university of zimbabweir.uz.ac.zw/jspui/bitstream/10646/3498/1/gwenzi_impact_of_leaders… ·...

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UNIVERSITY OF ZIMBABWE

GRADUATE SCHOOL OF MANAGEMENT

Impact of leadership styles on organizational performance within Industrial

Development Corporation of Zimbabwe (2009 -2012), with special emphasis on

the full transformational leadership model.

By CHRISTOPHER GWENZI (R930227V)

A dissertation submitted in partial fulfillment of the requirements for the

degree of Master of Business Administration

2013

Graduate School of Management

University of Zimbabwe

Supervisor: Mrs. C. Tsikirayi

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CHAPTER 1

1.0 INTRODUCTION AND BACKGROUND

1.1 INTRODUCTION TO THE STUDY

Leadership is a critical element in ensuring the smooth and successful running of

organizations. It involves selecting, equipping, training, and influencing followers

who have diverse skills and abilities, and directing their efforts towards the

organization’s performance (Winston, 2003). Leadership style determines leader

effectiveness, follower extra effort and job satisfaction. In turn, these factors

determine organizational performance (Bass & Avolio, 1994). Organizational

performance is measured using both qualitative and quantitative measures.

Quantitative measures include production maximization, cost minimization, and

profitability ((Shukla, 1994). Qualitative measures include, for example, technological

excellence and satisfaction of different stakeholders such as shareholders,

employees, suppliers, customers and the society in general. Both measures should

take into consideration the short, medium and long term goals of the organization

(Shukla, 1994).

There are different styles of leadership, among them, transformational, transactional,

laissez-faire and servant leadership(Schneider & George, 2011). Transformational

leadership is concerned with the ability to stimulate followers’ motivation and

imagination, which should result in a different way of doing things (Schneider &

George, 2011). It is about a creative interaction between the leader and the followers

in such a way that followers move beyond their self-interests. It raises the followers’

level of maturity and concern for achievement, self-actualization, and the

achievements of the organization and society at large (Bass, 1999). This type of

leadership is usually appropriate in times of change and / or restructuring, after

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which other forms of leadership take over (Atkinson & Pilgreen, 2011).

Transformational leadership is key for any organization to achieve its objectives

through the efforts of its employees in times of change (Burns, 1978).

Transactional leadership is a reward-based style of leadership. Under this style of

leadership, targets are agreed upon with the superior or leader beforehand and

followers are rewarded, based on their achievements of the agreed target. Laissez

faire is a passive type of transactional leadership where the leader is inclined to

abdicating his role as a leader. In some cases, it is referred to as ‘no leadership at

all’. The two types of leadership are part of the full transformational model as

proposed by Avolio & Bass (1991).

Servant leadership is defined as the desire by the leader to motivate, guide and care

through lasting quality relationships (Schneider & George, 2011). It is concerned

with ethical behavior and concern for subordinates. Winston (2003) distinguishes

between transformational and servant leadership. According to Winston (2003),

transformational leadership thinks first about the organization and second about the

followers while servant leadership thinks first about followers and the organization

second.

This study is on the impact of leadership on organizational performance. It focuses

on the impact of leadership style on the variables that impact on organizational

performance; which are leader effectiveness, follower extra effort and job

satisfaction. In terms of the leadership styles, it uses the full transformational

leadership model, which comprise transformational and transactional (including

laissez faire leadership) styles. The study is a case study of the Industrial

Development Corporation of Zimbabwe Limited (IDCZ). Section 1.2 that follows

presents the background to this study.

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1.2 BACKGROUND TO THE STUDY

1.2.1. ORGANIZATIONAL CONTEXT

IDCZ is a body corporate established by an Act of Parliament, the Industrial

Development Corporation Act [Chapter 14:10] (IDCZ Act or the Act). It is a profit-

making state enterprise, wholly owned by the Government of Zimbabwe, under the

Ministry of Industry and Commerce. The Corporation is a holding company of a

number of subsidiaries and associate companies in diverse sectors of industry, such

as, chemicals and fertilizers, non-ferrous metals, motor vehicle manufacturing and

maintenance, food processing, refractory, real estate, textile, glass manufacturing,

mining, selling of heavy farming and mining equipment. The subsidiaries of IDCZ

Group and their revenue contributions to the Group, to the nearest whole number,

are shown in Table 1.1 below.

Table 1.1: Subsidiary revenue contribution to IDCZ for year ended December

2011

Subsidiary Revenue $ % of Total Revenue

Allied insurance company 1 837 990 1%

Almin Metal Industries 941 158 1%

Chemplex Corporation 2 850 710 67%

Ginhole Investments 191 229 0%

Motec Group 44 223 274 29%

National Furniture Industries 261 790 0%

Sunway 1 790 337 1%

Zimglass 1 123 164 0%

Source: IDCZ Consolidation schedules, 2011

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The object of the Corporation “… shall be to promote the establishment of new

industries and industrial undertakings and the development of existing industries and

industrial undertakings …” (IDCZ Act, 1980, p.1). The success of IDCZ in fulfilling its

goals as provided for in the Act depends on both its leadership and employees.

Follower extra effort and job satisfaction, and leader effectiveness are the factors

that impact on organizational performance. These three variables are influenced by

the leadership style (Bass & Avolio, 1994). Hence leadership style influences

organizational performance. This is more so when the environment in which the

organization is operating has significantly changed or is fast changing. For the IDCZ

Group to be able to promote the establishment of new industries, manage the

existing industries profitably, effective leadership capable of leading the organization

into success, follower extra effort and job satisfaction are required. Precey &

Jackson (2010), Muchiri & Cooksey (2011), Zopiatis & Constanti (2010), and

Edwards, Schyns, Gill & Higgs (2012), have demonstrated that transformational

leadership is effective leadership, especially in times of change. A transformational

leader is described as a person of vision, creativity and inspiration, who leads

change (Mohammad, Al-Zeaud & Batayneh, 2011). A transformational leader does,

however, operate in an environment full of constraints. The IDCZ business

environment is discussed below.

1.2.2. IDCZ BUSINESS ENVIRONMENT

To understand the impact of the environment on leadership, and therefore

organizational performance, the macro environment in which the organization

operates and sets out to achieve its objectives should be understood. The macro

environment comprises political, economic, social, technological (PEST) factors. The

PEST model, acknowledges that there are factors outside the organization, which

the leaders have little or no control over, but still have effect on both the leadership

and the variables that impact on organizational performance (Weiner & Mahoney,

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1981). The PEST model requires that an organization should scan the environment;

analyze and appraise the environmental factors, and eventually take into account

their impact on leadership and the variables that impact directly on organizational

performance.(Weiner & Mahoney, 1981). The organization should also understand

the impact of the interaction of the PEST factors on leadership styles and the

variables that impact directly on organizational performance. The implication of the

PEST factors on IDCZ Group leadership and organizational performance are

discussed below, starting with the political factors.

1.2.2.1. POLITICAL FACTORS

Political factors that affect the operations f the IDCZ Group include Government

policies, legislation, and bilateral and international relations. The Government of

National Unity (GNU), which is a coalition of the three main political parties which

came into existence in 2009, while it provided economic stability, posed its own

business challenges. The sometimes conflicting statements from Government make

it difficult for business, IDCZ included, to plan ahead with certainty. Lack of

Government policies that encourage foreign direct investments limited the extent to

which IDCZ could court new partners to invest in new project and recapitalize the

existing ones. This therefore, impacted on the overall performance of the IDCZ.

Since IDCZ is wholly owned by the Government of Zimbabwe under the Ministry of

Industry and Commerce, IDCZ through the Board of Directors has to consult the

Minister on a regular basis. This bureaucracy has also limited the swiftness of

leadership action, thereby impacting on its performance. This was the case, with a

number of projects when the business environment presented some opportunities in

mining and other sectors of the economy. IDCZ leadership was not able to take

advantage of these opportunities before competition. In some cases IDCZ

leadership had an advantage insofar as it is protected by Government since it could

lobby Government for protection from outside competition. More critical to the IDCZ

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has been the issue of sanctions imposed by the United States of America (USA)

Government on IDCZ through the Zimbabwe Democracy and Economic Recovery

Act (ZDERA) of 2001. Chemplex Corporation, Olivine Industries and IDC Head

Office cash transfers from customers or to suppliers were intercepted by the Office

of Foreign Assets Control (OFAC) of the United States of America Department of

Treasury, which enforces economic and trade sanctions. Motec Holdings was also

blocked from importing genuine Mazda motor vehicle spare parts from the USA. This

ha s impacted o the ability of leadership to run the companies as they would have

planned, therefore impacting negatively on the overall performance of the IDCZ.

These political factors negatively affects the leader effectiveness hence follower

extra effort and job satisfaction, and therefore organizational performance. The next

section discusses the effects of economic factors on leadership and organizational

performance.

1.2.2.2. ECONOMIC FACTORS

Economic factors that impact on IDCZ include the liquidity crunch, interest rates,

exchange rates, imports, and energy. The unavailability of long-term finance on the

local market meant that IDCZ could not undertake long-term projects or revamp its

existing plant and machinery. This adversely affected the IDCZ leadership in their

endeavor to achieve set goals. As a result of the liquidity crunch on the local market,

interest rates on short-term borrowing punitive, and this makes business unviable.

Such high costs of borrowing, of interests rates averaging 20%, make local products

uncompetitive on both the local and international markets. This adversely affects

leader effectiveness, follower extra effort and job satisfaction which drive

organizational performance. The use of the multicurrency regime in Zimbabwe,

dominated by the US dollar, makes it difficult for IDCZ leadership to lobby

Government for currency devaluation to promote exports. Hence products produced

by IDCZ Group companies cannot compete with the imports, especially from South

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Africa. The non –availability of electricity, and its cost when available, have further

made IDC products uncompetitive. This has, for example, resulted in the closure of

Willowvale Mazda Motor Industries (motor vehicles) and Modzone Enterprises

(textiles). The economic factors have fettered the degree to which IDC leadership

can apply themselves to motivate its followers to put extra effort and derive job

satisfaction which translate to effective organizational performance. The

implications of social factors on the IDCZ Group leadership and organizational

performance are discussed below.

1.2.2.3. SOCIAL FACTORS

Social variables include demography, lifestyle and social values. Migration of skilled

labor to greener pastures has negatively affected IDCZ leadership, its effectiveness

and therefore organizational performance. Inability by companies to inject new blood

in organization, in the form of new graduates, as a result of poor capacity utilization,

had impacted on the generation of new ideas. Where these new graduates are

employed, they are paid paltry salaries which are not able to cover their basic needs.

This affects their ability to put extra effort and derive job satisfaction from their

employment. As a result theft and fraud by employees has been rampant, and IDCZ

has not been spared. This has affected the performance of the organization. The

impact of technological factors on IDCZ Group leadership and organizational

performance is discussed below.

1.2.2.4. TECHNOLOGICAL FACTORS

Most IDCZ Group companies have lagged behind in technological developments.

The plant and machinery used in the production processes is now obsolete and so

are the production processes. Maintenance costs are, therefore, very high such that

when factored in the cost of the products, the selling price of the IDCZ products

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become uncompetitive. This, together with the liquidity challenges in the economy

has limited the extent to which the IDCZ leadership can motivate its followers to put

extra effort to improve organizational performance.

The fiber optic cable technology in Zimbabwe presents opportunities to the

economy, including the IDCZ Group of companies. The slow adoption of this

technology by the IDCZ leadership in doing business has, no doubt, affected its

effectiveness, follower extra effort and job satisfaction. This technology can be used

to link with suppliers, customers and other stakeholders thereby reducing the costs

of doing business. Whilst the company has strength in IT skills, the skills have not

been fully utilized beyond automation of traditional areas, such as accounting. The

slow rate at which modern technology is being adopted in the IDCZ has impact on

the leadership style that a manager may employ. Where, for example, work being

done can be monitored on line the traditional methods are still being used. This

takes a lot of time from the leaders to monitor progress rather than focus on other

strategic issues. The effect is leader ineffectiveness, follower job dissatisfaction and

less effort. Since PEST factors present both opportunities and threats to leaders and

the achievement of organizational objectives, leaders should be prepared to exploit

opportunities and minimize the threats. Hence the need for a SWOT analysis

discussed below.

1.2.3. SWOT ANALYSIS

The SWOT analysis is used for a company’s situational analysis (Hung, n.d.). The

model is applied here to understand the internal strengths and weaknesses of the

IDCZ Group and the opportunities and threats that the external environment

presents. The four factors and their impact on leadership and organizational

performance are discussed below.

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1.2.3.1. STRENGTHS

The Board of Directors of the IDCZ is appointed by the Minister of Industry and

Commerce with the approval of the President of the Republic of Zimbabwe. The

Chairman of the Board has direct access to the Minister, Cabinet and the President.

This makes it easy for the IDCZ leadership to lobby Government on policy issues,

especially those that directly affect the Group companies’ operations. The ability of

leadership to lobby Government enables them to ensure that policies are in their

favor and transform into effective organizational performance where the company

meets its set goals. As a result of the size of IDCZ, the Group companies were

benefiting from the different skills base. This was made possible through Group

Chief Executives Meetings which were being held on a quarterly basis.

At one point, all Government and quasi-government departments were required to

buy their motor vehicles from Willowvale Mazda Motor Industries unless there was

no stock. The leadership skills of managers are therefore complimented by

Government policy. This has led to improved sales and employee morale then.

