The Journal of Developing Areas Volume 51
No. 4
Fall 2017
LEADERSHIP STYLES AND EMPLOYEES’ MOTIVATION: PERSPECTIVE FROM AN EMERGING ECONOMY Muhammad Fiaz Qin Su Amir Ikram* Xi’an Jiaotong University, China Aruba Saqib University of Engineering and Technology, Pakistan ABSTRACT Leadership deficit has been Pakistan’s most pressing issue for decades, and this problem is even more pervasive in public organizations than private sector. Tackling the leadership crisis is now increasingly a question of what constitutes an appropriate leadership style to augment motivation of employees. Thus the purpose of the study is to explore the intriguing question of the most pragmatic leadership style and its potential impact on employees’ motivation. For this purpose, autocratic, democratic, and laissez-faire styles are considered as independent variables, while employees’ motivation is the dependent variable. Data is collected via survey questionnaire, based on closed-ended Multifactor Leadership Questionnaire (MLQ), from a sample of 110 senior level and middle level managers working at WAPDA, an autonomous organization of Pakistan working under the administrative control of federal government for the development of energy resources. Descriptive statistics, reliability statistics, multiple regression model and analysis of variance are deployed to test hypotheses of the study and derive practical implications. Autocratic leadership style is found to be more dominant and exhibits significant negative relationship with employees’ motivation, whereas democratic and laissez-faire leadership styles are shown to positively predict motivation of employees. However, the positive relationship between democratic leadership and employees’ motivation comes out to be insignificant, which depicts the bureaucratic and decentralized nature of the organization. The research findings are in line with the theoretical assumptions for autocratic and laissez-faire style, but inconsistent with democratic leadership style. The paper proposes the preference for democratic and laissez-faire leadership style in the face of deleterious bureaucratic environment. Though few researchers investigated the relationship between leadership styles and employees’ performance, there is hardly any study that focuses on bureaucratic environment of an emerging economy. The study offers broader policy implications to strengthen institutions by establishing democratic leadership style. In a context marked by bureaucracy and sluggishness, top management needs to focus on leadership development programs and pursuance of democratic leadership style. JEL Classifications: C12, D22, L32, M54 Keywords: Leadership style, autocratic leadership, democratic leadership, laissez-faire leadership, employees’ motivation Corresponding Author’s Email Address:
[email protected]
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1.
INTRODUCTION
Leaders play a pivotal role in leading their followers to fulfill organizational goals effectively. They need to communicate with their employees thoroughly, and manage human capital, finance, and marketing wisely. In simple terms, leadership is a process by which an individual motivate or influence others to achieve organization goals (Kesting et al., 2016). It is the process of enhancing and encouraging the self-esteem of employees to achieve organizational task and goals. Employee motivation is a way to achieve unusual goals, in which they put effort above and beyond stated organizational goals. Comprehensively speaking, employee motivation is the extent to which employees are bound emotionally or psychologically towards the organization (Anitha, 2014). In achieving organizational goals, employees are considered to be the most effective source. Employees have the tendency to utilize the organizational capital efficiently and increase the productivity and profitability of the organization. The well-qualified, capable and talented workforce is needed to achieve organization strategic goals. In order to advantageously utilize that asset, leadership style is considered being the most important determinant to increase employee motivation. Induction of hardworking, commitment and motivation in employees is at the core of an organizational success. The committed workforce is an important success factor for organizations to achieve their desired goals. The significant importance of committed workforce is that it has less intention to leave the organization. The employees’ motivation, performance and productivity should increase if they are treated with good leadership style. Leadership styles can be categorized as autocratic, laissez faire, or democratic (Lewin, Lippitt & White, 1939; Bass & Stogdill, 1990). The government and semi-government institutions of developed economies have attained maturity, and mostly following democratic leadership style (Giddens, 2013). Different national cultures shape the mindset of individuals in a different way, thus there can be differences in management styles and employee motivation throughout