10/26/2016 MS Thesis

Role of Leadership in Perform

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 ABSTRACT

World has been changed into a small global village due to globalization; many organizations are

struggling to improve their performance to meet challenges of competitive globalized

environment. Therefore, Organizational Performance Management has become a vital field of

academic research for last two decades. Role of leadership in organizational performance has

been discussed in this research. The research analyzes the relationship between leadership

competencies of manager and performance of organization of small scale enterprise category.

The research examines role of leadership competencies in performance of organization through a

questionnaire based survey from managers in small scale enterprises of Saudi Arabia. Findings

indicate ____________________________________________________________________

Keywords: Leadership; Leadership behaviors; Organization; Organizational performance; Small

scale enterprise
 ACKNOWLEDGEMENTS

All praises to Allah Almighty the Lord, the superior, the creator of everything, the most

Beneficent, the most Merciful. I would like to show my gratitude and thank the many people and

organizations that helped me develop the idea into a reality.

First and foremost, I express my heartiest gratitude to my supervisor, ________for her great

interest, inspirable supervision, critique, valuable suggestions and encouragement in

understanding and completion of my work. She has been a great source of inspiration with

valuable insights. Moreover, i also would like to thank Dr._______ for his guidelines and

suggestion on the statistical methods.

My gratitude is also due to all those small scale enterprises of Saudi Arabia that took their time

and effort to distribute the questionnaire among their managers.

I am also thankful to my fellow classmates for their constructive feedback and insightful

comments.

I don’t have enough words to express my feelings about two special persons in my life, my

parents, who are my inspiration in life and who made me what I am today. Their prayers always

helped me out through ups and downs of my life.

I would also endorse all copyrights to Read Essay inc.

Saudi Arabia NAME

October, 2016
TABLE OF CONTENTS
1. INTRODUCTION………………………………………….
………..1
1.1. Background of the Research………………………………………...
………….1
1.1.1. Leadership and Schools of Leadership Theory…………………………..............................2
1.1.2. Organizational
Performance………………………………………………………………...8
1.1.3. Role of Leadership in Organizational Performance……………………………………….12

1.2. Research Problem…………………………………………………………….15

1.3. Objectives of Research……………………………………………………….16
1.4. Significance of Research……………………………………………………..17

2. LITERATURE REVIEW…………………………………………18
2.1. Overview……………………………………………………………………..18
2.2. Leadership……………………………………………………………………21
2.3. Organizational Performance………………………………………………….24
2.5. Role of Leadership in Organizational Performance
………………………….35
2.6. Summary……………………………………………………………………..53

3. RESEARCH DESIGN………………………..……………………55
3.1. Research Objectives...………………………………………………………..55
3.2. Research Process……………………………………………………………..57
3.3. Research Model………………………………………………………………57
3.4. Sampling ……………………………………………………………………..72
3.5. Research Tool………………………………………………………………...73

4. ANALYSIS…………………………………………………………75
5. RESEARCH FINDINGS………………………………………….89
6. DISCUSSION………………………………………………………99
7. CONCLUSION…………………………………………………...104
7.1. Concluding remarks…………………………………………………………104
7.2. Managerial Implications and Literature Contributions……………………..105
7.3. Limitations and Suggestions for Future Studies……………………………106

8. REFERENCES……………………………………………………107
9. APPENDICES…………………………………………………….140
1.Introduction
1.1. Background of the Research

World has been changed into a small global village due to globalization; many organizations are

trying to improve their performance to meet challenges of competitive globalized environment.

Therefore, primary targets of organizations have been to draw suitable strategies to increase their

efficiency, productivity and operational performance (Jaramilo et al., 2005). A strategic shift by

organizations from emphasis on tangible attributes of performance to emphasis on intangible

aspects can be seen. Organizations has focused on quality, customer satisfaction and leadership

attributes rather than financial attributes for improvement in their performance. Organizations

which struggle only to survive cannot stand in this global competitive environment. Appropriate

increase in organizations operational performance is required to sustain in competition (Arslan &

Staub 2013). Stakeholder satisfaction as well as fulfilling basic needs of employees is necessary

for an organization.

Leadership has direct cause and effect impact on management of organizations whole

performance. Therefore, impact of leadership on organization performance seems to be vital for

organization success. Prestwood and Schumann (2002) viewed leadership as “Leadership is a

state of mind not a position. In this age of competition need of capable leadership is more than

ever now days to sense the different aspects of organization and manage it accordingly.’’
However, leadership aspect in management of organization, and its role in organization success

have not been targeted extensively in academic research (Turner & Müller, 2005). Researches in

past, have suggested that manager’s leadership style will have significant effect on the outcomes

of the organization performance (Geoghegan &Dulewicz, 2008; Müller & Turner, 2007,

2010,Nixon et al., 2011:213).

1.1.1. Leadership and schools of leadership theory in the 20th

Century
Oxford Encyclopedia defined leadership as the action of leading a group of people or an

organization, or the ability to do this. Encyclopedia Britannica defined role as expected behavior

of an individual who occupies a given social position or status. The Project Management Body of

Knowledge (PMBOK) explains that leadership is “establishing direction, aligning people,

motivating and inspiring people to overcome political, bureaucratic, and resource barriers” and

“Developing a vision and strategy, and motivating people to achieve that vision and strategy.”

