remains the best description of this population, according to T. Alpert (personal communication ... modern Internet marketing techniques. Contingent reward. ...... Tierney, J. (2011). Catalog mailers may get hit with massive postal increase.
THE DIFFERENCES IN LEADERSHIP STYLES AMONG GENERATION COHORTS OF SMALL BUSINESS LEADERS AND THEIR RELATIONSHIP TO ORGANIZATIONAL OUTCOMES by Renee A. Just NANCY S. BOSTAIN, PhD, Faculty Mentor and Chair PAULA FREMONT, PhD, Committee Member SHARLENE ADAMS, PsyD, Committee Member David Chapman, PsyD, Dean, Harold Abel School of Social and Behavioral Sciences
A Dissertation Presented in Partial Fulfillment Of the Requirements for the Degree Doctor of Philosophy
Capella University May 2011
© Renee A. Just, 2011
Abstract The Small Business Administration (2009) reported the small business sector employs approximately half of U.S. workers and creates 60–80% of all new jobs. The U.S. workforce is now comprised of four different generational cohort groups, each group with its own history, value-shaping experiences, and motivational patterns. This is a quantitative study, a survey of leaders in the direct-to-consumer catalog industry with revenues ranging from $15–100 million. The first purpose of this study was to determine the degree to which leadership styles (transactional, transformational, and laissez-faire) are used by four different generational cohorts (Veterans, Baby Boomers, Generation X, and Generation Y) of small business leaders in the direct-to-consumer catalog industry. The second purpose of this research was to determine how well the degree of leadership style predicts organizational outcomes in these small business organizations. The Multifactor Leadership Questionnaire was used to address the hypotheses and multivariate analysis of variance and multiple regression were used to analyze the data gathered. This research bridges a gap in the literature on leadership styles, organizational outcomes, and the generational differences in the direct-to-consumer catalog industry.
Dedication I dedicate this research to my spouse, my friend, my support system, my life partner, and biggest fan, Marge. It is through your support, calming nature, love, and patience over the years that I have come to realize my true potential and purpose on this planet. You have shown me how to tap into my softer side, which set in motion a quest to evolve into a happier, grounded, giving individual. Thank you for showing me that through trust and vulnerability I am able to find true peace.
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Acknowledgments Without the wisdom and support of my mentor, Dr. Nancy S. Bostain, and committee members, Dr. Sharlene Adams and Dr. Paula Fremont, I would have become discouraged long ago. These ladies provided the feedback, support, challenge, and insights necessary when I needed them most. I would like to extend a special thank you to Dr. Adams for not retiring before I was able to finish. I had the pleasure to begin and end my doctoral journey with her support. I owe a debt of gratitude to my dear friend, Terri, for the countless hours she spent proofing my drafts, one after another. She recognized when I simply read the words too many times and was able to decipher my thoughts. Thank you. I would like to thank my parents for their continuous support and living through my frustrating phone calls. Additionally, I need to thank my grandmother. While she is not with us any longer, on many occasions it was her voice that kept me going, reassuring me that I can do anything I put my mind to!
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Table of Contents Acknowledgments
iv
List of Tables
vii
CHAPTER 1. INTRODUCTION
1
Introduction to the Problem
1
Background of the Study
2
Statement of the Problem
5
Purpose of the Study
6
Research Questions and Hypotheses
8
Significance of the Study
9
Definition of Terms
10
Assumptions
13
Limitations
14
Theoretical Framework
15
Organization of the Remainder of the Study
16
CHAPTER 2. LITERATURE REVIEW
17
Introduction
17
Leadership Styles
17
Transactional Leadership
18
Transactional Research
20
Transformational Leadership
22
Transformational Research
25
Laissez-Faire Leadership
27 v
Laissez-Faire Research
28
Organizational Outcomes
29
Methodological Research
31
Generational Cohorts
31
Chapter Summary
35
CHAPTER 3. METHODOLOGY
37
Purpose of the Study
37
Research Design
38
Target Population
39
Participant Selection
40
Sampling and Data Collection Procedures
40
Instrumentation
43
Validity and Reliability
44
Data Analysis
45
Expected Findings
46
CHAPTER 4. DATA COLLECTION AND ANALYSIS
48
Introduction
48
Description of the Sample
49
Details of Analysis
51
Results
52
Chapter Summary
62
CHAPTER 5. RESULTS, CONCLUSIONS, RECOMMENDATIONS Introduction
64 64
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Summary of the Study
64
Summary of Findings
69
Limitations
73
Conclusion
74
Recommendations for Future Research
76
REFERENCES
78
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List of Tables Table 1. Frequencies and Percentages for Participant Cohorts
52
Table 2. Means, Standard Deviations, and Reliability Coefficients for MLQ Subscales
53
Table 3. Results of the Kolmogorov–Smirnov Tests and Box’s M Test for Transformational, Transactional, and Laissez-Faire Subscores
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Table 4. MANOVA and ANOVAs for Transformational, Transactional, and Laissez-Faire Leadership Subscales by Generation Cohort
55
Table 5. Means and Standard Deviations for Transactional Subscores by Generational Cohort
56
Table 6. Means and Standard Deviations for Transformational Subscores by Generational Cohort
57
Table 7. Means and Standard Deviations for Laissez-Faire Subscores by Generational Cohort
58
Table 8. Multiple Regression for Transformational, Transactional, and Laissez-Faire Subscores Predicting Extra Effort
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Table 9. Multiple Regression for Transformational, Transactional, and Laissez-Faire Subscores Predicting Effectiveness
61
Table 10. Multiple Regression for Transformational, Transactional, and Laissez-Faire Subscores Predicting Satisfaction
62
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CHAPTER 1. INTRODUCTION
Introduction to the Problem Gomez-Mejia, Balkin, and Cardy (2007) provided information that employee satisfaction is achieved through leadership, communication, and effective employee relations. They further explained that the current business environment is not commandand-control; the current business environment is more entrepreneurial. Fuller, Morrison, Jones, Bridger, and Brown (1999) stated that leadership behaviors are positively related to organizational outcomes to include job satisfaction. They further concluded that the level of satisfaction of the employee depends on his or her intrinsic task motivation. While it may be human nature to crave the instant gratification that extrinsic rewards provide, it is quite possible, given this study, to consider that the lasting effects of intrinsic motivation withstand time. Fuller et al. found through a study involving nurses that leadership behaviors are positively related to organizational outcomes to include job satisfaction. Spreitzer (1996) investigated the effect of intrinsic motivation and its correlation to satisfaction, and suggested that one new variable to be considered that could significantly enhance the positive effects of transformational leadership behaviors is psychological empowerment. Rafferty and Griffin (2006) explored the effects of transformational versus transactional leadership and the effect each one has on employee satisfaction. They specifically set out through their 1
hypotheses testing to determine the supportive and developmental leadership strengths and effects on satisfaction. They concluded that developmental leadership had a stronger relationship to employee satisfaction. Though much research has been devoted to generational issues of employees and leadership styles, a gap exists in the examination of leadership styles of different generations in the small business environment. What remains to be examined are leadership styles of leaders and organizational outcomes as perceived by the leaders in direct-to-consumer catalog companies.
Background of the Study Leadership styles differ; however, through development, experience, or coaching, individuals find themselves working within one of numerous models. Transformational leadership was described by Ardichvili and Manderscheid (2008), Cragg and Spurgeon (2007), and Yukl (2006) as a leadership style that produces employees who exhibit increased loyalty, motivation, and commitment. Bass (1985), Bass and Riggio (2006), and Cragg and Spurgeon noted that for transactional leadership, the primary focus is on task. Bass and Riggio, Cragg and Spurgeon, and Northouse (2004) added that the foundation of transactional leadership is based on leader–member exchange in a reward– punishment system. Path–goal leadership, according to both Northouse and Yukl, is built on the leader motivating the follower to accomplish preset goals. Northouse and Yukl both contended that while charismatic leaders are self-confident, motivate their followers, and possess high expectations, there is also a dark side in that followers can overdevelop their trust and begin to completely rely on the leader. Laissez-faire leadership was 2
described by Ardichvili and Manderscheid and Rue and Byars (2007) as a hands-off approach to leadership in that the followers make all the necessary decisions. Situational leadership, according to Ardichvili and Manderscheid, Cragg and Spurgeon, and Yukl is a style in which the leadership depends on the circumstances; Yukl further described the leadership behavior as ever-changing based on the maturity level of the followers. This research focused on transformational and transactional leadership styles. According to Yukl (2006), the foundation, initial influence, and key concepts of transformational leadership were provided by Burns. However, Bass (1985, 1996) has provided the most recent influence and empirical research. According to Yukl, Bass purported leaders transform and motivate followers through awareness of task outcomes, suggesting that they put their own self-interest aside for the sake of the organization and call to mind the greater good. The framework of transformational leadership consists of four behaviors. The first is idealized influence, which refers to the behaviors of the leader that are easily observed by followers and measures the leader’s charismatic appeal (Bass & Avolio, 1995). The second component is individualized consideration, in which the leaders develop their followers through coaching and mentoring. The third component is inspirational motivation, which grasps a follower’s values, personal needs, and hopes, thereby motivating him or her to reach remarkable goals. The final component of transformational leadership is intellectual stimulation, a form of energizing followers by challenging their imagination and expanding their ability to solve problems. Walumbwa, Peng, Lawler, and Kan (2004) completed a study to determine the effects of transformational leadership and its relation to work outcomes. In answering 3
their first hypothesis, they found a positive effect with collective efficacy in relation to transformational leadership. This research is of value in terms of the effect leaders have on employee satisfaction as well as organizational effectiveness and how they are interrelated. The strengths of transformational leadership are that leaders who master transformational leadership are able to increase awareness of their followers, raise achievement goals, and raise the confidence in their followers’ achievements, reaching far beyond the followers’ boldest expectations (Bass, 1999). Additionally, Ardichvili and Manderscheid (2008), Cragg and Spurgeon (2007), Northouse (2004), and Yukl (2004) reported that followers of transformational leaders realize increased motivation and morale. Northouse and Yukl both concurred that leaders of this type inspire change in their followers, and Cragg and Spurgeon added that this style of leadership empowers the follower base. Transactional leadership is a style in which the leader develops a relationship with his or her supervisees that is exchange related. Avolio and Bass (2002) and Northouse (2004) explained the exchange is based on reward or punishment, depending on how satisfactorily the task has been completed. Rowold and Rohmann (2008) explained that transactional leaders intervene only after errors have been detected or standards have not been met. Transactional leadership is comprised of contingent reward and managementby-exception (active or passive). Contingent rewards are rewards provided that are contingent on successful completion of designated obligations. Passive management refers to the punishments as a response to any deviation to designated obligations; active and passive management, redefined, added a third component (Antonakis, Avolio, & 4
Sivasubramaniam, 2003; Antonakis & House, 2002; Avolio, 1999; Yukl, 1999) in which laissez-faire leadership is practiced by a leader who exhibits passive indifference about the task and direct reports.