the world (Hofstede, 1980). However, much attention has not been given towards examining the state institutions of developing economies with respect to their leadership style. Thus implications of leadership and the relevant leadership style is even more important for emerging economies, such as Pakistan, which are marked by roller coaster period and dynamic change. Thus it is imperative to analyze the pivotal organization of an emerging economy and the prevalent leadership style. The research paper examines the role of leaders and managers working in Water and Power Development Authority (WAPDA), an autonomous organization assigned with the vital tasks related to electricity sector of Pakistan. Its obligations include development of water reservoirs, generation of electricity, transmission and distribution to the end users in industry, commerce, trading, agriculture, domestic and various social sectors (WAPDA, 2016). Considering the fact that electricity crisis is perhaps the biggest problem that Pakistan is currently facing (Ikram, Su & Sadiq, 2016), it is imperative to analyze the entities and stakeholders involved from diversified perspectives; WADPA is primarily responsible for electricity generation, and constitutes an integral entity in hydropower development (Ikram, Su & Fiaz, 2017). We identify the elements of successful leadership development, and assesses the competencies that needs to be developed. The objective of the study is to determine the effect of autocratic, democratic
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and laissez faire leadership style on employees’ motivation. For organizational effectiveness it is imperative to have excellent leadership which should be complemented by higher levels of employees’ motivation. Next section provides a comprehensive view on the concepts of leadership styles and motivation. Third section describes research methodology and theoretical framework regarding the relationship of the most practiced leadership style with employees’ motivation. Section four elaborates data analysis and hypotheses testing. Lastly, the study offers concluding remarks regarding predominant leadership styles and provides practical implications for prospective leaders and entrepreneurs alike. 2. LITERATURE REVIEW 2.1 Leadership styles Leadership style is one of the most important human resource-related outcomes, and perhaps one of the most studied topic in management and industrial psychology. This is probably because leadership happens to be the core but sometimes contentious issue in organizational research (Kesting et al., 2016; Meindl, 2013; Puni, Ofei & Okoe, 2014). Psychologists Lewin, Lippitt and White (1939) identified three major leadership styles, namely, democratic, autocratic and laissez-faire styles. Leadership enables organizations to be more productive and profitable, but the extent of success depends on the style of the leader and the resultant environment created for employees to function well. Asrar-ulHaq and Kuchinke (2016) is of the view that the kind of leadership style exhibited by managers to a large extent influences organizational valued outcomes such as low employee turnover, reduced absenteeism, customer satisfaction and organizational effectiveness. Similarly, leadership style controls interpersonal, reward and punishment that shapes employee behavior, motivation and attitude which impacts on organizational performance (Pufi et al., 2014). It can either lead to inspiration or disenchantment among employees resulting in increase or decrease productivity. Furthermore, leadership style at the workplace can affect employee’s self-image either positively or negatively, particularly an employee’s health (Kahn & Katz, 1952). Most leadership theorists agree that the traits, style, and contingency theories dominate the leadership literature (Jung et al., 2014; Kesting et al., 2016; Schein, 2015). The leadership style movement started in 1945 at the Ohio State University. Significantly, the “Consideration” and “Initiating Structure” study stood out from these early contributions which provided the basic dimensions of leadership behavior in formal organizations. Consequently, contributors like Likert (1961), Kahn & Katz (1952) also expanded the works of their predecessors by basically analyzing the relationship between supervisory behavior and employee productivity and satisfaction in 1947 at the University of Michigan. Their studies identified two styles of leadership - Employee Centered (EC) and Production Centered (PC) leadership. EC leaders focus more on employee goals and satisfaction and less time in performing similar task assigned to employees. It is also disinterested in punishing employees when they go wrong. On the other hand, PC leaders are interested in output therefore spend more time in actual supervisory work related to production and less attention on supervisory activities like planning (Avolio, Walumbwa & Weber, 2009). Globalization resulted in the highly diversified labor, thus it is important to analyze leadership style from cross-cultural perspective. Bass (1997) observed that there are few
