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T h e J o u r n a l o f D e v e l o p i n g A r e a s Special Issue on Sydney Conference Held in April 2015 Volume 49 No. 6 2015 THE EMERGING ROLE OF TRANSFORMATIONAL LEADERSHIP Mostafa Sayyadi Ghasabeh C laudine Soosay Carmen Reaiche University of South Australia, Australia ABSTRACT This paper presents a literature review of leadership over the years and the emerging role of transformational leadership. We also argue that this form of leadership is appropriate in the context of globalized markets, where there is increasing diffusion of goods, services, values and technologies globally, which results in the convergence of societies toward a uniform pattern of economic, political and cultural organization. There are various issues and consideration existing in the leadership literature as “the core of the c riticism in the literature is that organisations of all sorts (corporations, government agencies, and not-for-profit organisations) tend to be over-managed (and/or over-administrated) and under-led” (Mills 2005, p.19). Mills (2005) highlights the vital importance of leadership in both political and business areas, and argues that organisations in both areas, in the absence of effective leadership, are not capable of effectively implementing changes at the organisational level. This paper adopts a conceptual approach aiming to convey the importance of transformational leadership amongst other styles. In this paper, we review the role of leadership in the business area and establish the need to investigate transformational leadership, as an ideal leadership form in enabling firms to accomplish sustainable competitiveness as they operate in global markets.

Based on the various leadership theories discussed be further argued that leadership is highly essential for business organisations to achieve a sustained change and eventually higher degree of effectiveness, especially when operating in global markets. Transformational leadership, comprising characteristics of idealised influence, individualised consideration, intellectual stimulation, and inspirational motivation has been found to have implications for higher leadership effectiveness in new market environments and production locations. Various empirical studies highlighted transformational leadership as an enabler of innovation . To demonstrate the role of transformational leadership in organizational innovation, it can be argued that these leaders facilitate the generation of new knowledge and ideas through applying intellectual stimulation aspect that motivates employees to approach organizational problems in a more novel approach.

Accordingly, we establish the appropriateness of transformational leadership as a managerial-based, output-based as market- based competency for firms in globalized markets.

We conclude by providing suggestions and scope for empirical investigation into local organizations to evaluate the extent of transformational leadership apparent and how effective they can be in globalized markets. The findings from empirical studies could provide managerial and research implications on a Nation’s competitiveness in today’s dynamic and globalized environments.

JEL Classifications: M10, M120 Keywords: Leadership, Transformational Leadership, Globalized Markets, Local Firms Corresponding Author’s Email Address: [email protected] 460 INTRODUCTION The business environment is constantly changing as organizations are increasingly participating in global markets . Globalized markets place demands on the roles of leaders in organizations operating in this modern environment. In Kock and Slabbert ’s (2003) view, the emergence of global business environments drives companies to become world- class. They argue that leaders within companies can play a crucial role in achieving a high level of effectiveness and world class efficiency. T oday’s globalized nature of competitiveness is placing more pressure on organizations to employ effective leaders who are capable to develop a global vision for organizations . Local strategies need to be realigned with the global economic integration and for individual countries to remain competitive at the same time. There are many studies that focus on the organizational and managerial factors that drive firm competitiveness. Leadership is one such area that plays a critical role and is a strategic prerequisite for business success in global markets . In this paper, we review the role of leadership in the business area and establish the need to investigate transformational leadership, as an ideal leadership form in enabling firms to accomplish sustainable competitiveness as they operate in global markets. THE CONCEPT OF LEADERSHIP AND THEORIES Burns (1978, p. 2) reviewed the historical foundations of leadership, and concluded that “leadership is one of the most observed and least understood phenomena on earth”.