However, with time, there was laxity in the enforcement of the Government policy

leading to the collapse of Willowvale Mazda Motor Industries. The impact of the

IDCZ Group weaknesses on leadership and organizational performance is

discussed below.

1.2.3.2. WEAKNESSES

The greatest weakness is the obsolescence of plant and equipment and the

resulting high costs of production arising from high maintenance costs. An imported

bag of fertilizer, for example, lands in Zimbabwe at a cheaper price of $10 compared

to a locally manufactured one selling at $35 (IDCZ, 2012, p.34). The same applies to

motor vehicles and food stuffs. This has made imported products more competitive

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than those locally produced by the IDCZ Group companies. This has led to

frustration of leadership, therefore affecting its effectiveness, follower extra effort and

job satisfaction; and therefore organizational performance, as demand for local

products decline. Leaders have a challenge in managing the production costs and

the prices of the products. Developing clear and motivating visions for the

companies becomes a daunting task for leaders. It becomes difficult for leaders to

encourage follower to follow them. This affects the overall performance of the

organization as demand for the IDCZ products fall, follower effort and job satisfaction

decline. The opportunities that are presented by the external environment to the

IDCZ Group are discussed in the next section.

1.2.3.3. OPPORTUNITIES

Since IDCZ is a wholly owned Government company, the leadership was able to

obtain a government guarantee to borrow $20 million from Industrial Development of

South Africa (IDCSA) to recapitalize its operations and to retire expensive local

loans (IDCZ, 2012, p.34). This has provided a lifeline to the organization. IDCZ has

been able to sustain most of its operations running. This has improved productivity in

some of the IDCZ companies as they had some working capital. Leaders were able

to engage in purposive action direct followers towards productivity. As a result of the

cheap funds some companies were able to lower their finance costs and improve

profitability, or at least reduce the financial losses.

The discovery of diamonds in Zimbabwe and the surge in commodity prices on the

international market, mining industry presents an opportunity to IDCZ to venture into

that sector. From 2009 to 2011, the mining sector has grown by 47% (Ministry of

Finance, 2012, p.32). Given IDCZ managers’ access to Government through the

Board of Directors, the company can be allocated some mining claims, land and

water use rights, which it can use as capital in joint venture operations with foreign

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partners. IDCZ leaders can use their capabilities, persistence and determination to

tap into these opportunities and improve the performance of the organization. The

next section discusses the threats presented by the external environment to the

IDCZ Group.

1.2.3.4. THREATS

The major threats to IDCZ are the lack of inward foreign direct investment. In most

greenfields that IDCZ has entered, this has been with foreign partners, where the

foreign partner provides capital while IDCZ provides the ‘local content’ which is

mainly natural resources, which are availed by Government, in the form of land,

water and minerals rights, and labor. IDCZ leadership is also facing the threats from

cheap imported products in every sector of the economy in which it operates. This

has affected the production level and therefore leader effectiveness, follower extra

effort and job satisfaction and ultimately organizational performance. Leaders need

to motivate followers to challenge the status quo and be optimistic about future to

overcome these threats and provide meaning to any task at hand. Leaders should

encourage team spirit which leads the organization to meeting its goals, for example,

increase revenue and profits. Section 1.3 below is on the research problem.

1.3 RESEARCH PROBLEM

Following the demise of the Zimbabwean dollar and adoption of the multicurrency

regime (dominated by the US dollar) in the Zimbabwean economy in 2009, many

companies were faced with a myriad of challenges. Their local currency reserves

were rendered useless, had no foreign currency reserves, products and services

were facing international competition (especially from South Africa), workers’ high

wages demands not consistent with productivity, and obsolete plant and equipment

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among others. Companies could not rely on high margins on their products.

Leadership has now been a key factor in the effective running of organizations. IDCZ

Group was no exception. It became imperative to take stock of leadership styles

that are within the organization, and map a way forward, which will result in followers

who put extra effort and are satisfied with their jobs. This study, therefore, seeks to

establish the impact of leadership styles on leader effectiveness, follower extra effort

and job satisfaction, and therefore organizational performance. Section 1.4 outlines

the objectives, Section 1.5 is on the research questions and Section 1.6 is on the

hypotheses of this study.

1.4 RESEARCH OBJECTIVES

1.4.1. OVERALL OBJECTIVE OF THE STUDY

To assess the impact of the transformational and transactional leadership style on

organizational performance within the IDCZ Group after the adoption of the multi-

currency system (2009 to 2012).

1.4.2. SPECIFIC OBJECTIVES

1. To gain insight into the leadership styles within the IDCZ.

2. To investigate the relationship between transformational leadership and

organizational performance within the IDCZ.

3. To investigate the relationship between transactional leadership and

organizational performance within the IDCZ.

4. To recommend leadership strategies that will improve organizational

performance within the IDCZ.

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1.5. RESEARCH QUESTIONS

1.5.1. MAIN RESEARCH QUESTION

What is the influence of transformational and transactional leadership styles on

organizational performance within the IDCZ?

1.5.1. MINOR RESEARCH QUESTIONS

1. Which leadership styles are exhibited within the IDCZ?

2. Is there a relationship between transformational leadership and


3. Is there a relationship between transactional leadership and


4. What are the leadership strategies that can be employed to improve


1.6. HYPOTHESES

1.6.1. MAIN HYPOTHESIS

Null Hypothesis: Organizational performance within the IDCZ is not influenced by

transformational leadership, while it is influenced by transactional leadership.

Alternative Hypothesis: Organizational performance within the IDCZ is influenced by

transformational leadership, while it is not influenced by transactional leadership.

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1.6.2. MINOR RESEARCH HYPOTHESES

Hypothesis 1

H1a (Null): Follower extra effort within the IDCZ is not influenced by any of the

transformational leadership factors; individualized consideration, idealized

influence(behaviors), idealized influence (attributes), intellectual stimulation and

inspirational motivation.

H1a (Alternative): Follower extra effort within the IDCZ is influenced by any of the




H1b (Null): Follower job satisfaction within the IDCZ is not influenced by any of the




H1b (Alternative): Follower job satisfaction within the IDCZ is influenced by any of

the transformational leadership factors; individualized consideration, idealized



H1c (Null): Leader effectiveness within the IDCZ is not influenced by any of the




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H1c (Alternative): Leader effectiveness within the IDCZ is influenced by any of the




Hypothesis 2

H2a (Null): Follower extra effort is influenced by any of the transactional leadership

factors; contingent reward, management by exception (active), management by

exception (passive) and laissez faire.

H2a (Alternative): Follower extra effort is not influenced by any of the transactional

leadership factors, contingent reward, management by exception (active),

management by exception (passive) and laissez faire.

H2b (Null): Follower job satisfaction is influenced by any of the transactional

leadership factors; contingent reward, management by exception (active),


H2b (Alternative): Follower job satisfaction is not influenced by any of the

transactional leadership factors, contingent reward, management by exception

(active), management by exception (passive) and laissez faire.

H2c (Null): Leader effectiveness is influenced by any of the transactional leadership



H2c (Alternative): Leader effectiveness is not influenced by any of the transactional



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1.7. JUSTIFICATION

This section gives the rationale for undertaking this study. Many studies have been

carried out on the relationship between leadership and organizational performance

and many have found convincing evidence that leadership is key for the success

and survival of organizations (Avolio & Yammarino, 2002; Erkutlu, 2008; Hall,

Johnson, Wysocki & Kepner, 2012; Raja & Palanichamy, 2012). Raja &

Palanichamy (2012), in their study, found that “participative human affectionate”

leadership styles had a positive association; while “non participative formal task

oriented” leadership styles had a negative association with organizational

effectiveness. From the above, participating human affectionate leadership styles

equate to transformational leadership while non participative formal task-oriented

leadership styles equate to transactional leadership on the full transformational

leadership model continuum.

This research would like to find out the styles of leadership in IDCZ and test the

effect transformational and transactional (including laissez faire) leadership has on

organizational performance variables (leader effectiveness, follower extra effort and

job satisfaction). This study is carried out when Zimbabwe is going through

challenging times where the functional currency is a foreign currency, plant and

equipment is obsolete, competition from imported products is high, labor is

demanding high wages and salaries and other challenges related to the adoption of

multi-currency system. Such an environment demands a radical change in the way

the organization is managed or it would have to close shop, just like many other

companies have closed post the Zimbabwe-dollar era. This transformation process

should be led by management, hence the need to transform managers into leaders

who would then be able to lead others.

The study will demonstrate the importance of leadership styles on organizational

performance. There are some useful lessons to be learnt for organizational

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leadership for both the IDCZ Group and other organizations. The impact of each

leadership style on each of the organizational performance variables will be used for

the purpose of leadership development programmes. These challenges relating to

each leadership style become lessons for the future. There are also positive lessons

to be learnt; how one leadership style affects each of the organizational performance

variables, and how organizations should tap more into specific styles of leadership

and less on the others.

In understanding the impact of leadership on organizational performance the study

will test the generally accepted position that transformational leadership is

associated with leader effectiveness, follower extra effort and satisfaction (Bass &

Avolio, 1994; Bass,1999; Carss, 2010; Ivey & Kline, 2010). These authors have

shown that transformational leadership is positively correlated with organizational

productivity, innovation, motivation, self-esteem and job satisfaction; all of which

result in the effective organizational performance.

From the researcher’s view point this study would enhance understanding of

leadership principles and practices. The researcher will also benefit from the

application of transformational and transactional leadership in dealing with

organizational performance variables in changing or challenging business

environments. Section 1.8 below covers the scope of this study.

1.8. SCOPE OF RESEARCH

The study focuses on the IDCZ Head Office and key subsidiaries. The subsidiaries

of IDCZ Group include Chemplex Corporation, Sunway City, Zimglass, Almin Metal

Industries, Motec Group, Ginhole Investments, National Furniture Industries, Motira

Tractors, Allied Insurance Company and Zimcopper. Almin Metal Industries,

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Ginhole Investments, Motira Tractors, Allied Insurance Company and Sunway City

are small entities in terms of both revenue and asset contribution to the Group.

The study will therefore concentrate on managers at Head office and key subsidiary

companies, which are Chemplex Corporation and Motec Holdings. The two

subsidiaries are also the largest in terms of sub-subsidiaries under them. Chemplex

Corporation is made up of Chemplex Animal and Public Health, ZimPhos, Chemplex

Marketing, Dorowa Minerals, and GD Haulage. The Motec Holdings is made up of

Amtec Motors, Deven Egineering, Hino, Autologistics and Willowvale Mazda Motor

Industries. As a result Chemplex Corporation and Motec Holdings have the largest

number of managers in the IDCZ Group. The two are the largest in terms of their

asset and revenue contribution to the IDCZ Group consolidated financial statements.

The study also focuses on the executives and middle and lower level managers in

Harare since the Head offices of IDCZ, Chemplex Corporation and Motec Holdings,

are all stationed in Harare. Further, the majority of the managers are also in Harare

with a few lower level managers outside Harare. Those outside Harare are

dominated by middle and lower level managers like accountants, branch, parts,

workshop, and marketing managers, in the case of Motec Holdings. In the case of

Chemplex Corporation only Dorowa Minerals is operating outside Harare.

Managers, in this study, include all the executives and middle and lower level

managers at IDCZ Head office, Chemplex Corporation and Motec Holdings. These

exclude supervisory management such as foremen, officers, and such similar ranks.

The smaller subsidiaries such as Ginhole, Zimcopper, Almin have only one or two

managers. These companies contribute very little to the IDCZ Group, in terms of

both assets and revenue. Associate companies in which IDCZ has less than 50%

shareholding were also excluded since the IDCZ does not have the power over such

an entity. Ethical issues faced in undertaking this study are discussed in Section 1.9

below.

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1.9 DISSERTATION STRUCTURE

The structure of this dissertation is as follows. Chapter 1: Introduction and

Background, introduces the study and has the following sections; introduction to

the study, background to the study, research problem, research objectives,

research questions, hypothesis or proposition, justification, scope of research,

dissertation structure and chapter summary. Chapter 2: Literature Review examines

the literature around the subject of leadership and organizational effectiveness. The

chapter has the following subtopics; introduction, main discussion and chapter

summary. Chapter 3: Research Methodology deals with how the research would be

carried out. The chapter has the following sections, Introduction, Research Design,

Research Strategy, Population and Sampling Techniques, Data Collection

Methods, Research Procedure, and Research Limitations. Chapter 4: Results

Presentation, Analysis and Discussion. The chapter presents the results and their

analysis. Chapter 5: Conclusions and Recommendations. The chapter sets out to

answer the objectives of the study and gives any recommendation as a result of the

research findings and conclusions.

1.11. CHAPTER SUMMARY

This Chapter is an introduction to the study. The Chapter is arranged in section as

follows; 1.1. Introduction to the study, 1.2 Background to the study, 1.3 Research

Problem, 1.4 Research Objectives, 1.5. Research Questions, 1.6 Proposition, 1,7.

Justification, 1.8 Scope of Research, 1.9 Dissertation Structure, and 1.10 Chapter

summary.

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CHAPTER 2

2.0 LITERATURE REVIEW

2.1. INTRODUCTION

Burns (1978) rightly puts it that one of the universal cravings is the hunger for

compelling and creative leadership. Whether intentional or unintentional, the actions

and attitudes of those in leadership positions affect the actions and attitudes of

employees and hence the performance of the whole organization (Mohammad, Al-

Zeaud & Batayneh, 2011).