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leadership strategies, for example, transactional and transformational leadership, that transcend national boundaries. Laissez faire style of management let the employees realize their potential without the undue meddling of management, thus it contributes towards transactional leadership and has positive impact on motivation (Chaudhry & Javed, 2012). 2.2 Autocratic leadership Autocratic leadership style (AL) places more emphasis on performance and low emphasis on people. The focus of power is with the leader and all interactions within the group move towards the leader. The leader unilaterally exercises all decision-making authority by determining policies, procedures for achieving goals, work task, relationships, control of reward, and punishment (Van Vugt et al., 2004). The basic assumption underlying autocratic leadership style is based on the premise that, people are naturally lazy, irresponsible, and untrustworthy and leaving the functions of planning, organizing, and controlling to subordinate would yield fruitless results and so such functions should be accomplished by the leader without the involvement of people. Further, Likert's (1961) four management systems, characterized autocratic leadership style system as an exploitative-authoritative system where power and direction come from the top downwards, where threats and punishments are employed, and where communication is poor and team-work is non-existent. Jung, Jeong and Mills (2014) described an autocratic leadership style on a continuum and opined that autocratic leaders make decisions and announce them, without inviting suggestions from subordinates. Autocratic leader relies heavily on authority, control, power, manipulation and hard work to get the job done (Puni et al., 2016). In the autocratic leadership system, formal centralized structures, procedures, processes and mechanism are clearly defined and are enforced to ensure that subordinates do their jobs efficiently within the rules. Punishments are often applied when mistakes are made and sanctions are in the form of withholding attention or good assignment or making people feel guilty. Motivation under this leadership style is by the means of economic incentives which are extrinsic in nature and based on performance. Development within an autocratic system comes from hard work and rarely does delegation of authority practiced. Most theorists have identified autocratic leaders with authoritarian leaders simply because research has proven that there is a strong positive correlation between autocratic leadership style and authoritarianism (Chemers, 2014; Schuh, Zhang, & Tian, 2013; Svolik, 2013). 2.3 Democratic leadership Bhatti et al. (2012) suggest that democratic leadership style focuses more on people and there is greater interaction within the group. The leadership functions are shared with members of the group and the leader is more part of the team. Similarly, Jones et al. (2016) and Raelin (2012) suggested that the principles of democratic leadership is friendliness, helpfulness, and the encouragement of participation. In the same vein, McGregor and Cutcher-Gershenfeld (2006) described this leadership style as benevolent, participative, and believing in people; they equated democratic leader to the Theory Y manager which is associated with increased follower productivity, satisfaction, involvement, and commitment. The philosophical assumption underlying democratic
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leadership style is that naturally all people are trustworthy, self-motivated, like responsibility and challenging work, and are encouraged by organizational conditions to foster teamwork, high performance and satisfaction (Jones et al., 2016). 2.4 Laissez faire leadership The main emphasis of laissez faire leadership style is neither on performance nor people; the philosophical assumption is that naturally human beings are unpredictable and uncontrollable and trying to understand people is a waste of time and energy. On this hypothesis, the leader tries to maintain a low profile, respects all constituencies within the organization, tries not to create waves of disturbance, and relies on the few available loyalists to get the job done (Chaudhry & Javed, 2012). Laissez-faire leader lives and work with whatever structure put in place without any suggestions or criticisms. Goals and objectives are established only when necessary and required. The leader is not control-frisk and abdicates controlling to employees. Such leaders shun decision-making as best as they can and would like to avoid communication, and converses only when needed. Thus, the business of employee development is not a concern to the laissez faire leader, as they believe that employees can take care of themselves (Wong & Giessner, 2015). It is pertinent to mention here that in a study on the banking sector of Pakistan, laissez-faire leadership style revealed negative relationship with employee performance outcomes (Asrar-ul-Haq & Kuchinke, 2016). 