Statement of the Problem The U.S. workforce has experienced tremendous changes in recent decades. It has become more dependent on the small business sector than it ever was at any time in recent history. The SBA (2009) reported the small business sector employs approximately half of U.S. workers and creates 60–80% of all new jobs. The U.S. workforce is now comprised of four different generational cohort groups, each with its own history, value-shaping experiences, and motivational patterns. Gravett and Throckmorton (2007) reported the striking difference in the mindsets, motivations, and behaviors of these four generations in the workforce have the potential to bring both challenges and opportunities to the organizations they serve. The four generational cohorts in today’s workforce include the Silent Generation, also known as the Veterans, born between 1925 and 1945, who comprise 7.5% of today’s workforce; the Baby Boomers, born between 1946 and 1964, who comprise 42.0% of the workforce; Generation X, born between 1965 and 1977, who comprise 29.5% of the workforce; and Generation Y, also known as the Millennials, born between 1978 and 1989, who comprise 21.0% of the workforce (Martin & Tulgan, 2002). The research by Riescher (2009), while examining leadership, only included Baby Boomers and Generation X. Ruddick (2009) also examined generational leadership. However, the concentration was on Generation Y. Landry (2009) researched leadership 5
only to include Baby Boomers, Generation X, and Generation Y. Hahn (2009), Licata (2007), and Walker (2006) researched the four generations in the workforce. However, none of the research was concentrated on the small business sector, nor has there been any published literature within the direct-to-consumer catalog industry. The direct-toconsumer catalog industry is an example of a type of small business that has not yet been examined and reported in the research literature. This research closes the gap in the literature. A quantitative survey method was selected for the research as it provides a numerical description from the sample representative of the population. According to Fowler (2001), questionnaires allow for the identification of specific attributes of a larger population through the sampling of a small group. The problem this study addressed is the lack of research on the leadership styles used by different generational cohorts within the direct-to-consumer catalog industry and whether the style differences predict organizational outcomes.
Purpose of the Study The first purpose of this quantitative study was to determine the degree to which leadership styles (transactional, transformational, and laissez-faire) are used by four different generational cohorts (Silent Generation, Baby Boomers, Generation X, and Generation Y) of small business leaders in the direct-to-consumer catalog industry. The second purpose was to determine how well the degree of leadership style predicts organizational outcomes in these small business organizations.
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This study helps fill the gap in the research literature by examining the relationship between generational cohorts and leadership style for small business leaders and the degree to which these different leadership styles predict organizational outcome. The instrument used in this study was the Multifactor Leadership Questionnaire (MLQ) 5X (2nd ed.) as designed by Bass and Avolio (1995). The MLQ offers two options in administration: a paper version and an online version. For the purposes of this research, the online MLQ was utilized. The MLQ was selected for the express questions relating to leadership style and organizational outcome. The MLQ identifies three basic leadership styles: transformational, transactional, and laissez-faire, and three indicators of organizational outcome: extra effort, effectiveness, and satisfaction. The creators of the instrument defined these leadership types as follows: transformational—idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration; transactional—contingent reward and management-by-exception; and laissez-faire, also referred to as nonleadership. Bass’s (1985) and Bass and Avolio’s (1994) studies defined outcome indicators as (a) extra effort: a leader’s ability to enhance followers’ desires to succeed, exceed expectations, and encourage them to try harder; (b) effectiveness: a leader’s ability to lead a group effectively, meet organizational requirements, and represent one’s group to a higher authority; and (c) satisfaction: an outcome that encompasses the feelings of the followers and the followers’ perceived satisfaction with their leader’s leadership style and behaviors. According to Williams (2007), leaders must encompass the courage to be flexible in adversity and maintain the discipline to adapt as situations become chaotic and 7
performance pressures remain unrelenting. This study provides leadership perspectives with practical values that can assist organizations to better understand, train managers, and implement leadership practices to improve organizational performance.
Research Questions and Hypotheses RQ1: Is there a significant difference in the degree of leadership styles exhibited by four different generational cohorts in small business leaders in the direct-to-consumer catalog industry? RQ1a: Is there a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts? RQ1b: Is there a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts? RQ1c: Is there a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts? RQ2: How well does degree of leadership style (transactional, transformational, and laissez-faire) predict organizational outcomes in small business organizations in the direct-to-consumer catalog industry? The hypotheses in this study are H1: There is a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-to-consumer industry. Ho1: There is not a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-toconsumer industry. 8
H1a: There is a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. Ho1a: There is not a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. H1b: There is a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. Ho1b: There is not a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. H1c: There is a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. Ho1c: There is not a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. H2: There is a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry. Ho2: There is not a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry.
Significance of the Study Small businesses in general, and small direct-to-consumer catalog companies in particular, are fighting to survive in today’s economic times. If leadership style is shown to be predictive of organizational outcome, then the conclusions of this research may 9
bring heightened awareness to direct-to-consumer leaders. By becoming aware of style differences and the impact these have on outcomes, leaders may learn and adapt the more effective styles, thereby improving their organizations’ results, including the likelihood of the direct-to-consumer companies’ long-term survival. Furthermore, by having an awareness of which generational cohorts tend to naturally adapt to which styles, leaders may be able to more easily observe and identify the styles in the behaviors of others, finding role models for their own success. Although researchers have studied generational issues, leadership styles, and organizational outcomes, little research has been conducted on the combination of the three variables. Additionally, little research has been conducted on small business owners examining generational cohorts, leadership styles, and organizational outcomes.
Definition of Terms Catalog companies. This term is considered by many to be obsolete; however, it remains the best description of this population, according to T. Alpert (personal communication, September 30, 2009) and C. Pardysz (personal communication, October 17, 2009). These companies sell a wide variety of goods directly to the consumer, using a number of channels, mainly a printed paper catalog that comes in the mail, coupled with modern Internet marketing techniques. Contingent reward. The process for which effort or behavior is exchanged for rewards. Bass and Avolio (1994) and Northouse (2004) explained this is an exchange relationship between leaders and followers in which the leader attempts to obtain agreement for the tasks to be performed. 10
Generational age cohorts. This research used Martin and Tulgan’s (2002) definitions: Veteran Generation, born before 1946; Baby Boomers, 1946–1964; Generation X, 1965–1977; Generation Y, 1978–1989. Idealized influence. Bass and Avolio (1994) and Bass and Riggio (2006) contended the leader becomes a role model for change, exhibiting charisma, high moral standards, and ethical practices. Bass and Riggio explained that leaders who serve as role models are admired, trusted, and respected; in return, followers want to emulate the behaviors of the leader. Individual consideration. A leader pays special attention to the needs of individual followers for achievement and growth and acts as a coach or mentor. Followers are often developed to higher levels of achievement and potential (Northouse, 2004). Inspirational motivation. Leaders with the ability to inspire others in joining in a shared vision are considered to use inspirational motivation. Bass and Riggio (2006) and Kotter (1999) affirmed this type of leader is said to envision the future, and through motivation and inspiration, the followers join in envisioning the future. Intellectual stimulation. A leadership style that energizes followers by challenging their imagination and expanding their creative ability to solve problems (Bass & Avolio, 1994; Bass & Riggio, 2006; Northouse, 2004). Laissez-faire leadership. A leadership style that is the avoidance of leadership itself (Avolio & Bass, 2002). The leader essentially leaves the subordinates to make decisions and accepts no responsibility for adverse outcomes.
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Leadership. “The process of influencing others to understand and agree about what needs to be done and how to do it, and the process of facilitating individual and collective efforts to accomplish shared objectives” (Yukl, 2006, p. 10). Management-by-exception (active). A leader who actively monitors followers’ progress, and when mistakes are identified or anticipated, the leader adjusts the course of action, thereby correcting the situation in real time. Management-by-exception (passive). A leader who is slow in taking corrective action is said to be using management-by-exception in a passive manner. This leader allows problems to become chronic or elevated before taking action. Multifactor Leadership Questionnaire 5X (MLQ 5X). The MLQ identifies three basic leadership styles: transformational, transactional, and laissez-faire, and three indicators of organizational outcome: extra effort, effectiveness, and satisfaction. The creators of the instrument defined these leadership types as follows: transformational— idealized influence, inspirational motivation, intellectual stimulation and individualized consideration; transactional—contingent reward and management-by-exception; and laissez-faire, also referred to as nonleadership. Bass’s (1985) and Bass and Avolio’s (1994) studies defined outcome indicators as extra effort, effectiveness, and satisfaction. Organizational outcomes. This study looked at three dimensions of organizational outcomes, which were combined to form a composite score. The dimensions, as defined by Avolio and Bass (1999, 2004), are •
Extra effort. A leadership outcome that refers to a leader’s ability to enhance followers’ desires to succeed, exceed expectations and encourage them to try harder. 12
•
Effectiveness. A leadership outcome that speaks to the leader’s ability to lead a group effectively, meet organizational requirements, and their ability to represent their group to a higher authority.
•
Satisfaction. A leadership outcome that encompasses the feelings of the followers and the followers perceived satisfaction with their leaders, leadership styles and behaviors.
Transactional leadership. Burns (1978) identified transactional leadership as an interaction between two persons with the purpose of exchanging valued objects without a mutual intent of achieving a higher objective. It is viewed as a leadership style that gains compliance through rewarding performance or punishing nonperformance or noncompliance (Bass & Avolio, 1994). Bass and Avolio (1995) listed three components of transactional leadership: contingent rewards and management-by-exception in both active and passive forms. Transformational leadership. A collaborative leadership style that produces change through engagement, connection, and motivation (Bass & Avolio, 1994; Northouse, 2004). The attributes that comprise transformational leadership are idealized influence, individual consideration, inspirational motivation, and intellectual stimulation.
Assumptions The assumptions for this study are as follows: 1. It is assumed the generational age cohort differences represent a conflict in the workplace (Martin & Tulgan, 2002). 2. The adults participating in this research are able to complete the online MLQ. 13
3. The organizations selected to participate use the services of employees of all four generational cohorts. 4. The responses of the employees will be truthful. 5. The scores of the instrument selected are based on reliable and valid methods. 6. Convenience sampling is an effective method of selecting a sample population. 7. Previous research conducted by Bass (1985) and Bass and Avolio (1994), wherein they indicated a strong relationship between leadership style and organizational outcome, is reliable.
Limitations 1. One limitation is the population that was sampled. Generalizability is limited due to sample size and type of sample. 2. The results of research from small business cannot be generalized to larger organizations. 3. The results of research conducted on one type of small business cannot be generalized to other types of small business. 4. Further research may provide differing results between small business leadership and large corporate leadership between the generations. 5. Internal and external environments of each organization cannot be controlled. 6. The generational sample size was determined based on the overall generational structure and produced an unequal sample size.
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Theoretical Framework Much attention is placed on managing employees in the multigenerational workplace (Martin & Tulgan, 2002; Strauss & Howe, 1991; Walker, 2006; Zemke, Raines, & Filipczak, 2000). Generational issues are on the minds of many corporate leaders as this conflict directly affects managing, leading, and motivating employees (Martin & Tulgan, 2002). The primary theoretical framework for understanding this study is based on research conducted by Bass (1985) and Bass and Avolio (1994) in which they indicated a strong relationship between leadership style and organizational outcome. Further, Bass found a relationship between positive organizational outcomes and transformational leadership. He suggested a causal relationship, proposing that transformational leadership leads to the positive organizational outcomes. Job performance, attitude, and perception of transformational leadership styles were linked by Bass and Avolio (1993). The theory of full-range leadership has been developed, and studies over a 20-year span by chief theorists Avolio and Bass (1991). Bass (1985), Burns (1978), Downton (1973), Wysong (2000), and Zaleznik (1977) have purported that a full range of leadership includes transformational and transactional leadership styles that enhance the leader–follower relationship, resulting in a positive organizational outcome. Research by Atwater and Bass (1994); Mowday, Porter, and Steers (1982); and Pearce and Ravlin (1987) found employee involvement to be related to commitment to organizational success. Further research by Bandura (1977), Bryant (2001), and Manz and Sims (1980) denoted employees with self-management skills promoted organizations in attaining positive outcomes. Graen and Uhl-Bien (1995) described a positive relationship between leader 15
supportiveness and the employees’ commitment to organizational success, and Bandura and Manz and Sims purported positive organizational outcomes in cases in which selfmanagement skills are practiced by employees. Schmitt, Branscombe, and Kappen (2003) explored social identity theory and group-based inequality and attitudes in five specific studies. In all five studies, they found attitudes to be group-specific. Brown (2000) purported that individuals in a specific group are likely to think of themselves as superior to those in other groups; further, Mullen, Brown, and Smith’s (1992) research and analysis revealed that group members commonly think their own group is superior to other groups and tend to behave in a discriminating manner toward other groups.