This Chapter reviews the definition of leadership, and development of leadership

theory towards the full transformational leadership model. It discusses the attributes

and behaviors of each leadership type and their impact on organizational

performance factors such as leader effectiveness, follower extra effort and job

satisfaction. Section 2.2. below highlights the salient features of leadership.

2.2. DEFINITIONS OF LEADERSHIP

Popa (2012) defines leadership as the ‘art of motivating a group of people to act

towards achieving a common goal’ (p.40). Leadership is a process where one

influences an individual or a group of people in both thought and behavior towards

set goals (Notgrass, 2010). Leadership is the ability to build confidence and get

support of the subordinates in order to achieve the goals of the organization

(Boonyachai, 2011). From the definitions, leadership implies that there should be a

common goal which both the leader and the followers seek to achieve. A leader

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should, therefore, be able to influence the effort of the follower(s) towards achieving

the common goals. Leaders are usually identified in times of crisis or challenges and

an innovative response is required. Leaders have a clear idea of what they want to

achieve and why, therefore they are able to think creatively, especially in non-routine

situations (Shibru, 2011).

Precey & Entrena (2011) argue that for organizations to be succeed they should

have leadership that can espouse a clear vision for the organization. That vision

should be broken down by the leader and his/her followers into tasks necessary to

fulfill the vision. Effective leaders help followers to deal with the challenges

confronting them and respond to the upcoming challenges (Bass & Avolio, 1994).

Leaders should build strong relationships with followers, share decision-making,

communicate effectively and hence influence the actions and attitudes of followers.

The direction and conviction of the leader has a strong bearing on leader

effectiveness, follower extra effort and job satisfaction. Leaders affect followers’

commitment which makes a difference as to the performance of the organization

(Precey & Entrena, 2011). Hence leadership is not a solitary activity, it requires

followership. Leaders need to discover, learn and develop the competencies, skills,

knowledge and attitudes that encourage others to follow them. It has to be

acknowledged that followers, in some occasions, assume the roles of leadership

either as departmental heads or as team leaders (Ivey & Kline, 2010). Effective

leadership has a developmental aspect. This type of leadership will produce

effective followers and leaders at the same time for the good of the organization

(Shibru, 2011). Section 2.3. discuses the development of leadership theory up to full

transformational leadership model, which is the subject of this study.

23

2.3. THEORIES OF LEADERSHIP

Four leadership theories; traits, behavioral and style, situational and the full

transformational leadership theory are discussed below. Each theory was developed

as a result of the weaknesses in the preceding theory. The full transformational

leadership model is the subject of this study.

2.3.1. TRAIT THEORY OF LEADERSHIP

The trait theory of leadership is about types of personality tendencies and behaviors

being linked with effective leadership. The theory argues that such leaders know

what they want to achieve, why they want it, how to communicate it to others, in

order to gain their cooperation and support (Doyle & Smith, 2001). Gardner as cited

by Doyle & Smith (2001) identified some of the leadership traits as the ability to

motivate others, the desire to seek power, self confidence, courage and resolution,

physical vitality and stamina, assertiveness and skill in dealing with people, among

others. The major weaknesses of the trait theory of leadership is that leaders are

born, therefore people cannot be trained or developed into leaders. The trait theory

also ignores the environmental factors which may differ from situation to situation,

and fails to explain leadership failures despite having the necessary traits (Doyle &

Smith, 2001). The leadership traits identified above are usually associated with

males, this then led to the behavioral and style theory of leadership discussed

below.

24

2.3.2. BEHAVIORAL AND STYLE LEADERSHIP THEORY

According to this theory leadership is not about traits but patterns of motives. This

theory was popularized by the Blake and Mouton Grid Model based on concern with

people and concern with productivity resulting in four leadership styles.

• Concern for tasks: The leader is more concerned with productivity and

achievement of concrete objectives. The leader concentrates on organizing

people and activities to achieve set objectives.

• Concern for people: The leader is more concerned with people’s interests,

needs, development and problems compared to productivity.

• Directive leadership: The leader takes decisions for others and expects them

to follow instructions.

• Participative leadership: The leader shares decision making with others

(Blake and Mouton cited in Doyle & Smith (2001)).

The Blake and Mouton Grid model does not take into account the environmental

factors which may differ from situation to situation, hence the development of the

situational theory of leadership discussed below.

2.3.3. SITUATIONAL LEADERSHIP THEORY

The theory presumes that different situations require different leadership styles.

Researchers on leadership started to look at the context in which leaders were

emerging. The situational theorist argued that particular contexts demand particular

forms of leadership. The theory therefore places a premium on people who could

adjust their style to suit the situation. This leads to the contingency approach to

25

leadership. Hersey and Blanchard in Doyle & Smith (2001) came up with the

following leadership styles:

• Telling: This comprises high task and low relationship behaviors. This is

similar to Blake and Mouton’s directive leadership.

• Selling: This is a high task and high relationship behavior. This is the

coaching approach to leadership, where the followers are willing and

motivated but lack maturity.

• Participating: This is a high relationship and low task leadership behavior.

Decision making is shared, and the main role of the leaders is facilitation.

• Delegating: This is a low relationship and low task behavior. The leader

identifies problems but responsibility for solving the problem is given to

followers (Hersey and Blanchard in Doyle & Smith, 2001). The next section

discusses the full transformational leadership model as popularized by Burns

(1978).

2.3.4. FULL TRANSFORMATIONAL LEADERSHIP MODEL

The concept of transformational leadership was popularized by Burns (1978) in his

seminal work and later developed by Bass (1985) and others such as Avolio & Bass

(1994). This model was expanded and revised by Avolio & Bass (1991) to

emphasize on the followers’ interest and hence a leadership continuum from

transformational to transactional (including laissez faire) leadership. The model

provides a multi-dimensional view of leadership behaviors. The three categories of

the transformational leadership model are made up of eight dimensions. These eight

dimensions are as illustrated in Figure 2.1. However, the Individual Influence

dimension is split into attributes and behaviors to ultimately result in nine

dimensions. Therefore this study uses the nine dimensional view of transformational

26

leadership model as shown in Figure 2.1. Each of these dimensions will be explored

under the relevant leadership style. The labels TF- represent dimensions of

transformational leadership and TA –represent dimensions of transactional

leadership.

27

Effective

Ineffective

Passive Active

Figure 2.1: The full transformational leadership model (Adapted from Avolio & Bass, 1991)

TA

Laissez Faire

TA

Management by Exception (Passive

TA

Management by Exception (Active)

TA

Contingent Reward

TF

Idealized Influence

TF

Inspirational Motivation

TF

Intellectual Stimulation

TF Individualized

Consideration

28

2.3.4.1. TRANSFORMATIONAL LEADERSHIP

The transformational leadership is concerned with how leaders change teams and

organizations in creating, communicating and modeling an organization’s vision, and

how it inspires employees to achieve more than is expected (Shibru, 2011). Studies

have shown that transformational leadership is positively correlated to organizational

outcomes such as productivity, innovation, motivation, self-esteem and job

satisfaction; all of which result in effective organizational performance (Bass &

Avolio, 1994; Avolio & Yammarino, 2002; Mitchell & Boyle, 2009; and Ivey & Kline,

2010).

Burns (1978) defined transformational leadership as a process in which leaders and

followers raise one another to higher levels of morality and motivation.

Transformational leadership is about stimulating followers’ motivation and

imagination. If leaders are to engage in purposive action they need to exhibit

transformational leadership behaviors that direct people towards constructive effort

and that provide others with a more integrated understanding of what is to be

achieved (Mitchell & Boyle, 2009). The transformation process changes and

transforms individuals, and frequently incorporates charismatic and visionary

leadership (Burns, 1978). This process is founded on empathy, understanding, and

consideration; rather than manipulation, power wielding, or coercion. Therefore

transformational leadership could be taught, learned, and practiced (Bass, 1990).

Atkinson & Pilgreen (2011) add that transformational leadership is based on the

following assumptions; subordinates will band together around a person that

inspires; and leaders with a vision and passion can accomplish amazing things.

Transformational leadership style explains how leaders change teams or

organizations by creating, communicating, modeling a vision and inspiring

employees to strive toward the intended vision (Shibru, 2011). Transformational

leaders have been described as those who alter the way their followers think about

29

themselves such that feelings of commitment and involvement are enhanced

(Gregory, Moates & Gregory, 2011).

Transformational leadership has been lauded for its superior, positive relationship to

subordinate satisfaction, performance, motivation, commitment, and ratings of leader

effectiveness over transactional and laissez-faire styles of leadership (Ivey & Kline,

2010). Further, transformational leadership has been recognized because of its

robustness across different sectors such business, politics, military, health and

education, and its cross-cultural applicability (Atkinson & Pilgreen, 2011; and Hall,

Johnson, Wysocki & Kepner, 2012). Transformational leadership has been studied

extensively by leadership researchers and has been found positively associated with

a number of important organizational outcomes in many different types of

organizations and situations, across different levels of analysis, and across cultures

(Avolio, Bass, Walumbwa, & Zhu, 2004; Karp & Helgo, 2009; Sheard, Kakabadse &

Kakabadse, 2012). However, as Kuchinke (2010) notes, much has been researched

on transformational leadership in North America, very little has been done in Africa

and other regions.

Empirical evidence has proved that high productivity, a decrease in the rate of laor

turnover, high levels of job satisfaction are all due to transformational leadership

(Bass & Avolio, 1994; Avolio & Yammarino, 2002; Mitchell & Boyle, 2009; Ivey &

Kline, 2010). The effectiveness or superiority of transformational leadership has

been proved in different countries and fields such as the military, health, research,

business and sport. Mohammad, Al-Zeaud, & Batayneh (2011), in their study of

private hospitals in Jordan, found that transformational leadership was strongly

positively correlated to job satisfaction hence were more preferred and profitable.

Transformational leaders get followers to perform above and beyond expectations

by articulating a vision, providing an appropriate role model, fostering the

acceptance of group goals, providing individualized support and intellectual

stimulation, and expressing high performance expectations (Organ, Podsakoff &

MacKenzie, 2009). In other words, transformational leadership is the ability to get

30

people to want to change, to improve, and to be led. It involves assessing followers’

motives, satisfying their needs, and valuing them (Hall, Johnson, Wysocki & Kepner,

2012). Therefore, a transformational leader could make the company more

successful by valuing its followers. The chief element of transformational leadership

is its ability to cultivate the needs of the followers in a follower-centered manner

(Muchiri & Cooksey, 2011). Taleb (2010) noted that transformational leadership has

moved from being an internal leader- follower focus to a broader, external one, with

an increasing focus on the efficacy of different leadership behaviors in differing

contexts of change. The role of transformational leadership is to redirect energy

needed to fuel renewal whereby leaders help people change problems (Beugre,

Acar & Braun, 2010). Transformational leaders can create significant organizational

change and act as change agents, foster higher level of intrinsic motivation, and

loyalty among followers, introduce a new image or view of the future and create a

commitment to this image among followers (Kinicki & Kreitner, 2008). Findings of a

study by Ghafoor, Qureshi, Khan & Hijaz (2011) show that transformational

leadership style and organizational desired outcomes are highly correlated.

However, Chiang & Wang (2012) assert that transformational leadership must also

be used in conjunction with transactional leadership to more effectively increase

trust and organizational commitment.

Overall transformational leadership impacts certain characteristics related to the

follower such as empowerment, commitment, self-efficacy beliefs, job satisfaction,

trust, and motivation. Studies related to the influence of transformational leadership

on organizational and personal (follower) outcomes show positive outcomes for the

organization and follower (Muchiri, Cooksey, Di Milia & Walumbwa, 2011). Further

research findings found that transformational leadership may assist organizations in

selecting leaders who have leadership qualities which would be an asset to the

future growth and development of the organization as well as the future growth and

development of the followers (Sadeghi & Pihie, 2012). Findings of Sagedhi & Pihie

(2012) also provide evidence that transformational leadership should be the subject

31

of management training and development to improve the innovation and

performance of organizations.

Jandaghi, Matin & Farjami (2009) observed that transformational leadership

elements are more observable in successful companies than in unsuccessful

companies and that the leadership style in successful companies is more based on

transformational leadership. Results from the same study showed that idealized

influence, inspirational motivation, intellectual stimulation and individual

consideration in successful companies were significantly higher than in unsuccessful

ones (Jandaghi, Matin & Farjami, 2009). Transformational leadership has the

greatest potential when it also involves followers in establishing organizational

culture (Birasnav, Rangnekar & Dalpati, 2011). In the context of profit-making

organizations, this will lead to a motivated workforce which is a source of competitive

advantage and hence successful organization.

There are four dimensions that describe transformational leadership style; idealized

influence, inspirational motivation, intellectual stimulation, and individualized

consideration (Burns, 1978). The first factor, idealized influence, is split into two

idealized influence attributes and idealized influence behavior. This result in five

dimensions attributed to transformational leadership style and nine factors for the full

model. Each of these five dimensions is discussed below.

2.3.4.1.1. IDEALIZED INFLUENCE (CHARISMA)

Idealized influence is about charisma. Leaders with idealized influence can be

trusted and respected by their followers to make sound decisions for the

organization (Hall, Johnson, Wysocki & Kepner, 2012). Followers should be able to

identify with their leaders who should exhibit extraordinary capabilities, persistence

and determination (Bass, 1998). Transformational leaders should be risk takers.

