The effect of leadership on employee commitment in FPT distribution company a full range leadership approach

ABSTRACT This research investigates the relationship between leadership styles and different types of employee commitment in FPT Distribution Company.. Many previous researchers recogniz

THE EFFECT OF LEADERSHIP ON EMPLOYEE COMMITMENT IN FPT DISTRIBUTION COMPANY – A FULL RANGE LEADERSHIP APPROACH

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

THE EFFECT OF LEADERSHIP ON EMPLOYEE COMMITMENT IN FPT DISTRIBUTION COMPANY – A FULL RANGE LEADERSHIP APPROACH

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International Business

by

Ms Tran Thi Ngoc Quyen

ID: MBA03027 International University - Vietnam National University HCMC

February 2013 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree

ACKNOWLEGEMENT

This thesis is done with great deal of supporting from the wonderful people, who showed significant concern towards me during the time of working on this dissertation I would like to take this opportunity to express my sincere gratitude to them

I wish to express my deepest gratitude to Dr Truong Thi Lan Anh for her great supervision and continuous support as well as providing critical insights during the course of my research

I would like to extend my thanks to all employees of FPT Distribution Company for their time completing all questionnaires, especially for their assistance, coordination and support during the research survey process

Last but not least, I want to say thankful to my family, who always beside me and give me power to complete my dissertation

With many thanks,

PLAGIARISM STATEMENTS

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University

Ho Chi Minh City

COPYRIGHT STATEMENT

This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author‟s prior consent

©Tran Thi Ngoc Quyen/MBA03027/2013

Table of Contents

Chapter 1: INTRODUCTION 1

1.1 Research background: 1

1.2 FPT Distribution Company introduction: 2

1.3 Rationales and Problem statement: 3

1.4 Research objectives: 4

1.5 Scope of research: 4

1.6 Significance of research: 4

1.7 Research structure: 4

Chapter 2: LITERATURE REVIEW AND RESEARCH MODEL 6

2.1 Leadership: 6

2.1.1 Concepts: 6

2.1.1.1 Differences between Managers and Leaders: 6

2.1.1.2 Some definitions of leadership: 7

2.1.2 Traditional leadership theories: 8

2.1.2.1 Trait Theory: 8

2.1.2.2 Behavioural Theory: 9

2.1.2.3 Contingency Theory: 11

2.1.3 Full-range leadership theories: 14

2.2 Employee commitment: 19

2.2.1 Concepts: 19

2.2.2 Components of employee commitment: 21

2.3 Relationship between leadership and employee commitment: 22

2.4 Research model and hypothesis: 25

Chapter 3: METHODOLOGY 26

3.1 Research design: 26

3.2 Research process: 29

3.3 Population and Data sampling: 29

3.4 Data collection: 30

3.4.1 Secondary data: 31

3.4.2 Primary data: 31

3.4.2.1 Preliminary research: 32

3.4.2.2 Final survey: 33

3.5 Data analysis: 38

3.5.1 Coding data: 38

3.5.2 Descriptive statistics: 39

3.5.3 Reliability and Validity test: 40

3.5.4 Regression analysis: 41

Chapter 4: RESEARCH RESULTS AND ANALYSIS 42

4.1 Response rate: 42

4.2 Demographic data: 42

4.3 Results of Validity test: 43

4.3.1 Exploratory factor analysis –EFA of independent variables: 43

4.3.2 Exploratory factor analysis –EFA of dependent variables: 44

4.3.3 Rename factors: 46

4.4 Results of Reliability test: 49

4.4.1 Cronbach‟s alpha for leadership variables: 49

4.4.1.1 Contingent Reward: 49

4.4.1.2 Personal Motivation: 49

4.4.1.3 Idealized Influence: 50

4.4.1.4 Management by exception: 50

4.4.1.5 Laissez-faire: 51

4.4.1.6 Intellectual Stimulation: 51

4.4.2 Cronbach‟s alpha for employee commitment variables: 52

4.4.2.1 Continuance Commitment: 52

4.4.2.2 Affective Commitment: 52

4.4.2.3 Normative Commitment: 53

4.4.3 Restate Research Model: 53

4.5 Regression analysis and Hypothesis testing: 56

4.5.1 Correlation analysis: 56

4.5.2 Regression analysis: 58

4.5.3 Hypothesis testing: 60

4.6 Differences among groups of followers: 63

4.6.1 T-test: 63

4.6.2 One-way ANOVA: 64

Chapter 5: RESEARCH DISCUSSION AND IMPLICATIONS 66

5.1 Effect of personal motivation on continuance and affective commitment: 66

5.2 Effect of idealized influence on continuance and affective commitment: 67

5.3 Effect of contingent reward on continuance and affective commitment: 68

Chapter 6: RESEARCH CONCLUSION AND RECOMMENDATION 70

6.1 Research Conclusion: 70

6.2 Recommendation: 70

6.2.1 Personal motivation: 70

6.2.2 Idealized influence: 71

6.2.3 Contingent reward: 72

6.3 Limitation and suggestion: 72

REFERENCES 74

APPENDIX 82

Appendix 1: Structured interview 82

Appendix 2: Survey Questionnaire: 84

Appendix 3: Survey questionnaire (Vietnamese version) 87

Appendix 4: Descriptive Statistics 90

Appendix 5: Result of exploratory factor analysis 92

Appendix 6: Result of reliability test 100

LIST OF TABLES

Table 1: Comparison between Leaders and Managers 6

Table 2: Studies of leadership traits and characteristic 9

Table 3: Summary of the development of Full Range Leadership Theory 18

Table 4: Measurement for leadership variable 35

Table 5 Measurement for employee commitment variable 37

Table 6: Summary of coding variables 39

Table 7: Summary of demographic data 42

Table 8: Rotated Component Matrix 43

Table 9: KMO and Bartlett's Test 44

Table 10: KMO and Bartlett's Test 44

Table 11: Total Variance Explained 45

Table 12: Rotated Component Matrix 46

Table 13: Summary of renaming factors after EFA 47

Table 14: Reliability coefficient of contingent reward measurement scale 49

Table 15: Reliability coefficient of personal motivation measurement scale 49

Table 16: Reliability coefficient of idealized influence measurement scale 50

Table 17: Reliability coefficient of management by exception measurement scale 50

