics of their environment, including the tasks at hand, the dynamics of the team, and the specific challenges they face. By adapting their leadership style to the context, leaders can improve team effectiveness and achieve better results. For instance, in high-pressure situations, a more directive approach may be necessary, while in a creative environment, a participative style could foster innovation and collaboration. This adaptability is a crucial aspect of what makes a leader successful within diverse organizational contexts. The other choices do not align with the principles of Contingency theory, as they either imply a fixed approach to leadership or suggest limitations on the nature of leadership effectiveness.