Literature Review on Leadership Theories

Literature Review on Leadership Theories 1. Introduction This chapter examined the literature of leadership practices on organizational commitment among managers. The study of leadership is seen as complicated because there has not yet reached any agreement among the researchers in terms of the real meaning of leadership. Professions from different fields around the world such as researchers, philosophers, organizational leaders had attempted to define the concept and meaning of leadership (Woods, 2007). As there are a lot of definitions define by professions around the world about the term of leadership, this study helps to identify the concepts of leadership in order to improve leadership practices on organizational commitment. The elements that will be discussed in this chapter were about theories of leadership that have been argued centuries. Then the definitions of leadership practices and five dimensions of leadership practices will be explained in detail. Lastly, the definition of organizational commitment will also be identified and be elaborated in detail. 2. Leadership Theories There had been existence of arguments about the definition of leadership for several centuries (Woods, 2007). It was indicated that the term of leadership cannot be defined easily. However, the existence of leadership in an organization cannot be denied in terms of its role in achieving the goals and objectives of the organization (Grojean, Resick, Dickson Smith, 2004, p.224). The scientific study of leadership became popular on 20th century and a lot of studies at that time were mainly focused on the effectiveness of leadership (Weinberger, 2009; Yukl, 1998). Daft (2005) defined leadership as a relationship between two parties which were leaders and followers that who were willing to create a shared value and strive toward a shared missions and objectives together (Lee, 2008). Besides that, leadership consisted of the meaning that a leader acts as an example or role model for the employees so that they can follow the step of the leader on the path towards the accomplishment of their tasks (Knab, 2009). The members in an organization tend to create the perceptions of what capabilities and criteria should be posses by an effective leader. Therefore, leadership was seen as effective when the leaders are able to develop and maintain the commitment of the employees through efficient monitoring and encouragement (Knab, 2009). According to Weinberger (2009), leadership can be nurtured in the attitudes and behaviours of the people through consistent training and practices. As many leaders in the leading organizations today are unable to fulfil the needs of team. Therefore, the studies of the leadership in terms of teamwork had received attention by the researchers around the world (Carroll and Levy, 2010). This is because different leader have different attitudes and behaviours. Thus, they will perform in different types of leadership practices under different circumstances (Morgeson, DeRue, and Karam, 2010; McGrath, 1962). In current century, the requirement of a leader to practice well in the leadership is getting more difficult. For the situation nowadays, leaders have to confront with more dynamic environment compared to the working environment that was less challenge for a few centuries ago (Leonard and Lang, 2010). The effective leaders were those who were able to fulfil their obligation perfectly and were able to achieve the expectation of the organization and its stakeholders (Weinberger, 2009; Goleman, 2000). There is no comprehensive of the theory and meaning of the term leadership, so it is difficult to determine what a leader should react and how the leader should behave in a particular situation. Regardless of the various meaning and definition of leadership, it continues to be one of the most widely researched topics today. The previous research on leadership had spur out different types of leadership theories such as Great Man Theory, Trait theory, Contingency Theory, Behavioral Theory, Transactional Theory, and Transformational Theory. Each of the leadership theories mentioned has their own meaning and explanation. The existence of different types of leadership theories indicated the efforts of previous researchers in the studies of leadership. Those theories play important role for the further literature study of the leadership (Morgeson, DeRue, and Karam, 2010). The management styles in Asian countries are different with those in western countries. Therefore, there is difficult to practice the western style of leadership in Asian countries such as Malaysia. Consequently, the leadership styles and theories that are accepted by western countries may not have the notable impact on the management styles of organizations in Malaysia (Lee, 2008). Every leader is different in his or her attitudes, behaviours, and management styles. Hence, there is no single theory works for all leaders. Leaders need to develop their own leadership approach by learning more about the following leadership theories. Great Man Theory Trait theory Contingency Theory Leadership Theories Behavioral Theory Transactional Theory Transformational Theory 2.1.1 Great Man Theory Researchers who support the Great Man Theory believe that people are born with the ability and competency to become a leader (Penn, 2008). The earlier studies defined that Great Man Theory described the leaders that had achieved greatness in their behaviours and attitudes (Daft, 2008). In the new era of today, there are still people that are willing to believe in this theory. Although this theory may sound old-fashioned in the eyes of some people in management team today, research suggests that some people actually possess the intelligence, personality traits, and characteristic that lead