Organization of the Remainder of the Study Chapter 2 contains a review of the literature on leadership and organizational outcome. The literature reviews articles, dissertations, and books that describe leadership issues and styles and organizational outcomes. Chapter 3 outlines the design of the research to include population, sample, instrument, and data collection procedures. Chapter 4 provides an analysis of the data collection as it relates to each hypothesis, and Chapter 5 provides a summary and conclusion of the findings, further limitations realized through the research, as well as recommendations for further research in the area of leadership and organizational outcomes.
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CHAPTER 2. LITERATURE REVIEW
Introduction This section summarizes the research literature concerning contemporary leadership theories. The literature review is presented in nine major sections. The first section is this introduction. In the second section, an overview of the major leadership theories is presented. The third section explains transactional leadership, the fourth section evaluates transformational leadership, and the fifth section reviews laissez-faire leadership. The sixth section explores organizational outcomes, and the seventh section provides a methodological overview with supporting research of the MLQ. The eighth section discusses each of the generational cohorts, and finally, the ninth section provides a summary of the literature review.
Leadership Styles Leadership styles differ; however, through development, experience, or coaching, individuals find themselves working within one of numerous models. Many models are available to leaders. Transformational leadership in which Ardichvili and Manderscheid (2008), Cragg and Spurgeon (2007), and Yukl (2006) explained employee’s exhibit increased loyalty, motivation and commitment. Bass (1985), Bass and Riggio (2006), and Cragg and Spurgeon asserted the primary focus of transactional leadership is on task, and 17
Bass and Riggio, Cragg and Spurgeon, and Northouse (2004) added that the foundation of this theory is based on leader–member exchange in a reward–punishment system. According to both Northouse and Yukl, path–goal leadership is built on the leader motivating the follower to accomplish preset goals. As for charismatic leadership, Northouse and Yukl both stated that while charismatic leaders are self-confident, motivate their followers, and possess high expectations, there is also a dark side in that followers can overdevelop their trust and begin to completely rely on the leader. Laissezfaire leadership was described by Ardichvili and Manderscheid and Rue and Byars (2007) as a hands-off approach to leadership in that the followers make all the necessary decisions. Situational leadership, according to Ardichvili and Manderscheid, Cragg and Spurgeon, and Yukl, is a style in which the leadership depends on the circumstances; Yukl further described the leadership behavior as ever-changing based on the maturity level of followers.
Transactional Leadership Burns (1978) identified transactional leadership as an interaction between two persons with the purpose of exchanging valued objects without a mutual intent of achieving a higher objective. Avolio, Waldman, and Yammarino (1991) proposed transactional leadership does not focus on the organization’s goals and vision; rather, it is geared to maintain the day-to-day operations. In addition, Avolio et al. and Seltzer and Bass (1990) reported that transactional leadership is a popular leadership style in organizations because it provides clear expectations of behavior.
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The concept that transactional leadership is a relationship based on negotiation is that of Boje (2000); Colvin (1999); Downton (1973); and Yi, Chen, Ying, and Barnes (2010). Bass (1985) purported the top-down management approach is utilized by transactional leaders. Zaleznik (1977) proposed transactional leadership is synonymous with management. The managers set goals and rewards for behavior leading to performance or the punishment for behaviors of nonperformance. Bass and Avolio (1995) listed three components of transactional leadership: contingent reward and managementby-exception in its two forms: active and passive. Contingent Reward Contingent reward is the process for which effort or behavior is exchanged for rewards. Bass and Avolio (1994) and Northouse (2004) explained this is an exchange relationship between leaders and followers in which the leader attempts to obtain agreement for the tasks to be performed. Leaders define expectations and the rewards the followers will receive for such positive behaviors. The leader also defines the punishment should the follower not meet the identified expectations. Management-by-Exception (Active) Management-by-exception in its active phase describes a leader who actively monitors the followers’ progress, and when mistakes are identified, the leader then adjusts the course of action, thereby correcting the situation. Avolio and Bass (2002) proposed while corrective action may be perceived as negative; an active approach tends to be effective in certain situations.
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Management-by-Exception (Passive) A leader who waits for mistakes, then moves in to take corrective action is said to be using management-by-exception in a passive manner. Bass and Avolio (1994) also described management-by-exception (passive) as a putting-out-fires approach or a reactive management approach. This relationship is not positive in nature as the follower only receives feedback from the leader when mistakes are present (Barbuto & Brown, 2000).
Transactional Research Bass (1985) considered transactional leadership to be a top-down approach to organizational management. Burns (1978) and Northouse (2004) shared the position that transactional leaders are motivated by self-interest, whereas Avolio and Bass (2002) and Bass and Avolio (1994) suggested the relationship is an exchange of something of value. Ardichvili and Manderscheid (2008), Rowold and Rohmann (2008), and Zagoršek, Dimovski, and Škerlavaj (2008) explained that transactional leadership is mainly based on a reward–punishment relationship. Zagoršek et al. conducted a study with a sample of 753 participants from various organizations of managers in the field of economics. The researchers examined transformational and transactional leadership. They found the contingent reward component of transactional leadership was nearly as strong as the effect of transformational leadership. Furthermore, Zagoršek et al. indicated that contingent reward was slightly higher than transformational leadership in some cases. They stated one reason for this finding is that contingent rewards allow followers to perceive the leaders as consistent in their behavior, leaders who honor their promises. 20
Results of a quantitative study in a textile manufacturing plant revealed lower level managers lacking in formal leadership training exhibited transactional leadership traits and behaviors (Gustafson, 2001). Conversely, the research showed higher level managers with formal leadership training exhibited traits and behaviors of a transformational leader. Barbuto (2005) studied 186 leaders from a range of industries to include governmental agencies and educational institutions. The common trait among the leaders was they had participated in a 12-month leadership training program. Results showed leaders practicing transformational leadership correlated with intrinsic motivation. Barbuto’s research showed instrumental motivation to be positive and correlated to management-by-exception (active). These findings concurred with previous research by Barbuto, Fritz, and Marx (2000). Research by Bass and Avolio (2000) revealed contingent reward may provide a broad basis for leadership; however, this requires a great amount of effort and innovation on the leader’s part for it to be effective. Kim (2009) conducted research of 359 athletic coaches in Division II institutions, comparing transformational and transactional leadership styles. While Kim found transactional leadership to be positively affected by contingent reward, it was negatively affected by management-by-exception. In addition, Kim concluded both transactional and transformational leadership styles to some extent had a positive effect on commitment. Neuhauser (2007) reviewed 62 female project managers across a number of industries with experience from 2–20 years in project management. The results of the survey indicated that the women exhibited behaviors of a transactional leader more frequently than those of a transformational leader.
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This current research examined transactional leadership in a manner similar to those of the preceding researchers. However, this research examined the differences in leadership style as they relate to generational cohorts and organizational outcomes in the direct-to-consumer catalog industry.
Transformational Leadership Bass suggested that transformational leadership is an effective leadership theory in any situation or culture (as cited in Yukl, 2006). The components of transformational leadership, as defined by Bass and Avolio (1994), consist of idealized influence, individualized consideration, inspirational motivation, and intellectual stimulation. It could be argued that transformational leadership is the softer side of leadership as it appeals to followers’ morale and core ethics (Einstein & Humphreys, 2001). This leadership theory also taps into the follower’s conscience with the goal of increasing passion and energy as a form of motivation. According to Yukl (2006). the foundation, initial influence, and key concepts of transformational leadership were provided by Burns. Bass (1985, 1996), however, provided the most recent influence and empirical research. According to Bass, the leader transforms and motivates followers by [a] making them more aware of the importance of task outcomes, [b] inducing them to transcend their own self-interest for the sake of the organization or team, and [c] activating their higher order needs. (cited by Yukl, 2006, p. 262) The dynamics of transformational leadership lend themselves to employee motivation and empowerment, thereby a satisfied worker producing greater results. While Ardichvili and Manderscheid (2008), Cragg and Spurgeon (2007), and Yukl (2006) 22
touted that through transformational leadership, employees exhibit increased loyalty, motivation, and commitment, Masi (2000) stated that through these behaviors, employees are motivated. Further, Masi claimed that transformational leaders promote motivation and empowerment while realizing increased productivity. Bass and Avolio (1994), Kimball and Nick (2006), and Yukl (2006) concurred that through a leader providing encouragement, positive recognition, and opportunities for development, employees feel an increased sense of motivation, thereby creating an empowered follower base. Based on their research, House and Shamir (1993) and Kimball and Nick concurred that a transformational leader engages his or her followers and realizes increased goal accomplishment. Drake, Wong, and Salter (2007) proposed that a leader who provides feedback and rewards can have a positive influence on an employee’s motivation, performance, and sense of empowerment. Yukl also cited innovation and reduced turnover as a result of empowerment. Idealized Influence Bass and Avolio (1994) and Bass and Riggio (2006) contended that the leader becomes a role model for change, exhibiting charisma, high moral standards, and ethical practices. Further, Bell and Narz (2007) found leaders have no false pride and are true to personal ethics, goals, and principles. Bass and Riggio explained that leaders who serve as role models are admired, trusted, and respected; in return, followers want to emulate the behaviors of the leader. According to Bass and Avolio (1994) and Mariotti (2000), leaders displaying idealized influence embrace integrity and principle-based behaviors.
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Inspirational Motivation Leaders with the ability to inspire others in joining in a shared vision are considered to use inspirational motivation. Bass and Riggio (2006) and Kotter (1999) affirmed that this type of leader envisions the future and, through motivation and inspiration, followers join in envisioning the future. According to Bass and Avolio (1994) and Bass and Riggio, the leader creates an enthusiastic, spirited environment. Bass and Avolio, Kotter, and Tichy and Devanna (1990) agreed that motivation and role modeling are key behaviors to inspirational motivation. Intellectual Stimulation Intellectual stimulation is a leadership style that energizes followers by challenging their imagination and expanding their creative ability to solve problems (Bass & Avolio, 1994; Bass & Riggio, 2006; Northouse, 2004). According to Bass (2008), Bass and Riggio, and Northouse, these leaders do not publicly criticize followers; rather, they encourage questioning assumptions, reframing problems, and identifying new ideas. Bass added that these leaders challenge followers to use intelligence in identifying new solutions. Individualized Consideration A factor critical to the transformational leader is to know the needs of followers. Bass and Riggio (2006) and Northouse (2004) declared this is presented through coaching, advising, and mentoring. Further, Bass and Riggio stated followers are developed through the recognition of individual needs by the leader.
