Principles of Management - Week 4 DB - 300 words

T h e J o u r n a l o f D e v e l o p i n g A r e a s Special Issue on Sydney Conference Held in April 2015 Volume 49 No. 6 2015

THE EMERGING ROLE OF

TRANSFORMATIONAL LEADERSHIP

Mostafa Sayyadi Ghasabeh

Claudine Soosay

Carmen Reaiche

University of South Australia, Australia

ABSTRACT

This paper presents a literature review of leadership over the years and the emerging role of

transformational leadership. We also argue that this form of leadership is appropriate in the context

of globalized markets, where there is increasing diffusion of goods, services, values and technologies

globally, which results in the convergence of societies toward a uniform pattern of economic,

political and cultural organization. There are various issues and consideration existing in the

leadership literature as “the core of the criticism in the literature is that organisations of all sorts

(corporations, government agencies, and not-for-profit organisations) tend to be over-managed

(and/or over-administrated) and under-led” (Mills 2005, p.19). Mills (2005) highlights the vital

importance of leadership in both political and business areas, and argues that organisations in both

areas, in the absence of effective leadership, are not capable of effectively implementing changes at

the organisational level. This paper adopts a conceptual approach aiming to convey the importance

of transformational leadership amongst other styles. In this paper, we review the role of leadership

in the business area and establish the need to investigate transformational leadership, as an ideal

leadership form in enabling firms to accomplish sustainable competitiveness as they operate in global

markets. Based on the various leadership theories discussed be further argued that leadership is highly essential for business organisations to achieve a sustained change and eventually higher degree of

effectiveness, especially when operating in global markets. Transformational leadership, comprising

characteristics of idealised influence, individualised consideration, intellectual stimulation, and

inspirational motivation has been found to have implications for higher leadership effectiveness in

new market environments and production locations. Various empirical studies highlighted

transformational leadership as an enabler of innovation. To demonstrate the role of transformational

leadership in organizational innovation, it can be argued that these leaders facilitate the generation

of new knowledge and ideas through applying intellectual stimulation aspect that motivates

employees to approach organizational problems in a more novel approach. Accordingly, we establish the appropriateness of transformational leadership as a managerial-based, output-based as market-

based competency for firms in globalized markets. We conclude by providing suggestions and scope for empirical investigation into local organizations to evaluate the extent of transformational

leadership apparent and how effective they can be in globalized markets. The findings from empirical

studies could provide managerial and research implications on a Nation’s competitiveness in today’s

dynamic and globalized environments.

JEL Classifications: M10, M120

Keywords: Leadership, Transformational Leadership, Globalized Markets, Local Firms

Corresponding Author’s Email Address: [email protected]

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INTRODUCTION

The business environment is constantly changing as organizations are increasingly

participating in global markets. Globalized markets place demands on the roles of leaders

in organizations operating in this modern environment. In Kock and Slabbert’s (2003)

view, the emergence of global business environments drives companies to become world-

class. They argue that leaders within companies can play a crucial role in achieving a high

level of effectiveness and world class efficiency. Today’s globalized nature of

competitiveness is placing more pressure on organizations to employ effective leaders who

are capable to develop a global vision for organizations. Local strategies need to be

realigned with the global economic integration and for individual countries to remain

competitive at the same time. There are many studies that focus on the organizational and

managerial factors that drive firm competitiveness. Leadership is one such area that plays

a critical role and is a strategic prerequisite for business success in global markets. In this

paper, we review the role of leadership in the business area and establish the need to

investigate transformational leadership, as an ideal leadership form in enabling firms to

accomplish sustainable competitiveness as they operate in global markets.

THE CONCEPT OF LEADERSHIP AND THEORIES

Burns (1978, p. 2) reviewed the historical foundations of leadership, and concluded that

“leadership is one of the most observed and least understood phenomena on earth”. There

is no comprehensive definition that encompasses all of the leadership aspects. Although

the current definitions on the concept of leadership are somewhat different, it can be seen

that these definitions provide various viewpoints about leadership that could positively

contribute to define the concept of leadership. In the reviewed literature, leadership is

defined as influenced interactions with groups of followers to implement changes and

achieve the determined goals (Rost 1991; Bess & Goldman 2001; Zaccaro, Rittman &

Marks 2001; Kan & Parry 2004; Ohman 2000; Osborn, Hunt & Jauch 2002; Pearce &

Conger 2002; Mills 2005; Vroom & Jago 2007; Western 2008). Therefore, this concept of

leadership creates change through taking process-oriented and relationship-practices in

pursuit of attaining goals. In an attempt to portray the concept of leadership, various

leadership theories have been presented to date and are now briefly review below.