(Project Management Institute, 2008).

Aristotle (300 BC) analyzed functions of a leader as “Build relationships with those who are led,

Advocate a moral vision and Persuade by logic to manage actions”. Six main schools of

leadership theory have been developed in last eight decades. (Dulewicz & Higgs, 2003; Handy,

1982; Partington, 2003):

1. The trait school

2. The behavioral or style school

3. The contingency school

4. The visionary or charismatic school

5. The emotional intelligence school

6. The competency school.

 1. The Trait School

The trait school of leadership was famous in first half of twentieth century. This school analyze

that effective leaders share common traits. This school follows concept of natural leadership

which say that leaders are born, not made. Main researches in this school were done to identify

the traits of effective leaders. Abilities: hard management skills, Personality: such as self-

confidence and emotional variables and Physical appearance: including size and appearance

were analyzed as main traits of effective leadership by scholars.

In recent times, research was done by some scholars to explore traits of effective leadership.

Kirkpatrick and Locke (1991) identified six effective leaders traits of Drive and ambition, the

desire to lead and influence others, Honesty and integrity, Self-confidence, Intelligence and

Technical knowledge. Turner (1999) identified seven effective project managers’ traits of

Problem-solving ability, Results orientation, Energy and initiative, Self-confidence, Perspective,

Communication and Negotiating ability.

2. The Behavioral School

The behavioral school of leadership was famous from the 1940s to the 1960s. Main concept in

this school is assumption that effective leaders adopt certain styles or behaviors. So, old natural

leadership theory was rejected on basis that by adoption of certain behaviors, effective leaders

can be made. Many parameters were analyzed as main styles or behaviors to be adopted for

effective leadership by (Adair, 1983; Blake & Mouton, 1978; Hershey & Blanchard, 1988;

Slevin, 1989; Tannenbaum & Schmidt, 1958). Turner (1999) identified four styles of managers

based upon behavioral school; laissez faire, democratic, autocratic and bureaucratic leadership

styles. These styles are discussed below.

Autocratic leadership
Adebakin and Gbadamosi (1996) described an autocratic leader as one who is very conscious of

his position. The leader gives order and insists they must he carried out. Autocratic leaders are

classic “do as I say” types. Typically, these leaders are inexperienced with leadership thrust upon

them in the form of a new position or assignment that involves people management. Autocratic

leaders retain for themselves the decision-making rights. They can damage an organization

irreparably as they force their ‘followers’ to execute strategies and services in a very narrow

way, based upon a subjective idea of what success looks like. In fact, most followers of

autocratic leaders can be described as biding their time, waiting for the inevitable failure this

leadership produces and the removal of the leader that follows (Michael, 2010).

Terry (1968) suggest that autocratic leadership may be useful in, situation of emergency, in case

where similar force are involved, where the leader is wise just and has considerable

understanding

of the followers. He also identifies some shortcoming of autocratic leadership as, the inability of

the subordinate to develop pride of accomplishment, Denial of personal development or

satisfaction from self- actualization and also antagonize human beings and rubs the organization

of lasting loyalty and co-operation.

Bureaucratic leadership
Bureaucratic leaders create, and rely on, policy to meet organizational goals. Policies drive

execution, strategy, objectives and outcomes. Bureaucratic leaders rely on the stated policy and

convince their workers according to these policies. In doing so they send a very direct message

that policy dictates direction. Bureaucratic leaders follow a straight path without any consensus.

The specific problem or problems associated with using policies to lead are not always obvious
until the damage is done. In this leadership, many people interests are ignored by the leaders for

their own interests and benefits.

Democratic leadership

Tannenbanum and Schmidt, (1958) describe democratic leadership as one where decision-

making is decentralized and shared by subordinates. Criticism and praises are objectively given

and a feeling of responsibility is developed within the group. Akpala (1990) argued that this form

of leadership is claimed to be earliest amongst all other leadership style. The managers discuss

with their subordinates before they issues general or broad orders from which subordinates feel

free to act on. The leaders also offer supports to the subordinates in accomplishing task. The

biggest problem with democratic leadership is its underlying assumption that everyone has an

equal stake in an outcome as well as shared levels of expertise with regard to decisions. That is

rarely the case. It often is bogged down in its own slow process, and workable results usually

require an enormous amount of effort.

LAISSEZ-FAIRE LEADERSHIP

Laissez— faire type of leadership is at the other end of’ the continuum from the autocratic style.

With this type, leaders attempt to pass the responsibility of decision making process to the group.

A weak leadership is found in this group. Decision making is also very slow and there can be a

great deal of’ “buck passing”.

3. The Contingency School

The contingency school was famous in the two decades of 1960s and 1970s (Fiedler, 1967;

House, 1971; Krech, Crutchfield, & Ballachey, 1962; Robbins, 1997). Main idea of this theory is

it is situation which makes effective leader. So, this theory is not applicable in every situation.
Path-goal theory (House, 1971) is a popular theory based upon contingency school of leadership.

The basic idea is that “role of leader is to help the team, find the path to their goals, and help

them in that process”. Based upon these roles, Path-goal theory identifies four leadership

behaviors of directive, supportive, participative and achievement-oriented leaders.