2.5 Evaluating motivation and it relationship with leadership Employees’ motivation is dependent upon leadership styles to quite an extent, though is varies from organization to organization. Bouckenooghe, Zafar and Raja (2015) argues that motivation is a key component of leadership. They state that leadership is, amongst others, the ability to motivate others to contribute toward the effectiveness and success of the groups of which they are members. Asrar-ul-Haq and Kuchinke (2016) suggests that motivation of employees in the public sphere is very important as the performance of governments and their administrations affect our society much more than any other private sector organization. With respect to measuring motivation, Touré-Tillery and Fishbach (2014) differentiated between the outcome-oriented motivation to complete a goal and the process-focused motivation that entails comprehensive elements of goal pursuance. Fishbach and Choi (2012) compared the intrinsic and extrinsic motivations on behavior and advocated the creation of context to highlight and distinguish one of these dimensions, for example through experimental designs. While investigating outcomefocused dimension of motivation, Touré-Tillery and Fishbach (2012) evaluated motivation through adherence to ethical, religious, and correctness standards over the course of successive actions. They further suggested that means-oriented motivation is Ushaped, because beginning and end activities are comprehended as more analytic for making self-interpretations. Democratic leaders rely upon group decision making and active member involvement, autocratic styles are domineering and laissez-faire styles also known as the “hands-off” styles minimize the leader’s involvement. Therefore, Bhatti et al. (2012) reveal that democratic leaders take great care to involve all members of the team in discussion, and
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can work with a small but highly motivated team. Schwartz (2013) found a high submissiveness among workers in democratic organizations, but those in autocratic organizations expressed frustration and anger. Bouckenooghe et al. (2015) argues that the effectiveness of group leaders is dependent on the criterion which was being used to assess leadership. Thus, if leadership is assessed in terms of productivity, then autocratic style is most efficient but if the role is seen as maintaining good morale and a steady level of work, democratic style is effective. 3. RESEARCH METHODOLOGY & HYPOTHESES DEVELOPMENT Relationship between independent and dependent variables is depicted in theoretical framework (Figure 1). Based on the evidence from previous studies (Lewin et al., 1939; Bass & Stogdill, 1990), three leadership styles are taken as independent variables, namely autocratic, democratic and laissez-faire leadership styles. While employees’ motivation is the dependent variable. 3.1 Theoretical framework
LEADERSHIP STYLES
Autocratic Leadership
Democratic Leadership
Employees Motivation
Laissez-Faire Leadership FIGURE 1. RELATIONSHIP BETWEEN INDEPENDENT AND DEPENDENT VARIABLES 3.2 Regression Model and hypotheses formulation
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In order to determine the association between employees’ motivation and leadership styles, a multiple regression analysis employing three independent variables was carried out. The operationalization of dependent and independent variables are as follows: EM pfe = β0 + β1 (AL) + β2 (DL) + β3 (LF) + ηi +ɛit Where,
EM pfe = Employees’ motivation (process-focused evaluation)
AL = Autocratic Leadership
DL = Democratic Leadership
LF = Laissez faire
ηi=unobservable heterogeneity
Ɛ it= error term
Β0=constant variable
Β1, β2, & β3= Proportionate change in dependent variable due to independent variables.
On the basis of aforementioned prior literature and multiple regression model, following hypotheses are formulated: H1: Autocratic leadership has a significant impact on employee’s motivation. H2: Democratic leadership has a significant impact on employee’s motivation. H3: Laissez-faire leadership has a significant impact on employee’s motivation.
3.3 Research design Stratified sampling technique was used to collect data from 110 high and middle level managers, working in WAPDA. The sampling technique ensured the proportionate representation of both high-level and middle-level managers. The selection of WAPDA is imperative from two perspectives: firstly, the persistent problem of power shortage asks for critical examination of the entities and stakeholders involved (Ikram, Su & Fiaz, 2017); secondly, the federal institutions of developing South Asian economies are notorious for their bureaucratic style of governance. With respect to the research framework, independent variables are leadership styles (Autocratic, Democratic, Laissezfaire) and the dependent variable is employees’ motivation. The cross-sectional study makes use of closed-end Multifactor Leadership Questionnaire (MLQ) (Bass & Avolio, 2000), based on Likert scale, as a survey instrument for data collection. For the purpose of evaluating employee’s motivation, we relied on process-focused approach as elaborated by Touré-Tillery and Fishbach (2014). We conduct the Cronbach’s alpha test to valid the MLQ. As per Table 1, the Cronbach’s alpha for the autocratic leadership