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Transformational Research In a field experiment by Barling, Weber, and Kelloway (1996), 20 managers previously trained in transformational leadership were compared to a control group. The researchers found a positive relationship to the managers’ intellectual stimulation. Another field study by Dvir, Eden, and Avolio (2002) compared company leaders in the Israeli Defense Force to a control group. The company leaders had been trained in transformational leadership, whereas the control group had not. The findings showed the company leaders who demonstrated a transformational leadership style had a higher sense of self-efficacy and were less passive. Walumbwa et al. (2004) completed a study to determine the effects of transformational leadership and its relation to work outcomes. They accepted their first hypothesis: There is a positive effect with collective efficacy in relation to transformational leadership. This research is of value in terms of the effect leaders have on employee satisfaction as well as organizational effectiveness and how they are all interrelated. In a study by Webb (2007), 223 presidents and chief executive officers (CEOs) were sampled from 105 institutions in the Council for Christian Colleges and Universities. The data confirmed that the presidents and CEOs were more likely to practice transformational leadership than transactional or laissez-faire leadership. Webb revealed that the executives who demonstrated intellectual stimulation, individualized consideration, inspirational motivation, and individual consideration were more likely to motivate and increase the production of their staff. Motivated employees display lower
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absenteeism rates and an increased productivity level in the workplace (Montana & Charnov, 1993). Tsai, Chen, and Cheng (2009) conducted a study involving 282 insurance agents. The sample was collected from 10 insurance firms in Taiwan, and the researchers gathered their data through a questionnaire. The researchers chose insurance agents as they often act independently with little supervision; however, they may work closely with colleagues (Singh, Goolsby, & Rhoads, 1994). Tsai et al. deemed the findings significant to the field of leadership as the results suggested transformational leadership can influence an employee’s performance. The authors further suggested the behavior of the transformational leader can improve employees’ positive moods by idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. The strength of transformational leadership, according to Einstein and Humphreys (2001), is that it, simply put, is not another form of leadership but is better leadership. Einstein and Humphreys saw transformational leadership as the wave of the future, the ability to understand and develop more effective leaders; transformational leadership provides flexibility in the skills of the leader to deal with subordinates in an individual manner. Kouzes and Posner (2007) have conducted research in the leadership field for more than 25 years, in the form of a questionnaire to over 75,000 business and government executives. They have found that a leader must be honest, inspiring, competent, and forward-looking to inspire others to follow willingly (Kouzes & Posner, 2007). They suggested that transformational leadership is leadership so moving that it infuses individuals with energy, motivation, and morality. Some employees are led or 26
motivated through intellect, just as others may need to be led in a more inspirational manner; transformational leadership provides a broad brush so that the needs of many workers can be met, thus developing a larger or stronger follower base. Based on research by Bass (1999) and Bass and Avolio (1994), leaders who master transformational leadership are able to increase awareness of their followers, raise achievement goals and confidence in their followers’ achievement, reaching far beyond followers’ boldest expectations. Ardichvili and Manderscheid (2008), Cragg and Spurgeon (2007), Northouse (2004), and Yukl (2004) believed followers realize increased motivation and morale when working for a transformational leader. Both Northouse and Yukl concurred that leaders inspire change in their followers, and Cragg and Spurgeon added that this style of leadership empowers the follower base. According to Bass and Avolio and Northouse, transformational leadership provides a broad scope from which a leader can operate. Ardichvili and Manderscheid, Bass and Riggio (2006), and Northouse asserted the strength of transformational leadership is the evidence of success in leadership development. This current research adds to that of Barling et al. (1996), Bass (1999), Bass and Avolio (1994), Dvir et al. (2002), Einstein and Humphreys (2001), Tsai et al. (2009), and Webb (2007) in that it expands the body of knowledge of the behaviors of a transformational leader.
Laissez-Faire Leadership Avolio and Bass (2002), Bass and Riggio (2006), and Northouse (2004) concurred that laissez-faire leadership is a style of absence or avoidance. The leader 27
essentially leaves the subordinates to make decisions and accepts no responsibility for adverse outcomes. Barbuto and Brown (2000) further explained that laissez-faire leaders are often absent when issues arise or they avoid corrective action when confronted with problems. Barbuto and Brown stated laissez-faire leaders are often unaware of their subordinates’ performance or accomplishments. Hinkin and Schriesheim (2008) added that laissez-faire leaders display a lack of response to subordinates’ needs and performance. Bradford and Lippitt (1945) considered a laissez-faire leader as one who has complete disregard for the responsibilities imposed on managers. Ardichvili and Manderscheid (2008) considered laissez-faire leadership to be “impoverished leadership” (p. 623).
Laissez-Faire Research In a study conducted by Barbuto (2005), 186 leaders participated in the examination of leadership styles and motivation. While the laissez-faire leaders gave their groups complete freedom and authority, they offered little guidance. The results showed the group to be more disorganized, less efficient, and produced lower quality work than the groups managed by leaders exhibiting alternate leadership behaviors. In a study containing three samples, Hinkin and Schriesheim (2008) examined nonleadership with a sample of 241 hotel managers, 297 managers of financial institutions, and 261 managers of a large commercial bakery. All participants were employed by organizations within the United States. In all three samples, the researchers’ findings revealed that laissez-faire leadership showed a strong negative relationship with supervisor effectiveness. Their findings further revealed the constructive implications of positive reinforcement and 28
contingent rewards and the negative effects of laissez-faire leadership. Hinkin and Schriesheim contended that laissez-faire leadership develops due to a lack of response to subordinates and not from intent. Webb (2007) examined the motivation and leadership of 223 presidents and CEOs from 105 colleges and universities in the Council for Christian Colleges and Universities. All participants were asked to complete the MLQ, which was administered electronically. The findings demonstrated a negative relationship with motivation toward extra effort. Webb suggested a lack of interaction from leader may in fact be the cause of reduced motivation.
Organizational Outcomes Hodge, Anthony, and Gales (1996) espoused that some consider an organization that achieves its goals as effective. Further, Hodge et al. believed that being an effective organization is more difficult than merely achieving predetermined goals. Avolio and Bass (2004) defined outcome indicators as (a) extra effort, a leader’s ability to enhance followers’ desires to succeed, exceed expectations, and encourage them to try harder; (b) effectiveness, the leader’s ability to lead a group effectively, meet organizational requirements, and represent their group to a higher authority; and (c) satisfaction as an outcome that encompasses the feelings of the followers and the followers’ perceived satisfaction with their leader’s leadership styles and behaviors. Based on their research, Day and Lord (1988) suggested effective leadership as a positive effect on the performance of an organization. Felfe and Schyns (2004) examined 213 supervisors and their leadership styles as it relates to organizational outcomes. Their 29
findings revealed a positive relationship between leadership styles and organizational outcomes. Felfe and Schyns’s findings indicated the strongest relationship is that of the transformational leader and the organizational outcomes. In research conducted by Lowe, Kroeck, and Sivasubramaniam (1996), they determined that the behaviors of transformational leaders had a positive relationship on organizational effectiveness and satisfaction. The results were later confirmed by Bass (2008); Day and Lord (1988); and Dumdum, Lowe, and Avolio (2002); Chandler (1962) concurred that leadership styles have a tremendous influence on an organization and its outcomes. Hetland and Sandal (2003) conducted a study exploring transformational leadership and organizational outcomes of 100 midlevel managers in Norway. The MLQ was facilitated, and the results showed organizational outcomes were directly related to the leader’s leadership style. Moreover, the results indicated transformational leadership had a strong correlation to organizational outcomes. The researchers reported that transactional leadership showed positive correlations to outcomes but not to the extent of transformational leadership. The results based on the aforementioned research support previous studies of Avolio and Bass (1995), Bass (1985), Bass and Riggio (2006), Bennis (1984), Dessler (1998), and Hater and Bass (1988) that leadership styles bear a significant relationship to organizational outcomes. This current research is similar in that organizational outcomes were examined in relation to the leader’s leadership style. The difference is that the organizational outcomes were examined across the four generational cohorts.
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Methodological Research In their research of leadership styles, Barbuto (2005), Felfe and Schyns (2004), Hinkin and Schriesheim (2008), Lowe et al. (1996), Toor and Ofori (2009), Tsai et al. (2009), Walker (2006), and Webb (2007) selected the MLQ as it differentiates behaviors of leadership style and organizational outcome. The MLQ was designed by Avolio, Bass, and Jung (1995) and has been used in both business and nonbusiness environments alike. The MLQ has been used in over 30 countries and in a variety of settings, including Fortune 500 companies, government agencies, and educational institutions (Avolio & Bass, 2004). The MLQ 5X is based on a force ranking method using a 5-point Likert scale. In this scale, 0 = not at all, 1 = once in a while, 2 = sometimes, 3 = fairly often, and 4 = frequently, if not always (Avolio & Bass, 2004). The online version has a sixth option, unsure, so as not to leave any unanswered questions.
Generational Cohorts Today’s U.S. workforce is comprised of four different generational cohort groups, each with its own history, value-shaping experiences, and motivational patterns. The striking difference in the mindsets, motivations, and behaviors of these four generations of the workforce has the potential to bring both challenges and opportunities to the organizations they serve. The four generational cohorts in today’s workforce include the Silent Generation, also known as the Veterans, born between 1925 and 1945, who comprise 7.5% of today’s workforce; Baby Boomers, born between 1946 and 1964, who comprise 42.0% of the 31
workforce; Generation X, born between 1965 and 1977, who comprise 29.5% of the workforce; and Generation Y, also known as the Millennials, born between 1978 and 1989, who comprise 21.0% of the workforce (Martin & Tulgan, 2002). Research by Riescher (2009), while examining leadership, only included Baby Boomers and Generation X. Ruddick (2009) also examined generational leadership; however, the concentration was on Generation Y. Landry (2009) researched leadership only to include Baby Boomers, Generation X, and Generation Y. Hahn (2009), Licata (2007), and Walker (2006) researched the four generations in the workforce; however, none of the research was concentrated on the small business sector, nor has any published literature within the direct-to-consumer catalog industry been published. As referenced previously, there is ample information in the literature on the nature of effective leadership and the traits and styles of strong leaders, but very little research has been conducted comparing all four generations of leaders in the small business environment. This research bridges the gap by including all four generational cohorts. Further, it was devoted to an industry in which there is a very limited amount of data. Provided as follows, is an overview of the events and technologies that shaped the formative years of the four groups in the workforce today. Each of these groups is generally identified by its prevailing attitudes (Martin & Tulgan, 2002). The hypothesis is that these attitudes have a significant effect on the styles by which each generation leads and is best led, and that those leaders who understand and respect these differences are best able to create positive outcomes for their organizations. Each cohort group’s attitudes and values have been shaped by the world events that occurred during its formative years. The Silent Generation grew up in the midst of 32
economic devastation. Its members (the Silents) are children of the Great Depression; they represent the American Dream and have been permanently shaped by the events of Pearl Harbor, Franklin D. Roosevelt’s New Deal, the Korean War, and World War II (Zemke et al., 2000). The Baby Boomers grew up in a time of strong nuclear families with stay-athome mothers, economic prosperity, and a suburban lifestyle (Zemke et al., 2000). Known as the original Me Generation, with parents from the Silent Generation, this generation was given everything its parents did not have. The events that shaped this generation include the civil rights movement, the assassinations of John F. Kennedy and Martin Luther King, the Cuban Missile Crisis, the Vietnam War, the first landing on the Moon, Woodstock, the women’s liberation movement, and the Kent State shootings (Alwin, 1998). In contrast to their Baby Boomer parents, members of Generation X grew up in a world wrought by high divorce rates and working mothers (Losyk, 1997). Cufaude (2000) further explained that many of them were latchkey kids, that is, they were children who came home to an empty house as both parents were working. Key events that occurred while they were coming of age include Watergate and the resignation of President Nixon; the murder of their beloved icon, John Lennon; the fall of the Berlin Wall; the Challenger disaster; and the spread of AIDS (Losyk, 1997; Martin & Tulgan, 2002). Generation Y has been shaped by the recent events of Desert Storm, the Columbine shootings, the Clinton sex scandals, and 9/11 (Zemke et al., 2000). The skills and work habits of the cohort groups have also been shaped by the technological advancements that occurred during each group’s formative years. Strong 33
technological influences in the early lives of the Silent Generation include the spread of radio broadcasting, the dawn of television, and the introduction of electrical household appliances from refrigerators and toasters to washers and dryers. Baby Boomers saw the introduction of the color TV, the photocopier, touch-tone dialing, and eight-track tapes. Generation X came of age during the personal computer revolution, which brought computers and a wide variety of software to nearly every home and every desk. Generation Y came of age in a period of cell phones and the Internet. The only reality this generation has ever known is that of the always-on networked society, in which everyone is connected to everyone else, and information is but a few keystrokes away (Oreg, 2003). The striking differences in the formative experiences of the four cohort groups provide context for understanding the profound differences in their attitudes and values. The Silent Generation is disciplined and committed, civic minded, possesses significant knowledge, and its members are willing to reinvent themselves (Hill, 2004; Lancaster & Stillman, 2002; Saxby, 2004). The Baby Boomer generation is driven and hard working, committed and relationship-oriented (Martin & Tulgan, 2002). Further, its members are change agents and corporate overachievers. Conversely, Martin and Tulgan and Zemke et al. (2000) purported the members of Generation X are loyal to themselves first and expect the workplace to accommodate their needs. The members of Generation Y respect positions and titles and work well within a structured environment. They are also the most technologically capable and the most skilled at multitasking.