them to become good leader (Penn, 2008; Yaverbaum and Sherman, 2008). The term Great Man Theory was first studied by Thomas Carlyle (1841) who suggested that great men are the people that posses the intelligent and created the history of the world. Carlyle argued that great man is born with well personality traits, good behaviours, and high degree of knowledge. They are the people that able to facil itate their power and ability of leadership and open minded which lead them to become a great leader and will leave their footprints in the legend and history (Eckmann, 2005). Leader Born Personality traits Behaviours Knowledge 2.1.2 Trait Theory Trait Theory suggested that an effective leader can be identified through the recognition of his or her traits. Traits are the personal characteristic that possess by a leader, such as intelligence, knowledge, values, ideas, self-confidence, and attire or appearance (Daft, 2008). Trait theory suggested that a leader that complete with perfect and unique characteristic will become an effective leader. There were several studies found that potential leader will posses that similar straits of an effective leader. Trait theory had been neglected in the pass studies of leadership. However, as there had been more researchers explored the studies of leadership theories, more research had been done on this theory in recently years (Penn, 2008). Since the studies about straits theory has getting more popular, more research can be done on other personal traits that a leaders possess such as physical and social characteristic so that a more specific and appropriate trait of an effective leader can be develop. According to Daft (2008), there were some studies of this theory showed that same kind of personal characteristic may not suitable for every situation as the environment is always changing. Leader Characteristics or Traits Intelligence Values Self- confidence Appearance 2.1.3 Contingency Theory Contingency theory suggested that effective leaders will perform an appropriate leadership practices according to the different environment and situation (Penn, 2008). They will commit in the management styles that suitable and acceptable by the employees and organizations. According to this theory, the challenge and environment for every organization was different, so there was no a particular leadership or management style that can fit into all kinds of scenarios. A leadership style will have a positive impact for the organization and its member when the style fulfils the requirement of the situation and expectations of the employees. There were two Contingency had been identified in the past studies which were Path-Goal theory and Situational theory (Penn, 2008). According to Daft (2008), Path- Goal Theory suggested leaders can increase the commitment and enthusiasm of the employees to their jobs through the implementation of the leaders behaviours that fulfil the expectation of the employees. Besides that, this theory emphasized that employees organizational commitment can be increase through the using of reward to show the appreciation of contributions of the employees. On the other hand, Situational Theory emphasized that suitable and appropriate leadership styles will be formed for different situations and leaders have to make sure that their leadership styles are match with the abilities of the subordinates and function in the right situation (Hamilton, 1992). Contingency Theory Path-Goal Theory Situational Theory Leader Behaviour Use of Rewards Right Situation Leadership Style 2.1.4 Behavioral Theory In contrast to other theory discussed above, Behavioural Theory suggested that the actions of leaders will have a positive impact when the leaders perform appropriate behaviours that fit into the situations. In other words, everyone can learn to become a good leader if he or she can match the categories of their behaviours with the appropriate leadership styles (Katsuhiko, 2007; Shapira, 1997). According to Coleman (1986), Blake and Mouton of the University of Texas had proposed a two-dimensional leadership theory called the leadership grid. Each axis on the grid is a nine-point scale, with 1 meaning low concern and 9 meaning high concern. Figure 4.1.4 shows the leadership grid. According to Blake and Mouton (1980), Team management (9,9) was considered as the most effective leadership style because all members in the organizations that work together as a team will complete the tasks faster and can achieve a better result through the process of knowledge sharing in a team. Country club management (1,9) occurred when the leaders were behave to be more concern about the well-being of the employees instead of the productivity of the company. In a contrast, Authority- compliance management (9,1) occurred when the leaders show more concern of the productivity instead of the well-being of the employees. Nevertheless, Middle-of-the-road management (5,5) reflected a moderate amount of concern for both people and production. Impoverished management (1,1) was identified as the worst leadership style as the leaders are not concern for both people in the organization and productivity of the organization. Managers are not put their efforts in the maintaining of the relati onship with the subordinates. They also do not concern of the sustainability of the organizations production. 