Table 18: Reliability coefficient of laissez-faire measurement scale 51

Table 19: Reliability coefficient of intellectual stimulation measurement scale 51

Table 20: Reliability coefficient of continuance commitment measurement scale 52

Table 21: Reliability coefficient of affective commitment measurement scale 52

Table 22: Reliability coefficient of normative commitment measurement scale 53

Table 23: Summary of revised research model 54

Table 24: Pearson's Rotated factor loading 57

Table 25: Regression – Coefficients of continuance commitment 58

Table 26: Regression – Coefficients of affective commitment 58

Table 27: Regression analysis at second round 59

Table 28: Regression – coefficient of dependent variables 59

Table 29: Summary result of hypotheses test 62

Table 30: Group statistic on Gender 63

Table 31: Result of independent sample test 64

Table 32: Test of Homogeneity of Variances 64

Table 33: Result of ANOVA test 65

LIST OF FIGURES

Figure 1: The basic leadership approaches 14

Figure 2: A Model of the Full Range Leadership Development Theory 16

Figure 3: Conceptual framework 25

Figure 4: Research process 29

Figure 5: Restated Research Model 54

Figure 6: Resulted model 63

ABSTRACT

This research investigates the relationship between leadership styles and different types of employee commitment in FPT Distribution Company The literature provided discusses the leadership and employee commitment

Information was gathered, using two instruments, from a sample of 210 raters The Multifactor Leadership Questionnaire, which was formulated from Bass and Avolio‟s (1997) Full Range Leadership Development Theory, was used to determine leadership style within the organisation Employee commitment was captured using Meyer and Allen‟s (1997) Organisational Commitment including Three-Component Model of employee commitment Leadership was identified as the independent variable and organisational commitment as the dependent variable Data obtained from each of the research instruments was then statistically processed in data analysis in order to refine and operationalize the conceptual model and to investigate the relative effects of the various factors Result of data processing indicated that there are three factors affect employees‟ continuance and affective commitment such as personal motivation, idealized influence and contingent reward In which personal motivation and contingent reward is the key factor and idealized influence is an important factor have an impact

on employee commitment

The analysis emphasizes the importance of increasing level of employee commitment to the organization by increasing rewards, often reviewing salaries or building mutual trust between leaders and subordinates

Keywords: employee commitment, leadership

Chapter 1: INTRODUCTION

1.1 Research background:

The increase of organization‟s day by day changes is becoming a major component of

everyday organizational functioning These changes require most companies to supply the best

and highest quality of products and services Therefore, employee commitment is extremely

crucial in order to remain competitive of these pressures It can be said that the success of an

enterprise depends on many determinants ranging from internal to external Along with capital

and resources, workforce is also the company‟s greatest assets People are becoming a source of

competitive advantage for most organizations (Ulrich, 2000) Ulrich (2002) has argued in his

work that the competitive edge of companies no longer lies in its products, but in its people

People are seen to be the lifeblood of organizations and they represent the most valuable

resources of organizations It is undeniable that no organization can perform at top levels unless

each employee is committed to the organization‟s objectives and works effectively However,

recruiting the right employees is not as difficult as making them devoted for the organization It

is obviously affected by so many different reasons The objective of the organization is not only

to acquire workforce but also look for an efficient and effective labor force

Leadership is essentially the core and spirit of organizations which helps to maximize

efficiency and to achieve organizational targeted goals According to Bass & Avolio (1993),

leadership styles are behaviors or processes that leaders conduct or participate in that enable

extraordinary things to be done in or by the organization Leaders set a direction for the rest, they

help subordinates recognize what lies ahead; and visualize which achievement that can be

obtained; they also encourage and inspire their staff to work to their utmost Effective leadership

helps company get through peril times and make the business run smoothly and successfully It is

sure that without leadership, organization will move slowly, stagnate, and lose its initial way and

subordinates will quickly degenerate into argument and conflict Much of the literature about

organizations stresses decision-making and implies that if decision-making is timely, complete,

and correct, then things will go well Yet a decision by itself changes nothing

Hughes (2005) had proved that the success of any organization is dependent upon the collection

of individuals, including leaders and subordinates, and the amount of effort each individual puts into it Many previous researchers recognize that employee commitment (Meyer et al., 2004; Allen & Myer, 1990) and leadership styles (Bass, 1997; Bass et al., 2003) are of major factors to the organizational success or failure If leaders ensure that employees will have an opportunity to

be appreciated and recognized for their individual attempt, they will be ready to make profit and contribute to the company‟s success Allen & Myer (1990) also suggest that the continued interest is a result of the belief that if properly managed, employee commitment can lead to benefits such as leadership effectiveness, improved employee performance, reduced turnover and absenteeism

1.2 FPT Distribution Company introduction:

FPT Distribution Company (FDC) is one of seven affiliate companies of FPT Corporation, Vietnam‟s largest informatics organization It was officially established on April

13th, 2003 whose headquarter was located in Ha Noi and other branches was in Ho Chi Minh City, Da Nang and Can Tho Province FDC is always proud to have the country‟s largest distribution network, with agents nationwide, and enjoys an annual average growth rate of approximately 32 percent

FDC has been the leader in both information technology and telecommunication market in Vietnam Currently, FDC is valuable partners with more than 60 leading IT companies from around the world namely IBM, Microsoft, HP, Nokia, Toshiba, Oracle, Samsung, Computer Associates, Apple, Intel, Symantec, NEC, etc It is highly appreciated by consumers as well as partners simply because FDC brings customers the latest IT products together with various types and perfect quality With its existing strengths and customer-oriented principles, FDC commits

to continue bringing its customers the added value, maintaining trust and credibility with partners, developing in domestic market and expanding to foreign countries

In general, the amount of employees in FDC increased slightly, from 553 in 2008 to 571 in