32

They can be consistently relied upon to do the right thing, displaying high moral and

ethical standards. Idealized influence is about the leader having a clear set of values

demonstrated in every action, hence providing a role model for their followers.

Leaders who exhibit this dimension should be role models in which followers have

pride, confidence and loyalty (Lam & O’Huggins, 2012). The idealized influence

dimension is split into two dimensions; idealized influence (attributes) and idealized

influence (behaviors) which are discussed below.

2.3.4.1.1.1. IDEALIZED INFLUENCE (ATTRIBUTES)

Idealized influence (attributes) refers to leaders’ socialized charisma such as

confidence, beyond self-interest, ethical standing and power (Zopiatis & Constanti,

2010). Under this dimension leaders are admired, trusted, and observe high

standards of ethical and moral conduct (Avolio & Bass, 2004). Attributes include

instilling pride in followers for being associated with the leader; going beyond self-

interest for the good of the team or followers and displaying a sense of power and

confidence (Analoui, Doloriert & Sambrook, 2012). Leaders exhibiting this dimension

are held in high regard and command loyalty from their followers. The second

dimension of Idealized influence (charisma) is Idealized influence (behaviors).

2.3.4.1.1.2. IDEALIZED INFLUENCE (BEHAVIORS)

Idealized influence (behaviors) refers to leaders’ actions based on values, beliefs

and a sense of mission (Zopiatis & Constanti, 2010). Leaders displaying idealized

influence behaviors talk about their most important values and beliefs, specifying the

importance of having a strong sense of purpose and considering the moral and

ethical consequences of their decisions (Analoui, Doloriert & Sambrook, 2012). Such

leaders also emphasize the importance of having a collective sense of mission.

33

Inspirational motivation which is the other dimension of transformational leadership

style is discussed below.

2.3.4.1.2. INSPIRATIONAL MOTIVATION

Inspirational motivation refers to leaders’ ability to motivate others by providing

meaning and challenge to followers’ work (Mitchell & Boyle, 2009). It refers to the

degree to which the leader articulates a vision that is appealing and inspiring to

followers. Leaders with inspirational motivation challenge followers with high

standards, communicate optimism about future goals, and provide meaning for the

task at hand (Bass, 1998). The followers of inspirational motivational leaders are

willing to invest more effort in their tasks; they are encouraged and optimistic about

the future and believe in their abilities. Leaders with inspirational motivation

encourage team spirit which leads to the organization meeting its goals of, for

example, increased revenue and market growth (Hall, Johnson, Wysocki & Kepner,

2012). This transformational leadership element provides vision, motivation and

inspires followers during eras of environmental and professional change (Rukmani,

Ramesh & Jayakrishnan, 2010). The third dimension of transformational leadership

style is Idealized consideration.

2.3.4.1.3. INDIVIDUALIZED CONSIDERATION

Individualized consideration is the consideration of employee’s individuality (Bass &

Avolio, 1994). A transformational leader links the interests of every follower with

those of the organization. This leadership dimension focuses on the development,

coaching and training of employees that create new opportunities. Individual

consideration describes leaders who act as mentors, coaches and advisers to their

followers whether individuals or teams. Managers with individual consideration

34

encourage constituents to reach goals that help both the constituents and the

organization (Hall, Johnson, Wysocki & Kepner, 2012). Under this transformational

leadership element, individual desires and needs are respected, differences are

accepted, and two-way communication is common. These leaders are considered to

be good listeners, empathetic and along with this is personalized interaction.

Followers of these leaders move continually toward development of higher level of

individual and team performance. Therefore each follower’s contributions to the

team are respected and celebrated. Hence the followers will have the zeal and

aspirations for self-development and intrinsic motivation for their tasks. This has a

positive impact of the performance of the organization as a whole.

When employees are being individually considered; their activities, decision making,

and feeling of belongingness develops. This sense of belongingness develops

commitment and ultimately improves performance in terms of meeting organizational

goals competitively (Stairs, 2005). Sabir, Sohail & Khan (2011), in their study, found

that when organizational culture and employee value propositions are the same, it

increases the commitment of employees, especially, in a newly hired employee. The

employee’s sense of belongingness improves his/her perception about his/her work

and organization and develops an association with his work (Avey, Avolio, Crossley

& Luthans, 2009). The fourth and last dimension of transformational leadership style

is Intellectual stimulation.

2.3.4.1.4. INTELLECTUAL STIMULATION

According to Bass & Avolio (1994) intellectual stimulation is the enhancement of the

followers’ ability to think on their own so far as it relates to work tasks. Intellectual

stimulation is the ability of an individual to be logical, rational and able to intelligently

adapt to different situations. Logical thinking and intelligent evaluation of the

environment helps employees create new ideas, with public criticism being avoided

(Bass, 1998). Stimulating employees’ intellect encourages them to take risks in order

35

to bring new practices and ideas that help improve the individual’s and ultimately

organization’s performance. The transformational leader should encourage

innovation and creativity by challenging the status quo. This will promote critical

thinking and problem solving for the betterment of the organization (Hall, Johnson,

Wysocki & Kepner, 2012). The key feature of this element of transformational

leadership is stimulation of creativity in the followers. The leaders should challenge

assumptions, take risks and solicit ideas from followers. Transformational leaders

should nurture and develop people who think independently. For such leaders,

learning is a value and unexpected situations are seen as opportunities to learn. At

the individual level, Gumusluoglu & Ilsev (2007) found that there is a positive

relationship between transformational leadership and employees' creativity. In

addition, transformational leaders influence employees' creativity through

psychological empowerment. At organizational level, Gumusluoglu & Ilsev (2007)

found that transformational leadership is positively associated with organizational

innovation. Intellectual stimulation requires that leaders challenge critical

assumptions, seek differing perspectives when solving problems, get others to look

at problems from different angles, and suggest new ways of how to accomplish

assignments. The next section looks at the second leadership style on the full

transformational leadership model continuum, transactional leadership style.

2.3.4.2. TRANSACTIONAL LEADERSHIP

Transactional leaders focus on the subordinates’ immediate self interests and what

the organization can do for them (Atkinson & Pilgreen, 2011). In this type of

leadership, the leader rewards or disciplines the subordinates depending on the

adequacy of their performance. Bass & Avolio (1997) defines transactional

leadership as the exchange relationship between the leaders and subordinates to

meet self interests which may take the form of a contingent reward, management by

exception (active) or management by exception (passive) and laissez faire (passive

36

avoidant) leadership. McGuire & Kennerly (2006) also add that transactional leaders

use rewards such as money, praise, recognition in exchange for effort.

Transactional leaders set goals, direct, and use rewards to reinforce subordinates’

behavior. The four dimension of transactional leadership; contingent reward,

management by exception (active), management by exception (passive) and laissez

faire (passive avoidant) are discussed below.

2.3.4.2.1. CONTINGENT REWARD

Contingent reward is when the leader clarifies what the subordinates need to do to

get the reward for their effort (Avolio & Bass, 1999). In contingent reward, a

transactional leader provides rewards in exchange for achieving targets and which

are usually short-term and measurable. The transactional leader clarifies for the

subordinates through direction or participation what they need to do to be rewarded

for the effort (Arnold & Loughlin, 2010). The transactional leaders under contingent

reward dimension provide subordinates with assistance in exchange for their effort,

state in specific terms the performance targets to be achieved and by who, make

clear the reward expected to be received when those targets are met, and express

satisfaction when subordinates meet expectations. Arnold & Loughlin (2010),

Zopiatis & Constanti (2010) and Sadeghi & Pihie (2012) in their studies found that

there is positive correlation between all transformational leadership factors and

transactional leadership contingent reward. The second dimension of transactional

leadership is Management by exception (active).

2.3.4.2.2. MANAGEMENT BY EXCEPTION (ACTIVE)

Bass & Avolio (1997) define management by exception (active) as a situation when

the leader monitors the performance of followers and takes corrective action when

the follower fails to meet the set standards. Management by exception (active) is

37

whereby the leader monitors the subordinates’ performance and eliminates the

deviations from the path of set goals (Arnold & Loughlin, 2010). A transactional

leader who exhibits this attribute focuses attention on irregularities, mistakes,

exception and deviations from set standards. They concentrate their efforts on

dealing with mistakes, complaints and failures, and keep track of these. The third

dimension of transactional leadership is management by exception (passive).

2.3.4.2.3. MANAGEMENT BY EXCEPTION (PASSIVE)

Management by exception (passive) leadership is when the leader waits for the

problems to arise before corrective action is taken –“the why-fix-when-its- working”

attitude. In passive management by exception, the transactional leader interfaces

with subordinates only when they provide unacceptable performance. Such leaders

fail to provide expectations and standards to be achieved but will only intervene

when problems present themselves. Under the passive management by exception

dimension of transactional leadership, leaders wait for the poor performance of a

follower to reach a critical level before any intervention (Precey & Jackson, 2010).

The fourth and last dimension of transactional leadership which is treated, in some

cases, as a separate leadership style is laissez faire.

2.3.4.2.4. LAISSEZ- FAIRE (PASSIVE AVOIDANT)

Laissez-faire is the passive avoidant and ineffective type of leadership. Laissez-faire

leadership represents a type of behavior in which leaders display a passive

indifference towards work, responsibility and their followers. Laissez-faire leaders

are inclined to moving out from the leadership role and offer little direction or support

to followers (Kirkbride, 2006), they avoid making decision, give up responsibilities,

38

and are indifferent to the needs of their followers. The MLQ norm for laissez faire

leadership should not exceed 0.65% of the respondents (Avolio & Bass, 2004).

From the foregoing contingent reward is the most effective transactional leadership

(Arnold & Loughlin, 2010). Chiang & Wang (2012) emphasize the point by stating

that subordinates under transactional leadership are more concerned about fairness

in results, which is subtly affected by their level of trust in their leader because their

relationship with their leader is based on the results of their own efforts. Chiang &

Wang (2012) introduce an element of trust for transactional leadership to work.

Transactional leadership behavior is needed for effective department management,

identifying performance standards, and classification of job expectations (Rukmani,

Ramesh & Jayakrishnan, 2010). Section 2.4 that follows discuses the organizational

performance factors. If leadership can impact positively on each of these

organizational performance factors, these factors will in turn improve the

performance of an organization.

2.4. ORGANIZATIONAL PERFORMANCE VARIABLES

2.4.1. LEADERSHIP STYLES AND FOLLOWER EXTRA EFFORT

Extra effort refers to the extent to which the follower would commit to putting their

best effort for the organization (Smith, 2012). The individual’s effort level is the

degree to which the follower is motivated to do more than is expected of him,

attempt to achieve difficult tasks with resolve and conviction to succeed. An

individual would usually put extra effort, which helps the organization to achieve its

goals, when the one-to-one relationship between the leader and the follower is

positive. Consequently, individuals’ effort level reflects the intensity with which they

fulfil the expectations assigned to them by the leader. Whether exerting leadership

39

engenders extra effort is to a large extent determined by the leadership style

employed by the leader (Smith, Andras & Rosenbloom, 2012). Transformational

leadership, therefore, helps to mitigate the negative effect to the leader-follower

relationship and engenders a positive influence. A leader gets others to do more

than they expected to do and heightens others’ desire to succeed. This would have

a direct impact on the ability of the organization in achieving its set goals.

2.4.2. LEADERSHIP STYLES AND FOLLOWER JOB SATISFACT ION

Followers working under transformational leaders are more involved, satisfied,

empowered, motivated, and committed to their organizations and demonstrate less

withdrawal behaviors (Walumbwa, Orwa, Wang & Lawler, 2005). Followers who feel

they receive the leader’s special attention are more likely to work toward longer-term

goals and work harder to meet the leader’s expectations, resulting in increased job

satisfaction (Burton & Peachey, 2009). Bass & Avolio (1990) suggest that the

individualized attention paid by transformational leaders is one of the most

important reasons that such leaders are able to build trust and respect among their

followers and hence motivate them to perform beyond expectation.

Liu, Siu & Shi (2010) finds that transformational leadership has both direct and

indirect effects on job satisfaction. In their study they find that the supervisor’s

transformational behaviors pertain directly to the supervisor, and therefore to

followers’ satisfaction with the supervisor. They conclude that it is reasonable that

supervisor’s transformational leadership has a direct effect on satisfaction (direct

component of job satisfaction). Transformational leadership, however, can exert

influence indirectly through other variables,such as self-efficacy. Follower job

satisfaction means that the leader uses methods of leadership that are satisfying,

and he/she work with others in a satisfactory way, both which lead to the

organization achieving its goals.

40

Judge & Piccolo (2004) found that, across studies, transformational leadership was

more positively associated with satisfaction with the leader than either transactional

or laissez-faire leadership. Mohammad, Al-Zeaud, & Batayneh (2011) in their study

found that inspirational motivation influences follower job satisfaction more than the

other transformational leadership factor. Mohammad, Al-Zeaud, & Batayneh (2011)

findings differ from those of Shibru (2011) who found that individualized

consideration and idealized influence were key factors that influenced follower job

satisfaction.

2.4.3. LEADERSHIP STYLES AND LEADER EFFECTIVENESS

Polychroniou (2009) demonstrates that there is a strong positive relationship

between transformational leadership and leader effectiveness. An effective leader

takes a personal interest in the long-term development of followers in the interest of

the organization. It is about tapping into the individual potential in the interest of

furthering organizational goals. Leader effectiveness will therefore lead to good

performance by the organization (Wells & Peachey, 2011).