There is no comprehensive definition that encompasses all of the leadership aspects . Although the current definitions on the concept of leadership are somewhat different, it can be seen that these definitions provide various viewpoints about leadership that could positively contribute to define the concept of leadership. In the reviewed literature, leadership is defined as influenced interactions with groups of followers to implement changes and achieve the determined goals (Rost 1991; Bess & Goldman 2001; Zaccaro, Rittman & Marks 2001; Kan & Parry 2004; Ohman 2000; Osborn, Hunt & Jauch 2 002; Pearce & Conger 2002; Mills 2005; Vroom & Jago 2007; Western 2008). Therefore, this concept of leadership creates change through taking process-oriented and relationship-practices in pursuit of attaining goals. In an attempt to portray the concept of leadership, various leadership theories have been presented to date and are now briefly review below. Trait Theory In Judge, Piccolo and Kosalka’s (2009, p.855) view, “the leader trait perspective is perhaps the most venerable intellectual tradition in leadership research” that highly recommends an approach in which “great men and women with certain preferred traits in fluencing followers to do what the leaders wish in order to achieve group or organizational goals that reflect excellence defined as some kind of higher order effectiveness” (Rost 1991, p. 94 -95). Whetten and Cameron (1991) collect these traits in the second edition of Developing Management Skills , and summarise them as being honest, inspirational, competent and credible. Similarly , Kirkpatrick and Locke (1991, p.48) identify the following traits: “drive (a broad term which includes achievement, motivation, ambition, energy, tenacity, and initiative), leadership motivation (the desire to lead but not to seek power as an end in 461 itself), honesty and integrity, self-confidence (which is associated with emotional stability), cognitive ability and knowledge of th e business.” Table 1 presents an illustration of the traits of leadership.

TABLE 1. TRAITS OF LEADERSHIP Researchers Leaders’ Traits Stogdill (1948) Alertness, Initiative, Intelligence, Insight, Persistence, Responsibility, Self - confidence, Sociability Mann (1959) Adjustment, Conservatism, Dominance, Extroversion, Masculinity Stogdill (1974) Achievement, Cooperativeness, Initiative, Influence, Insight, Persistence Responsibility, Self - Confidence, Sociability, Lord, DeVader and Alliger (1986) Dominance, Intelligence, Masculinity Kirkpatrick and Locke (1991) Confidence, Cognitive ability, Drive, Integrity, Motivation Zaccaro, Kemp and Bader (2004) Agreeableness, Cognitive abilities, Conscientiousness, Emotional stability, Extroversion, Intelligence, Motivation, Openness, Problem solving, Self - Monitoring, Social Intelligence, Source:

Zaccoro, Kemp and Bader (2004) Behavioural Theory The paradoxes, as mentioned above, could have been the impetus for a change in the foc us of leadership studies (Marturano & Gosling 2008), and encouraged researchers instead to embark on empirical studies to identify “leader behaviours and accompanying categorisation schemes” (Pierce & Newstrom, 2008, p. 165). Stogdill and Coons (1957) and Likert (1961) investigated the behaviours of leaders at both universities of Ohio and Michigan, and also classified leadership styles, which are rated in two aspects of task and people. These studies aimed to portray the best leadership style in both aspects of task and people, and also illustrate the behaviours of effective versus ineffective leaders. Ohio State Studies To investigate effective behaviours in leaders, Stogdill and Coons (1957) conducted an empirical study in which they employed a Leader Behaviour Description Questionnaire (LBDQ) for subordinates to evaluate the behaviours of their leaders, using 150 items that reflect important functions of a leader. More importantly, Stogdill and Coons (1957) rated these behaviours using a range between two aspects of initiating structure and consideration. They commented that a leader can score high or low on each of these aspects. While initiating structure refers to the “behaviour that organises and defines relationships or roles, and establishes well-defined patterns of organization, channels of 462 communication, and ways of getting the job done” (Yunker & Hunt, 1976, p.46), consideration has been highlighted as the “behaviour indicative of friendship, mutual trust, respect, and warmth” (Yunker & Hunt, 1976, p.46). In Stogdill and Coons’ (1 957) view, there can be four types of leadership styles. These are classified as low initiating structure and low consideration, low initiating structure and high consideration, high initiating structure and low consideration, and high initiating structure and high consideration. Michigan University Studies Likert (1961) conducted another empirical study at the University of Michigan, which aimed to define the relationship between leaders’ behaviour, group performance and processes within a group. Accordingly, Likert (1961) suggested the three leadership styles as (1) task-oriented, which focuses on planning the work, organising employees and technically supporting them to achieve their business goals. These are similar functions to ‘initiating structure’ as identified by the Ohio State Studies; (2) relationship-oriented behaviour that reflects supportive behaviours for subordinates, and is consequently equivalent to ‘consideration’ as described by the Ohio State Studies; and (3) participative behaviour which is reflected by paying attention to both task-oriented and relationship- oriented behaviours, and demonstrating some behavioural aspects such as being supportive, collaborative, cooperative, and highly oriented towards accomplishing high performance, solving problems, and facilitating conflict resolution. Situational Theory Situational theory was developed to highlight the importance of situational factors and how they impact the effectiveness of leadership. Murphy (1941, p.12) argues that leadership is naturally situational, and that “leadership study calls for a situational approach; this is fundamentally sociological, not psychological. Leadership does not reside in a person. It is a function of the whole situation”.