2010 (3.9% in 3 years) However, compared to the number of people who quit job and were hired, this amount was small In 2008, 26 staff including managers and employees left their

position in FDC and this became an alarmed situation when this proportion grew significantly to

45 in 2010 Disloyal employees considerably affect the organizational process since newcomers need at least 2 month probation to catch up with working progress Also, FDC has some long-term projects in IT distribution which requires the in-charge staff should take care of vendors as well as retailers from the beginning till the end If a member stops his/her work at the middle of the progress, the project and company‟s turnover will surely influenced Therefore, in order to maximize profit and decrease all cost of recruitment or canceling project, leaders in FDC recognize to sustain their competent people by building a strong commitment basis among their workforce Commitment is complex and continuous, thus it requires employers or managers to discover ways of enhancing the work life of their employees

1.3 Rationales and Problem statement:

FDC has well recognized human capital as a competitive advantage Thus, for FDC‟s vision to become a reality, its leadership relies on employees to execute strategic objectives The employees‟ knowledge, experience, skills, expertise, the ability to collectively innovate and their decision making processes is the key to the success of FDC

As you know that, most of FDC‟s profit comes from IT projects with big retailers And a project will surely run well unless sales managers have good relationship as well as enough experience in dealing prices However, in recent years, FDC may face challenges of losing competent and experienced employees They tend to move to FDC‟s competitors such as Viettel, Digiworld,… Obviously, turnover among these competent employees results in interruptions in normal operations, loss of efficiency, increased replacement and recruitment cost, project delays, increased customer dissatisfaction, and many other difficulties Lack of employee commitment threatens the survival of the organization because a loss of a competent employee is a loss of competitive advantage for the organization The loss of skillful employees in FDC mainly lies in the way of leading the organization Thus, the ability of FDC‟s leadership to retain competent employees is critical to its success

It is said that committed employees tend to generate high performance business outcomes

as measured by increased sales, improved productivity, profitability and enhanced employee

retention Although obtaining experienced employees is hard, keeping them deep-seated in organization is harder Therefore, this study is considered important to determine the relationship between full-range leadership styles (i.e transformational, transactional and laissez-faire leadership) and employee commitment (i.e affective, normative and continuance) in FPT IT Distribution Company – a subsidiary of FPT Corporation And the purpose of this study is figuring out which factors of leadership in the company can significantly influence employees in FDC and how to improve these factors in order to increase the level of a staff‟s commitment to

an enterprise

1.4 Research objectives:

This research is aimed to:

- Identify which leadership attributes affect employee commitment of FDC

- Examine their importance towards employee commitment

- Suggest solutions to improve leadership for higher employee commitment to

1.7 Research structure:

This thesis comprises 5 chapters as below:

- Chapter 1: Introduction

This chapter gives a brief introduction about research background, problem should be solved of the company and objectives of research

- Chapter 2: Literature review and research model

This chapter introduces conceptual framework about some related concepts and theories of the study, then hypotheses are built based on these basic concepts

- Chapter 3: Methodology

This chapter states the method used in research which includes research design and instrument, data collection and sampling and also the way how to analyze data in order to test the

measurement and conceptual framework

- Chapter 4: Research results and analysis

This chapter presents and discusses the results of the correlation analysis of the research

hypothesis and the assessment of the reliability of the research data

- Chapter 5: Research discussion and Implications

After presenting the results of the research in the previous chapter, the implications of these results are now discussed in the light of the literature review

- Chapter 6: Research conclusion and Recommendations

Research limitations are identified and recommendations of the research are also discussed in this chapter

Chapter 2: LITERATURE REVIEW AND RESEARCH MODEL

2.1 Leadership:

2.1.1 Concepts:

2.1.1.1 Differences between Managers and Leaders:

Controversy has arisen over whether leaders are different from managers or they are the same Actually, both of them are essential for an organization‟s prosperity While leaders develop the vision, managers carry out the vision Managers should therefore acknowledge the importance of the leadership component of their work and be developed to become leaders who achieve goals Leadership is arguably based on purpose, change, and emotions, in contrast, management is based on objectives, stability, and rationality Below table defines some differences between the two concepts:

Are the heart of an organization Are the brain of an organization

Motivate, encourage and work with people Establish systems

Create a vision and set a direction, and share

with followers

Create rules and operational procedures

Align people based on their knowledge,

abilities and personality

Are a task-oriented and often not oriented

Take you to a new place Take care of where you are

Wonder that if the problem set in a new

environment might require a different solution

Think that a successful solution to a management problem can be used again

Write business plans, set budgets and monitor

progress

Get organizations and people to change

(Source: Colvard, 2009)

Table 1: Comparison between Leaders and Managers

2.1.1.2 Some definitions of leadership:

There are a number of definitions and views on the nature of leadership in the literature According to Sorenson (2002), Stogdill‟s Handbook of Leadership, first published in 1974, listed 4,725 studies of leadership and 189 pages of references Therefore, it is complicated to find a standard definition for leadership Bass (1985b) also supported this idea by noting that finding one specific definition of leadership is a very complex task as studies on this topic are varied and there is no single generally accepted definition In the literature, leadership has been identified as

an important subject in the field of organizational behavior Generally speaking, leadership involves influencing other individuals to act towards the achievement of a goal Some definitions describe leadership as an act of influence, some as a process and yet others have looked at a person‟s trait qualities (Lussier and Achua, 2001)

Various authors regard leadership as the behaviour of an individual when directing the activities of a group toward a shared goal John Martin (2005) defined “leadership reflects the ability of one person to direct and control the activities of others, albeit from a slightly different perspective than that of management It still reflects the process of influence and therefore the exercise of power” Lee and Chuang (2009) also explained that the excellent leader not only inspires subordinate‟s potential to enhance efficiency but also meets their requirements in the process of achieving organizational goals Fry (2003) explained leadership as use of leading strategy to offer inspiring motive and to enhance the staff‟s potential for growth and development

