Which theory primarily emphasizes maximizing shareholder value?

The theory that primarily emphasizes maximizing shareholder value is Theory E. This theory focuses on economic value and encourages organizations to concentrate on financial performance, including profitability and shareholder returns. In the context of change management, Theory E suggests that the primary goal of strategic actions should be to enhance shareholder value by aligning the organization’s operations and strategies to optimize financial outcomes. This makes it especially relevant for organizations operating in competitive markets where financial success is crucial.

In contrast, Theory O centers around the development of organizational capabilities, employee engagement, and culture, which may not necessarily prioritize financial returns in the short term. The other two options, Transformational Leadership Theory and Situational Leadership Theory, primarily deal with leadership styles and approaches to motivate and guide individuals and teams rather than directly emphasizing shareholder value. Thus, Theory E is the most fitting answer as it directly connects organizational change initiatives with the goal of maximizing financial performance for shareholders.