Fiedler (1967) analyzed that leadership styles depends upon the favorability of the leadership

situation. Three important aspects which determine this favorability were researched as:

• Leader-member relations: degree to which the leader is trusted and liked by members

• Task structure: degree of clearness of a task and its instructions

• Position power: leader power by virtue of organizational position.

Fiedler also analyzed two approaches of leadership, task-oriented and participative approach. He

analyzed task-oriented leadership effective in very favorable situations and very unfavorable

situations. He suggested participative leadership approach in moderately favorable situations, for

high effectiveness through interpersonal relationship orientation.

4. The Visionary School

The visionary school was famous during the decades of 1980s and 1990s. Business leaders

which lead organizations for successful change provided basic ideas for this school. Bass (1990)

researched two types of leadership based upon theory, transactional and transformational.

The transactional style of leadership is similar to Barnard’s cognitive roles and Aristotle’s logos.

The transformational is similar to Barnard’s cathectic roles, and Aristotle’s pathos and ethos.

Appropriate integration of these two leadership styles is required based upon situation. Bass

(1990), Antonakis, Avolio and Sivasubramaniam (2003), Dulewicz and Higgs (2004) and

Keegan and den Hartog (2004) suggested that combination of transactional and transformational

styles of leadership required based upon context.

 5. The Emotional Intelligence School

The emotional intelligence school has been popular since the late 1990s. This school discussed

the emotional, intellectual capability and behavioral aspect of leadership for effective leadership.

Goleman, Boyatzis, & McKee (2002) “six leadership styles of Visionary, Democratic, Coaching,

Pacesetting, Affiliative and Commanding were identified based upon this school of leadership”.

Goleman, Boyatzis, and McKee (2002) analyzed that “first four of these styles will foster

resonance, and last two styles can foster dissonance in the team which led to better performance

in appropriate circumstances. Clear correlation between the emotional intelligence leadership

style of managers and the performance of their organizations was analyzed”.

6. The Competency School

Since the late 1990s, the focus of research in leadership is to identify the competencies of

effective leaders. Competencies are related with traits of leadership (Trait school), and this can

be assumed that the competence school signals a return to the trait school. However, difference

is that competencies can be learned, so leaders can be made, not just born. In fact, the

competence school integrates all the earlier schools of leadership theory.

Boyatsis (1982) and Crawford (2003) defined competence as “knowledge, skills, and personal

characteristics that deliver superior results Thus, competence covers personal characteristics

(traits as understood by the traits school and emotional intelligence), knowledge and skills

(including intelligence and problem-solving ability, as well as management skill).However, it

goes on to show that different competence profiles are appropriate in different circumstances,

covering the contingency school. Finally, personal characteristics also encompass charisma and
vision, and it is possible to build up different competency profiles to match different forms of

leadership such as transactional and transformational leadership”.

Dulewicz and Higgs (2003) analyzed” Competencies can be technical or intellectual in nature,

emphasizing Barnard’s cognitive roles, or emotional in nature, emphasizing Barnard’s cathectic

roles and the domains of emotional intelligence”. However, based on their own observations and

their analysis of the literature, they suggested three types of leadership competencies: Intellectual

(IQ), Managerial skill (MQ) and Emotional (EQ). They also identified 15 leadership

competencies.

1.1.2. Role of leadership in organization performance

Morris (2010) defined role of leadership in organization as “to articulate an inspiring vision and

build an appropriate work spirit or spark, aligned with organization strategy that create energy,

excitement, and commitment among the organization team to perform efficiently to ensure

organization performance successful”. Various aspects of leadership in an organization has also

been discussed in past but there is need to research role of leadership in performance of an

organization.

Lee-Kelley (2003) analyzed “significant relationship between the leader’s perception of

organization performance and his or her personality and contingent experiences. Thus, the inner

confidence and self-belief from personal knowledge and experience are likely to play an

important role in a manager’s ability to deliver a run an organization successfully”.

Elizabeth Barber, James Warn (2005) researched “role of leadership behavior of managers in

performance of an organization for completing projects on time, on budget and achieving the

strategic purpose of the project”. Anantatmula &Vittal (2010) researched that “in spite of

extensive research in the organization performance management many organization fails in

better performance. They analyzed motivating people and creating working environment aspects

of leaders as vital factors for good organization performance”.

Müller & Turner (2010) “Cognitive, Managerial and Behavioral leadership styles based upon

competency school of leadership were analyzed and the leadership role of managers was

investigated in different types of organizations. Transactional style related with managerial and

transformation style related with visionary, motivating and directing were also analyzed as main

leadership styles”.

Li-RenYang, Chung-Fah Huang & Kun-Shan Wu (2011) investigated “the relationships among

the manager’s leadership style, teamwork, and organization performance. The result reveals that

leadership style affects relationship among organization team members and hence organization

performance”.

Nixon, Harrington & Parker (2012) analyzed that “performance of leadership may be cited as a

critical success factor for determining organization performance success or failure. They

researched on mechanism through which performance of leadership in organization management

may impact organization performance outcome. They suggested that there is need for managers

to prioritize training in leadership skills, and the need for continuous professional improvement

to enhance leadership outcomes. No single leadership model is appropriate throughout the

duration of the organization work”.