Some authors define leadership as a process whereby an individual influences a group of individuals to achieve a common target Vecchio (1997) describes leadership as a process through which leaders influence the attitudes, behaviors and values of others towards organizational goals This was supported by Jacques and Clement (1994) who defined leadership

as a process in which one person sets the purpose or direction for others and gets them to move along together with him/her in that direction with competence and commitment

Other researches defined leadership as the process of moving a group (or groups) in the same direction through mostly non-coercive means This definition is consistent with some researchers such as Bass (1990a) and Yammarino (1997) Bass has been in the forefront of

approaching leadership in terms of styles He has described three well-known styles of leadership: laissez-faire, transactional, and transformational leadership Transformational leaders encourage subordinates to adopt the organizational vision as their own, through inspiration, thus adopting a long-term perspective and focus on future needs (Bass, 1990b) Transformational leaders tend to have a holistic perspective of organizational factors Transactional leaders, on the other hand, identify and clarify job tasks for their subordinates and communicate how successful execution of those tasks will lead to receipt of desirable job rewards (Bass, 1990b) According to Avolio et al (1991), a transactional leader determines and defines goals for their subordinates and suggests how to execute tasks They provide feedback and rewards on completed tasks These leaders motivate subordinates to achieve expected levels of performance by helping them

to recognise task responsibilities, identify goals and develop confidence about meeting desired performance levels They also make subordinates understand how their needs and the rewards they desire are linked to goal achievement Laissez-faire leaders abandon their responsibility, leave their subordinates to work relatively on their own and avoid making decisions (Bass, 1990b)

2.1.2 Traditional leadership theories:

2.1.2.1 Trait Theory:

Early studies analysed leadership based on hereditary attributes and compared traits of leaders with those of followers Trait approach emphasizes attributes of leaders such as personality, motives, values and skills By identifying specific traits or characteristics of leaders, one could distinguish a leader from a follower (Hughes, 2005, p.25)

Research concerning trait theory concentrated on the following factors: (a) physical factors such as age, height, weight, physique, health and appearance; (b) ability factors such as fluency

of speech, tone of voice, academic performance, intelligence, judgment and decision, insight and initiative; and (c) personality features such as integrity, emotional control, self-confidence and popularity (Bass, 1990a) According to this theory, an individual must possess these traits or characteristics in order to assume leadership

Seeking to ascertain if trait theory accurately predicted leadership potential, Mann had reviewed trait studies, and reported that the foundation of trait theory lacked validity Hence, Stogdill (1974) completed a second review of trait leadership research which identified factors associated with energy, age, status, mobility, education and intelligence as being able to separate effective leaders from ineffective leaders However, Stogdill (1974) surmised that trait theory research produced confusing results because a combination of traits proved effective in some groups of leaders, while they were ineffective in others Therefore, Stogdill concluded that leadership requires more than just the study of people, but also the study of situations (Hughes,

2005, p26)

Stogdill (1948) Mann (1959) Stogdill (1974) Lord et al.(1986) Kirkpatrick and

Locke (1991) Intelligence

Achievement Persistence Insight Initiative Self-confidence Responsibility Cooperativeness Tolerance Influence Sociability

Intelligence Masculinity Dominance

Drive Motivation Integrity Confidence Cognitive ability Task knowledge

Table 2: Studies of leadership traits and characteristics (Northouse, 2001)

2.1.2.2 Behavioural Theory:

Failure of the trait theory led to further research that focused on behavioural styles of leadership Behavioural leadership proposed that behaviour of the leader impacted work and follower effectiveness This era of research focused on leadership behaviour as a mean of identifying the best way to lead Under this approach, many studies were carried out to support this theory, majorly: McGregor‟s Theory X and Theory Y (1960), the Ohio State and University

of Michigan Models (in Hellriegel et al., 2004) and the Managerial Grid Model of Blake and Mouton (1964)

McGregor‟s (1960) Theory X and Theory Y model proposed two distinct theories of leadership behaviours: one negative labelled theory X and the other positive labeled theory Y His theories contend that leadership behaviours are based on an assumption about employees His Theory X assumption includes the belief that employees dislike work and will avoid it if possible According to McGregor (1960), here managerial behaviours include coercing employees, controlling their tasks and activities, and directing their behaviours McGregor‟s (1960) Theory Y assumption includes the belief that employees can view work as a positive experience given the right conditions Here, managerial behaviours include providing encouragement, positive reinforcement and rewards

The Ohio State studies were viewed as influential because the research focused on activities of leaders, instead of traits (Bryman, 1986) Through this research, the Leadership Behaviour Description Questionnaire was developed Results of the Ohio State studies indicated two major dimensions of leadership behaviour, labelled “consideration” and “initiating structure” Consideration reflects the extent to which the leader establishes trust, mutual respect and rapport with the group This dimension is associated with two-way communication, participation and the human relations approach to leadership Initiating structure reflects the extent to which the leader defines and consolidates group interactions toward attainment of formal goals and organizes group activities This dimension is associated with efforts to achieve organizational goals

Leadership research during the 1940s conducted at the University of Michigan compared the behaviour of effective leaders with ineffective leaders These studies resulted in the development of two type of leadership behaviour (Bryman, 1986) Employee-centered leaders focus on the individual needs of followers, while job-centered leaders direct activities toward efficiency by focusing on reaching task goals and facilitating the structure of tasks Although the employee-centred and job-centred styles of leadership correspond to the Ohio State studies concepts of consideration and initiating structure, the Michigan studies concluded that leaders used one type of leadership and did not change styles depending on employee competency

One popularized outgrowth of the emphasis on leader behaviour aimed at both task and people issues is the Managerial Grid, developed by Robert Blake and Jane Mouton (Blake & Mouton, 1985, p.10-11) The foundation of the theory is the contrast between two approaches to the managerial role: (a) concern for production and (b) concern for people (Bryman, 1986) Blake and Mouton believed that both concerns are essential ingredients of effective management and each is conceptualized as a nine-point scale, thus producing eighty-one possible combinations of managerial behaviour They later added flexibility as a third variable According

to Blake et al (1964), leaders can only exhibit behaviours that fall into two primary categories (task-oriented or people-oriented) Depending on which category is most frequently shown, a leader could be placed along each of the two categories