2.1.5 Transactional Theory Transactional leadership suggested that there was an agreement of contract made between the leader and follower about the obligations of both parties (Penn, 2008). According to the agreement, the followers need to perform and accomplish the task and instructions given by the leaders with full commitment. Instead, leaders have to recognize the contributions of the employees and reward them if the tasks given are being fulfilled effectively. Transactional leadership suggested that people tend to put in more effort in order to complete tasks given when there is existence of the rewards and reorganization. However, in the today diverse working environment that full with challenges, there are getting more people that put in effort to complete the task not by the attraction of rewards, they are doing so due to the self motivation and the inspiration of challenge themselves. Transactional leadership consists of two factors which are contingent reward and management by exception (Bass, 1990) . Contingent reward is formed when there is a mutually agreement between leaders and followers in with the ultimate purpose of achieving the objectives and goals of the company. On the other hand, management by exception is focusing on task execution which means that there is mutual trust between the leaders and the employees. Leaders will try their best in correcting the problems arise in order to maintain employees well performance (Weinberger, 2009). Transactional leadership Contingent Reward Management by Exception Mutual Agreement Focusing on task execution Correcting Problems 2.1.6 Transformational Theory Burns (1978) developed the original idea of Transformational Theory. This theory was defined as a process that transforms people through the motivation, values, and well planning goals which can lead the leaders and followers to higher level of satisfaction and successful in achieving target (Anagnoste, Agoston, Puia, 2010). This theory also indicated the ability of leaders in satisfying the needs and expectations of the followers (Kuhnert Lewis, 1987). Bass (1985) suggested that Transformational Theory emphasized the influence of leaders to the followers by developing a way that can encourage the commitment of the followers to achieve a better performance (McCall, Jr., Morgan, 1986). Transformational leaders tend to have the capability to inspire the subordinates. They always encourage the employees to explore deeper of their potential so that they can be more confident about themselves and can contribute more in the effort of achieving the goals of organization (Carless, 2001). According to Bass (1985), there were four major factors that must be practiced by the leaders that wanted to commit in Transformational Leadership. The first factor was Charisma which emphasized on the characteristics expressed by the leaders that can attract and retain the employees through their persuasive words and actions. The second factor was Inspirational leadership which was defined as a sub factor within charismatic leadership behaviour. The leaders that commit in this leadership have the capability to motivate and influent others through the emotional qualities. The third factor was Individualized Consideration which means that the leaders concern for the needs and development of each employee and they respect the dignity of each employee. The last factor was Intellectual Stimulation which implied the intelligent of leaders in problem solving. They encourage the subordinates in asking question and explore the potential of employees to be creative (McCall, Jr., Morgan, 1986) . Transformational Leadership Charisma Inspirational Individualized Intellectual Leadership Consideration Stimulation 2.2 Leadership Practices There were several aspects of the studies of leadership practices because it compromised by different identifications and reorganization (Morgeson, DeRue, and Karam, 2010). An effective leadership practices is the main key to improve employees achievement. Therefore, the focus on this study is to identify the effectiveness of leadership practices in promoting the followers to achieve higher level of organizational commitment. According to Knab (2009), leaders that perform well leadership practices have the ability to motivate and generate interest of the employees to the jobs. At the same time, they are the leaders that can inspire the employees to strive for the wellness of the organization and productivity and look beyond their own self interest. Kouzes and Posner (1993) suggested that credibility is characteristic that can be learnt by leaders through the experience of previous actions. Leaders that had been through different kinds of challenges tend to be more mature and know the way to handle their relationship with subordinates (Woods, 2007). Leaders are responsible to strive and maintain the credibility through continuing behaviours. With credibility as the essential ingredient of leadership, leaders need to always improve in that particular area in order to increase the trust and commitment of employees to them. Kouzes and Posner (2007) also suggested that the theory of leadership practices had been studied by many researchers and those practices can be studied jointly or independently. According to the previous research, practices of credible leaders can be defined in five categories which are: (a) Challenge the Process (b) Inspire a Shared Vision (c) Enable Others to Act (d) Model the Way (e) Encourage the Heart Leadership can happen at any location, in any form and occur in anytime. The effective leaders that organize the people well can accomplish many and different kinds of difficult tasks. According to Kouzes and Posner (2009), every leader that wanted to success in the leadership must commit in the five dimensions of leadership practices that mentioned earlier. 