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Chapter Summary This chapter began with an overview of many leadership theories available to leaders. The leadership styles that were expanded upon were transformational, transactional, and laissez-faire. The concept of organizational outcomes was explored in relationship to leadership styles. Studies indicate the preferred leadership style is that of the transformational leader. Transformational leadership is viewed as the motivational and developmental approach to leadership. Transactional leadership, while not the preferred choice, has been found to be useful in some instances as it provides clear leader expectations. It is seen as a means to maintain day-to-day operational efficiencies. The least effective is that of laissez-faire leadership style because of its nonparticipative, hands-off behaviors. The generational literature focused on the differing generations (Veteran, Baby Boomer, Gen X, and Gen Y). Specifics of each cohort group’s attitudes and values that have been shaped by the world events during its formative years were explored. Detailed context was provided as a basis for understanding the issues facing the workforce today. The literature review confirmed there is research available on various leadership styles, organizational outcomes, and the differing generations in the workforce. However, no research exists examining the four generations, leadership styles, and organizational outcomes in the direct-to-consumer catalog industry. In addition, the literature review established the MLQ as a common instrument in examining leadership styles and organizational outcomes. This present study closes the gap in the literature in determining prevalent leadership styles in the different generational cohorts in the small business environment. 35
Chapter 3 explains the methods used in this study and describes the target and sample population. Additional components of Chapter 3 include sampling procedure, research design, the instrument, and its reliability and validity. The final components discussed are data collection and analysis.
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CHAPTER 3. METHODOLOGY
Purpose of the Study The first purpose of this quantitative study was to fill a gap in the research literature in determining the degree to which leadership styles (transactional, transformational, and laissez-faire) are used by four generational cohorts (Veterans, Baby Boomers, Generation X, and Generation Y) of small business leaders in the direct-toconsumer catalog industry. The second purpose was to determine how well the degree of leadership style predicts organizational outcomes in these small business organizations. The research questions that were examined are RQ1: Is there a significant difference in the degree of leadership styles exhibited by four different generational cohorts in small business leaders in the direct-to-consumer catalog industry? RQ1a: Is there a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts? RQ1b: Is there a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts? RQ1c: Is there a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts?
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RQ2: How well does degree of leadership style (transactional, transformational, and laissez-faire) predict organizational outcomes in small business organizations in the direct-to-consumer catalog industry?
Research Design This study was conducted using a quantitative research design employing a descriptive survey method. The instrument that was used is the MLQ online version. For Research Question 1, the independent variable was membership in one of four generational cohorts (the Silent Generation, Baby Boomers, Generation X, and Generation Y) and the three dependent variables were the degree to which each of the three leadership styles (transformational, transactional, and laissez-faire) was exhibited. The scores for the degree of each leadership style represent a composite of the scores on the subscales designed to measure that style. For Research Question 2, there were three independent (predictor) variables: the degree of leadership style (transactional, transformaitonal, and laissez-faire), and the dependent (outcome) variable was organizational outcome, which is a composite score of three dimensions (extra effort, effectiveness, and satisfaction). Measuring organizational outcome as a composite score is consistent with prior research (Bennett, 2009; Briggs, 2008; Smith, 2005; Walker, 2006). The quantitative research design was selected because the information obtained was best accomplished through the survey method as opposed to observation. According to Leedy and Ormrod (2005), quantitative research addresses relationships among measured variables to explain or predict. Quantitative research requires a hypothesis prior to beginning study, and ends with accepting or rejecting the 38
hypothesis. One strength of addressing the generational issue in a quantitative manner is that information will be obtained through an instrument that allows for precise measurement and analysis. Additionally, by addressing the generational issue in a quantitative manner, generalization of the findings to the larger population (Hartford, 2000) is possible. According to Fowler (2001), questionnaires provide the researcher the ability to identify specific attributes of a population from a small group of individuals.
Target Population The population from which the sample was obtained was comprised of leaders from direct-to-consumer catalog companies with revenues between $15-100 million located in the mid-Atlantic and northeast region of the United States. The term catalog company is considered by many to be obsolete, but it remains the best description of this population, according to T. Alpert (personal communication, September 30, 2009) and C. Pardysz (personal communication, October 17, 2009). These companies sell a wide variety of goods directly to the consumer, using a number of channels, mainly a printed paper catalog that comes in the mail, coupled with modern Internet marketing techniques. Companies that focus on few products, sell services rather than goods, or use the Internet or brick-and-mortar retail stores as their primary forms of distribution are not included in this population. According to T. Alpert (personal communication, September 30, 2009), this is an industry experiencing numerous external threats, and many would describe the industry as being in turmoil. One example of the current turmoil and external threat impacting this industry is the postage rate increase imposed by the U.S. Postal Service. This increase has 39
created a financial hardship for many catalogers, causing them to reduce catalog circulation. Alpert also reported that in just the last few years, many of these organizations have been forced to cease operations.
Participant Selection For the purposes of this study, to qualify as a leader, the person had to be in a professional position that requires independent judgment and has supervisory authority. The leader could have been a supervisor, manager, director, department head, vice president, president, or any member of the executive team. According to Chris Pardysz (personal communication, October 17, 2009), CEO of Pardysz Matera, a marketing services company to this industry, there are approximately 150 direct-to-consumer companies in the $15–100 million revenue range today. Pardysz further stated most of these companies have similar organizational structures to one another. It is estimated there are an average of 15 leaders per organization (T. Alpert, personal communication, September 30, 2009); therefore, the estimated general population of leaders is 2,250.
Sampling and Data Collection Procedures The convenience sampling method was based on a professionally established network within this industry. An advantage of convenience sampling is the ease of organizing the sample and the more immediate manner in which these participants can be accessed. A disadvantage of convenience sampling is that it may not be generalizable to the greater population. The variables as identified are related to this population because it 40
was expected the companies identified would employ workers of all four generations. Two demographic questions were asked of all participants in an effort to collect information relevant to the research at hand and identify participants by generational cohort and position in the organization. To ensure consistency and confidentiality, Mind Garden, the sole distributor of the MLQ in the United States, added two demographic questions to the beginning of the survey: “What is your year of birth?” and “What is the title of your current position?” Data were gathered from the leaders who had access to a computer to participate in this research. Any employee not having access to a computer was excluded from participating in this research. For the purposes of this research, the sampling frame was intended to be 200 and, according to a power analysis from G*Power, the actual sample size should be 128. The sampling frame of 200 was representative of the number of leaders who were invited to participate in this research. The sample was a distribution of leaders across the four generational cohorts; therefore, the predicted n = 32 participants per generational cohort. The following assumptions were made based on a power analysis: 32 responses from each generational cohort would yield a medium effect size, an alpha of of .05, and power of .80. Effect size, stated simply, is the indication of how large the mean is or how different two means are. The previous calculations were from G*Power. Power is the probability of rejecting a false null and should be as close to 1 as possible; alpha is the probability of rejecting a true null hypothesis and should be small. While a larger sample size may have increased the power of the research study, for monetary concerns, the sample was limited to N = 128 leader participants. Given the overarching sampling frame in which the data were collected, it was assumed an equal distribution of n = 32 would be 41
achieved. The survey was distributed to the entire sample and data were analyzed based on the response rate received. Convenience sampling was used as the technique to recruit direct-to-consumer catalog companies of the appropriate revenue size to participate in this study. The organizations in this industry were identified through a professional network in order to produce the convenience sample. An initial contact to each target business was made to the businesses CEO, who remained the company contact throughout this research. The CEO provided this researcher a list of e-mail addresses for all qualifying leaders in the organization. Qualifying leaders were sent an electronic memorandum explaining the nature of the research and asked to review an attached Waiver of Signed Consent form. If they wished to participate, they clicked on an attached link to the MLQ from Mind Garden. Mind Garden customized the survey so that the first question asked the participants if they had read, understood, and agreed to participate in the research. If the participant answered “Yes,” he or she was then prompted to the next question in the survey, and if he or she responded “No,” the participant was taken to the submisison page and thanked for his or her time, thereby opting out. The response data will be housed by Mind Garden, the publisher of the MLQ instrument. Only raw data were released, and were released only to the researcher. At no time will any data be released to any member of the participating organization. Each organization was offered a copy of this researcher’s published study.
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Instrumentation The instrument that was used for the collection of the data for all research questions (RQ1 & RQ2) was the MLQ 5X short (2nd ed.) online version. The MLQ was designed by Avolio, Bass, and Jung (1995) and has been used in both business and nonbusiness environments alike. The MLQ has been used in over 30 countries and in a variety of settings including Fortune 500 companies, government, and education settings (Avolio & Bass, 2004). This instrument identifies and allows the leaders’ self-reported leadership styles (transformational, transactional, and laissez-faire) and three dimensions of organizational outcomes (extra effort on the job, satisfaction, and effectiveness) combined to form a composite score to be analyzed. The MLQ 5X is based on a force ranking method using a 5-point Likert scale. In this scale, 0 = not at all, 1 = once in a while, 2 = sometimes, 3 = fairly often, and 4 = frequently, if not always (Avolio & Bass, 2004). The online version has a sixth option, unsure, so as not to leave any unanswered questions. Generational cohorts were measured by each individual’s self-reported age and then placed into groups according to Martin and Tulgan’s (2002) definition of generational cohorts. Leadership style and organizational outcomes were measured through the MLQ. The MLQ was selected for the questions relating to leadership style and organizational outcome. The MLQ identifies leadership style by transformational, transactional, and laissez-faire. It further identifies organizational outcome by extra effort, effectiveness, and satisfaction. According to Bass and Avolio (1995), the MLQ purports to measure four major components of leadership: transformational leadership, transactional leadership, 43
nontransactional leadership, and outcomes of leadership. These four components provide 12 scores grouped as follows: transformational (idealized attributes, idealized behaviors, inspirational motivation, intellectual stimulation, and individualized consideration), transactional (contingent reward, management-by-exception-active, management-byexception-passive), nontransactional (laissez-faire), and outcomes of leadership (extra effort, effectiveness, and satisfaction). The three dimensions of organizational outcome were combined to form a composite score to represent organizational outcome. Additionally, the scores for the degree of each leadership style represent a composite of the scores on the subscales designed to measure that style.
Validity and Reliability Avolio et al. (1995) tested convergent and discriminate validity in which for all nine scales and three outcomes of the MLQ there was a high degree of construct validity. Validity refers to the extent to which an instrument measures what it claims to measure. Convergent validity, as purported by Meier and Brudney (1997), examines the consistency of the scale and whether it measures the concept in question. According to Gamble (2009), “The internal validity of the MLQ 5X has been established through a Confirmatory Factor Analysis (CFA) by Avolio and Bass (2004)” (p. 107), who analyzed data from a sample of 3,788 participants who each evaluated their leader. Reliability refers to the extent to which an instrument consistently yields the same results. The coefficient alpha of the MLQ is .93, and reliability for each of the six leadership factor scales ranges from .63 to .92 (Avolio & Bass, 2004). The available
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literature demonstrates that the MLQ consistently measures the concepts of Bass and Avolio’s (1995) theory of leadership styles (Antonakis, 2001).