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(AL) is 0.787, suggesting that the items have relatively high internal consistency. The alpha coefficient for the democratic leadership (DL) is 0.682, depicting relatively low internal consistency. The alpha coefficient for the Laissez faire (LF) is 0.890, which is highest as compared to other two variables. The alpha coefficient for the employees’ motivation (EM) is 0.834 suggests that the items have relatively high internal consistency. The overall alpha coefficient for the four items is 0.787, signifying that the items have relatively high internal consistency and thus survey instrument is expected to generate pragmatic results. TABLE 1. RELIABILITY STATISTICS TEST Variables
AL
Cronbach's
Cronbach's Alpha Based on
N of Items
Alpha
Standardized Items
0.787
0.771
5
0.682
0.634
5
0.890
0.888
5
0.718
0.778
20
DL LF Overall
Table 2 portrays that the value of N is valid for all the dependent and independent variables. Similarly missing questions are found to be zero. The overall mean is found to be 2.5160, and standard deviation is found to be 0.33397. The overall variance is found to be 0.112. Therefore, all the results analyzed show significance and reliability of data. TABLE 2. DESCRIPTIVE STATISTICS AL
DL
LF
EM
Overall
110
110
110
110
110
0
0
0
0
0
Mean
1.7618
3.4333
1.6455
3.2061
2.5160
Std. Deviation
0.4617
0.7075
0.5134
0.6289
0.3339
Variance
0.2130
0.5010
0.2640
0.395
0.112
Minimum
1.00
1.67
1.00
1.67
1.52
Maximum
3.20
4.67
3.33
4.67
3.31
Valid N Missing
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4. DATA ANALYSIS & HYPOTHESES TESTING Reliability test and descriptive statistics endorsed the research methodology of the study. Now, in order to empirically test the formulated hypotheses that we set forth in Section 3, we deploy analysis of variance test (ANOVA) with the help of statistical software SPSS. TABLE 3. Model
R
MODEL SUMMARY
R Square
Adjusted R Square
Std. Error of the Estimate
0.476a
1
0.226
0.197
0.41386
a. Predictors: (Constant), AL, DL, LF
In regression model (Table 3), R-value depicts multiple correlation coefficient between the independent variables (predictors) and the dependent variable (). The multiple correlation between the predictors (AL, DL and LF) and the dependent variable (employee motivation) is 0.465, thus there is moderate positive relation between the variables. R square is the ratio of the variance in the dependent variable solely or jointly explained by the independent variables; the value of 0.226 shows that AL, DL and LF account for 2.26% of the variation in employees’ motivation. TABLE 4. ANALYSIS OF VARIANCE Model
Sum of Squares
df
Mean Square
F
Sig.
Regression
5.255
4
1.314
7.670
.000b
Residual
17.984
105
.171
Total
23.240
109
a. Dependent Variable: EM b. Predictors: (Constant), AL, DL, LF
The results of the study and hypotheses testing are primarily based on Table 4 and Table 5. Analysis of variance (ANOVA) is depicted in Table 4, which shows that the effect of predictor on dependent variable is statistically significant which is below 0.05. ANOVA indicates that the model is reliable and best fitted at all conventional levels of significance. Since p-value for F-statistic is less than the 5% level of significance, the overall model of the study is significant and correctly specified. Table 5 shows that the value of beta and standard error is deviating from variable to variable. The significance of AL is low, i.e. 0.164. The study suggests that autocratic leadership (AL) has significant negative relationship with employees’ motivation at WAPDA. The negative relationship between autocratic leadership and motivation of employees is in line with the previous studies (Kipnis et al., 1981; Jung et al., 2014). Lack of employees’ motivation can be traced back
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to the prevalence of autocratic leadership style. As suggested by Bass (1997), the democratic and laissez-faire leadership styles depict positive relationship with employees’ motivation. However, the analysis depicted that the values do not support significant relationship between democratic leadership style and employees’ motivation. This discrepancy is understandable as the bureaucratic environment hardly allows employees to participate in decision making, and thus there is lack of democratic leadership. TABLE 5. HYPOTHESES TESTING Unstandardized
Standardized
Coefficients
Coefficients
Model B
Std. Error
(Constant)
0.990
0.294
AL
-0.192
0.067
-0.294
-2.87 0.005
DL
0.083
0.079
0.092
1.05
0.164 Insignificant
LF
0.079
0.070
0.107
1.12
0.009
EM
0.411
0.079
0.496
5.23
0.000
a.
Beta
t
Sig.
