CHAPTER 2
Transformational Leadership Theory and Hypotheses
The concept of transformational leadership was first expressed by Burns (1978) in his qualitative classification of transactional and transformational political leaders. The concept was subsequently applied to leadership research by House (1977) and Bass (1981).
Transformational leadership is often contrasted to transactional leadership. Their distinctions are found in the component behaviors used to influence others and the effects of the leader on others (Yukl 2002). In general, transactional leadership behaviors focus on coping with task-related complexities. As a result, transactional leadership helps to establish order and provide consistency in achieving specific goals. Their focus is on process, (for example how decisions are made rather than what decisions are made, as well as explicit and predetermined decision processes). This approach might also be characterized as problem-solving because issues (transactions) are dealt with as they arise (Pinto et al. 1998). Transactional leadership behaviors include the following subcategories: Planning and controlling (for example, the definition of a detailed cost plan and schedule was provided by the project manager); information and communication (for example, the project manager clearly communicating to team members how to make the project manager aware of problems); decision participation (for example, project managers discussing the project goals with the project team).
In contrast, transformational leadership behaviors are about coping with and even inspiring change. According to Bass (1985), transformational leaders motivate followers by heightening their awareness of task outcomes, encouraging them to transcend self-interests for the good of the team and activating higher-order needs (for example needs for esteem, personal fulfillment, and achievement). Transformational leadership also implies a more positive personal connection between leaders and followers. Followers feel trust, admiration, loyalty, and respect toward the leader. As a result transformational leaders broaden and elevate followers’ goals, providing them with confidence to go beyond minimally acceptable expectations.
Transformational leadership theorists (for example, Bass 1985; Bass and Aviolo 1994; and Burns 1978) have argued that transformational leadership is more proactive and ultimately more effective than transactional, corrective, or avoidant leadership in terms of motivating followers to achieve higher performance (Bass and Aviolo 1994; Burns 1978). This pattern of results has been supported in a number of studies over the last decade (Dumdum et al. 2002; Lowe et al. 1996). It has been argued that transformational leaders are more capable of sensing their environment and then forming and disseminating goals that capture the attention and interest of their followers.
Transformational leadership includes four subcategories of behavior (Bass 1985; Bass and Avolio 1996). Idealized influence is behavior that arouses strong follower emotions and identification with the leader. Intellectual stimulation is behavior that increases follower awareness of problems and influences them to develop innovative and or creative approaches to solving them. Individualized consideration includes providing support, encouragement, and coaching to followers. Inspirational motivation includes conveying a clear, engaging vision, using symbols to focus attention, and modeling appropriate efforts and behavior.
Transformational Leadership And Project Success
While the implications of transformational leadership for individual performance and attitudes are fairly well substantiated, we know relatively little about its impact on broader levels of performance. Moreover, in practice, leaders are expected to influence collective outcomes such as team performance and organizational effectiveness, and they are often held accountable for accomplishing such results (Yammarino, Dansereau, and Kennedy 2001).
While it may seem reasonable to assume that results at the individual level of analysis are capable of being generalized for groups, it’s a potentially precarious position to take. Research on levels of analysis (e.g., Klein, Dansereau, and Hall 1994; Kozlowski and Klein 2000; Rousseau 1985) has shown that findings at one level of analysis cannot automatically be assumed to exist at a higher level of analysis. In addition, by doing so we may miss opportunities to further explain how the processes involved in change-oriented leadership (for example transformational) occur at more aggregated levels of human interaction.
Since Judge et al. (2002) reported their findings, three empirical studies have linked transformational leadership to unit-level performance criteria. Bass et al. (2003) found that transformational leadership predicted unit performance in infantry teams, Dvir et al. (2002) found that transformational leadership training resulted in better unit performance relative to groups that did not receive training. More recently, Lim and Ployhart (2004) found that transformational leadership behavior predicted performance of military artillery teams participating in daylong simulations.