Data Analysis The data obtained through the MLQ were analyzed using multivariate analysis of variance (MANOVA) for Research Question 1 and regression analysis for Research Question 2. The MANOVA is recommended in determining the differences, and regression is recommended when examining predictions (Creswell, 2002). All data analysis was performed through SPSS 18.0. RQ1: Is there a significant difference in the degree of leadership styles exhibited by four different generational cohorts in small business leaders in the direct-to-consumer catalog industry? RQ1a: Is there a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts? RQ1b: Is there a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts? RQ1c: Is there a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts? Research Question 1 contains one independent variable: membership in one of four generational cohorts (the Silent Generation, Baby Boomers, Generation X, and Generation Y), and three dependent variables representing leadership style (transactional, transformational, and laissez-faire leadership scores). The sample consisted of four
45
groups of leaders as defined by their generational cohort. Once all the data were gathered, MANOVA was performed to answer Research Question 1. RQ2: How well does degree of leadership style (transactional, transformational, and laissez-faire) predict organizational outcomes in small business organizations in the direct-to-consumer catalog industry? A regression analysis was conducted for Research Question 2 in examining the predictability of leadership style on organizational outcome. There were three predictor variables (transactional, transformational, and laissez-faire leadership scores) and one outcome variable (organizational outcome). Significance refers to the likelihood of the findings being the result of random chance. This research was designed to decrease the probability of a Type I error, a false positive that would lead to the conclusion that there is a relationship when there is not. A significance level of .05 or lower was required for this research. A significance level of < .05 means there is less than a 5% chance that a relationship could be observed. The desired power of .80 means there is an 80% chance of not making a Type II error. All data collected were electronically directed to Mind Garden to be housed, to increase reliability and validity. All statistical analysis was performed through SPSS.
Expected Findings This research was designed to answer research questions using quantitative analysis. It was expected there would be a significant difference in the degree of leadership styles exhibited by the four generational cohorts (Veterans, Baby Boomers, Generation X, and Generation Y) in small business leaders in the direct-to-consumer 46
catalog industry. And it was expected the degree to which the different leadership styles (transactional, transformational, and laissez-faire) exhibited would be predictive of organizational outcomes in these small business organizations. These assumptions are founded in the research and results of Avolio and Bass (1995), Bass (1985), Bass and Riggio (2006), Bennis (1984), Dessler (1998), and Hater and Bass (1988) that leadership styles bear a significant relationship to organizational outcomes. It was expected that an equal collection of responses would be obtained across the generational cohorts. There was no monetary incentive for participation; therefore, it was expected all participants would do so on a voluntary basis and do so honestly.
47
CHAPTER 4. DATA COLLECTION AND ANALYSIS
Introduction The first purpose of this quantitative study was to determine the degree to which leadership styles (transactional, transformational, and laissez-faire) are used by four different generational cohorts (the Silent Generation, Baby Boomers, Generation X, and Generation Y) of small business leaders in the direct-to-consumer catalog industry. The second purpose was to determine how well the degree of leadership style predicts organizational outcomes in these small business organizations. The instrument that was used for the collection of the data for all research questions (RQ1 & RQ2) was the MLQ 5X short (2nd ed.) online version. The MLQ identifies three basic leadership styles: transformational, transactional, and laissez-faire, and three indicators of organizational outcome: extra effort, effectiveness, and satisfaction. The MLQ was designed by Avolio et al. (1995) and has been used in both business and nonbusiness environments alike. The MLQ identifies the leaders’ selfreported leadership styles (transformational, transactional, and laissez-faire), and three dimensions of organizational outcomes (extra effort on the job, satisfaction, and effectiveness) combined to form a composite score to be analyzed. The MLQ was purchased from Mind Garden, the sole distributor in the United States. All data analysis
48
was performed through SPSS 18.0. The remainder of this chapter contains three sections: description of the sample, data analysis and results, and the conclusion.
Description of the Sample The population from which the sample was obtained was comprised of leaders at direct-to-consumer catalog companies with revenues from $15-100 million located in the mid-Atlantic and northeast region of the United States. To qualify as a leader, the participant must have been, at the time of the survey, in a professional position that requires independent judgment and supervisory authority. The leader may have been, but was not limited to, a supervisor, manager, director, department head, vice president, president, or any member of the executive team. Forty companies were invited to participate, of which 11 agreed. All CEOs or presidents provided written consent for their organization to participate in the research. In addition, they provided e-mail addresses of potential leaders within their organizations. All leaders were sent an e-mail describing the research, an attached informed consent, and a link to the MLQ survey. Mind Garden customized the survey so that the first question asked participants if they had read, understood, and agreed to participate in the research. If the participant answered “Yes,” he or she was then prompted to the next question in the survey, and if he or she responded “No,” the participant was taken to the submission page and thanked for his or her time, thereby opting out. Mind Garden also added two questions to serve as qualifiers to participate in the survey. The qualifying questions asked each participant to select his or her appropriate generational age cohort
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(Veteran, born before 1946; Baby Boomer, 1946–1964; Generation X, 1965–1977; and Generation Y, 1978–1989) and provide the title of his or her current position. One hundred fifty electronic surveys were sent out; 96 of the recipients responded, for a return rate of 64%. The sampling frame of 200 and participant count of 128 were not achieved for a number of reasons: (a) one organization with approximately 30 leaders rescinded its commitment to participate; (b) two organizations initiated heirarchical restructuring efforts, which significantly reduced the size of their leadership teams; and (c) many CEOs of participating companies cited a number of external factors that limited the amount of time their organization could devote to this research, thereby reducing the number of leaders participating. The effect of a smaller sample than projected, while having an overall impact on the ability to distinguish differences in the Veteran and Generation Y cohorts, did not limit the ability to establish other significant differences. The results in this study are presented in aggregate, as it is not the purpose of this research to compare or correlate data between participating companies. As stated by T. Alpert (personal communication, October 4, 2009), the direct-toconsumer industry experienced a postage rate increase from the U.S. Postal Service in 2007 that crippled some organizations, forcing them to cease operations. The overall state of economic affairs has had an impact on many industries, including the direct-toconsumer catalog sector. The direct-to-consumer catalog industry received potentially devastating news in April 2011: They may be faced with a postal increase of 22% this year (Tierney, 2011). M. Dowling (personal communication, April 15, 2011) asserted the recession has changed the climate of the direct-to-consumer catalog industry. The recession taught consumers they do not need as much and to be bargain-oriented; this, 50
Dowling suggested, is the reason for the hierarchical restructuring, filing of Chapter 11, and, in some cases, companies forced into a distress sale. In an industry that is shrinking, companies are tasked with the challenges of innovation, creativity, and output at different levels than ever before (M. Dowling, personal communication, April 15, 2011).
Details of Analysis This study examined two primary factors: (a) the degree to which leadership styles (transactional, transformational, and laissez-faire) are used by four different generational cohorts (the Silent Generation, Baby Boomers, Generation X, and Generation Y) of small business leaders in the direct-to-consumer catalog industry, and (b) how well the degree of leadership style predicts organizational outcomes in these small business organizations. Five hypotheses were tested and analyzed. Ninety-six participants took part in the study. Fifty-three (55.2%) of the participants were from the Baby Boomer generation (born 1946–1964), 34 (35.4%) were from Generation X (born 1965–1977), seven (7.3%) were from Generation Y (born 1978–1989), and two (2.1%) were from the Veteran Generation (born 1945 or before). Frequencies and percentages for participant cohorts are presented in Table 1. Scales were created for the research variables. The transformational, transactional, and laissez-faire subscales from the MLQ were calculated. Scores on transformational ranged from 1.85 to 4.00 points, scores on transactional ranged from 1.13 to 3.38 points, scores on laissez-faire ranged from 0.00 to 1.75 points, scores on extra effort ranged from 0.67 to 4.00 points, scores on effectiveness ranged from 2.00 to 4.00 points, and scores on satisfaction ranged from 1.50 to 4.00 points. 51
Table 1. Frequencies and Percentages for Participant Cohorts Cohort
n
%
Veterans (< 1946)
2
2.1
Baby Boomers (1946–1964)
53
55.1
Generation X (1965–1977)
34
35.4
Generation Y (1978–1989)
7
7.3
Cronbach’s alpha tests of reliability were conducted on the MLQ survey subscale. The alpha coefficients were evaluated according to the guidelines provided by George and Mallery (2003), who suggested, “> .9 Excellent, > .8 Good, > .7 Acceptable, > .6 Questionable, > .5 Poor, < .5 Unacceptable” (p. 231). Good alphas were found on transformational and extra effort, questionable alphas were found on laissez-faire and effectiveness, and poor alphas were found on transactional and satisfaction. A good alpha signifies the items in the scale were all answered in the same way; a poor alpha encompasses much more variability in the responses. Means, standard deviations, and reliability coefficients are presented in Table 2.
Results This section provides the data analysis results for each of the research questions and corresponding hypotheses. Each hypothesis is discussed and a decision to reject or not reject the null hypothesis is made based on the level of obtained significance. 52
Significance values of .05 or less resulted in the rejection of the null hypothesis, and significance values of .05 or greater resulted in the failure to reject the null hypothesis.
Table 2. Means, Standard Deviations, and Reliability Coefficients for MLQ Subscales Subscale
α
No. items
M
SD
Transformational
0.85
20
3.08
0.43
Transactional
0.53
8
2.19
0.50
Laissez-faire
0.64
8
0.54
0.43
Extra effort
0.84
3
2.90
0.73
Effectiveness
0.68
4
3.40
0.45
Satisfaction
0.30
2
3.23
0.64
Research Question 1 Are there significant differences in the degrees of transformational, transactional, and laissez-faire leadership styles exhibited by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y)? H1: There is a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-to-consumer industry. Ho1: There is not a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-toconsumer industry. 53
To examine Research Question 1, a MANOVA was conducted to assess if significant differences in transformational, transactional, and laissez-faire leadership subscales were different by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y). In preliminary analyses, the assumption of normality was assessed with three Kolmogorov–Smirnov tests. The results of the tests were significant for laissez-faire leadership only, violating the assumption; however, according to Stevens (2009), MANOVA is robust toward the violation with respect to Type I error. The assumption of equality of covariance was assessed with the Box’s M test and the result of the test was not significant, verifying the assumption of equality of covariance. There are primary assumptions that must be met in a MANOVA. One is the assumption of normality, which assumes the dependant variable is normally distributed within each group; the second is the assumption of equality of covariance, which assumes the variances in each group are roughly equal. Table 3 presents the assumptions of equality of covariance.
Table 3. Results of the Kolmogorov–Smirnov Tests and Box’s M Test for Transformational, Transactional, and Laissez-Faire Subscores
Subscore
K–S statistic
df
P
Box’s M (12, 1190)
p
Transformational
0.09
96
.073
8.21
.843
Transactional
0.07
96
.200
Laissez-faire
0.14
96
.001
54
The results of the MANOVA were not significant, F(9, 276) = 1.36, p = .205, suggesting there were not significant differences in transformational, transactional, and laissez-faire subscales by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y); therefore, the null hypothesis cannot be rejected. Results of the MANOVA and individual ANOVAs are presented in Table 4.
Table 4. MANOVA and ANOVAs for Transformational, Transactional, and Laissez-Faire Leadership Subscales by Generational Cohort ANOVA F(3, 92) Variable Cohort
MANOVA F(9, 276)
Transformational
Transactional
Laissez-faire
1.36
2.88*
0.20
0.17
Note. F ratios are Wilks’s approximation of F. ANOVA = univariate analysis of variance. MANOVA = multivariate analysis of variance. *p < 0.05. **p < 0.01.