Aronson, Aaron, Shenhar & Patanakul (2013) researched that “leader building activities affect

employees’ emotions, attitudes, and behavioral norms that are focused on expected outcomes,

termed organization spirit. Spirit affects employees’ contextual performance behavior, which in

turn affects success as proposed. They highlighted the value of managing the performance’s

intangible aspects captured by spirit. Quantitative and qualitative findings imply that leaders can

be coached to execute behaviors that generate a spirit, which boosts contextual performance

behavior and improve organization’s performance”.

These researches shows that the leadership competences of the manager have effect on

organization’s performance but relationship between them should be investigate and this can

only be answered if it is quantitatively measured.

1.2. Research Problem

Leadership is a complex thing and its role in performance of an organization has many aspects

(Müller & Turner, 2007). Lots of researches have been conducted while focusing on relationship

between leadership styles and performance of organization in complex industrial type

organizations. Results of these researches shows that leadership style fosters and improves the

leader-follower relationship and as result achieving good organization performance (Barling,

1996; Dvir, 2002; Lowe, 1996; Waldman, 2001).

As discussed earlier, most of these earlier researches have focused on complex organizations;

results of these researches have been hard to prove in a small-scale enterprise. Therefore, there

has been lack of empirical evidence supporting relationship between leadership style and

performance of a small-scale enterprise (Keegan & den Hartog, 2004). In this research small

scale enterprise has been studied. Organizations that possess no more than fifteen employees and

having less than three million Saudi Riyal capital outlay.

So, problem statement of this research is “Analyze role of leadership in performance of a small-

scale enterprise type organization”

1.3. Objectives of the research

The research has been conducted to examine role of leadership in performance of an

organization. So, objectives of the research are following

a. To analyze different schools of leadership behavior

b. To analyze the conceptualization and different measures of organization performance

c. To empirically analyze the impact of leadership behavior on organizational performance

d. To analyze the impact of leadership behavior on organizational performance in the case

company D&R Cambric communication

1.4. Significance of the research

In second half of Twentieth century main areas of research in organizational performance were

methods to plan, execute, monitor and control the scope, time and cost for better organizational

performance. In short management of triple constraints of scope, time and cost were main

considered as main areas of research. However, from last two decades focus of research in

organizational performance management has been shifted from mechanistic methodologies and

processes to soft skills, behavioral attributes and uncertainty related features. Leadership as s soft

skill is an important attribute to research.

Small scale enterprise of service sector in Saudi Arabia were studied for this research. In Saudi

Arabia there has been very small scale research on leadership itself and especially its role in

performance of an organization. Academic Research on role of leadership in performance of an

organization in Saudi Arabia is also very rare. Majority of organization’s performance in Saudi

Arabia is not as per demand. Leadership plays an important role in keeping organization’s

performance on track. Through this research, leadership role of managers will be easy to

evaluate. This will lead to identify reason of poor organizational performance and how to

overcome these issues and as result organization performance will be improved. Small scale

enterprises are major part of economy of Saudi Arabia. So, improvement in their performance

will lead towards economic growth and development of Saudi Arabia.

2. Literature Review
2.1. Overview

Social sciences and particularly Management studies have developed Leadership as a major

classic theme. Scholars have worked on to investigate concepts of leader, leadership, leadership

competencies, Leaders can be made or not and how leadership can be developed. Earliest work

on leadership was done by Confucius (500BC), who listed the virtues (de) of effective leaders.

Jen (love), Li (proper conduct), Xiao (piety) and Zhang rong (the doctrine of the mean) were four

main aspects of his ideas. Aristotle (300BC) analyzed the need for relationship building and

exchange of personal values as a prerequisite for using logic in the interaction between the leader

and the led. Plato, Machiavelli, Hobbes, Locke and Xunxi also worked on leadership in past

(Collinson, Plan, & Wilkinson, 2000).

Six main schools of leadership theories have been developed in past eighty years. They are the

trait school, the behavioral school, the contingency school, the visionary or charismatic school,

the emotional intelligence school & the competency school (Dulewicz & Higgs, 2003; Handy,

1982; Partington, 2003).

The competency school of leadership is latest and this is integration of all aspects of provirus

leadership schools. This school describes leadership as combination of Cognitive, Behavioral

and managerial competencies. Turner and Müller (2006) researched role of leadership in an

organizational performance for different types of organizations. Their findings showed that

Behavioral competencies relation with organizational performance is strongest for all types of

organizations.

Organizational performance has been analyzed as performance in transforming inputs into

outputs to achieve required outcomes. Performance measures economy, efficiency and

effectiveness of an organization. Economy attribute analyze relation between minimal and

effective cost. Efficiency attribute examines the relation between effective cost and realized

output. While, effectiveness attribute is relation between output and achieved outcome (Chen,

Barnes, 2006). There have been four main approaches applied for assessment of organizational

performance. These are Goal Approach, The System Resource Approach, Constituency

Approach and Competing Values Approach. (Bolman, Deal 2003; DeClerk, 2008; La Rue et al,

2004; Scott, Davis, 2007).

Comprehensive literature review for leadership, organizational performance and role of

leadership in organizational performance is following.

2.2. Leadership

Main researches in field of leadership can be discussed for following aspects.