However, these three studies focused on the performance of all-male military units performing specialized tasks under simulated conditions. The idiosyncrasy of a military organization limits the external validity of many of the military studies (Lim and Ployhart 2004). Virtually no studies have looked at the effects of transformational leadership behavior on group performance in organizational settings. This distinction is important especially in light of recent meta-analytic work suggesting that organizational context has implications for the construct validity of transformational leadership, especially as measured by the multi-factor leadership questionnaire (MLQ) (Antonakis et al. 2003). Replication in civilian organizations with mixed-gender and older participants is needed (for example, Dvir et al. 2002). The present study used project-based organizational work as the context in which to expand upon the military studies discussed above.
There are a number of reasons why project-based organizational work provides a particularly useful context for looking at the effects of transformational leadership. First, projects are temporary and once projects are completed, project success or failure can be assessed and the effect of transformational leadership on success can be directly addressed. Second, at the project level we are able to capture unique situational attributes that influence project outcomes. Moreover, assessing the effect of transformational leadership on success at the project level enables us to gather perceptions of the leader from members who are representatives of the entire project team. Third, project-based work is becoming increasingly common in today’s organizations and a more detailed understanding of how leadership applies to the role of a project manager should be of particular practical value.
Project Success Criteria
While there is good reason to think that transformational leadership is relevant to project level success, universal relevance does not mean that transformational leadership is equally relevant to all measures of success (Yukl 2002). Researchers have identified different measures of project performance. Pinto and Mantel (1990) identified three aspects of project performance: the implementation process; the perceived value of the project; and client satisfaction with the delivered project outcome. Beyond these three performance measures, Shenhar, Levy, and Dvir (1997) suggested two additional project performance measures: business success and preparing for the future. However, empirical results (Lipovetsky, Tishler, Dvir, and Shenhar 1997) indicated that the importance of the latter measurement is all but negligible. Thus, in the current study, we used the construct of business results/success as the fourth measure of project success. In summary, in our study, we examine the influence of transformational leadership on the following aspects of project success: project efficiency, project effectiveness, client satisfaction, and business success.
We expect that the impact of transformational leadership behavior and success will vary depending on which project success criteria are considered. For instance, a project manager’s use of intellectual stimulation might positively impact such success criteria as effectiveness (technical performance), client satisfaction, and business success by influencing team members to develop innovative and creative approaches to solving problems. Similarly, by communicating their vision regarding project goals and plans to project members, transformational leaders should engender high levels of coordination and teamwork and member satisfaction which should translate to customer satisfaction. On the other hand, the impact of project efficiency should not be as strongly influenced by transactional behaviors, but should be influenced by transactional behaviors. Meeting project schedule and budget constraints (efficiency) should also be dependent on the leader’s ability to coordinate and control external resources for the success of the project at hand (for example, Miller and Lessard 2000). Taken together, we propose the following:
H1: Project Manager Transformational leadership behavior will predict project success as defined by efficiency, effectiveness, customer satisfaction and business success.
Project Characteristics as Contextual Moderators for the Effects of Transformational Leadership
By the same token it may be a mistake to assume that that all subcategories of transformational leadership are of equal importance across all situations (Yukl 2002). As Bass (1997, p. 130) noted:
“universal does not imply constancy of means, variances and correlations across all situations…the range of leadership behaviors of interest may very well correlate differently depending on context. In other words, behaviors A and B may both be frequently required in context X…however, in context Y behavior B may be not be necessary or may even be counterproductive with effective leaders demonstrating behavior B less frequently.”
These kinds of distinctions are important to theory and practice. As Antonakis et al. (2003) noted, a better understanding of how and when unique components of transformational leadership make a difference will allow us to develop leadership training and coaching interventions for project managers that can be focused on leading specific types of projects in different contexts. For example, for a radical new product innovation, project training could focus on developing the intellectual stimulation skills of leaders rather than broad training on transformational leadership. These same researchers also stressed that an important next step in the study of transformational leadership is to determine the impact of contextual factors on the predictive validity of transformational leadership models such as the multi-factor leadership questionnaire (MLQ).
Examples of situational characteristics that some have argued may moderate the impact of transformational leadership include environmental stability, an organic organizational structure, the dominance of boundary spanning units (for example, projects) and an entrepreneurial culture (Yukl 2002). To date, however, there have been relatively few empirical investigations of how context moderates the effect of transformational leadership behavior on unit level performance. Therefore, a second focus for this study was to identify key contextual factors (more specifically, characteristics of project-based work and objectives) that might have implications for how and when transformational leadership behaviors are most likely to be relevant to unit level performance. In general, we propose that the impact of a project manager’s transformational leadership behavior on project outcomes (performance and success) is moderated by the extent to which the project environment is characterized by uncertainty and the potential for change.