2.2.1 Challenge the Process The meaning of this Challenge the Process leadership practice was defined detail by Kouzes Posner (1995). The previous studies showed that this particular leadership practice described the characteristic of a leader that always look into the opportunity and space for improvement. They are the group of people that willing to confront with the challenges and risks. Besides that, they always prepare themselves to face the changing of the world (Knab, 2009). Leaders that commit in this leadership practice are not afraid of failure, instead they take failure as a process to grow up and improve. The leadership practice of Challenge the Process emphasized on the attitude of leaders that always prepared to venture out. They are the group of people that able to accept new creations and encourage the followers to accept new products, systems, and processes. In fact, they are the one that bring into the new products or services into the organization. The leaders engaged in this leadership practices are the originators of innovation. Therefore, this leadership practice suggested that the leaders to constantly think the situation from different dimensions so that they can create a different and unexpected new thing that can contribute to the productivity of the organization (Kouzes Posner, 2009). 2.2.2 Inspire a Shared Vision Members of the organization expect their leaders to have a clear image of the future and share the vision with them. Leaders who committed leadership practice of inspire a shared vision will helps everyone to formulate a clear picture about future goals that are acceptable and achievable by everyone (Knab, 2009). Leaders play a significant role in communicates the objectives and future plans to the employees in an effective way, and in the meanwhile inspires them to work towards a shared vision. According to Hyatt (2007), the effective leaders that commit in this leadership practice have to share their ideas with the employees. Therefore, the employees will know the direction that of their effort and will strive towards the goal with full commitment. Besides that, the leadership practice of Inspire a Shared Vision emphasized on the behaviours of the leaders that allow the employees to take part in the forming of future vision (Hyatt, 2007; Gabris Ihrke, 2000). Thus, employees will have a feeling that they are part of the organization and play an important part in future planning. Leaders that engaged in this practice are willing to accept known possibilities of the future. They tend to figure out the outcome first before they give the instructions to start a new project. Therefore, they will form a clear picture about what exactly they are pursuing and the best way to achieve the successful. Furthermore, they create a common and shared vision taking into account of the needs and expectations of all members in the organization (Kouzes Posner, 2009). 2.2.3 Enable Others to Act According to Knab (2009), an effective leader that engaged in leadership practice of Enable Other to Act have the ability to influent others and encourage others to act in the way that expected by the leader. They are the leaders that support and encourage the employees to speak out their mind and contribute their ideas in the projects. Besides that, they always provide options for the employees and inspire the commitment of the employees. This leadership practice emphasized the effort of leaders and subordinates work as a team (Woods, 2007). Therefore, leaders play an important part in nurturing mutual trust within the team members (Hyatt, 2007; Tan Tan, 2000). In order to achieve successful in a project, mutual trust and cooperation among the team members are extremely important. This practice also suggested that leaders enable others to act not by forcing or strictly command. Instead, they encourage others to act through the delegation of power (Hyatt, 2007; Gabris Ihrke, 2000). They allowed the employees to make their own decision as long as the decision they make was for the good of the organization. Moreover, they always use the word we to emphasize the important to work as a team (Kouzes Posner, 2009). Thus, the employees will have a perception that they are on the same boat with others member, then the organizational commitment will increase. 2.2.4 Model the Way The leadership practice of Model the Way suggested that leaders can develop and foster mutual trust between the leader and subordinates and within the subordinates by being the role model for the subordinates (Knab, 2009). Leaders that engaged in this practice are the leaders that ethic, honest and respect dignity of others. They will clearly define the obligations of employees and give a specific instruction so that employees will receive a clear picture of what are the expectations of leaders to them. According to the study of Woods (2007), it was defined that leaders that engaged in this particular leadership practices are able to express themselves with a clear values. Then they will make sure that their behaviour and attitudes are aligned with the values they show to the employees. Competency leaders know that they must involve in the role model expected by employees so that they can gain the trust of the employees and upgrade the commitment of the employees. To be an effective leader that model the way, leaders have to make sure their values and beliefs were accepted by the employees and demonstrate their daily actions that committed to their values and standards (Hyatt, 2007; Gabris Ihrke, 2000). Leaders actions will have more impact on the commitment of the employees than their words or instructions. However, leaders actions must be consistent with what they are promised to the employees. Besides that, leaders have to identify their position in the eyes of employees. They have to make sure that their existence in the organization is important and their instructions always followed by the subordinates. The leadership practice of Model the Way explained the right attitudes that leaders should commit in their direct interaction with employees. The leaders that act as a role model tend to be the leaders that earn the respect of the employees (Kouzes Posner, 2009). 