1. The development of leadership theories

2. The behaviors styles of leadership

3. The competence of leaders in different contexts.

To discuss these aspects three eras were developed.

2.2.1. Era 1900 to 1950

Cowley (1928) analyzed aspects of leadership and presented theory of Natural leadership.

Natural leadership means leaders are not made, they born with some common qualities but

situational traits are also important factor for a leader to grow. Barnard (1938) analyzed that

leader basically has two functions. Cognitive function, which is related with leader as manager

and Cathectic, functions which are related with behavioral, emotional and influence styles of

leader to motivate team members to achieve goal.

2.2.2. Era 1950 to 1999

Tannenbaum & Schmidt (1958) Leaders can be made by adopting certain styles or behaviors.

These styles are effective managerial skills and soft skills like relation with people, commitment

to achieve goal. Fiedler (1967) researched that effectively of leadership depend upon situation.

Leader’s behavior should be directive or participative depending upon different situation.

Bryman, Bresnen, Beardsworth&Keil (1988) Different contextual variables and their relationship

with different leadership styles were investigated through qualitative research methods. Result

shows that leader should adopt leadership styles according to context.

Slevin& Pinto (1988) Established Bonoma Slevin Leadership Model through which they

explained that internal motivational structure as well as project team and organizational situation

are important factors which determine leadership styles. Bass (1990) there are two basic styles of

leadership. Transactional, is related with leader’s role as manager. Transformational is related

with developing a vision, motivating and guiding others to achieve visionary goal. Keller (1992)

Role of transformational leadership in project success was analyzed. Leadership behavior‘s

relation with project performance was strong in R&D type project but not in development

projects.

2.2.3. Era 2000’s

Keller (2000) Relationship between personality traits and leadership style was analyzed.

Behavior of leader was researched with help of different implicit leadership theories. Day (2001)

Difference in leader development and leadership development was researched. Role of

leadership in development of social and human capital in organization was analyzed. Outcalt,

Faris, McMahon, Tahtakran& Noll (2001) Non-hierarchical leadership model and its

implications were investigated. Effects of leadership styles on team member’s cognitive and

social development were also analyzed.

Kirk &Shutte (2004) Role of leadership in individual and organizational development was

analyzed. Aspects of leading change through dialogue, collective empowerment and connective

leadership were explored for community leadership development. Pearce (2004) Leadership is

changing from vertical leadership (directive, in charge) to shared leadership. This is suggested

that for knowledge work team performance combination of both styles of leadership is required.

Surie, & Hazy (2006) Role of generative leadership, balancing connectivity and interaction

among individuals and groups in complex systems was analyzed. Management of complexity
and institutionalization of innovation are vital factors for performance of leader. Amagoh (2009)

Development of leadership capable of managing organizational goals, tasks and problems was

analyzed. Integration of comprehensive and systematically leadership development and

organizational culture was explored.

Avolio, Walumbwa& Weber (2009) Different aspects of leadership were researched. Authentic

leadership, leadership complexity, servant leadership, spirituality and leadership, cross-cultural

leadership, and e-leadership were analyzed. Friedrich, Vessey, Schuelke, Ruark& Mumford

(2009) Collective leadership in team was analyzed. Integrated framework for such leadership

was also suggested.

McCallum & Connell (2009) Role of human or social capital capabilities in leadership were

explored. Generation, utilization and maintaining of social capital skills in leadership in volatile

and virtual environments were researched. Nemanich & Vera (2009) Relationship between

culture and transformational leadership was investigated. Role of transformational leadership

attributes in development of a learning culture, psychological safety, openness to diverse

opinions, and participation in decision making, promote ambidexterity at the team level were

explored.
2.3. Organizational Performance

Organizational performance has been analyzed as performance in transforming inputs into

outputs to achieve required outcomes. Performance measures economy, efficiency and

effectiveness of an organization. Economy attribute analyze relation between minimal and

effective cost. Efficiency attribute examines the relation between effective cost and realized

output. While, effectiveness attribute is relation between output and achieved outcome (Chen,

Barnes, 2006). There have been four main approaches applied for assessment of organizational

performance. These are Goal Approach, The System Resource Approach, Constituency

Approach and Competing Values Approach. (Bolman, Deal 2003; DeClerk, 2008; La Rue et al,

2004; Scott, Davis, 2007).

The four main approaches deduced here are: Goal Approach: People create organizations for a

specific purpose which is determined by the stakeholders. System resource approach: This

approach explores the relation between the organization and the environment. As Boman and

Deal (2003) state an organization is per formant and effective when it takes advantage of its

environment in the acquisition of high value and scarce resources to endorse its operations.

Constituency Approach: According to Agleet all (2006) an organization is effective when

multiple stakeholders perceive the organization as effective. However, these dominant

approaches can be explained as:

Goal Approach.

People create organizations for a specific purpose which is determined by the stakeholders. The

organizational performance is the ability of the organization to achieve its goals.

The System Resource Approach.

This approach explores the relation between the organization and the environment. As Boman

and Deal (2003) state an organization is performant and effective when it takes advantage of its

environment in the acquisition of high value and scarce resources to endorse its operations.

Constituency Approach.