Trait Theory

In Judge, Piccolo and Kosalka’s (2009, p.855) view, “the leader trait perspective is perhaps

the most venerable intellectual tradition in leadership research” that highly recommends an

approach in which “great men and women with certain preferred traits influencing

followers to do what the leaders wish in order to achieve group or organizational goals that

reflect excellence defined as some kind of higher order effectiveness” (Rost 1991, p. 94-

95). Whetten and Cameron (1991) collect these traits in the second edition of Developing

Management Skills, and summarise them as being honest, inspirational, competent and

credible. Similarly, Kirkpatrick and Locke (1991, p.48) identify the following traits: “drive

(a broad term which includes achievement, motivation, ambition, energy, tenacity, and

initiative), leadership motivation (the desire to lead but not to seek power as an end in

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itself), honesty and integrity, self-confidence (which is associated with emotional stability),

cognitive ability and knowledge of the business.” Table 1 presents an illustration of the

traits of leadership.

TABLE 1. TRAITS OF LEADERSHIP

Researchers Leaders’ Traits

Stogdill (1948) Alertness, Initiative, Intelligence, Insight, Persistence,

Responsibility,

Self-confidence, Sociability

Mann (1959) Adjustment, Conservatism, Dominance, Extroversion,

Masculinity

Stogdill (1974) Achievement, Cooperativeness, Initiative, Influence, Insight,

Persistence Responsibility, Self-Confidence, Sociability,

Lord, DeVader and

Alliger (1986)

Dominance, Intelligence, Masculinity

Kirkpatrick and

Locke (1991)

Confidence, Cognitive ability, Drive, Integrity, Motivation

Zaccaro, Kemp and

Bader (2004)

Agreeableness, Cognitive abilities, Conscientiousness,

Emotional stability, Extroversion, Intelligence, Motivation,

Openness, Problem solving, Self-Monitoring, Social

Intelligence,

Source: Zaccoro, Kemp and Bader (2004)

Behavioural Theory

The paradoxes, as mentioned above, could have been the impetus for a change in the focus

of leadership studies (Marturano & Gosling 2008), and encouraged researchers instead to

embark on empirical studies to identify “leader behaviours and accompanying

categorisation schemes” (Pierce & Newstrom, 2008, p. 165). Stogdill and Coons (1957)

and Likert (1961) investigated the behaviours of leaders at both universities of Ohio and

Michigan, and also classified leadership styles, which are rated in two aspects of task and

people. These studies aimed to portray the best leadership style in both aspects of task and

people, and also illustrate the behaviours of effective versus ineffective leaders.

Ohio State Studies

To investigate effective behaviours in leaders, Stogdill and Coons (1957) conducted an

empirical study in which they employed a Leader Behaviour Description Questionnaire

(LBDQ) for subordinates to evaluate the behaviours of their leaders, using 150 items that

reflect important functions of a leader. More importantly, Stogdill and Coons (1957) rated

these behaviours using a range between two aspects of initiating structure and

consideration. They commented that a leader can score high or low on each of these

aspects. While initiating structure refers to the “behaviour that organises and defines

relationships or roles, and establishes well-defined patterns of organization, channels of

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communication, and ways of getting the job done” (Yunker & Hunt, 1976, p.46),

consideration has been highlighted as the “behaviour indicative of friendship, mutual trust,

respect, and warmth” (Yunker & Hunt, 1976, p.46). In Stogdill and Coons’ (1957) view,

there can be four types of leadership styles. These are classified as low initiating structure

and low consideration, low initiating structure and high consideration, high initiating

structure and low consideration, and high initiating structure and high consideration.

Michigan University Studies

Likert (1961) conducted another empirical study at the University of Michigan, which

aimed to define the relationship between leaders’ behaviour, group performance and

processes within a group. Accordingly, Likert (1961) suggested the three leadership styles

as (1) task-oriented, which focuses on planning the work, organising employees and

technically supporting them to achieve their business goals. These are similar functions to

‘initiating structure’ as identified by the Ohio State Studies; (2) relationship-oriented

behaviour that reflects supportive behaviours for subordinates, and is consequently

equivalent to ‘consideration’ as described by the Ohio State Studies; and (3) participative

behaviour which is reflected by paying attention to both task-oriented and relationship-

oriented behaviours, and demonstrating some behavioural aspects such as being

supportive, collaborative, cooperative, and highly oriented towards accomplishing high

performance, solving problems, and facilitating conflict resolution.