The behavioural approach looks at what effective and ineffective leaders actually do; how they delegate tasks to subordinates, where and when they communicate to others and how they perform their roles Behavioural models made a great contribution to the understandings of leadership, as the focus shifted from who leaders are (traits) to what leaders do (behaviours) However, leadership behaviours that are appropriate in one situation aren‟t necessarily appropriate in another Because the behavioural models failed to uncover a leadership style that were consistently appropriate to all situations, other leadership models were devised (Hellriegel,

et al., 2004)

2.1.2.3 Contingency Theory:

Contingency theories tried to predict which types of leadership style will be most effective

in different types of situations Contingency approaches hypothesize that there are no universally acceptable styles of leadership A particular leadership style may prove valid in one situation, yet ineffective in another Many studies have attempted to isolate critical situational factors that affect leadership effectiveness including the degree of structure in the task being performed, the quality of leader-member relations, the leader‟s position power, subordinate‟s role clarity, group norms, information availability, subordinate acceptance of leaders‟ decisions, and subordinate maturity (Howell et al., 1986, p.88-102)

The models of contingency theory discussed include Leadership Continuum of Tannenbaum and Schidt, Fiedler‟s Contingency Model, House and Mitchell‟s path-goal theory,

Hersey and Blanchard‟s Situational Leadership theory and Vroom and Yetton‟s Contingency Model

Fiedler‟s (1967) contingency theory posited that effective group performance was dependent upon the appropriate match of the leader‟s personality and the situation Personality orientation of the leader is centered on a task or interpersonal style Hellriegel and colleagues (2004) indicated that leadership depends on matching a leader‟s style to a situation‟s demand Situational factors that influence leader effectiveness included leader-member relations, degree

of task structure, and power position of the leader Leader-member relations referred to the quality of the relationship between the leader and member (Fiedler, 1967) The leader‟s influence over the members was enhanced through a strong relationship

The path-goal theory of leadership (House, 1971) postulated that the eventual performance and satisfaction of group members was highly influenced by the appropriateness of leader behaviours in relation to member‟s needs and desires as well as the characteristics of the task Therefore, the function of the leader was to provide coaching, guidance and personal support to members if necessary The path-goal theory proposed that group members preferred a highly structured regime when presented with ambiguous, varied and interdependent tasks Initiating structure and close supervision from the leader helped clarify the path-goal relationship and increased the coordination, satisfaction and performance of the group members

Hersey and Blanchard‟s (1977) situational leadership theory proposed that leaders should vary their behaviours according to the member‟s maturity and they classified leader behaviours along two dimensions: directive behaviour (similar to initiating structure and production-centred) and supportive behaviour (similar to consideration structure and employee-centred) Directive behaviour, described one-way directional communication from the leader to the member Supportive behaviour, described bidirectional communication from the leader when providing social-emotional support for the member Hersey and Blanchard (1977) also claimed that the levels of directive and supportive leader behaviour should be based on the level of readiness of the followers Member maturity or readiness referred to the ability and willingness of members

to take responsibility for directing their own behaviour in relation to a specific task These behaviours are labeled as delegating, participating, selling, and telling

Vroom and Yetton (1973) focused their research on decision-making rather than styles of leadership This model seeks to enhance the decision-making ability of the leader and the follower‟s acceptance of those decisions It was complex decision tree incorporating seven contingencies whose relevance could be identified by making “Yes” or “No” choices (Robbins, 1997) Vroom and Yetton‟s model was normative, it provided a sequential set of rules that should be followed for determining the form and amount of participation desirable in decision making, as dictated by different types of situations (Robbins, 1997) The model presents three basic styles: autocrative (where the leader unilaterally makes decisions), consultative (where the leader solicits member inputs before deciding) and group (where the leader collaborates with members to arrive at a joint decision)

The weakness of the contingency approach is that it failed to provide some universal principles of leadership (Bass, 1990a) Yukl (2002) also stated that although situational leadership theories provide insights into reasons for effective leadership, conceptual weaknesses limit the approach‟s usefulness Thus, it is difficult to derive specific testable propositions from the approach, with the approach not permitting strong inferences about the direction of causality

Figure 1: The basic leadership approaches Note: Adapted from Amos and Ristow (1999) Small Business Management Series Human Resources Management, pp134

2.1.3 Full-range leadership theories:

In the past, there are many approaches to leadership theory According to Yukl (2005), numerous studies on the theory of leadership can be summarized into five broad theories, namely, trait, behavioral, contingency or situational approach, contemporary integrative approach, and power and influence approach Although previous studies about these leadership

theories have different approaches, they all state that each leadership has their own distinct style and it is totally different with others However, this judgment seems unilateral since a leader may employ different styles at different times actually Therefore, the results and suggestions of these researches cannot be applied in reality any more This study applies the “full-range leadership theory” as conceptualized by Bass (1985) and developed by Avolio and Bass (1991) The full-range leadership theory model describes a full range of influencing styles from „non-leadership‟

to powerful transformational leadership behaviors The model captures different kinds of behaviors which make a difference to outcomes for associates of the leader In other words, the range of behaviors starts with transformational leader behaviors to transactional leader behaviors reaching to the lowest leader interaction of laissez-faire leader behaviors (MLQ, undated; Bass et al., 2003)

Bass (1985) argued that existing theories of leadership primarily focused on follower goal and role clarification and the ways leaders rewarded or sanctioned follower behavior This transactional leadership was limited to inducing only basic exchanges with followers Bass suggested that a paradigm shift was required to understand how leaders influence followers to transcend self-interest for the greater good of their units and organizations in order to achieve optimal levels of performance He referred to this type of leadership as transformational leadership Bass‟s original theory included four transformational and two transactional leadership factors Bass and his colleagues (Avolio & Bass, 1991; Avolio et al., 1991) further expanded the theory based on the results of studies completed between 1985 and 1990 In its current form, the Full Range Leadership theory represents nine single-order factors including five transformational leadership factors, three transactional leadership factors, and one non-transactional laissez-faire leadership These leadership styles have been described to have a direct effect on individual and organisational level outcomes (Bass, 1990a)