3.37
0.001
Decision
Significant
Significant
Dependent Variable: EM
The results of hypotheses are: H1: Autocratic Leadership has a significant negative impact on employee’s motivation H2: Democratic Leadership do not have significant positive impact on employee’s motivation H3: Laissez-Faire Leadership has a significant positive impact on employee’s motivation
5. CONCLUSION AND IMPLICATIONS OF THE STUDY This study is an effort to explore three prominent leadership styles and understand its impact on the motivation of employees working in the federal or semi-government institutions of Pakistan. Much like other public sector and semi-government institutions, WAPDA has become victim of deleterious bureaucracy and sluggishness. It is vital to strengthen such institutions by establishing democratic traditions and leadership style. For this endeavor, we conducted cross-sectional study of WAPDA, an autonomous federal institution of Pakistan, to examine the relationship between leadership style and employees’ motivation. The observations of the study indicate that all three leadership styles have their own importance with regard to enhancing employees’ motivation and performance. Autocratic leadership style was found to be
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more rampant in our given organization, which results in lack of employees’ motivation. Though autocratic style could not be omitted altogether, but its dominance could be reduced to a certain level by the training of prospective leaders in an appropriate way to enhance employees’ motivation. Meanwhile, preference for laissez faire and democratic leadership styles can enhance productivity of the enterprise. This will boost employees’ morale and the resultant voluntarily behavior will improve efficiency and effectiveness of the organization. The significant positive relationship of laissez faire style suggests that motivational level is high because this particular style let the employees to realize their potential without undue meddling of management. (Chaudhry & Javed, 2012). Adoption of democratic and laissez faire style can lead to generation of positive outcomes on the part of employees. As noted by Kesting et al. (2016), leadership styles are contingent upon environment and various stages of innovation. Enterprises in Pakistan are facing widespread technical inefficiency (Ikram, Su & Sadiq, 2016), so entrepreneurs and leaders need to inculcate appropriate leadership style to enhance productivity and performance. Besides, state owned and semi-government owned institutions are notorious for their bureaucratic environment and autocratic style of leadership. Since the organization under investigation, i.e. WAPDA, operates under the administrative control of the federal government, it is inherently characterized by bureaucratic environment. In this regard, the leadership and personality traits can enhance performance by taking care of the negative impacts of bureaucratic environment and ensuring democracy; personality traits of conscientiousness and agreeableness comes handy for democratic style of leadership and enhancing performance (Anwar et al., 2017). Though the findings of this study are context specific, however they are in line with the theoretical assumptions of autocratic style and laissez-faire style (Van Vugt et al., 2004; Wong & Giessner, 2015), but inconsistent with democratic leadership style (Raelin, 2012). The study has broader practical implications for researchers and academicians to better understand the role and nature of leadership styles and their impact on motivation of employees. Leadership deficit is perhaps Pakistan’s most pressing problem, and the study provides at least a prime facie evidence on how leadership styles should be devised. Based on the outcomes, top management in the stateowned societies should realize the significance of effective leadership style and focus on leadership development programs. The findings can be helpful for the managers and leaders to understand that which kind of leadership style is most appropriate in terms of its outcomes and motivations, and how they can modify their leadership styles to make it further result oriented. Furthermore, leaders should empower their associates so that they can accomplish their responsibilities in an effective manner. Empowerment includes providing training and education necessary for delegated task completion. Caution must be taken while strategizing, as laissez-faire leadership style exhibited negative association with employee performance outcomes in terms of employee satisfaction in the context of Pakistan (Asrar-ul-Haq & Kuchinke, 2016). Though selection of appropriate leadership
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style is a contingency factor, our study suggests the preference for the style that has both a high concern for people and a high concern for the task, i.e. democratic style. The responses on Multifactor Leadership Questionnaire (MLQ) were self-report measures, and thus can lead to single-source bias; managers and leaders at WAPDA themselves rated their leadership and has direct relevance of this with their work, so the issues of social desirability and reactivity can arise. This problem can be mitigated through crossratings, so it is recommended for future studies. Findings are less generalizable as the sample size was limited to only semi-government institution. Future researches may include other semi-government institutions and perform comparative analysis. It is further advised to address the moderating and mediating factors of leadership styles and innovative work attitude. ENDNOTES * Acknowledgement The authors are thankful to State Key Laboratory for Manufacturing Systems Engineering, Key Lab of the Ministry of Education for Process Control and Efficiency Engineering, and School of Management of Xi’an Jiaotong University, China. The research contribution has also been facilitated by ‘National Natural Science Foundation of China [Project Number: 71371151]’ and ‘Humanities and Social Sciences of Ministry of Education Planning Fund [13YJA630078]’.
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