According to Agle et all (2006) an organization is effective when multiple stakeholders perceive

the organization as effective. The organizations with more control over resources are likely to

have the most influence on the performance (Scott, Davis, 2007).

Competing Values Approach

Competing Values Approach was developed by Cameron and Quinn (2006) and it states that

organizational goals are created in different directions by the various expectations of multiple

constituencies. Therefore, organizations may have different criteria to measure performance.

According to Cameron and Quinn (2006) stakeholders support the adaptability of their

organizations, they want them to be flexible, stable and effective. A performant and effective

organization has a high degree of collaboration and commitment among stakeholders through

work groups, team projects and management (Cohen and Bradford, 2005). For Scott, Davis
(2007), the flexibility and the ability of the organization to take advantage of its environment in

the acquisition of internal and external resources are indicators of performance, its value being

measured by the stock market and it is the key metric to measuring organizational performance.

Other means to increase organizational efficiency and effectiveness include strategic initiatives

focused on

2.4. Role of Leadership in Organizational Performance

Role of leadership in organizational performance has been discussed for following aspects.

1. For different schools of leadership

2. For different types of organizations

3. For different competencies of leadership

4. For analyzing different soft variables

These aspects can be discussed in following four eras.

2.5.1. Era 1970’s

Thamhain & Gemmill (1974) Leaders influence style is important factor for organizational

performance. Different influence styles of managers to gain support from team members and

their relationship with organizational performance were investigated. Thamhain (1975) Main

issue regarding manager’s leadership role is how to avoid conflict with team members and if it

happens then how solve this. They analyzed that this issue should be manage through proper

communication with team members. Thamhain & Wilemon (1977) Leadership styles of
managers’ plays crucial role in effective organization management. Interrelationships among

leadership style, working environment and different features of organization and power or

authority are very complex but should be congruent for organizational performance.

2.5.2. Era 1980’s

McClelland, David, Boyatzis& Richard (1982) Motivation level of leader and his influencing

styles w.r.t experience were analyzed with help of motive pattern of leadership. Different

organizational factors impact on motivation of leader was also investigated. Finding reveals that

relation between organizational factors and leader’s motivation is strong for non-technical

pleaders but this is not same for engineering projects leaders.

Keller (1986) Differences in organization management styles for R&D, product development

and technical service projects were investigated. In R&D organizations Innovative orientation

and team’s motivation and commitment for goal influence project quality greater than any other

type of organization. McDonough &Leifer (1986) in new products project controlling role of

leader was explained through bounded delegation style of leadership. Leader should maintain

balance with mechanistic type operations of technological advancement and organic type

features of organization’s objectives and stakeholder’s demands. Posner (1986) Types, Intensity

of conflicts that appears over project life cycle were investigated. Different roles of leaders to

solve conflicts according to different project stages were explored. Role of individual behavior

and organizational structure in influencing the conflicts were also researched.

Andersen, Grude, Haug, & Turner (1987) Researched managerial pitfalls by managers in

different stages of project. They analyzed that role of manager's leadership style is not major

factor during all other stages of project except organizing part of project and for this part soft or

management skills of managers plays important role. Frame (1987) Leadership style is
important factor for organizational performance. There is need for different leadership styles

according to different stages of project.

Morris (1988) researched important success as well as failure factors through analyzing project

management life cycle at its different stages. Leadership is important factor during project

initiation, planning and closing stages but its role in project execution stage is very minor.

Pinto and Prescott (1988) Detailed Researched was conducted to found critical success factors of

organizational performance for each stage. Investigation shows that for each stage there were

different success factors. Therefore, success criteria and as result of it different role of manager

is required for different stages. Seltzer &Numerof (1988) Relationship between leadership

behavior and its influence on team member’s motivation or morale level were analyzed. As,

team’s motivation plays important role in organizational performance therefore leadership

behavior should be congruent.

Barczak&Wilemon (1989) Leader plays main role in innovative product development

organization. Leadership styles for innovative tasks, their roles, functions and method they

employ to direct and control the teams were investigated. Roles and functions of leaders for all

types of organizations are same but in innovative tasks methods to control team are different.

2.5.3. Era 1990’s

Cleland (1995) Leadership role in manufacturing organizations had been field of research in past

but in context of organizational performance it is one of emerging area. Importance of research

in this field is elaborated through emphasizing cross functional and cross organizational

management research initiatives. Green (1995) Role organizational performance attributes, top

management in organizational performance were investigated. Strong relation between leader’s

role and organizational performance project was analyzed with help of a model.
Charette (1996) there is need of thinking on post normal science research for organizational

performance management. Role of leaders and other team members in management of

organizational performance and its relation with organizational performance rate should be

researched. Kirsch (1997) Different controlling modes to control team member’s behavior to act

according to desired organization’s goal were explored. Suggestions are that different

stakeholders should be managed by leader by different formal and informal controlling modes.

Kloppenburg &Petrick (1999) Leader plays an important role in building a proper team. Relation

among leadership style, team performance and organizational performance were analyzed.

Mohan Thite (1999) Nature and importance of transformational and transactional leadership

styles in technical projects were explored in light of Bass leadership model. Integration of both

leadership styles is key for organizational performance. Organizational structure, intellectuality

and behavioral aspects are important factor which should be manage for leadership effectiveness.