Bass (1985a) based his descriptions of transformational and transactional leaders on Burns‟s (1978) original ideas Burns proposed that one could differentiate ordinary from extraordinary leadership He described transactional leaders as those leaders who influence compliance by expected rewards Transactional leadership is an exchange relationship that involves the reward of effort, productivity and loyalty Transformational leaders emphasize higher motive development and arouse followers‟ motivation and positive emotions by means of

creating and representing an inspiring vision of the future (Bass, 1997) Transformational leaders are those who motivate their followers to perform beyond expectation by raising the follower‟s confidence levels and providing support for developing to higher levels Followers feel a greater degree of respect and trust for the leaders who spiritually encourage them to achieve their working target The main idea of this theory is that followers are more motivated to enhance their performance by transformational leadership rather than transactional leadership (Bass & Avolio, 1990b) The work of Bass and colleagues (Bass, 1990a) expanded Burns‟s factors of leadership to include a third leadership style called laissez-faire leadership style Bass (1990a) described the laissez-faire leader as an extremely passive leader who is reluctant to influence subordinates considerable freedom, to the point of abdicating his/her responsibilities In a sense, this extremely passive type of leadership indicates the absence of leadership

Figure 2: A Model of the Full Range Leadership Development Theory (Bass and

Avolio, 1994: 5)

Avolio and Bass (1991) classify leadership into three major types of behaviour: faire (non-leadership), transactional, and transformational leadership Bass (1990), proposed four

laissez-behaviours of transformational leadership including charisma, inspirational motivation, intellectual stimulation, and individual consideration

Idealized influence attributes or behaviors, or Charisma is characterized by vision and a

sense of mission, instilling pride in and among the group, and gaining respect and trust (Humphreys & Einstein, 2003) Charismatic behaviour also induces followers to go beyond self-interest for the good of the group, providing reassurance that obstacles will be overcome, and promoting confidence in the achievement and execution influence (Howell and Frost, 1989) and followers place an inordinate amount of confidence and trust in charismatic leaders (Howell and Avolio, 1992) Idealized influence (attributes) refers to the socialized charisma of the leader, whether the leader is perceived as being confident and powerful, and whether the leader is viewed as focusing on higher-order ideals and ethics; while idealized influence (behaviors) refers

to charismatic actions of the leader that are centered on values, beliefs, and a sense of mission

Turning to inspirational motivation, Bass (1985) pointed out that followers look up to their

inspirational leader as one providing emotional appeal to increase awareness and understanding

of mutually desirable goals This characteristic was formed by the communication of high expectations, using symbols to focus efforts, and expressing important purpose in simple ways The leaders always talk optimistic things about the future, articulate a compelling vision for the future and provide an exciting image of organizational change (Bass and Avolio, 1994) The leaders encourage followers to envision attractive future states, for the organization and themselves (Bass et al, 1997)

Intellectual stimulation provides followers with challenging new ideas and encourages

them to break away from the old ways of thinking (Bass, 1985) The leader is recognized as one who promotes intelligence, rationality, logical thinking, and careful problem solving The attributes include seeking differing perspectives when solving problems, suggesting new ways of examining how to complete assignments and encouraging re-thinking of ideas that have not been questioned in the past (Bass and Avolio, 1994)

Finally, the fourth dimension of transformational leadership is individual consideration

which is concerned with developing followers by coaching and mentoring (Bass, 1985; Bass & Avolio, 1991) The leader pays close attention to the inter-individual differences among the

followers and act as mentor to the follower He teaches and helps others develop their strengths, and listens attentively to other‟ concerns (Bass and Avolio, 1994) Followers are treated individually in order to raise their levels of maturity and to enhance effective ways of addressing their goals and challenges (Bass, 1985)

Bass and Avolio (1997) described transactional leadership in terms of two characteristics: the use of contingent rewards and management by exception

Contingent reward is described as the reward that the leader will bestow on the subordinate

once the latter has achieved goals that were agreed to It is therefore the exchange of rewards for meeting agreed-on objectives By making and fulfilling promises of recognition, paying increases and advancement for employees who perform well, the transactional leader is able to get things done

Transactional leaders may also rely on active management by exception which occurs

when the leader monitors followers to ensure mistakes are not made, but otherwise, allows the

status quo to exist without being addressed (Bass & Avolio, 1995) In passive management by exception, the leader intervenes only when things go wrong

Both the transformational and transactional leadership are found to be contrasted with the

third style of leadership, called laissez-faire leadership (Bass, 1990 as cited in Bučiūnienė &

Škudienė, 2008) James & Collins (2008) described the laissez-faire leader as an extreme passive leader who is reluctant to influence subordinates‟ considerable freedom, to the point of handing over his/her responsibilities In a sense, this extremely passive type of leadership indicates the absence of leadership Bass (1990a) concludes that there is a negative association between laissez-faire leadership and a variety of subordinate performance, effort and attitudinal indicators This implies that laissez-faire leadership is always an inappropriate way to lead

Leadership

theories

Trait Theories Focused on leaders‟ physical ability

and personality; leaders are borne

Lacks validity, leaders without traits ruled and vice versa; difficult to list endless traits Behavioural

Transactional

Theory

Leadership is a social exchange, where leaders guide or motivate their followers in the direction of established goals by clarifying role, task requirements and rewarding system

Emphasized on rewarding system, positive or negative The effect on followers is short

Transformational

Theory

Leaders motivate followers into a common vision that identifies high goals for the organization, moves them gradually from concerns for exchange to achievement and growth The effects last long

Lacked the overall view of leaders‟ behaviours; other styles are needed for the prosperity of organizations, and a less level of environment consideration than transactional

Full-range

leadership Theory

Viewed the leadership behavior as a multi-dimensional construct, where leaders may act transformational, transactional and laissez-faire, depending on the interaction among all variables, including leaders, followers, situation, work environment and all related factors