Project Innovativeness and Urgency as Specific Characteristics of Projects
Before beginning to operationalize the relevant project characteristics that represent sources of uncertainly and change, it should be noted that at this point we are considering them as discrete entities. The interactions between them must also ultimately be taken into account. Nonetheless, given the fact that to date there have been relatively few investigations into their implications, it is appropriate to begin by considering them discretely.
Project Innovativeness
The extent to which a project team’s work would be described as new and non-routine represents one contextual project characteristic that should moderate the impact of a project manager’s transformational leadership behavior. For instance, one way to describe the level of innovation inherent in a project is in terms of the technical challenges it poses. At one extreme, a project could be characterized as routine. This implies that objectives are met by applying technical solutions that previously existed in essentially the same way that they have been applied before. A more technically challenging project could be described as one in which meeting objectives required project team members to apply existing technology in new or different ways. A project with an even greater level of innovation could be described as one that called for the development of new technology and or knowledge that did not previously exist. As the level of innovation required to successfully meet project objectives increases, so should the relevance of transformational leadership behaviors to project success. This assumption is rooted in prior research.
For instance, an explanation of the relationships between transformational leadership behaviors and innovative tasks can be found in an experimental study by Sosik (1997). He reasoned that intellectual stimulation should enhance both generative and exploratory thinking. It is likely to enhance generative thinking he argued, by promoting nontraditional thoughts and/or promoting the application of existing information in new or unusual ways. At the same time, exploratory thinking that involves refining ideas through elaboration and successive improvement (Torrance 1988) should also be enhanced through intellectual stimulation.
The results of Sosik’s study supported his reasoning. He reported that members of groups assigned to a high transformational leadership condition were more likely to generate original solutions, ask questions about solutions, and to pursue solution clarifications or elaborations.
Inspirational motivation should also be relevant to projects requiring innovation because such motivation efforts encourage and inspire followers to link their self-concepts of the collective interests of the project team, which in turn should heighten team members’ intrinsic motivation (Shamir et al. 1993). Considerable research over the years has consistently demonstrated that intrinsic motivation is a key underlying determinant of idea generation and creative performance for both individuals and groups (for example, Amabile 1996; Deci and Ryan 1985).
Strong support for innovation level as a moderator of the effects of transformational leadership can also be found in a study by Keller (1992). His longitudinal investigation of research and development project groups found that the impact of transformational leadership on individual performance was moderated by the type of research and development work being pursued. Transformational leadership was a stronger predictor of project quality ratings for research projects (those projects requiring individuals to go beyond existing scientific and technological knowledge) than for development and service projects (those projects focusing on incremental technological improvements to existing technology).
H2: Project innovativeness moderates the effect of transformational leadership behaviors on project success. With increasing levels of innovativeness, transformational leadership behaviors will be increasingly important to project success.
Urgency
Another source of complexity is the level of urgency associated with a project. This concept reflects the extent to which the project is operating under significant time constraints and/or the extent to which successful completion of the project is likely to have a major impact on overall organizational outcomes. Under these conditions, the galvanizing effect of transformational leadership should contribute to successful results. Leadership behaviors relating to inspirational motivation seem particularly relevant. For instance, inspirational motivation includes actions like articulating a compelling vision, showing determination to accomplish what one sets out to do, setting high standards, providing continuous encouragement, and directing attention toward essential aspects of the project (Bass and Avolio 1996). Behaviors relating to idealized influence should also have an impact. Examples include providing assurance that obstacles will be overcome, and emphasizing the importance of being committed to beliefs and objectives (Bass and Avolio 1996). Such leadership behaviors could potentially help project team members in their efforts to meet both temporal and strategic demands that are often inherent in projects with high levels of urgency.
H3: Project urgency moderates the effect of transformational leadership behaviors on project success. In situations of high urgency, transformational leadership behaviors will be increasingly important to project success.