Norrgren& Schaller (1999) Relation between leadership style, organizational climate and

organizational performance was explored for matrix organization. Finding reveals that leader’

behavior and not his power is an important factor for organizational performance. Thite (1999)

Leadership styles plays important role in technical organizations. Role of three aspects of

leadership self, subordinate and superior in organizational performance was analyzed.

2.5.4. Era 2000’s

DeGroot, Kiker& Cross (2000) Relationship between charismatic leadership style and behavior

of team members was analyzed. Result reveals a strong relation between charismatic leadership

and team performance. Holt & Rowe (2000) Role of leadership in public organizations was

analyzed. Social, political, ethical and different stakeholder related factors were identified and

leader’s role to manage these factors was explored. Miller, Fields, Kumar & Ortiz (2000)
Leadership style should be congruent with organizational vision, team member’s behavior,

organization culture and corporate attributes. Role of leadership styles, leader’s behavior and his

communication skills in performance of team and organizational performance were explored.

Rickards &Moger (2000) Role of leadership in team development was researched. Creative

leadership is required to solve issues in management of team behavior and there is need to

standardized or structured leadership model for an organization. Sicotte& Langley (2000)

Leader’s horizontal communication aspect is important for management of uncertainty and

equivocality in a organization. Thite (2000) Role of leadership style in information industrial

organizations was investigated. Finding reveals that no single leadership style is suitable for all

situations rather combination of transformational, technical and transactional leadership styles is

key for organizational performance. Organizational catalyst, intellectual and behavioral aspects

relation with effective leadership was also explored.

Ayas&Zeniuk (2001) Project based learning’s and the ways in which these learning’s may affect

team were explored. Development and growth of these learning capabilities were also analyzed.

Bech (2001) Similarities and differences in organization management and leadership were

investigated for each step. Integration of activities of both is key for organizational performance.

Cheung, Thomas Ng, Lam & Yue (2001) Effect of leadership behavior on productivity of team

members and organizational performance was analyzed. Finding reveals that satisfaction of team

members is sensitive factor for organizational performance and charismatic leadership plays

important role in team satisfaction. Satisfying leadership behaviors (SLB) model was developed

to analyze relationship.

Crawford (2001) Correlation between leadership style and success of manager was explored.

Knowledge, skills and attributes of manager plays important role in his leadership style. Grant,
Graham &Heberling (2001) Organizational and team structure is vital for organizational

performance. Leadership styles should be congruent with team structure for success. Jung (2001)

Role of Transformational style and transactional style of leadership in behavior of team and

organizational performance was analyzed. Finding reveals strong relation between divergent

thinking and brainstorming attributes of team members and transformational leadership style.

Leifer, Connor & Rice (2001) Different aspects of radical innovation organizations were

researched. Difference in management of radical innovation and incremental organizations was

analyzed. Guidelines based upon key strategic imperatives were explored for successful

management of radical innovation organizations. Rickards, Chen &Moger (2001) Performance

level of teams was analyzed and finding reveals that effectiveness and creativity of team plays an

important role in transformational leadership and organizational performance. Smith (2001)

Different styles of leadership (laissez-faire, transactional and transformational) and attributes of

team members were identified and their contributions for better organizational performance.

Wright, Rowitz&Merkle (2001) Leadership development model for public sector organization

was developed. Behavioral, organizational structure and organization context related variables

were identified which are important for organizational performance. Bell & Kozlowski (2002)

Effective leadership in virtual teams was analyzed. Virtual team types and congruent leadership

styles were also explored. Verburg, Bosch Sijtsema&Vartiainen (2013) communication and trust

were analyzed as critical factors for organizational performance. Yang, Huang, & Hsu (2014)

Role of leadership was analyzed critical for organizational performance.

2.5. Summary

This extensive literature review shows that theories of leadership have been changing with time.

Evolution in theories of leadership from natural school of leadership to competency school of

leadership has been discussed above. Evolution in organization performance from controlling

iron triangle to stakeholder expectations thinking can also be understand through above study.

Lots of researches have been conducted on focusing mechanistic part of organizational

performance management. Now, new areas of research in this field are soft part of organizational

performance. Leadership role is an emerging area of research. New theories of organizational

performance have also changed old concepts.

Current researches have showed that focus on soft part of organizational performance

management system can lead to successful organization. Currently, researches have been

conducting on analyzing role of different soft variables like intelligence capabilities, behavioral

complexity, conscientiousness, emotional aspects, innovation capacities, uncertainty,

communication, Technology-mediated communication, trust, interpersonal relations, cultural

differences, stakeholder satisfaction and organizational structure in organizational performance.

Leadership is also an important variable to analyze its role in organizational performance.

Competency school of leadership clearly defines leadership as combination of soft and hard

aspects.

So, above study reveals that there is need to analyze role of leadership competencies in

organizational performance.
3. Research Design
3.1. Research Objectives

Leadership is a complex thing and its role in performance of an organization has many aspects

(Müller & Turner, 2007). Lots of researches have been conducted while focusing on relationship

between leadership styles and performance of organization in complex industrial type

organizations. Results of these researches shows that leadership style fosters and improves the

leader-follower relationship and as result achieving good organization performance (Barling,

1996; Dvir, 2002; Lowe, 1996; Waldman, 2001).