2.2.5 Encourage the Heart Leaders that engaged in leadership practice of Encourage the Heart are willing to show their appreciation to the employees publicly, and always find ways to celebrate the achievement of the subordinates (Knab, 2009). Therefore, people will be more enthusiasm to their job as their contributions are appreciated by the leaders. Besides that, the employees that receive the recognition of the leaders will increase in their self-confidence and self-esteem (Hyatt, 2007; Javidan Waldman, 2003). Thus, they will not be afraid to share their ideas and knowledge with other colleagues. The increase of confidence of employees will then encourage the commitment of employees in their jobs. This will be a competitive advantage for the organization to compete in this challenging world. The high level of organizational commitment among the employees will then increase the productivity ultimately. In the process of upgrading the quality of the products and services require the leaders to motivate the heart of the employees. Leaders play an essential role to ensure that the employees values are align with the objectives of the company (Kouzes Posner, 2009). The leaders that appreciate the effort of the employees will increase the sense of belonging of the employees. When the employees feel that they are a part of the members in the organization, they will be more commit in their jobs and willing to stay with the organization even in the through tough times. 2.3 Organizational Commitment Organizational commitment had received highly attention of the researchers in the previous studies. Previous research had identified that organizational commitment had a significant influence in some aspect of working attitudes and behaviours such as job satisfaction, job performance, and turnover rate (Lee, 2008; Lok and Crawford, 2001; Yousef, 2000). Organizational commitment focuses on employees commitment to the organization. Mowday et al., (1974) explained the definition of organizational commitment as the belief of employees regarding the organizations objectives and values. This will imply the desire of the employees effort and the willingness to contribute to the organization. The employees will be more committed in their organizations if the values and culture of the organizations align with their expectations. Then they will stay loyalty to the organization. According to Cole (2000), a committed worker always believes in companys products and services. He or she is willing to put in a lot of effort and even willing to make sacrifices as long as the purpose is for the good of company. Besides that, the employees are willing to introduce the company to their friends. They will feel proud of their company and recommend their organization to the others as the best place to work for. Furthermore, they will choose to contribute to the company that spur out their organizational commitment rather than the company that provide high salary but absence of the sense of belonging (Lee, 2008). Meyer and Allen (1991) developed three different types of organizational commitment. According to Woods (2007), the three aspects of organizational commitment were defined as below. Affective Commitment This aspect of the commitment described the feeling of employees to the organization that expressed in a positive way. They feel attach to the organization because the organization provided them a sense of belonging. The choose stay in the organization because they want to. Continuance Commitment This aspect of the commitment explained the perceptions of the employees that they will lose their benefits if they leave the organization. Besides that, they afraid to suffer the cost of losing their friendship with colleagues and the cost of losing the economic cost such as insurance, welfare, bonus, and etc. Therefore, they will choose to stay in the organization because they have to. Normative Commitment This aspect of the commitment suggested that the employees continue to contribute to the organization as they have a feeling of obligation. There will be many causes of that feeling. For instance, an employee will have a sense of moral obligation and afraid to leave the company as the company had invested a lot in his or her training. Therefore, the employee will have a perception that he or she has the responsibility to stay still in the organization. As a result, the employees will choose to commit in the organization as they feel that they ought to. 2.4 Summary Leadership was defined in many meanings by researchers and it showed that leadership was indeed plays an important role in todays organization. Although there have been many different theories and definitions of leadership, there is still space for further research about leadership (Lee, 2008). Since it was suggested by previous studies that principal of leadership is the key to improve employees achievement, it is important that we continue to investigate what type of leadership is most effective for the organizations (Knab, 2009). The need for effective and efficient leadership practices are important for the leaders in today organization to engage in. Sufficient and efficient practices of leadership in the organization by leaders will increases the organizational commitment of the employees. As a result, the productivity will also be increased. A leader may have knowledge and skills to act effectively in one situation but he or she may not perform as effectively in a different situation as there is always consist of different challenges in different situation (Lee, 2008; Rad and Yarmohammadian, 2006). In this chapter, the theories of leadership were defined. Subsequently, in this chapter the five leadership practices was explained and its important was discussed as well. Furthermore, the meaning of organizational commitment also be defined and three-component model of commitment was identified.