Chiang & Wang (2012) demonstrate that transformational leadership more than

transactional leadership was positively related to groups, as well as, individual

performance and therefore organizational performance. As Schneider & George

(2011) suggest, the relationship between leadership and turnover is strongly

associated with satisfaction with the work environment which includes satisfaction

with the leader. If an employee has a high quality relationship and is satisfied with

the leader, leaving the organization would entail psychological loss, making

withdrawal costly (Eisenbeiss & Boerner, 2011). Therefore effective leaders are

those who meet others’ job-related needs, represent their group to higher authorities

and meeting set organizational goals (Edwards & Gill, 2012).

41

2.5. CONCEPTUAL MODEL

The Figure 2.1. summarizes this study diagrammatically. The external environmental

(PEST) factors present opportunities and threats to IDCZ. Within the IDCZ there are

weaknesses and strengths that impact on leadership styles and organizational

performance. The leadership styles impact on the organizational performance

variables and therefore on organizational performance.

Weaknesses

Organizational performance factors

Leadership styles Follower extra effort

Transformational leadership Follower job satisfaction

Transactional leadership Leader effectiveness

Strengths

IDCZ

Opportunities & threats

P E S T FACTORS

Figure 2.2: The conceptual model of the study

strengths Strengths

42


This chapter provided an overview of the results from research studies on leadership

styles; transformational and transactional including laissez faire and their effects on

leader effectiveness, follower extra effort and job satisfaction and therefore

organizational performance. Chapter 3 that follows describes the research

methodology chosen for the study and provides rationale for the research approach.

43

CHAPTER 3

3.0 RESEARCH METHODOLOGY

3.1. INTRODUCTION

This previous chapter dealt with the review of literature on leadership styles, paying

special attention to the full transformational leadership model. It also discussed the

impact of leadership styles on organizational performance factors; follower extra

effort, and job satisfaction, and leader effectiveness. This Chapter presents the

research methodology used in this study. It includes the following sections; 3.1.

Introduction, 3.2. Research design, 3.3. Research strategy, 3.4. Data analysis, 3.5.

Validity and reliability, 3.6. Ethics and values and 3.7. Chapter summary.

3.2. RESEARCH DESIGN

3.2.1. RESEARCH APPROACH

This study generally adopted a case study research design. This is because the

study focuses on one entity, the IDCZ. However, in collecting the responses a

survey is also used, through the use of questionnaires. The study uses a

correlational design to establish the relationship between leadership styles and

follower extra effort and job satisfaction, and leader effectiveness, and therefore

IDCZ’s performance between 2009 to 2012. The research uses a quantitative

approach where the responses can be quantified and the relationship between the

independent variables (leadership styles) and the dependent variables (follower

extra effort and job satisfaction, and leader effectiveness,) can be statistically

44

quantified. The correlational design is used to explain the relationship between two

or more variables and uses statistical analysis to explain the results and make

interpretations based on the results. The results from the quantitative study make

use of inferential statistics, which can be analyzed and interpreted fairly easily as

compared to results from a qualitative study. This reduced bias, at least, at the

analysis and interpretation stages of the study. The method used for data collection

is a questionnaire. Avolio & Bass (2004) Multifactor Leadership Questionnaire Self

Rater (5x-short), discussed below, was used in this study. Section 3.3 below is on

research strategy used for this study.

3.3. RESEARCH STRATEGY

The study is a case study of the IDCZ Group companies from 2009 to 2012. The

study used survey to collect data on the leadership styles within the IDCZ and their

impact on leader effectiveness, follower extra effort and job satisfaction. The survey

was done using the hand-delivered questionnaires.

3.3.1. POPULATION AND SAMPLING TECHNIQUES

The population for this study is all managers in the IDC Group. The target population

is the 74 managers at IDC Head Office, Motec Holdings, and Chemplex Corporation

in Harare. The distribution of managers is in Table 3.1.

45

Table 3.1: Distribution of study population

Company In Harare Outside Harare Total

IDC Head Office 10 0 10

Motec Holdings 27 9 36

Chemplex Corporation

37 12 49

Total 74 21 95

The 74 questionnaires were distributed to all managers (target population) in the

above entities in Harare. The organizations to be studied were selected using non-

statistical convenience sampling. However, for those organizations which were

selected, a survey of the target population was done.

3.3.2. DATA COLLECTION METHODS

3.3.2.1. MULTIFACTOR LEADERSHIP QUESTIONANAIRE (SEL F RATER 5x -

SHORT)

The study uses the Multifactor Leadership Questionnaire (MLQ) Self-Rater (5x-

Short) designed by Avolio & Bass (2004)(Appendix1). The MLQ Self-Rater (5x-short)

is used in this study to determine the leadership styles within the IDCZ Group and

their impact on follower extra effort and job satisfaction, and leader effectiveness,

and therefore organizational performance This questionnaire requires that

managers, as the leaders, to rate themselves on each of the nine attributes of the

transformational leadership model. The questions are Likert-type questions which

have the following ratings:

46

Not at all Once in a while sometimes Fairly often Frequently or always

0 1 2 3 4

The Questionnaire had 45 questions. The questionnaire was structured as follows.

Questions, 15, 19, 29 and 31 are on Individualized Consideration; 10, 18, 21, and

25 Idealized Influence (attributes), 6, 14, 23, and 34 Idealized Influence

(behaviors), 2, 8, 30, and 32 Intellectual Stimulation, and 9, 13, 26, and 36

Inspirational Motivation of transformational leadership. Questions 1, 11, 16 and 35

are on Contingent Reward, 4, 22, 24, and 27 Management By Exception (Active),

and 3, 12, 17, and 20 Management By Exception (Passive) of transactional

leadership. Questions 5, 7, 28 and 33 are on laissez faire leadership. Questions 39,

42, and 44 are on follower extra effort, 37, 40, 43, and 45 are on leader

effectiveness, and 38 and 41 are on follower job satisfaction. The Questionnaire is

the most extensively validated and commonly used measure of transformational,

transactional and laissez faire leadership.

3.3.2.2. WEAKNESSSES OF THE MLQ SELF RATER 5x-SHORT

Despite being the most accepted, validated and commonly used questionnaire in

measuring leadership behaviors and their effects, criticisms are still leveled against

it. Judge, Woolf, Hurst & Livingstone (2006) argue that the dimensions used in the

Questionnaire are not distinctive, while others (Precey & Jackson, 2009; Precey &

Entrena, 2011) argue that they are distinct but they are highly correlated. The

second criticism is that transformational leadership factors are highly correlated with

transactional leadership’s contingent reward, and that transformational leadership

factors are often used together with contingent rewards (Judge, Woolf, Hurst &

Livingstone, 2006).

47

3.3.3. QUESTIONNAIRE ADMINISTRATION

Consent was obtained from the IDCZ Human Resources Executive to carry out the

study (Appendix 2). A copy of the questionnaire used in the survey was attached to

the request. Further, verbal consent was sought from each participating respondent

at the point in time of hand-delivering the questionnaires. The questionnaires were

hand-delivered to managers attached to initial company-coded self-addressed

envelopes. The envelopes were initialed (i) for IDC head office, (m) for Motec

Holdings and (c) for Chemplex Corporation. The responses were deposited at the

reception of each company and delivered to the researcher’s premises reception

using the IDCZ Group letter-delivery system. The responses were recorded by the

researcher as they were being received. The following section is on how data

collected for this study was is going to be analyzed.

3.4. DATA ANALYSIS

The primary data collected from the MLQ Self Rater (5x-short), Likert–type questions

were entered using the Census and Surveys Processing System (CSPro). The data

was then exported into the Statistical Package for the Social Sciences (SPSS). The

analysis was done using SPSS and complimented by MS Excel. The Average score

factors by type of leadership style and organization were recorded, with the highest

average scores were reported on all the full transformational leadership factors.

Correlational test were also conducted. Inferential statistics showing the relationship

between the dependent and independent variables were also be used. Testing of the

hypotheses was done; which determined whether to accept or to refute the set

hypotheses. Stepwise multiple regression was also run to determine the predictors

of follower extra effort, follower job satisfaction and leader effectiveness. The

48

measurement of the validity and reliability of the data collected for this study is

discussed in the following Section 3.5.

3.5. VALIDITY AND RELIABILITY

Validity is the ability of the instrument used to measure what it is supposed to

measure (Boonyachani, 2011). From the literature review the MLQ Self Rater (5x-

short) has been used the world over in more than 300 studies in different fields, in

measuring leadership styles (Fiery, 2008). To confirm its validity the MLQ Self Rater

(5x-short) has been translated into 13 languages and has been used successfully by

different researchers both in pilot and main studies and found to be valid (Fiery,

2008). Reliability is the degree to which the instrument used produce consistent

results. SPSS the Cronbach‘s Alpha test was used to test the reliability of the data.

The MLQ Self Rater (5x-short) form has 45 questions, and the lower limit for

acceptable reliability is 0.60 and above 0.70 is acceptable reliability (Boonyachani,

2011). Reliability tests are shown in Table 4.7. below. Section 3.6 that follows is on

ethical issues and values.

3.6. ETHICAL ISSUES

One of the ethical issues faced in doing the research is breach of confidentiality. The

researcher assured the respondents that the information would be used for

academic purposes of the study. The questionnaire also included a statement to the

effect that the information is treated confidentially and used only for the purposes of

the study. Management of the participating entities were informed that they may get

copies of the results, if they so wish, for the purposes of using the study to improve

the leadership of their organizations. The fact that the researcher is employed IDCZ,

at IDCZ Head office as an Internal Auditor posed a risk of using the research to

49

justify preconceptions about executives’ and managers’ leadership styles and their

impact on organizational performance.

To guard against this, a quantitative instrument, the questionnaire, was therefore

used for data collection. This instrument is objective and cannot be manipulated to fit

preconceived conclusion. Permission to carry out the study in the IDCZ group was

requested and granted by the IDCZ Human Resources Executive. Further, the

questionnaire did not request personal information of the respondents or their

organizations. Being an employee of IDCZ greatly assisted the researcher in

accessing all the executives and managers. The limitations of this study are

discussed in the following section.

3.7. LIMITATIONS TO THE STUDY

The study does not include the subsidiaries which are out of Harare due to

accessibility challenges and the costs involved in trying to access them. Associates

are also excluded because IDCZ does not have control over the activities of the

companies and as such the financial statements are excluded from the IDCZ Group

consolidated financial statements. Managers of smaller subsidiaries were also

excluded because of the cost involved in trying to access one or two managers in a

small company. This exclusion would not have much effect on the results of this

study because of the few number involved.

50


This chapter dealt with the research methodology used for the study. The chapter

comprises the following section, 3.1 Introduction, 3.2 Research design, 3.3

Research strategy, 3.4 Data analysis, 3.5 Validity and reliability, 3.6 Ethical issues,

3.7 Limitations of the study, and 3.8 Chapter summary. The results of this are study

are reported and discussed in Chapter 4 that follows.

51

CHAPTER 4

4.0 RESULTS PRESENTATION, ANALYSIS AND DISCUSSION

4.1. INTRODUCTION

The previous chapters introduced the study, reviewed literature as the basis of this

study, and described the research methodology used. Chapter 4 presents the

following sections; 4.1. Introduction, 4.2. Discussion of the response rate, 4.3.

Descriptive analysis of the data, 4.4. Reliability tests, 4.5. Correlation tests 4.6

Correlation and Regression analysis, and 4.7. Chapter summary. The following

section is on the discussion of the study response rate.

4.2. DISCUSSION OF THE RESPONSE RATE

The overall response rate was 64 (86%) out of the 74 distributed questionnaires.

The response rate at IDCZ head office was 8(80%) out of 10 possible respondents.

From Chemplex Corporation the response rate was 24 (89%) out of the possible 27

respondents. Motec Holdings had a response rate of 32 (86%) out of the possible 37

respondents. The response rate is summarized in Table 4.1.

52

Table 4.1: Response rate

Organization Total number

of

questionnaires

distributed

Total number

of

questionnaires

returned

Total number

of

questionnaires

not returned

Returned

questionnaire

as a %

Chemplex

Corporation

27 24 3 89%

IDC Head

office

10 8 2 80%

Motec

Holdings

37 32 5 86%

Total 74 64 10 86%

The overall response rate was high 64 (86%) out 74 questionnaires. This was mainly

due to closed questions, which were easy to respond to and took less time. The

exclusion of personal information (like position, department, and level of

management, age and gender) that was likely to lead to identification of the

respondent also influenced the response rate. There were no missing answers found

in any of the returned 64 questionnaires. The primary data was entered using the

Census and Surveys Processing System (CSPro) and exported into the Statistical

Package for the Social Sciences (SPSS). Most of the analysis was done using

SPSS and complimented by MS Excel. Table 4.2 shows the number of

respondents and their percentage from each IDCZ entity. Three firms were visited;

Motec Holdings (m) contributed 50% of the sample while Chemplex Corporation (c)

and IDC Head Office (i) contributed 37.5% and 12.5%, respectively.

53

Table 4.2: Sample description by organisation

Sample Distribution by Organisation

Organisation N % Chemplex Corporation (c) 24 37.5 IDC Head Office (i) 8 12.5 Motec Holdings (m) 32 50.0 Total 64 100.0

Section 4.3 gives the descriptive analysis of the results and answers the first

research question; Which leadership styles are exhibited within the IDCZ?