Table 3: Summary of the development of Full Range Leadership Theory (conceptualized by

Hassan Othman Saqer, 2009)

2.2 Employee commitment:

2.2.1 Concepts:

Over the past few years, the study of commitment has advanced in many different directions A variety of disciplines have adopted the topic as a theme in their research and these have offered fresh and significant insights These recent advances include new approaches to the conceptualisation of employee commitment

Newstrom and Davies (2002) define employee commitment as the degree to which an employee identifies with the organization and wants to continue actively participating in it Like

a strong magnetic force attracting one metallic object to another, it is a measure of the

employees‟ willingness to remain with a firm in the future It often reflects the employees‟ belief

in the mission and goals of the firm, willingness to expend effort in their accomplishment, and intentions to continue working there Commitment is usually stronger among longer-term employees, those who have experienced personal success in the organization, and those working with a committed employee group

Luthans (1995) explains that, as an attitude, organizational commitment is most often defined as:

• a strong desire to remain a member of a particular organization;

• a willingness to exert high levels of effort on behalf of the organization; and

• a definite belief in and acceptance of the values and goals of the organization

In other words, this commitment is an attitude about employees‟ loyalty to their organization and is an ongoing process through which organizational participants express their concern for the organization and its continued success and well-being The organizational commitment attitude is determined by a number of personal (age, tenure in organization, and dispositions such as positive or negative affectivity, or internal or external control attributions) and organizational (the job design and leadership style of one‟s supervisor) variables Even non-organizational factors such as the availability of alternatives, after making the initial choice to join an organization, will affect subsequent commitment

Meyer & Allen (1997) [as cited in Meyer & Becker, 2004] define a committed employee

as being one “stays with an organization, attends work regularly, puts in a full day and more, protects corporate assets, and believes in the organizational goals” This employee positively contributes to the organization because of its commitment to the organization Organizational commitment is associated with increased satisfaction, performance, and organizational adaptability (Meyer & Becker, 2004), as well as decreased absenteeism and employee turnover (Lo et al., 2010)

According to Madigan et al (1999), committed employees would work diligently, conscientiously, provide value, promote the organization‟s services or products and seek continuous improvement In exchange, they expect a work environment that fosters growth and

empowerment, allows for a better balance of personal and work life, provides the necessary resources to satisfy the needs of customers and provides for their education and training as well

as that of their co-workers

Hellriegel (2001) emphasizes that organizational commitment goes beyond loyalty to include an active contribution to accomplishing organizational goals Organizational commitment represents a broader work attitude than job satisfaction because it applies to the entire organization rather than just to the job Further, commitment typically is more stable than satisfaction because day-to-day events are less likely to change it

2.2.2 Components of employee commitment:

The most popular multi-dimensional approach to organizational commitment is the conceptualization of Meyer and his colleagues This theory differs from others in the nature of the psychological state being described In 1984, Meyer and Allen, based on Becker‟s side-bet theory, introduced the dimension of continuance commitment to the already existing dimension

of affective commitment As a result, organizational commitment was regarded as a dimensional concept that included an attitudinal aspect as well as a behavioral aspect In 1991, Allen and Meyer added a third component, that is, normative commitment to their two dimensions of organizational commitment They proposed that commitment as a psychological attachment may take the following three forms: the affective, continuance and normative forms

bi-Affective commitment refers to an employee's emotional attachment to, involvement in, and

identification with the organization and its goals Affective commitment involves three aspects such as the formation of an emotional attachment to an organization, identification with, and the desire to maintain organizational membership (Allen & Meyer, 1991)

Continuance commitment is a commitment situation originating from the needs of

employees to stay in the organization considering the costs of leaving In continuance commitment, the employees consider the disadvantages of leaving the organization and avoid quitting Continuance commitment also includes factors such as years of employment or benefits that the employee may receive that are unique to the organization (Hunt and Morgan, 1994)

The third dimension of employee commitment is normative commitment, which reflects a

feeling of obligation to continue employment Those with high levels of normative commitment stay with an organization because they feel they ought to remain (Allen & Meyer, 1991) Normative commitment can be explained by other commitments such as marriage, family, religion, etc Therefore, when it comes to one‟s commitment to their place of employment, they often feel like they have a moral obligation to the organization

2.3 Relationship between leadership and employee commitment:

Several studies have reported the relationship between two variables: commitment and leadership style According to Stum (1999), employee commitment reflects the quality of the leadership in the organization It is important for the company to know what are the aspects that plays important role or have big impact in boosting the commitment of the employees Hence, in order to be effective, it is critical for managers to influence their subordinates, peers, and superiors, to assist and support their proposals, plans, and to motivate them to carry out with their decisions Swanepoel et al (2000) highlighted that leadership styles that encourage employee commitment is essential in order for an organization to successfully implement business strategies, achieve their goals, gain competitive advantage and optimize human capital Previous researchers on managerial performance pointed out that an important component of successful management is the ability to influence others As such, committed employees are more motivated and dedicated towards meeting and achieving organizational goals

Lee (2004) found out that transformational leadership correlates significantly with organizational commitment with samples of research and development professional in Singapore On the other hand, Hayward et al (2004) noted that transformational leadership has moderate positive correlation with affective commitment Other researchers such as Kent and Chelladurai (2001) posited that individualised consideration has positive relationship with both affective commitment and normative commitment Similarly, positive correlations was found between intellectual stimulation and both affective commitment and normative commitment Bass and Avolio (1994) revealed that transformational leaders who encourage their followers to think critically and creatively can have an influence on their followers‟ commitment

Transformational leadership helps to increase trust, commitment and team efficacy Also in this research, Bass and Avolio (1994) further suggest that employees are far more likely to be committed to the organization if they have confidence with their leaders This is further supported by Walumbwa and Lawler (2003) that transformational leaders can motivate and increase followers‟ motivation and organizational commitment by getting them to solve problems creatively and also understanding their needs Hence, hypotheses are formulated as follow:

H1: Idealized influence is positively related to employee commitment

H2: Inspirational motivation is positively related to employee commitment

H3: Intellectual stimulation is positively related to employee commitment

H4: Individual consideration is positively related to employee commitment

Contrary to transformational leadership, transactional one does not have significant relationship with organizational commitment Similarly, Hayward et al (2004) indicated that no correlation was found between transactional leadership and affective, normative and continuance commitment However, Bass (1985) insisted that rewarding when employees reached targets had

a positive and considerable influence on their next attempt and increased their work efficiency

In addition, when subordinates made mistakes, if leaders directed and gave them valuable advises, they would be more confident and dedicated to the organization This would lead to significant effect on a staff‟s work Hence, hypotheses are formulated as follow:

H5: Contingent reward is positively related to employee commitment

H6: Active management by exception is positively related to employee commitment

H7: Passive management by exception is positively related to employee commitment Bass et al (1997) conceptualized a third type of leadership, laissez‐faire leadership, which was hypothesized to occur when there is an absence or avoidance of leadership In this case the decisions are delayed, and reward for involvement is absent No attempt is made to motivate the followers, or to recognize and satisfy their needs The research of Nyengane, M.H (2007) indicates a weak, but significant and negative correlation between laissez-faire leadership

behaviour and affective commitment The results also suggest that this leadership behaviour will have a negative influence on the affective commitment Hence, hypothesis is formulated as follow:

H8: Laissez-faire leadership is negatively related to employee commitment

Although many previous researchers had various studies about the relationship between leadership style and employee commitment in an organization, there seems so few researches applied in IT distribution company Also, from the original theory of Bass and Avolio (2000) and Meyer and Allen (1997), some measurements are developed to make the research suitable for FDC‟s reality and shown in research instrument These characteristics will make my research different and special from other previous studies

2.4 Research model and hypothesis:

Based on the literature review, the conceptual framework is developed as follows:

Figure 3: Conceptual framework

Due to above framework, the hypotheses are formed as follows:

H1: Idealized influence is positively related to employee commitment

H2: Inspirational motivation is positively related to employee commitment

H3: Intellectual stimulation is positively related to employee commitment

H4: Individual consideration is positively related to employee commitment

H5: Contingent reward is positively related to employee commitment

H6: Active management by exception is positively related to employee commitment

H7: Passive management by exception is positively related to employee commitment

H8: Laissez-faire leadership is negatively related to employee commitment

Active management by exception

Passive management by exception

Chapter 3: METHODOLOGY

3.1 Research design:

As King (1994) cited in his research that an effective research design links abstract and stylized concepts and questions with the empirical world‟s complexities and challenges A research design must at once be specific and highly flexible It must be expansive enough to adapt these very complexities while still pointing you towards relevant data

The research design is a comprehensive master plan of the research study to be undertaken, giving a general statement of the methods to be used The function of a research design is to ensure that requisite data in accordance with the problem at hand is collected accurately and economically Simply stated, it is the framework, a blueprint for the research study which guides the collection and analysis of data The research design, depending upon the needs of the researcher may be a very detailed statement or only furnish the minimum information required for planning the research project

According to Babbie and Mouton (2004), there are different types of social research methods that can be identified from the literature, namely exploratory research, descriptive research and explanatory research Babbie and Mouton (2004) concluded that the aims for social research vary a great deal, ranging from, gaining new sights into the phenomenon; undertaking preliminary investigation before a more structured study of the phenomenon is done; describing central concepts and constructs of a phenomenon; determining priorities for the research and developing new hypotheses about existing phenomena Since the objective of the research is to explore the relationship between leadership style being practiced within FPT Distribution Company and organizational commitment to the organization, the research design for this study

is an exploratory case study that is analysed through mixed method

Quantitative research involves the collection of data so that information can be quantified and subjected to statistical treatment in order to support or refute “alternate knowledge claims” (Creswell, 2003, p 153) Qualitative research is also described as an unfolding model that occurs

in a natural setting that enables the researcher to develop a level of detail from high involvement

in the actual experiences (Creswell, 1994) What constitutes qualitative research involves

purposeful use for describing, explaining, and interpreting collected data Leedy and Ormrod (2001) alleged that qualitative research is less structured in description because it formulates and builds new theories Qualitative research can also be described as an effective model that occurs

in a natural setting that enables the researcher to develop a level of detail from being highly involved in the actual experiences (Creswell, 2003)

Quantitative research is an inquiry into an identified problem, based on testing a theory, measured with numbers, and analyzed using statistical techniques The goal of quantitative methods is to determine whether the predictive generalizations of a theory hold true

In contrast to the quantitative approach, qualitative research approaches reality from a constructivist position, which allows for multiple meanings of individual experiences In this approach a researcher develops a complex, holistic picture, analyses words, reports detailed views of informants, and conducts the study in a natural setting (Creswell, 2007) The goal of qualitative research is to explore and understand a central phenomenon in a qualitative research study (Creswell, 2005) Qualitative research uses a naturalistic approach that seeks to understand phenomena in context-specific settings, such as "real world setting [where] the researcher does not attempt to manipulate the phenomenon of interest" (Patton, 2002) Qualitative research, broadly defined, means "any kind of research that produces findings not arrived at by means of statistical procedures or other means of quantification" (Strauss and Corbin, 1990, p 17) and instead, the kind of research that produces findings arrived from real-world settings where the

"phenomenon of interest unfold naturally" (Patton, 2002) Unlike quantitative researchers who seek causal determination, prediction, and generalization of findings, qualitative researchers seek instead illumination, understanding, and extrapolation to similar situations

Because all methods of data collection have limitations, the use of multiple methods can neutralize or cancel out some of the disadvantages of certain methods As well, the strengths of each approach can complement each other Therefore, this study is conducted by using both qualitative and quantitative research called mixed method research Quantitative is the main method and will be supported by qualitative method Mixed method research is the type of research in which a researcher or team of researchers combines elements of qualitative and quantitative approaches (e.g., use of qualitative and quantitative viewpoints, data collection, analysis, inference techniques) for the purpose of breadth and depth of understanding and