Based on a review of the literature, the author summarizes and evaluates research on the role of principals in effective schools and suggests additional factors needing study. Her review identifies nine features of effective principals and schools, involving commitment to academic goals, academic expectations, school climates that facilitate learning, time utilization, and principals' instructional leadership, personality traits, interpersonal style, organizational potency, and goal monitoring and evaluation activities. Six assumptions in the literature are discussed by the author, including the assumptions that principals' observed behaviors are causally related to observed outcomes and that schools are tightly coupled systems. From this discussion she proposes a new model that adds the variables of social context, principal characteristics, and inschool mediating processes to the existing variables of principals' behaviors and educational outcomes. She reviews further literature to suggest specific social contexts (such as federal, state, teacher union, district, and community pressures) and mediating processes (including schools' demographic, institutional, interpersonal, and labor relations characteristics) that should be accounted for in research on effective principals. Finally, the author discusses the usual criteria used for school effectiveness--test scores--and suggests adding other criteria, such as school attendance rates. Two appendices reorder the bibliography by topic and propose an agenda for future research on principal effectiveness. (RW)