Research Question 1a Is there a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts? H1a: There is a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. Ho1a: There is not a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. Further analysis of the ANOVA for transactional subscores by generational cohort (see Table 3) showed that the ANOVA was not statistically significant, F(3, 92) = 0.20, p 55
= .894, suggesting differences did not exist in the transactional subscores by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y). The null hypothesis could not be rejected; there is not a statistical difference on transactional subscores by generational cohort. Means and standard deviations for transactional subscores by generational cohort are presented in Table 5.
Table 5. Means and Standard Deviations for Transactional Subscores by Generational Cohort Generational cohort
M
SD
Veterans (< 1946)
2.44
0.09
Baby boomer (1946–1964)
2.20
0.51
Generation X (1965–1977)
2.16
0.54
Generation Y (1978–1989)
2.16
0.27
Total
2.19
0.50
Research Question 1b Is there a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts? H1b: There is a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. Ho1b: There is not a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. 56
Further analysis of the ANOVA for transformational subscores by generational cohort (see Table 3) showed that the ANOVA was statistically significant, F(3, 92) = 2.88, p = .040, suggesting differences existed in the transformational subscores by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y). Scheffe post hoc analyses were conducted but revealed no statistically significant pairwise comparisons between the generational cohorts. The null hypothesis was rejected; while the ANOVA was significant, there were no pairwise significant differences found. Pairwise comparisons would be Veterans versus Baby Boomers, and so forth. This is a comparison between one group and another. In this case, the groups were different from each other; however, no group stood out from the other groups. Means and standard deviations for transformational subscores by generational cohort are presented in Table 6.
Table 6. Means and Standard Deviations for Transformational Subscores by Generational Cohort Generational cohort
M
SD
Veterans (< 1946)
2.45
0.57
Baby boomer (1946–1964)
3.17
0.42
Generation X (1965–1977)
2.99
0.42
Generation Y (1978–1989)
3.09
0.36
Total
3.08
0.43
57
Research Question 1c Is there a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts? H1c: There is a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. Ho1c: There is not a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. Further analysis of the ANOVA for laissez-faire subscores by generational cohort (see Table 3) showed that the ANOVA was not statistically significant, F(3, 92) = 0.17, p = .914, suggesting differences did not exist in the laissez-faire subscores by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y). The null hypothesis could not be rejected. Means and standard deviations for laissez-faire subscores by generational cohort are presented in Table 7.
Table 7. Means and Standard Deviations for LaissezFaire Subscores by Generational Cohort Generational cohort
M
SD
Veterans (< 1946)
0.56
0.62
Baby boomer (1946–1964)
0.55
0.46
Generation X (1965–1977)
0.51
0.38
Generation Y (1978–1989)
0.63
0.48
Total
0.54
0.43
58
Research Question 2 RQ2: Do transformational, transactional, and laissez-faire styles exhibited predict extra effort, effectiveness, and satisfaction scores? H2: There is a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry. Ho2: There is not a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry. To examine Research Question 2, three multiple regressions were conducted to assess if transformational, transactional, and laissez-faire styles exhibited predict extra effort, effectiveness, and satisfaction subscores. In preliminary analysis, the assumptions of linearity, normality, and homoscedasticity were assessed for each of the multiple regressions. These assumptions were verified. The assumption of absence of multicollinearity was assessed by examining the variance inflation factors (VIF). No VIF was above 10, meeting the assumption for the absence of multicollinearity (Stevens, 2009). Therefore, no two variables in the model were related to each other. Extra effort. The result of the multiple regression predicting extra effort was significant, F(3, 92) = 42.44, p = .001, suggesting that the model predicted (R2) 58.1% of the variance in extra effort scores. Further analysis revealed that transformational scores successfully predicted extra effort, B = 1.28, p = .001, suggesting that for every point increase in transformational scores, extra effort increased by 1.28 points. The null hypothesis was rejected; while the model was significant as a whole, only 59
transformational subscores offered a unique contribution to predicting extra effort. Results of the multiple regressions for transformational, transactional, and laissez-faire leadership predicting extra effort are presented in Table 8.
Table 8. Multiple Regression for Transformational, Transactional, and Laissez-Faire Subscores Predicting Extra Effort Model
B
SE
β
t
p
Transformational
1.28
0.13
0.76
10.25
.001
Transactional
0.03
0.10
0.02
0.29
.769
Laissez-faire
0.01
0.12
0.00
0.04
.967
Note. F(3, 92) = 42.44, p < .001, R2 = 0.581.
Effectiveness. The result of the multiple regression predicting effectiveness was significant, F(3, 92) = 20.35, p = .001, suggesting that the model predicted (R2) 39.9% of the variance in effectiveness scores. Further analysis revealed that transformational scores successfully predicted effectiveness, B = 0.40, p = .001, suggesting that for every point increase of transformational subscores, effectiveness also increased by 0.40 point. Transactional subscores successfully predicted effectiveness, B = 0.19, p = .014, suggesting that for every point increase of transactional subscores, effectiveness also increased by 0.19 point. Laissez-faire successfully predicted effectiveness, B = –0.30, p = .001, suggesting that for every point increase in laissez-faire subscores, effectiveness
60
decreased by 0.30 point. The null hypothesis is rejected. Results of the multiple regression are presented in Table 9.
Table 9. Multiple Regression for Transformational, Transactional, and Laissez-Faire Subscores Predicting Effectiveness Model
B
SE
β
t
p
Transformational
0.40
0.09
0.38
4.33
.001
Transactional
0.19
0.08
0.21
2.51
.014
Laissez-faire
–0.30
0.09
–0.28
–3.35
.001
Note. F(3, 92) = 20.35, p < .001, R2 = 0.399.
Satisfaction. The result of the multiple regression predicting satisfaction was significant, F(3, 92) = 16.52, p = .001, suggesting that the model predicted (R2) 35.0% of the variance in satisfaction scores. Further analysis revealed that transformational scores successfully predicted satisfaction, B = 0.82, p = .001, suggesting that for every point increase of transformational scores, satisfaction also increased by 0.82 point. The null hypothesis is rejected; while the model was significant as a whole, only transformational subscores offered a unique contribution to predicting satisfaction. Results of the multiple regressions for transformational, transactional, and laissez-faire leadership predicting satisfaction are presented in Table 10.
61
Table 10. Multiple Regression for Transformational, Transactional, and Laissez-Faire Subscores Predicting Satisfaction Model
B
SE
β
t
p
Transformational
0.82
0.14
0.55
5.95
.001
Transactional
–0.04
0.11
–0.03
–0.34
.735
Laissez-faire
–0.21
0.13
–0.14
–1.56
.122
Note. F(3, 92) = 16.52, p < .001, R2 = 0.350.
Chapter Summary Chapter 4 discussed the description of the sample, the response rate, the data analysis, and in-depth description of the results. Descriptive statistics were used to demonstrate an initial understanding of the variables used in this study. MANOVAs, ANOVAs, regression analysis, Cronbach’s alpha test, Kolmogorov–Smirnov tests, Box’s M, and Scheffe post hoc tests were conducted to test the hypotheses. The results showed all three leadership styles are predictors of one of the organizational outcomes: effectiveness. Transformational leadership is the only style shown to significantly predict the outcomes of satisfaction and extra effort, and in the case of extra effort, the impact of this leadership style is pronounced. For the outcome of effectiveness, every point increase of the transactional score resulted in an increase in the effectiveness score of 0.19 point; every point increase of the laissez-faire score resulted in a decrease in effectiveness of 0.30 point; and every point increase of transformational score resulted in an increase of 0.40 point. For the outcome of satisfaction, every point 62
increase in transformational scores resulted in increases of satisfaction by 0.82 point; and for the outcome of extra effort, each point of increase in transformational scores resulted in an increase of 1.28 points. The results from this research with regard to the degree to which leadership style is exhibited by each of the generational cohorts were far less conclusive than the results of leadership style as a predictor of organizational outcome. This research was limited by the smaller-than-expected sample size and the concentration of leaders within just two of the cohort groups: Baby Boomers and Gen X. Nonetheless, the data collected were sufficient to reject the null hypothesis for Research Question 1a, “Is there a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts?” While the ANOVA was significant, no significant pairwise differences were found. As for the degrees of leadership style for transactional and laissez-faire; the null hypotheses could not be rejected as no significant differences were found in degrees of leadership across the generational cohorts. This chapter provided an analysis of the data and a discussion of the findings. Chapter 5 further discusses the findings as well as the implications and limitations of the study. In addition, recommendations for future research are discussed.
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CHAPTER 5. RESULTS, CONCLUSIONS, RECOMMENDATIONS
Introduction The first four chapters provided the foundation and findings for this study on leadership and organizational outcomes from a generational perspective in the direct-toconsumer catalog industry. Chapter 1 introduced the nature of the study, research questions, hypotheses, and theoretical framework for this study. Chapter 2 provided a review of relevant literature for this research study. Chapter 3 introduced the methodology, which included the data collection process and analysis techniques that were used in this research study. Chapter 4 described the data collection and analysis procedures and results of the study. This chapter represents the conclusion of the study and contains the discussion, implications, limitations, and recommendations for future research.
Summary of the Study The U.S. workforce has experienced tremendous changes in recent decades. It has become more dependent on the small business sector than it was at any time in recent history. The SBA (2009) reported the small business sector employs approximately half of U.S. workers and creates 60–80% of all new jobs. The U.S. workforce is now comprised of four different generational cohort groups, each with its own history, value64
shaping experiences, and motivational patterns. The four generational cohorts in today’s workforce include the Silent Generation, also known as the Veterans, born between 1925 and 1945, who comprise 7.5% of today’s workforce; the Baby Boomers, born between 1946 and 1964, who comprise 42.0% of the workforce; Generation X, born between 1965 and 1977, who comprise 29.5% of the workforce; and Generation Y, also known as the Millennials, born between 1978 and 1989, who comprise 21.0% of the workforce (Martin & Tulgan, 2002). The primary theoretical framework for understanding the present study is based on research conducted by Bass (1985) and Bass and Avolio (1994) in which they indicated a strong relationship between leadership style and organizational outcome. Further, Bass found a relationship between positive organizational outcomes and transformational leadership. He suggested a causal relationship, proposing that transformational leadership leads to the positive organizational outcomes. Job performance, attitude, and perception of transformational leadership styles were linked by Bass and Avolio (1993). The theory of full-range leadership has been developed and studied over a 20-year span by chief theorists Avolio and Bass (1991), Bass (1985), Burns (1978), Downton (1973), and Zaleznik (1977). Wysong (2000) purported a full range of leadership includes transformational and transactional leadership styles, which enhances the leader–follower relationship, resulting in a positive organizational outcome. Research by Atwater and Bass (1994), Mowday et al. (1982), and Pearce and Ravlin (1987) found employee involvement to be related to commitment to organizational success.
65
The first purpose of this quantitative study was to fill a gap in the research literature in determining the degree to which leadership styles (transactional, transformational, and laissez-faire) are used by four generational cohorts (Veterans, Baby Boomers, Generation X, and Generation Y) of small business leaders in the direct-toconsumer catalog industry. The second purpose was to determine how well the degree of leadership style predicts organizational outcomes in these small business organizations. This research sought to answer the following questions: RQ1: Is there a significant difference in the degree of leadership styles exhibited by four different generational cohorts in small business leaders in the direct-to-consumer catalog industry? RQ1a: Is there a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts? RQ1b: Is there a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts? RQ1c: Is there a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts? RQ2: How well does degree of leadership style (transactional, transformational, and laissez-faire) predict organizational outcomes in small business organizations in the direct-to-consumer catalog industry? Based on these research questions the following hypotheses were generated: H1: There is a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-to-consumer industry.