54

4.3. DESCRIPTIVE ANALYSES OF THE DATA

4.3.1. STRUCTURE OF QUESTIONNAIRE

Table 4.3: Structure of the MLQ (5x-short)

Factors Question

numbers

Transformational leadership Individual consideration 15, 19, 29, & 31

Idealized influence (attributes) 10,18, 21, & 25

Idealized influence (behaviors) 6,14, 23, & 34

Intellectual stimulation 2, 8, 30, & 32

Inspirational motivation 9,13, 26, & 36

Transactional leadership Contingent reward 1,11,16 & 35

Management by exception(active) 4, 22, 24 & 27

Management by exception (passive) 3, 12, 17 & 20)

Laissez faire (passive avoidant) 5, 7, 28 & 33

Organizational performance factors Follower extra effort 39,42 & 44

Follower job satisfaction 38 & 41

Leader effectiveness 37, 40, 43 & 45

55

4.3.2. MEAN SCORES

Table 4.4: Mean score factor by type of leadership, organizational performance

factor and organization

Mean score factor

Factor Organiz ation Total

c i m

Transformational Leadership

Individual consideration 12 12 12 12 Idealized influence(attributes) 12 12 13 13

Idealized influence(behaviors)

12 12 13 13

Intellectual stimulation 13 13 14 14 Inspirational motivation 14 14 14 14

Transactional Leadership

Contingent reward 12 12 13 13 Management by exception (active) 10 10 8 9

Management by exception (passive) 2 3 2 2

Laissez faire 2 2 1 2 Organizational performance

factors

Follower extra effort 9 10 11 10 Follower job satisfaction 6 6 7 7 Leader effectiveness 13 13 14 13

56

Table 4.5: Classification of leadership and organiz ational performance factors

Factor Classification

Organisation Total

c i m

Transformational Leadership

Individualized consideration Moderate

12.5% 6.3% 4.7%

High 100.0% 87.5% 93.8% 95.3%

Idealized influence - attributes High 100.0% 100.0% 100.0% 100.0%

Idealized influence - behaviors

Moderate 16.7% 12.5% 6.3% 10.9%

High 83.3% 87.5% 93.8% 89.1%

Intellectual simulation High 100.0% 100.0% 100.0% 100.0%

Inspirational motivation High 100.0% 100.0% 100.0% 100.0%

Transactional Leadership

Contingent reward Moderate 20.8% 6.3% 10.9%

High 79.2% 100.0% 93.8% 89.1%

Management by exception - active

Low 12.5% 15.6% 12.5%

Moderate 8.3% 25.0% 31.3% 21.9%

High 79.2% 75.0% 53.1% 65.6%

Management by exception - passive

Low 87.5% 75.0% 68.8% 76.6%

Moderate 12.5% 25.0% 31.3% 23.4%

Laissez faire Low 87.5% 100.0% 96.9% 93.8%

Moderate 12.5% 3.1% 6.3%

Organizational performance

factors

Follower extra effort Moderate 33.3% 12.5% 9.4% 18.8%

High 66.7% 87.5% 90.6% 81.3%

Followers job satisfaction Low 4.2% 3.1% 3.1%

Moderate 95.8% 100.0% 96.9% 96.9%

Leader effectiveness High 100.0% 100.0% 100.0% 100.0%

The average score was obtained by obtaining the total responses from all the 64

respondents for all the questions which relate to a leadership factor or organizational

performance factor and divided by the number of respondents. For individual firms

the total score is divided by the number of respondents that is 24, 8 , and 32 for

Chemplex Corporation, IDC Head Office and Motec Holdings respectively. For the

factor individual Consideration, for example, the responses from the 64

questionnaires are added together for each of the four questions (15, 19, 29 & 31),

the total is then divided by 64. Hence the highest possible mean score for individual

consideration is 16. For the factor follower job satisfaction the highest possible mean

57

is 8. Table 4.4 shows the mean scores for each organization and the mean scores

for the study in total. According to Mohammad, Al-Zeaud, & Batayneh (2011) a

mean score of less than 25%, 26-74%, and 75% and above, is rated as low,

moderate and high respectively.

.

Research question 1 : Which leadership styles are exhibited within the IDCZ?

Table 4.5. shows how each leadership and organizational performance factor was

rated in the study. All transformational leadership factors were rated as either high or

moderate. More than 89% of the respondents rated transformational leadership

factors highly. The only transformational leadership factors which were rated

moderately were Individualized consideration and Idealized influence (behaviors)

with 4.7% and 10.9% respectively. On transactional leadership, contingent reward

was rated moderate to high. Management by exception (active) factor reported low,

moderate to high mean scores while management by exception (passive) factor and

laissez faire reported low to moderate mean scores. The results show that to large a

extent managers in the IDCZ exhibit transformational leadership and sometimes

transactional leadership. The findings of this study also support previous studies that

transformational and transactional leadership are not mutual exclusive (Avolio &

Bass, 2004; Sadeghi & Pihie, 2012), although in this case of IDCZ transformational

leadership is more pronounced. Transactional leadership Contingent reward is rated

highly, meaning 89% of the leadership in the IDCZ makes use of rewards to get

follower effort (Arnold & Loughlin, 2010). From the study 65%, 22% and 12% of the

managers rated Management by exception (active) as high, moderate and low. From

the results in Table 4.5., 66% of the managers in the IDCZ monitor the performance

of followers and takes corrective action when the follower fails to meet the set

standards. Management by exception (passive) is rated moderate by 23% of the

respondents. This further demonstrates that transactional leadership behaviors and

attributes are being exhibited in the IDCZ. Of the respondents 6% rated laissez faire

58

as moderate. The MLQ norm for laissez faire leadership should not exceed 0.65% of

the respondents (Avolio & Bass, 2004), but for the IDCZ it is rated moderate by 6.3%

which is above the norm. The transactional leadership laissez faire mean score of 2

show that managers in the IDCZ exhibit this type of behavior. The next section

shows the reliability of the questionnaire using the Cronbach reliability tests.

4.4. RELIABILITY TESTS

Table 4.6: Cronbach reliability test

Scale: ALL VARIABLES

CRONBACH'S ALPHA

CRONBACH'S ALPHA BASED ON

STANDARDIZED ITEMS NO. OF ITEMS

0.712 0.750 12

Table 4.6 above measure the reliability of the instrument used in this study.

According to Manning & Munro in Boonyachai (2011), Cronbach’s Alpha values

above 0.70 are considered to represent “acceptable”, above 0.80 “good”, and above

0.90 “excellent” reliability. The lowest acceptable Cronbach’s Alpha value of

reliability is considered to be 0.60 in exploratory research (Boontachai, 2011). The

reliability of the questionnaire is above the lowest acceptable limit of Cronbach’s

alpha value of 0.60 which is acceptable reliability. The reliability test confirm past

studies using the MLQ (5X-Short) instrument that its level of reliability range from

0.64 to 0.92 (Fiery, 2008). The following Section 4.5 is on the correlation between all

the leadership and the organizational performance factors.

59

4.5. CORRELATION TESTS

Table 4.7. Inter-item correlation matrix

r IC II(A) II(B) IS IM CR MBEA MBEP LF FEE FJS LE

IC 1.000 II(A)

.530 1.000

II(B) .353 .438 1.000

IS .104 .344 .251 1.000 IM .165 .315 .702 .531 1.000 CR .167 .355 .537 .557 .780 1.000 MBE(A)

.026 -.029 -.160 -.021 -.233 -.258 1.000 MBE(P)

.132 .027 -.264 -.222 -.548 -.305 .306 1.000 LF .213 .159 .311 -.187 -.106 -.188 .248 .136 1.000 FEE .335 .509 .538 .591 .572 .685 -.179 -.004 -.030 1.000 FJS .127 .038 .263 .329 .486 .476 -.152 -.373 -.064 .260 1.000

LE .216 .260 .726 .394 .677 .527 .012 -.296 .100 .403 .611 1.000

Key: IC- Individual consideration; II(A)- Idealized influence (attributes); II(B)- Idealized influence

(behaviors); IS- Intellectual stimulation; IM-Inspirational motivation; CR- Contingent reward; MBE(A)-

Management by exception(active); MBE(P)- Management by exception(passive); LF- Laissez faire;

FEE- Follower extra effort; FJS- Follower job satisfaction; and LF- Leader effectiveness.

60

4.5.1. INTER-ITEM CORRELATION

Table 4.7. above shows the correlation between the different factors of the

leadership styles and organizational performance. Transformational leadership

factors are all positively correlated, although individual consideration is weakly

positively correlated to intellectual stimulation and inspirational motivation. All

transformational leadership factors are also positively correlated to transactional

leadership contingent reward. This result is supported by previous studies (Avolio &

Bass, 2004). Therefore, transformational leaders in the IDCZ frequently use rewards

in exchange with follower efforts to meet organizational performance goals. There is

a weak positive correlation between individual consideration and the other

transactional leadership factors (MBEA, MBEAP and LF). The other transformational

leadership factors are, generally, negatively correlated to transactional leadership

factors.

From Table 4.8, using two tail tests, at 5% significance level, only idealized

influence(attributes) II(A) is related to Inspirational motivation with r=0.315, p=1.1% <

5%. Using the same test, Idealized influence (behaviors) II(B) is related to

intellectual stimulation (IS), with r=0.251, p=4.5% < 5%.

As expected, from Tables 4.7 and 4.12, the correlation between transactional

leadership contingent reward (CR) is negative to the other transactional leadership

factors; management by exception (active) (MBEA), management by exception

(passive)(MBEP) and laissez faire(LF) with the correlation factors being -0.258, -

0.305 and -0.188 respectively. MBEA, MBEP and LF are positively correlated,

though weakly. Section 4.6 that follows is on correlation and regression tests,

answers research questions 2 and 3 on the influence of transformational and

transactional leadership factors on organizational performance by testing the

research hypotheses.

61

4.6. CORRELATION AND REGRESSION ANALYSIS

4.6.1. RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADER SHIP AND

ORGANIZATIONAL PERFORMANCE FACTORS

Table 4.8: Transformational leadership factors and organizational performance

factors Pearson’s correlation coefficients

IC II(A) II(B) IS IM FEE FJS LE IC Pearson

correlation (r) 1 Sig. (2-tailed) (p) N 64

II(A) Pearson correlation (r) .530** 1 Sig. (2-tailed) (p) .000 N 64 64

II(B) Pearson correlation (r) .353** .438** 1 Sig. (2-tailed) (p) .004 .000 N 64 64 64

IS Pearson correlation (r) .104 .344** .251* 1 Sig. (2-tailed) (p) .413 .005 .045 N 64 64 64 64

IM Pearson correlation (r) .165 .315* .702** .531** 1 Sig. (2-tailed) (p) .192 .011 .000 .000 N 64 64 64 64 64

FEE Pearson correlation (r) .335** .509** .538** .591** .572** 1 Sig. (2-tailed) (p) .007 .000 .000 .000 .000 N 64 64 64 64 64 64

FJS Pearson correlation (r) .127 .038 .263* .329** .486** .260* 1 Sig. (2-tailed) (p) .318 .768 .036 .008 .000 .038 N 64 64 64 64 64 64 64

LE Pearson correlation (r) .216 .260* .726** .394** .677** .403** .611** 1

Sig. (2-tailed) p .086 .038 .000 .001 .000 .001 .000 N 64 64 64 64 64 64 64 64

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

62

Table 4.9a: Coefficients: Transformational leaders hip factors and follower

extra effort

Coefficients a

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

95.0% Confidence

Interval for B

B Std. Error Beta

Lower Bound

Upper Boun

d 1 (Constant) 2.607 1.297 2.010 .049 .014 5.200

Intellectual stimulation .546 .095 .591 5.765 .000 .357 .735 2 (Constant) -.194 1.293 -.150 .881 -2.780 2.392

Intellectual stimulation .450 .086 .486 5.259 .000 .279 .621 Idealized influence(behaviors) .324 .072 .416 4.496 .000 .180 .468

3 (Constant) -.625 1.274 -.491 .625 -3.174 1.924

Intellectual stimulation .400 .086 .433 4.637 .000 .228 .573

Idealized influence(behaviors) .262 .076 .336 3.444 .001 .110 .413

Idealized influence(attributes) .149 .070 .213 2.119 .038 .008 .289

a. Dependent Variable: Follower extra effort

Table 4.9b: Model summary: Transformational leader ship factors and follower

extra effort

Model Summary d

Model r r² Adjusted r²

Std. Error of

the Estimate

Change Statistics

r² Change

F Change df1 df2

Sig. F Change(p)

1 .591a .349 .338 1.25474 .349 33.236 1 62 .000 2 .715b .511 .495 1.09631 .162 20.214 1 61 .000 3 .738c .545 .522 1.06623 .034 4.490 1 60 .038

a. Predictors: (Constant), Intellectual stimulation

b. Predictors: (Constant), Intellectual stimulation, Idealized influence(behaviors)

c. Predictors: (Constant), Intellectual stimulation, Idealized influence(behaviors), Idealized influence(attributes)

d. Dependent Variable: Follower extra effort

63

Research question 2: Is there a relationship between transformational leadership

and organizational performance within the IDCZ?