Situational Theory

Situational theory was developed to highlight the importance of situational factors and how

they impact the effectiveness of leadership. Murphy (1941, p.12) argues that leadership is

naturally situational, and that “leadership study calls for a situational approach; this is

fundamentally sociological, not psychological. Leadership does not reside in a person. It is

a function of the whole situation”. This theory, unlike behavioural and trait theories,

highlights that there is no best single leadership style for all the situations, and conversely

encourages leaders to consider the impact that situational variables can have on the

effectiveness of a behaviour.

Transformational Leadership Theory

Burns (1978) initially developed the theory of transformational leadership.

Transformational leadership emphasises satisfying basic needs and meeting higher desires

though inspiring followers to provide newer solutions and create a better workplace

(Chandrashekhar, 2002; Jue, 2004; Marturano & Gosling, 2008). Bass (1985) uncovered

four dimensions of transformational leadership. They are idealised influence,

individualised consideration, intellectual stimulation, and inspirational motivation. The

idealised influence aspect aims to develop a shared vision and improve relationships with

followers (Canty, 2005); while individualized consideration concentrates on identifying

employees’ individual needs and empowering followers in order to build a learning climate

(Lowe, Kroeck, & Sivasubramaniam, 1996) and mobilise their support towards goals at the

organizational level (Osong, 2006). On the other hand, intellectual stimulation propels

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knowledge sharing in the company to generate more innovative ideas and solutions.

Finally, inspirational motivation focuses on inspiring human assets, thereby setting a

higher level of desired expectations for them. These four dimensions represent an effective

leader in a knowledge-based economy grounded on developing and managing intellectual

capital within organizations.

Following the evolution of leadership theories, the early 1980’s has been

earmarked by dissatisfactions from previous leadership theories, which were a dichotomy

of people-oriented versus task-oriented views (Gardner & Cleavenger, 1998; Hinds, 2005).

Subsequently, a new shift occurred in leadership studies with this new paradigm based on

the theory of transformational leadership (Conger & Kanungo, 1994). This is seen as a

leadership form at its highest level of evolution (although somewhat associated with the

trait theory). By analysing 188 cases, Lowe and Gardner (2000) has found that

transformational leadership theory captured more interests during the period 1995-1999 as

compared to the period 1990-1994. These results are demonstrated in the following Table:

TABLE 2. A REVIEW OF ARTICLES PUBLISHED IN LEADERSHIP

QUARTERLY

Leadership Theories Total

Publications

Trait Theories 17

Behavioural Theories 5

Situational Theory 25

Transformational Leadership Theory 37

Source: Lowe and Gardner (2000; p.480)

More recently, Dinh et al (2014) reviewed the articles published in the 2000-2012 period

in 10 top-tier academic journals, by analysing 752 cases, these researchers concluded that

transformational leadership theory is still one of the most dominant paradigms as compared

to other leadership theories such as trait theory, behavioural theories, and situational

theories. The findings of this study are illustrated in the following Table.

TABLE 3. A REVIEW OF ARTICLES PUBLISHED IN 10 TOP-TIER

ACADEMIC JOURNALS

Leadership Theories Total

Publications Trait Theories 149

Behavioural Theories 64

Situational Theory 55

Transformational Leadership Theory 154

Source: Dinh et al. (2014; p.40)

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DISCUSSIONS, CCOCLUSIONS, AND FUTURE RESEARCH

Organizational innovation results in the creation of new and valuable services or products

(Woodman et al., 1993) through applying new ideas and knowledge. Damanpour (1991,

p.561) takes a more market-oriented approach and defines organizational innovation as

“new products/services introduced to meet an external user market need”. To demonstrate

the role of transformational leadership in organizational innovation, it can be argued that

these leaders facilitate the generation of new knowledge and ideas through applying

intellectual stimulation aspect that motivates employees to approach organizational

problems in a more novel approach. Transformational leaders, as visionary leaders,

develop a shared and inspiring vision for future, which play a critical role in shifting

organizations toward the creation of new services and products.

Transformational leaders are clearly those leaders who are able to enhance organization

performance in global markets through empowering human resource and enabling change

(Senge, 1999). Hence, transformational leadership theory sheds light on the critical role of

employees’ attitudes and values in implementing changes at the organizational level, and

features effective organizational change as a product of developing relationships with

subordinates. The success in today’s business environment is not achievable without

employing an effective leadership that can enable organizations to accomplish their goals.

Transformational leadership instills major changes at the organizational level through

changing attitudes and assumptions at the individual level and creating collective.

Moreover, this leadership facilitates organizational innovation and learning, and generates

a shared and inspiring vision for future. These tasks are highly necessary when operating

in global environments. This establishes the need for empirical investigation into

transformational leaders in local organizations operating in global markets in order to be

effective. We propose that there is a need for future research to measure the potential

impacts that this theory of leadership may have on the success of local organizations

competing in global market.

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