66
Ho1: There is not a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-toconsumer industry. H1a: There is a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. Ho1a: There is not a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. H1b: There is a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. Ho1b: There is not a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. H1c: There is a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. Ho1c: There is not a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. H2: There is a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry. Ho2: There is not a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry. The instrument used in this study was the MLQ 5X (2nd ed.) designed by Bass and Avolio (1995). The MLQ offers two options in administration: a paper version and 67
an online version. For the purposes of this research, the online MLQ was utilized. The MLQ was selected for the express questions relating to leadership style and organizational outcome. It was further selected based on its acceptance in the field and its proven reliability and validity. The results were then stratified by generational cohort (Veterans, Baby Boomers, Generation X, and Generation Y) to determine if there is a significant difference in the degree of leadership style used by the leaders in each of the generational cohorts and to determine if the degree of leadership style is predictive of the degree of organizational outcomes (extra effort, effectiveness, and satisfaction). Ninety-six participants took part in the study. Fifty-three (55.2%) of the participants were from the Baby Boomer generation (born 1946–1964), 34 (35.4%) were from Generation X (born 1965–1977), seven (7.3%) were from Generation Y (born 1978–1989), and two (2.1%) were from the Veteran Generation (born 1945 or before). Once all the data were gathered, MANOVA was performed to answer Research Question 1. Statistical significance was determined by an alpha of < .05. Descriptive statistics were computed for each generational cohort by leadership style (Tables 5–7). A regression analysis was conducted for Research Question 2 in examining the predictability of leadership style on organizational outcome (Table 8). Statistical significance was determined by an alpha of < .001. The summary of the findings derived from the research questions and hypotheses of this study is as follows.
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Summary of Findings Hypothesis 1 There is a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-to-consumer industry. The results of the MANOVA were not significant, p = .205; significant differences in transformational, transactional, and laissez-faire leadership subscales by generational cohort were not detected in this sample. Because of the unequal sample sizes for the generational cohorts, with the Veteran cohort containing only two data points and Generation Y containing just seven, no generalizable conclusion could be made. Therefore, although these findings did not support the literature, they cannot be used to refute the literature. Hypothesis 1a There is a significant difference in the degree of transactional leadership exhibited by each of the four generational cohorts. The ANOVA was not statistically significant, p = .894, suggesting differences did not exist in the transactional subscores by generational cohort; therefore, the null hypothesis could not be rejected. Further research attaining a larger sample size may provide alternate results. Walker (2006) found a statistical significance in transactional leadership and the generational cohorts in his leadership research examining the four generational cohorts of entrepreneurs with a sample size of 413 leaders. Hypothesis 1b There is a significant difference in the degree of transformational leadership exhibited by each of the four generational cohorts. 69
Analysis for the transformational subscores showed the ANOVA was statistically significant, p = .040, suggesting differences existed in the transformational subscores by generational cohort. Post hoc analyses were conducted but revealed no significant pairwise comparisons between the generational cohorts. The null hypothesis was rejected. The existence of transformational leadership exhibited among the generational cohorts supports the generational research of DeClerk (2008), Kenan-Smalls (2011), Pettine (2007), and Walker (2006), suggesting transformational leadership is the preferred leadership style. Hypothesis 1c There is a significant difference in the degree of laissez-faire leadership exhibited by each of the four generational cohorts. The analysis of the ANOVA was not statistically significant, p = .914; therefore, the null hypothesis could not be rejected. The data gathered in this study neither supported nor refuted the earlier findings of Walker (2006), who did not find a significant difference in the degree to which laissez-faire leadership is adopted across the generations, or this hypothesis (1c) that such differences do exist. Returning to the discussion of the general hypothesis: “There is a significant difference in the degree of leadership style exhibited by the four generational cohorts in small business leaders in the direct-to-consumer industry,” this study found meaningful differences in the degree of transformational leadership exhibited by each of the four generational cohorts but was unable to determine whether or not there exist meaningful differences in the degree of transactional or laissez-faire leadership exhibited because of the very small number of participants from the Veteran Generation (2 participants, or 70
2.1% of total sample) and Generation Y (7 participants, or 7.3% of total sample). It is reasonable to expect that given a larger overall sample size or a more even distribution of leaders across the generations, there would be statistically significant data to support or refute all aspects of the hypothesis. Hypothesis 2 There is a difference in the degree of leadership style that predicts organizational outcomes in small business organizations in the direct-to-consumer catalog industry. The outcomes of extra effort, effectiveness, and satisfaction are discussed individually. Extra effort. The result of the multiple regression predicting extra effort was significant, F(3, 92) = 42.44, p = .001, suggesting that the model predicted (R2) 58.1% of the variance in extra effort scores. Further analysis revealed that transformational scores successfully predicted extra effort, B = 1.28, p = .001, suggesting that for every point increase in transformational scores, extra effort increased by 1.28 points. The null hypothesis was rejected; while the model was significant as a whole, only transformational subscores offered a unique contribution to predicting extra effort. These findings support the research of Wegner (2004). Effectiveness. The result of the multiple regression predicting effectiveness was significant, F(3, 92) = 20.35, p = .001, suggesting that the model predicted (R2) 39.9% of the variance in effectiveness scores. Further analysis revealed that transformational scores successfully predicted effectiveness, B = 0.40, p = .001, suggesting that for every point increase of transformational subscores, effectiveness also increased by 0.40 point. Transactional subscores successfully predicted effectiveness, B = 0.19, p = .014, 71
suggesting that for every point increase of transactional subscores, effectiveness also increased by 0.19 point. Laissez-faire successfully predicted effectiveness, B = –0.30, p = .001, suggesting that for every point increase in laissez-faire subscores, effectiveness decreased by 0.30 point. This supports the research of Lowe et al. (1996), who determined through their research that the behaviors of transformational leaders had a positive relationship on organizational effectiveness and satisfaction. It further supports the research of Hinkin and Schriesheim (2008), whose findings revealed that laissez-faire leadership showed a strong negative relationship to the leader’s effectiveness. Satisfaction. The result of the multiple regression predicting satisfaction was significant, F(3, 92) = 16.52, p = .001, suggesting that the model predicted (R2) 35.0% of the variance in satisfaction scores. Further analysis revealed that transformational scores successfully predicted satisfaction, B = 0.82, p = .001, suggesting that for every point increase of transformational scores, satisfaction also increased by 0.82 point. The null hypothesis was rejected; while the model was significant as a whole, only transformational subscores offered a unique contribution to predicting satisfaction. This finding supports Walumbwa et al. (2004), who asserted transformational leadership style has a positive effect on employee satisfaction. The overall findings in the degree of leadership style predicting organizational outcomes support the generational research of Kenan-Smalls (2011), Walker (2006), and Wegner (2004). This research further supports the research of previous studies by Avolio and Bass (1995), Bass (1985), Bass and Riggio (2006), Bennis (1984), Dessler (1998), Hater and Bass (1988), and Hetland and Sandal (2003) that leadership styles bear a significant relationship to organizational outcomes. 72
Limitations There are several limitations of this study: 1. A limitation of this research is the population that was sampled. The results of research conducted on one type of small business, in this case direct-toconsumer catalog companies, cannot be generalized to other types of small business. Perhaps another industry in the small business sector would yield different findings. 2. The results of research in the small business sector cannot be generalized to larger organizations. The probability of a larger organization employing an equitable cross-section of generational cohorts may be higher than in the small business sector. 3. The generational sample size had been determined based on the overall generational structure and produced an unequal sample size. The limitation of an unequal sample size potentially is the difference in rejecting the null hypothesis or accepting it. The results showed that, combined, the Veteran Generation and Generation Y made up less than 10% of the leader participants. As a result, the data may not reflect the accurate leadership of those generational cohorts. Perhaps a larger sample would increase the opportunity for an equal sample size. 4. Internal and external environments of each organization cannot be controlled. This includes the reorganization of hierarchical structures that reduce the leaders in an organization. It also includes economic factors, such as the
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economy as a whole and the increase in postage levied by the U.S. Postal Service.
Conclusion The literature review confirmed there is research available on various leadership styles, organizational outcomes, and the differing generations in the workforce. This research concurred with the research of Bass (1985) and Bass and Avolio (1993) that transformational leadership and organizational outcomes are linked. This research further supported the findings of Wysong (2000), whereby transformational leadership style enhances the leader’s relationship, resulting in positive organizational outcomes. Leithwood, Jantzi, and Steinbach (1999) contended that transformational leadership increases the motivation necessary for extra effort, thereby positively impacting organizational outcomes. This study’s findings supported those of Bass, Bass and Avolio, Leithwood et al., and Wysong. This current research that examined leadership styles across the four generational cohorts and the relationship to organizational outcomes in the direct-to-consumer catalog industry helps close the gap in the literature. This research in part supports some leading theories that suggest a relationship between leadership styles and organizational outcomes; all three leadership styles were shown to predict effectiveness. Furthermore, transformational leadership was shown to predict satisfaction and extra effort, and in the case of extra effort, the positive impact of transformational leadership was pronounced. In further support of leading theories, the laissez-faire style of leadership was shown to have a negative impact; in the case of
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effectiveness, the greater the degree of laissez-faire leadership, the lower the organizational outcome. In addition, this research was able to demonstrate that the different generational cohort groups adopt the transformational leadership style to different degrees (Tables 4 & 6). However, further research is necessary in the examination of the degree of transactional and laissez-faire leadership styles across the generational cohorts. This research also supported the overarching theories and research of Barling et al. (1996), Bass (1999), Bass and Avolio (1994), Dvir et al. (2002), Einstein and Humphreys (2001), Tsai et al. (2009), and Webb (2007) that leaders who practice transformational leadership are more able to inspire and motivate followers. Kouzes and Posner (2007) suggested that transformational leadership is leadership so moving that it infuses individuals with energy, motivation, and morality. This study’s findings support research that transformational leadership predicts positive organizational outcomes and is the preferred leadership style across the generations. The findings of this study suggest professional development and training of the transformational leadership style would be beneficial to the leaders in the direct-toconsumer catalog industry. Based on research by Bass (1999) and Bass and Avolio (1994), leaders who master transformational leadership are able to increase awareness of their followers and raise achievement goals and confidence in their followers’ achievement, reaching far beyond followers’ boldest expectations. Williams (2007) contended leaders must encompass the courage to be flexible in adversity and maintain the discipline to adapt as situations become chaotic and performance pressures remain unrelenting. 75
Recommendations for Future Research Based on the findings derived from the research questions and hypotheses for this study, the following recommendations may be helpful to organizations large or small in the examination of leadership styles, generational cohorts, and their relationship to organizational outcomes. 1. The findings of this quantitative study add to the body of knowledge in leadership studies and support previous research on the positive effects of transformational leadership and the relationship of the leader’s leadership style and its effect on organizational outcomes. It is recommended that a quantitative study with a larger sample size be conducted as the results may provide a more accurate disposition of the Veteran and Gen y generational cohorts. 2. This research concentrated on direct-to-consumer catalog companies with revenues of $15–100 million. The results cannot be generalized to larger direct-to-consumer catalog companies. Therefore, it is recommended this study be replicated targeting organizations with a larger revenue base within the direct-to-consumer catalog industry. 3. The results of research in the small business sector cannot be generalized to larger organizations. As a result, it is recommended that this research be duplicated with a population sample from larger organizations, potentially resulting in an equitable cross-section of generational cohorts. 4. The direct-to-consumer catalog industry is experiencing significant external factors that threaten the survival of many of the organizations that participated 76
in this study. This researcher had no ability to control for the level of threat an organization faces, and this may have been a hidden variable contributing to the measured results. A replication of this study is recommended sampling leaders in a different small business sector. 5. It is recommended that with a more equitable, larger sample size, this study be replicated and through the analysis examine the variances of leadership styles within each generational cohort. 6. Taking into consideration that the transactional and laissez-faire leadership styles did not reveal a difference of style across the generational cohorts, a longitudinal study is recommended to determine if leadership style is determined by generational cohort or through maturation.
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