4.6.1.1. RELATIONSHIP BETWEEN TRANSFORMATIONAL LEAD ERSHIP

FACTORS AND FOLLOWER EXTRA EFFORT

Hypothesis 1

H1a (Null): Follower extra effort within the IDCZ is not influenced by any of the




H1a (Alternative): Follower extra effort within the IDCZ is influenced by any of the




All transformational leadership factors are positively correlated to all organizational

performance factors. Using two-tailed test at 5% significance level IC, II(A), II(B), IS

and IM are positively correlated to follower extra effort with Pearson’s correlation

coefficient of 0.335, 0.509, 0.538, 0.592 and 0.572 with p = 0.7%, 0.0%, 0.0%,

0.0%, and 0.0% (which is less that 5%) respectively. These relationships are

significant and shows that follower extra effort is influenced by IC, II(A), II(B), IS and

IM factors of transformational leadership. Further tests as shown in Table 4.9b

above show that follower extra effort is influenced more by intellectual stimulation,

idealized influence(behaviors), idealized influence(attributes) which together explain

54.5% ( r²) of the changes in follower extra effort using two tail test at 5% significant

level with p= 3.8%<5%. The single strongest predictor of follower extra effort is

64

intellectual stimulation which explains 34.9% (r²) with p=0.0<5%. Therefore the null

hypothesis, that follower extra effort within the IDCZ is not influenced by any of the

transformational leadership factors; individualized consideration, idealized influence

(behaviors), idealized influence (attributes), intellectual stimulation and inspirational

motivation is rejected and the alternative hypothesis is accepted.

Table 4.9a shows that the regression model is:

Follower extra effort = - 625 + 0.400 (Intellectual stimulation) + 0.262 (Idealized

influence (behaviors)) + 0.149 (Idealized influence (attributes). At 5% significant

level, the model is moderately good since the significance level p = 3.8% < 5%.

Reducing the variable to two, 49.5% of the changes in follower extra effort are

explained by intellectual stimulation and idealized influence (behaviors) since p= 0.0

% < 5%. The model for the two variables becomes:

Follower extra effort = - 0.194 + 0.450 (intellectual stimulation) + 0.324 (Idealized

influence (behaviors).

After further eliminating the second independent variable that explains most of the

changes in follower extra effort is intellectual stimulation with 34.9% and p = 0.0 %<

5%.

The regression model then becomes: Follower extra effort = 2.607 + 0.546

(Intellectual stimulation). The three factors intellectual stimulation, idealized

influence (behaviors) and idealized influence (attributes) together are the key factors

that explain 54.5% of follower extra effort in organizational performance. Therefore

in terms of research objectives transformational leadership factors have a positive

effect on follower extra effort since the correlation coefficients (r) is positive, with the

highest contribution coming from intellectual stimulation. Therefore for followers to

be committed to putting their best effort for the organization leader socialized

charisma and intellectual stimulation are key (Smith, 2012). Socialized charisma

(idealized influence) requires that the leader emphasizes trust, importance of

commitment and purpose. They should be role models in which followers have pride,

65

confidence and loyalty (Lam & O’Huggins, 2012). Leaders in the IDCZ also use

intellectual stimulation since it is the key factor that influences follower extra effort.

They are able to articulate a clear vision for the future, challenge their followers with

high standards, provide encouragement and meaning, and talk enthusiastically and

optimistically about the future (Lam & O’Huggins, 2012).

4.6.1.2 RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADE RSHIP

FACTORS AND FOLLOWER JOB SATISFACTION

H1b (Null): Follower job satisfaction within the IDCZ is not influenced by any of the




H1b (Alternative): Follower job satisfaction within the IDCZ is influenced by any of

the transformational leadership factors; individualized consideration, idealized



Table 4.10a: Coefficients: Transformational leader ship factors and follower

job satisfaction

Coefficients ͣ

Model



t Sig.

95.0% Confidence Interval for B

B Std. Error Beta Lower Bound

Upper Bound

1 (Constant) 3.374 .725 4.655 .000 1.925 4.824

Inspirational motivation .228 .052 .486 4.375 .000 .124 .332

a. Dependent Variable: Follower job satisfaction

66

Table 4.10b: Model summary: Transformational leade rship factors and

follower job satisfaction

Model Summary b

Model R r² Adjusted

r² Std. Error of the Estimate

Change Statistics

r² Change F Change df1 df2

Sig. F Change

(p) 1 .486a .236 .224 .80043 .236 19.138 1 62 .000

a. Predictors: (Constant), Inspirational motivation

b. Dependent Variable: Follower job satisfaction

From Table 4.8. IS and IM are positively correlated to follower job satisfaction at 5%

significance level using a two-tailed test. The Pearson’s correlation coefficient (r) is

0.329 and 0.486 for IS and IM with p= value of 0.8% and .00% which are less than

5%. Therefore IS and IM factors of transformational leadership have a significant

positive influence on follower job satisfaction. Table 10b above shows that IS the

major transformational leadership factor that explains changes in follower job

satisfaction. Using two-tail tests at 5% IS explains 23.6% of the changes in follower

job satisfaction with p= 0.0 %< 5%. The null hypothesis is therefore rejected since

there are transformational leadership factors that do influence follower job

satisfaction.

The regression model for follower job satisfaction is shown in Table 4.10a is as

follows:

Follower job satisfaction = 3.374 + 0.228 (Inspirational motivation). Inspiration

motivation has a positive effect on follower job satisfaction since the correlation

coefficient (r) is positive. Followers are satisfied by their jobs when they are involved,

satisfied, empowered, motivated, and committed to their organizations and

demonstrate less withdrawal behaviors (Walumbwa, Orwa, Wang & Lawler, 2005;

67

Lam & O’Huggins, 2012). From the results transformational leadership inspiration

motivation is the key factor that IDCZ managers use to get their followers satisfied

with their jobs. Mohammad, Al-Zeaud, & Batayneh (2011) also found that

inspirational motivation influences follower job satisfaction more than the other

transformational leadership factor. However, Shibru (2011) found that individualized

consideration and idealized influence were key factors that influenced follower job

satisfaction.

4.6.1.3. RELATIONSHIP BETWEEN TRANSFORMATIONAL LEAD ERSHIP

FACTORS AND LEADER EFFECTIVENESS

H1c (Null): Leader effectiveness within the IDCZ is not influenced by any of the




H1c (Alternative): Leader effectiveness within the IDCZ is influenced by any of the




68

Table 4.11a: Coefficients: Transformational leader ship factors and leader

effectiveness

Coefficients a

Model



t Sig.



Upper Bound

1 (Constant) 5.564 .957 5.815 .000 3.651 7.476 Idealized influence(behaviors) .619 .074 .726 8.311 .000 .470 .767

2 (Constant) 4.103 1.042 3.939 .000 2.020 6.186

Idealized influence(behaviors) .421 .099 .494 4.246 .000 .223 .619

Inspirational motivation .289 .102 .331 2.844 .006 .086 .492

a. Dependent Variable: Leaders effectiveness

Table 4.11b: Model summary: Transformational leade rship factors and leader

effectiveness

Model Summary c

Model r r² Adjusted r²

Std. Error of the

Estimate

Change Statistics

r² Change F

Change df1 df2 Sig. F

Change(p) 1 .726a .527 .519 1.17057 .527 69.079 1 62 .000 2 .763b .582 .569 1.10887 .055 8.091 1 61 .006

a. Predictors: (Constant), Idealized influence(behaviors)

b. Predictors: (Constant), Idealized influence(behaviors), Inspirational motivation

c. Dependent Variable: Leaders effectiveness

From Table 4.8, using a two tailed test at 5% significance level, transformational

leadership factors II(B), IS and IM have a positive influence on leader effectiveness

with Pearson’s correlation coefficient of 0.726, 0.394, and 0.677 with a p value of

0.0%, 0.1% and 0.0% (less than 5%) respectively. Therefore, II (A), IS, and IM have

a significant positive influence on leader effectiveness.

69

From Table 4.11b idealized influence (behaviors) and inspirational motivation

account for 58.2% of the variations in the dependent variable (leader effectiveness)

with p= 0.6 %< 5%. From Table 4.11a the model that explains changes in leader

effectiveness is as follows: Leader effectiveness = 4.103 + 0.421(idealized influence

(behaviors) + 0.289 (inspirational motivation). Using stepwise regression, idealized

influence (behaviors) explain 52.7% of the variation in leader effectiveness with p =

0.0 %< 5%. Idealized influence (behaviors) explains more than half of the changes in

leader effectiveness. The prediction model for leader effectiveness becomes: Leader

effectiveness = 5.564 + 0.619(Idealized influence (behaviors)). Therefore idealized

influence (behaviors) has the highest influence on leader effectiveness. The null

hypothesis that leader effectiveness within the IDCZ is not influenced by any of the

transformational leadership factors; individualized consideration, idealized influence

(behaviors), idealized influence (attributes), intellectual stimulation and inspirational

motivation is therefore rejected and the alternative hypothesis accepted. For

managers to be effective leader the key transformational factors are idealized

influence (behaviors) and inspirational motivation. The transformational leadership

factors that influence leader effectiveness are almost similar to those that influence

follower extra effort.

While the inter-item correlation shows that all transformational leadership

dimensions are positively correlated with all organizational performance factors,

using two-tailed tests at 5%significance level and stepwise regression, the influence

of the other factors is not significant. The results of this study show that the key

transformational leadership factors that influence follower extra effort, follower job

satisfaction and leader effectiveness are intellectual stimulation, idealized influence

(behaviors), idealized influence (attributes). These results do not include all the

transformational leadership factors as having significant influence on all the

organizational performance factors as most of the previous studies have found

70

(Wells & Peachey, 2011; Sheard, Kakabadse & Kakabadse, 2012; Ivey & Kline;

2010, Shibru, 2011 and Organ, Podsakoff & MacKenzie, 2009).

4.6.2. RELATIONSHIP BETWEEN TRANSACTIONAL LEADERSHI P AND

ORGANIZATIONAL PERFORMANCE FACTORS

Table 4.12: Transactional leadership factors and or ganizational performance

factors Pearson’s correlation coefficients

CR MBEA) MBEP LF FEE FJS LE

CR Pearson correlation (r) 1 Sig. (2-tailed) (p) N 64

MBEA Pearson Correlation (r) -.258* 1 Sig. (2-tailed) (p) .040 N 64 64

MBEP Pearson Correlation -.305* .306* 1 Sig. (2-tailed) (p) .014 .014 N 64 64 64

LF Pearson Correlation -.188 .248* .136 1 Sig. (2-tailed) (p) .137 .048 .283 N 64 64 64 64

FEE Pearson Correlation .685** -.179 -.004 -.030 1 Sig. (2-tailed) (p) .000 .157 .975 .813 N 64 64 64 64 64

FJS Pearson Correlation .476** -.152 -.373** -.064 .260* 1 Sig. (2-tailed) (p) .000 .231 .002 .617 .038 N 64 64 64 64 64 64

LE Pearson Correlation .527** .012 -.296* .100 .403** .611** 1

Sig. (2-tailed) (p) .000 .927 .017 .433 .001 .000 N 64 64 64 64 64 64 64

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).

71

Research Question 3: Is there a relationship between transactional leadership and


4.6.2.1. RELATIONSHIP BETWEEN TRANSACTIONAL LEADERS HIP

FACTORS AND FOLLOWER EXTRA EFFORT

Hypothesis 2

H2a (Null): Follower extra effort is influenced by any of the transactional leadership



H2a (Alternative): Follower extra effort is not influenced by any of the transactional



72

Table 4.13a: Coefficients: Transactional leadership factors and follower extra

effort.

coefficientsª

Model



t Sig.


B Std. Error Beta

Lower Bound Upper Bound

1 (Constant) 4.594 .748 6.142 .000 3.099 6.089 Contingent reward .428 .058 .685 7.403 .000 .312 .543

2 (Constant) 3.618 .826 4.381 .000 1.966 5.269

Contingent reward .471 .058 .754 8.059 .000 .354 .587

Management by exception (passive)

.180 .074 .226 2.419 .019 .031 .329

a. Dependent Variable: Follower extra effort

Table 4.13b: Model summary: Transactional leadershi p factors and follower

extra effort

Model Summary c

Model r r² Adjusted

r² Std. Error of the Estimate

Change Statistics

r² Change F

Change df1 df2

Sig. F Change

(p) 1 .685a .469 .461 1.13298 .469 54.806 1 62 .000 2 .718b .516 .500 1.09111 .046 5.850 1 61 .019

a. Predictors: (Constant), Contingent reward

b. Predictors: (Constant), Contingent reward, Management by exception (passive)

c. Dependent Variable: Follower extra effort

From Table 12, using the two-tail 5% significance test contingent reward is

significantly correlated to follower extra effort, with Pearson’s correlation coefficient

( r) of 0.685 and p = 0.0%<5%. The other transactional leadership factors are

negatively correlated to follower extra effort. However, with further test as shown in

73

Table 4.13b transactional leadership CR and MBE(P) together explain 50% of the

changes in follower extra effort with p =1.9%<5%. Contingent reward on its own

explains 46.1% of the changes in follower extra effort with p= 0.0 %< 5%. Therefore,

the null hypothesis that follower extra effort is influenced by any of the transactional


management by exception (passive) and laissez faire is accepted.