This theory, unlike behavioural and trait theories, highlights that there is no best single leadership style for all the situations, and conversely encourages leaders to consider the impact that situational variables can have on the effectiveness of a behaviour. Transformational Leadership Theory Burns (1978) initially developed the theory of transformational leadership.

Transformational leadership emphasises satisfying basic needs and meeting higher desires though inspiring followers to provide new er solutions and create a better workplace (Chandrashekhar, 2002; Jue, 2004; Marturano & Gosling, 2008). Bass (1985) uncovered four dimensions of transformational leadership. They are idealised influence, individualised consideration, intellectual stimulation, and inspirational motivation. The idealised influence aspect aims to develop a shared vision and improve relationships with followers (Canty, 2005); while individualized consideration concentrates on identifying employees’ individual needs and empowering followers in order to build a learning climate (Lowe, Kroeck, & Sivasubramaniam, 1996) and mobilise their support towards goals at the organizational level (Osong, 2006). On the other hand, intellectual stimulation propels 463 knowledge sharing in the company to generate more innovative ideas and solutions.

Finally, inspirational motivation focuses on inspiring human assets, thereby setting a higher level of desired expectations for them . These four dimensions represent an effective leader in a knowledge-based economy grounded on developing and managing intellectual capital within organizations . Following the evolution of leadership theories, the early 1980’s has been earmarked by dissatisfactions from previous leadership theories, which were a dichotomy of people-oriented versus task-oriented views (Gardner & Cleavenger, 1998; Hinds, 2005).

Subsequently, a new shift occurred in leadership studies with this new paradigm based on the theory of transformational leadership (Conger & Kanungo, 1994). This is seen as a leadership form at its highest level of evolution (although somewhat associated with the trait theory). By analysing 188 cases, Lowe and Gardner (2000) has found that transformational leadership theory captured more interests during the period 1995-1999 as compared to the period 1990 -1994. These results are demonstrated in the following Table: TABLE 2. A REVIEW OF ARTICLES PUBLISHED IN LEADERSHIP QUARTERLY Leadership Theories Total Publications Trait Theories 17 Behavioural Theories 5 Situational Theory 25 Transformational Leadership Theory 37 So urce: Lowe and Gardner (2000; p.480) More recently, Dinh et al (2014) reviewed the articles published in the 2000-2012 period in 10 top-tier academic journals, by analysing 752 cases, these researchers concluded that transformational leadership theory is still one of the most dominant paradigms as compared to other leadership theories such as trait theory, behavioural theories, and situational theories. The findings of this study are illustrated in the following Table.

TABLE 3. A REVIEW OF ARTICLES PUBLISHED IN 10 TOP-TIER ACADEMIC JOURNALS Leadership Theories Total Publications Trait Theories 149 Behavioural Theories 64 Situational Theory 55 Transformational Leadership Theory 154 So urce: Dinh et al. (2014; p.40) 464 DISCUSSIONS, CCOCLUSIONS, AND FUTURE RESEARCH Organizational innovation results in the creation of new and valuable services or products (Woodman et al., 1993) through applying new ideas and knowledge. Damanpour (1991, p.561) takes a more market-oriented approach and defines organizational innovation as “new products/services introduced to meet an external user market need”. To demonstrate the role of transformational leadership in organizational innovation, it can be argued that these leaders facilitate the generation of new knowledge and ideas through applying intellectual stimulation aspect that motivates employees to approach organizational problems in a more novel approach . Transformational leaders, as visionary leaders, develop a shared and inspiring vision for future, which play a critical role in shifting organizations toward the creation of new services and products. Transformational leaders are clearly those leaders who are able to enhance organization performance in global markets through empowering human resource and enabling change (Senge, 1999). Hence, transformational leadership theory sheds light on the critical role of employees’ attitudes and values in implementing changes at the organizational level, and features effective organizational change as a product of developing relationships with subordinates.

The success in today’s business environment is not achievable without employing an effective leadership that can enable organizations to accomplish their goals.

Transformational leadership instills major changes at the organizational level through changing attitudes and assumptions at the individual level and creating collective.

Moreover, this leadership facilitates organizational innovation and learning, and generates a shared and inspiring vision for future. The se tasks are highly necessary when operating in global environments. This establish es the need for empirical investigation into transformational leaders in local organizations operating in global markets in order to be effective. We propose that there is a need for future research to measure the potential impacts that this theory of leadership may have on the success of local organizations competing in global market.

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