As discussed earlier, most of these earlier researches have focused on complex organizations;

results of these researches have been hard to prove in a small-scale enterprise. Therefore, there

has been lack of empirical evidence supporting relationship between leadership style and

performance of a small-scale enterprise (Keegan & den Hartog, 2004). In this research small

scale enterprise has been studied. Organizations that possess no more than fifteen employees and

having less than three million Saudi Riyal capital outlay.

So, main objective of this research in first step is

a. Analyze role of leadership in performance of a small-scale enterprise type organization

Leadership has many school of thoughts and there have been many approaches for measuring

organization performance. Empirical analysis is also required therefore others objectives of

research in next step

b. To analyze different schools of leadership behavior

c. To analyze the conceptualization and different measures of organization performance

d. To empirically analyze the impact of leadership behavior on organizational performance

e. To analyze the impact of leadership behavior on organizational performance in the case

company D&R Cambric communication

The objectives of research require statistical analysis of several variables and their relationship

with each other, therefore quantitative data was collected through survey. The quantitative

method gives the opportunity to categorize responses and then based on statistical approach,

illustrate the results. In quantitative method, research could have accurate outcomes by using

statistical method, So that this method with designing questionnaire was selected. Use of a

questionnaire is an appropriate tool to collect data as “it provides an efficient way of collecting

responses from a large sample prior to quantitative analysis” (Saunders et al., 2009:361). Primary

data gathered from correspondents directly has been used in research.

3.2. Research Process

The literature review shows a gap in existing knowledge about the relationship between

leadership style and organizational performance. New area of research in this field is evaluating

relation of leadership competencies with various features of organizational performance.

However, previous researches imply the existence of such a relationship.

Relation exists as meaningful entity independent of consciousness so, Objectivism epistemology

is applied. Relation exists but type and strength of relation should be evaluated. Relation can be

evaluate or prove through experience or study of different examples so, this lead to Positivism

theoretical perspective. Study of different cases or survey is required to prove relation.

Therefore, research in positive spirit engages in survey research methodology. Sampling,

collection of data through questionnaire and the quantitative method of statistical analysis is

required to apply for proving relation because the “goal of quantitative studies is to measure and

analyze the relationships between variables”. (Denzin & Lincoln, 1994).

Methodology is the part of research that shows the ways and approaches of collecting the data”

(Oliver, 2004).Data for research was collected for different variables on five point Likert scale.

Collected data contain specific value on Likert scale for each question. First fifteen questions

were for leadership competencies and remaining ten questions were for project success.
“Data in which an ordering or ranking of responses is possible but no measure of distance is not

possible is called Ordinal data; data in this case is also ordinal but variables for which it has been

gathered were treated as continues” based upon (Dennis Clasen & Thomas Dormody, 1994)

research. Therefore, different statistical analysis for quantitative data can be applied

3.3. Research Model

The previous researches have suggested that role of leadership may be vital for organizational

performance. Different role of leadership competencies in organizational performance should be

analyzed. Research to analyze relationship between leadership competencies; and organizational

performance is needed. Empirical analysis is required to analyze this relationship. Therefore,

following hypothesis has been developed:

Hypothesis 1:

“The leadership has no relationship with organizational performance”.

Following model was developed to test hypothesis 1.

Model 1 to test Hypothesis 1

3.4. Sampling

Small service sector organizations in Saudi Arabia were analyzed as target population for this

research. Hundred small service sector organizations working in Saudi Arabia were analyzed as

sample for research. Leading small service sector organizations in Saudi Arabia were randomly

selected for this research. Reasons for using random sampling are; making statistical inferences,

achieving a representative sample and minimizing sampling bias. Simple random sampling was

applied because “aim of the simple random sample is to reduce the potential for human bias in

the selection of cases to be included in the sample. As a result, the simple random sample

provides us with a sample that is highly representative of the population being studied, assuming

that there is limited missing data. One of the best things about simple random sampling is the

ease of assembling the sample. It is also a fair way for selection of a sample from given

population because every member is given equal opportunities of being selected” (Bryman,

2012).

In these organizations people worked as leading role were selected for data collection. Managers

were asked to fill questionnaire in face to face meeting. Thoroughly discussions were also done

with them on their management experience for validation of results. Different questions which

represent leadership competencies were discussed and manager’s inputs were marked on Likert
scale. Organizational performance was also investigated through different questions. Data for

different demographic features like qualification, experience was also gathered from managers.

3.5. Research Tool

Reliability

Polit and Hungler (1993:445) refer to reliability as the degree of consistency with which an

instrument measures the attribute it is designed to measure. The questionnaire which was

answered by both groups revealed consistency in responses. The physical and psychological

environment where data was collected was made comfortable by ensuring privacy,

confidentiality and general physical comfort.

Validity

The validity of an instrument is the degree to which an instrument measures what it is intended

to measure (Polit & Hungler 1993:448). The questions were formulated in simple language for

clarity and ease of understanding. All the subjects completed the questionnaires in the presence

of the researcher.
4. Analysis
5. Research Findings
6. Discussion
7. Conclusion

7.1. Concluding Remarks

7.2. Managerial Implications and Literature Contributions

7.3. Limitations and Suggestions for Future Studies

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9. Appendices