From Table 4.13a the regression model for Follower extra effort is: Follower extra

effort = 3.618 + 0.471(contingent reward) + 0.180 (Management by exception

(passive)). Using stepwise regression, contingent reward contributes 46.1% of the

changes in follower extra effort with p = 0.0 %< 5%. The regression model becomes:

Follower extra effort = 4.594 + 0.428 (Contingent reward). The transactional

leadership factors that explain follower extra effort are contingent reward and

management by exception (passive) with contingent reward contributing more as an

individual variable. It is not surprising that contingent reward influences follower

extra effort given the positive correlation between transformational leadership factors

and contingent reward. The surprise factor is the influence of management by

exception (passive).This means that when managers in the IDCZ waits for the

problems to arise before corrective action is taken and only intervene when

followers provide unacceptable performance this results in follower extra effort. The

‘why-fix-when-its- working’ attitude has a positive effect on follower job extra effort.

This effect of transactional leadership management by exception (passive) on

follower extra effort is not consistent with the full transformational leadership model

continuum which suggests that management by exception (active) is more effective

than management by exception (passive) (Avolio & Bass, 1991).

74


FACTORS AND FOLLOWER JOB SATISFACTION

H2b (Null): Follower job satisfaction is influenced by any of the transactional



H2b (Alternative): Follower job satisfaction is not influenced by any of the

transactional leadership factors, contingent reward, management by exception

(active), management by exception (passive) and laissez faire.

Table 4.14a: Coefficients: Transactional leadership factors and follower job

satisfaction

Coefficientsª

Model



t Sig.


B Std. Error Beta

Lower Bound

Upper Bound

1 (Constant) 4.293 .532 8.072 .000 3.230 5.356 Contingent reward .175 .041 .476 4.257 .000 .093 .257

2 (Constant) 4.930 .591 8.335 .000 3.747 6.112


Management by exception (passive)

-.118 .053 -.251 -2.204 .031 -.224 -.011

a. Dependent Variable: Follower job satisfaction

75

Table 4.14b: Model summary: Transactional leadershi p factors and follower

job satisfaction

Model Summary c


r²

Std. Error of the

Estimate

Change Statistics

r² Change

F Change df1 df2

Sig. F Change (p)

1 .476a .226 .214 .80547 .226 18.126 1 62 .000 2 .532b .283 .260 .78152 .057 4.858 1 61 .031


b. Predictors: (Constant), Contingent reward, Management by exception (passive)

c. Dependent Variable: Follower job satisfaction

From Table 12, at 5% significant level two -tailed test, contingent reward is positively

correlated to follower job satisfaction with Pearson’s correlation coefficient of 0.476

and p =0.0%< 5%. Management by exception (passive) is negatively correlated to

follower job satisfaction with Pearson’s correlation coefficient (r) being -0.373 and p=

0.2 %< 5%. Table 14a and 14b show similar results that management by exception

(passive) is negatively correlated to follower job satisfaction. Contingent reward

explains 28.3 % of the changes in follower job satisfaction with p=0.0<5%. The null

hypothesis that follower job satisfaction is influenced by any of the transactional


management by exception (passive) and laissez faire is accepted. From Table 4.14a

the two transactional leadership factors that influence follower job satisfaction are

contingent reward and management by exception (passive). The model for follower

job satisfaction is: Follower job satisfaction = 4.930 + 0.147 (contingent reward) -

0.118(management by exception (passive)). The prediction model shows that

contingent reward contributes positively while management by exception (passive)

contributes negatively to follower job satisfaction. Using stepwise regression, Table

4.14b shows that contingent reward explains 22.6% of the changes in follower job

satisfaction with p= 0.0 %< 5%. The one factor prediction model is Follower job

satisfaction = 4.293 + 0.175 (contingent reward). The key predictor variable to

follower job satisfaction is contingent reward. Management by exception (passive) is

76

again, has significant influence on follower job satisfaction but this time its effect is

negative. This is expected given the negative correlation between contingent reward

and management by exception (passive) in Table 4.7 and 4.12 above.


FACTORS AND LEADER EFFECTIVENESS

H2c (Null): Leader effectiveness is influenced by any of the transactional leadership



H2c (Alternative): Leader effectiveness is not influenced by any of the transactional



Table 4.15a: Transactional leadership factors and leader effectiveness

Coefficients a

Model



t Sig.



Upper Bound

1 (Constant) 8.843 .955 9.260 .000 6.934 10.751


a. Dependent Variable: Leaders effectiveness

77

Table 4.15b: Transactional leadership factors and leader effectiveness

Model Summary b


r²

Std. Error of

the Estimate

Change Statistics

r² Change

F Change df1 df2

Sig. F Change(p)

1 .527a .278 .266 1.44641 .278 23.852 1 62 .000


b. Dependent Variable: Leaders effectiveness

From Table 12, using the two-tailed test at 5% significant level , only contingent

reward is positively correlated to leader effectiveness with r = 0.527 and p=

0.0%<5%. Contingent reward has a significant influence on leader effectiveness.

Table 4.15b shows that contingent reward explain 27.8% of the changes in leader

effectiveness with p = 0.0 %< 5%. Therefore, the null hypothesis that leader

effectiveness is influenced by any of the transactional leadership factors; contingent

reward, management by exception (active), management by exception (passive) and

laissez faire is accepted. From Table 4.15a the model that predicts leader

effectiveness is as follows; Leader effectiveness = 8.843 + 0.360 (contingent

reward).

The results show that transactional leadership contingent reward is a key factor that

influences follower extra effort, follower job satisfaction and leader effectiveness.

Most transformational leaders, therefore use the ‘carrot and stick; approach to

motivate followers to achieve results. They clarify the work targets to be met for the

followers to obtain the rewards, and therefore use incentives to get results from

followers. This result is consistent with the positive correlation between the

transformational leadership factors and many other studies (Arnold & Loughlin,

2010; Zopiatis & Constanti, 2010; and Sadeghi & Pihie, 2012).

78


This chapter presented the results and the data analysis from the statistical tests

which were done using CSPro, SPSS and Microsoft excel. It answers the first three

research questions:

1. Which leadership styles are exhibited within the IDCZ?

2. Is there a relationship between transformational leadership and organizational

performance within the IDCZ?

3. Is there a relationship between transactional leadership and organizational

performance within the IDCZ?

The chapter consists of the following sections; 4.1 Introduction, 4.2 Discussion of the

response rate, 4.3 Descriptive analyses of the data, 4.4 Reliability tests, 4.5

Correlation tests, 4.6 Correlation and Regression analysis and 4.7 Chapter

summary. Chapter 5 that follows presents the conclusions and recommendations

based on the results in this chapter.

79

CHAPTER 5

5.0 CONCLUSIONS AND RECOMMENDATIONS

5.1 INTRODUCTION

The previous chapter presented and discussed the results of this study. This is the

last chapter of this study, which presents the conclusions and recommendations

based on the results obtained and presented in Chapter 4. The purpose of the study

was to determine the dominant leadership style, relationship between

transformational and transactional leadership and organizational performance within

the IDCZ, and to make recommendations based on the results and conclusions

obtained. The study used descriptive statistics to determine the dominant leadership

style within the IDCZ. To determine the influence of transformational and

transactional leadership factors on organizational performance the study used

correlation, two-tailed significance test and stepwise regression. The last objective

which is to make recommendations based on the results and conclusions is

answered in this chapter. This Chapter consists of Sections 5.1 Introduction, 5.2

Conclusions, 5.3 recommendations, 5.4 Areas of further study, and 5.5 Chapter

summary. The following Section 5.2 addresses the main objectives of this study.

80

5.2 CONCLUSIONS

5.2.1 LEADERSHIP STYLES WITHIN THE IDCZ

This section addresses the first research objective of this study. Managers within the

IDCZ exhibited transformational leadership. All the transformational leadership

dimensions were rated as either high or moderate. More than 89% of the

respondents rated transformational leadership dimensions highly. The

transformational leadership factors which were rated moderately were individualized

consideration and idealized influence (behaviors) with 4.7% and 10.9% respectively.

However, using stepwise regression, idealized influence (behaviors) had significant

influence on follower extra effort and leader effectiveness. Given the high correlation

between the transformational leadership factors themselves, the study shows that all

the transformational leadership factors are exhibited within the IDCZ. On

transactional leadership, contingent reward was rated moderate to high. This also

showed that there are some managers within the IDCZ who exhibit transactional

leadership style. Though the proportion of managers who exhibited transactional

leadership, management by exception (active), management by exception

(passive)and laissez faire were not high, there were some managers who exhibited

these dimensions. Therefore, from the results, both transformational and

transactional leadership styles are exhibited by managers within the IDCZ Group.

The two types of leadership do not necessarily exclude each other. Managers use

both transformational and transactional leaders dimension on organizational

performance, the difference may only be the extent or the level of managers or

which entity employs more transactional than transformation leadership style than

the other. The following section addresses the second objective of this study.

81

5.2.2 RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADERS HIP AND

ORGANIZATIONAL PERFORMANCE WITHIN THE IDCZ

This section addresses the second objective of this study. Organizational

performance within the IDCZ is influenced by transformational leadership

dimensions. Intellectual stimulation, idealized influence (behaviors) and idealized

influence (attributes) were the major predictors of follower extra effort within the

IDCZ. Inspirational motivation was the major predictor of follower job satisfaction.

Idealized influence (behaviors) and inspirational motivation were the key predictors

of leader effectiveness within the IDCZ Group. The only missing transformational

leadership dimension, as key influencing factor of organizational performance, is

individualized consideration. Therefore, there is a relationship between

transformational leadership and organizational performance. The section that follows

answers the third objective of this study.

5.2.3 RELATIONSHIP BETWEEN TRANSACTIONAL LEADERSHIP AND


The major transactional factor that influences organizational performance was

contingent reward. Contingent reward was a significant predictor of follower extra

effort, follower job satisfaction and leader effectiveness. Management by exception

(passive) was the only surprise factor that influenced follower extra effort.

Management by exception (passive), however had a significant negative influence

on follower job satisfaction. Management by exception (active) and laissez faire had

no significant effect on any of the organizational performance factors. Therefore,

there was a relationship between transactional leadership and organizational

performance. The next section presents recommendations base on the results and

conclusions of this study. It also addresses the fourth and last objective of this study.

82

5.3 RECOMMENDATIONS

5.3.1 LEADERSHIP STYLES WITHIN THE IDCZ

Managers within the IDCZ group should use both transformational and transactional

leadership dimensions to improve its organizational performance. IDCZ managers

should adopt the transformational leadership in order to improve its performance,

though with less focus on individualized consideration. Managers should make use

of incentives in order to improve the performance of the organization.

5.3.2 RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADERSHIP AN D


Managers within the IDCZ should focus more on improving intellectual stimulation,

idealized influence (behaviors) and idealized influence (attributes) in order to

influence organizational performance follower extra effort. They should also use

inspirational motivation to influence follower job satisfaction. Idealized influence

(behaviors) and inspirational motivation are also key predictors of leader

effectiveness. In their leadership training and development programmes the IDCZ

executives and managers should focus more on intellectual stimulation, idealized

influence (behaviors), idealized influence (attributes) and inspirational motivation and

less on individualized consideration if they are to improve the performance of the

IDCZ Group. The next section looks at recommendations to management as regards

transactional leadership and organizational performance.

83

5.3.3 RELATIONSHIP BETWEEN TRANSACTIONAL LEADERSHIP AND


This section looks at the recommendations to IDCZ Group managers on the use of

transactional leadership to improve organizational performance. IDCZ Group

executives and managers should not only concentrate on transformational

leadership factors in their endeavor to improve the organizational performance, but

also on transactional leadership factors. IDCZ executives and managers should

incorporate transactional leadership factors such as the use of contingent rewards in

their leadership training and development programmes. Contingent rewards, used

together with the above transformational leadership factors, will help improve

follower extra effort, follower job satisfaction and leader effectiveness , and therefore

the organization’s performance. However, caution should be taken when using

management by exception (passive) since it has a significant positive influence on

follower extra effort and at the same time a significant negative effect on follower job

satisfaction. IDCZ management should focus less on transactional leadership

management by exception (active) and laissez faire factors to improve

organizational performance.

5.4 AREAS OF FURTHER STUDY

This study did not focus much on the control variables, such as level of management

in the organization, the qualifications, number of years in the position or at a given

management level, or the gender. Of these control variables the one that would be

more interesting to study in the case of IDCZ would be the level of management. It

would be interesting to find out what are the differences in terms of leadership styles

between the three management levels; lower middle or top management. Such a

study would assist the IDCZ Group in designing different training and development

84

programmes for the three levels. Each management level may have its own peculiar

factors or needs that should be focused on, though with the same aim, to improve

follower extra effort, follower job satisfaction and leaders effectiveness, and

ultimately organizational performance. Such a study would also be able to put clear

which level of management uses management by exception (passive) as to

influence follower extra effort.

5.5 CHAPTER SUMMARY

The study set out to determine the impact of leadership styles on organizational

performance, with special focus on the full transformational leadership model. The

chapter is made up of Section 5.1 Introduction, 5.2 Conclusions, 5.3

Recommendations, 5.4 Areas of further study, and 5.5 Chapter summary. The study

was conducted to satisfy four objectives. The three of the objectives are addressed

in Section 5.2 and the last one under Section 5.3. This chapter also presents areas

that were not addressed by this study but are of essence to the IDCZ Group, these

areas are highlighted under Section 5.4 of this chapter.

85

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