Leadership style has always been a controversial topic in educational administration and management. Following the recommendation of the Education Commission to introduce school-based management (SBM) into Hong Kong schools in the early 1990s, discussions about the kind of leadership style that is appropriate for SBM schools have never ceased. The government holds a continuing belief that SBM schools work better if they are managed by "better" principals, and emphasises the value of "transformational leadership." However, this paper articulates the limitations of that leadership style and argues for complementing it with "educational leadership," which purports that principals have an obligation to learn with others about ways of promoting student learning. Secondly, the staff should also be encouraged and helped to carry out certain leadership functions. These arguments are supported by references to the most relevant literature. The discussion is useful to school principals, leaders, and teachers by offering them a better understanding of how to facilitate the implementation of SBM. (Contains 8 notes.)