The linkages among adaptive leadership, learing organization and organizatinal performance

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --- Thai Van Trung Hieu THE LINKAGES AMONG ADAPTIVE LEADERSHIP, LEARNING ORGANIZATION AND ORGANIZATIONAL PER

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Thai Van Trung Hieu

THE LINKAGES AMONG ADAPTIVE

LEADERSHIP, LEARNING ORGANIZATION AND ORGANIZATIONAL PERFORMANCE

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – 2014

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Thai Van Trung Hieu

THE LINKAGES AMONG ADAPTIVE

LEADERSHIP, LEARNING ORGANIZATION

AND ORGANIZATIONAL PERFORMANCE

of friends who attended my survey, without whose helped this work would never have been possible

In addition, I want to thank you for all of friends at AMIGOS Company, who stood in the breach when I concentrated on research

Last but not least, my sincere thanks owe to my family who gave me good conditions to complete this work

PLAGIARISM STATEMENTS

I hereby declare that this thesis represents my own work and any sign of plagiarism would significantly drive rejection results by International School of Business (ISB belong to University of Economic, HCMC) I fully understand the statement above

ABSTRACT

In the last years, the plight of the Vietnam economy has forced a lot of companies to bankrupt Enterprises are seeking ways to overcome this dark cloud to survive and develop on the market, this made them aware of the importance of learning capabilities and role of leader in organization which are considered as one of the efficient ways to improve business’s performance outcome Hence, this research aims to explore whether there is the chain impact from adaptive leadership and learning organization to organizational performance in chemical companies in a Vietnam business environment or not The collected data was analyzed and evaluated

by structural equation modeling (SEM) method through Analysis of Moment Structures (AMOS software) at the sample size of 29 chemical companies with 128 responses returned from middle level managers This study finds out the effects of adaptive leadership on learning organization and learning organization has positive impact on a part of organizational performance In addition, learning organization plays mediating variable role in this correlation Nonetheless, this research has its limitations due to only focusing on chemical manufacturing field Hence, it could not represent a general characteristic for other areas The correlation among adaptive leadership, learning organization and perceptual performance outcome are interesting because the result is a vindication of the important of applying adaptive leadership as well as building learning organization will contribute how to success of organization Therefore, firms can use this correlation or knowledge from it to improve their adaptability to continuously compete in turbulent market

TABLE OF CONTENTS

ACKNOWLEDGE

PLAGIARISM STATEMENTS

ABSTRACT

CHAPTER 1: INTRODUCTION 1

1.1 Research background 1

1.2 Research questions 3

1.3 Research objectives 5

1.4 Research methodology and research scope 5

1.5Research contribution 6

1.6Research structure 6

CHAPTER 2: LITERATURE REVIEW 7

2.1Learning organization (LO) 7

2.2Adaptive leadership (AL) 11

2.3Organizational performance (OP) 16

2.4 Relationship among AL, LO and OP 17

CHAPTER 3: RESEARCH METHODOLOGY 22

3.1 Research design 22

3.1.1 Research method 22

3.1.2 Research procedure 23

3.2 Measurement scales 25

3.2.1 Learning organization 26

3.2.2 Adaptive leadership 26

3.2.3 Organizational performance 27

3.3Pilot research 30

3.3.1 Carry out reliability analysis for AL scale 31

3.3.2 Analyze reliability for LO scale 33

3.3.3 Conduct reliability analysis for OP scale 34

3.4Introduce main research 36

3.4.1 Sample size 36

3.4.2 Descriptive data 37

CHAPTER 4: RESEARCH RESULTS 40

4.1 Evaluate the measurement by CFA 40

4.1.1 CFA result for Adaptive leadership 42

4.1.2 CFA result for Learning organization 44

4.1.3 CFA result for Perceptual performance outcome 45

4.1.4 The saturated model 46

4.1.5 The theoretical model 47

4.1.6 The competitive model 49

4.1.7 Bootstrap 51

4.2 Hypothesis testing 52

CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 54

5.1 Findings 54

5.2 Implications of research 56

5.3 Limitations and directions for further research 57

REFERENCES 61 APPENDICES

LIST OF TABLES

Table 3.1 Measurement scale 27 Table 3.2 Descriptive data 37 Table 4.1 Results for discriminant validity of each variable 47 Table 4.2 Relationship between each concept in theoretical model (standardized) 49 Table 4.3 Relationship between each concept in competitive model (standardized) 51

Table 4.4 Estimated result by bootstrap at N = 200 51

Table 4.5 Results of hypotheses 52

LIST OF FIGURES

Figure 2.1 Learning loops 8

Figure 2.2 Research model 21

Figure 3.1 Research procedure 24

Figure 3.2 Research model revised 35

Figure 4.1 CFA result for adaptive leadership 43

Figure 4.2 CFA result for learning organization 44

Figure 4.3 CFA result for perceptual performance outcome 43

Figure 4.4 SEM analysis results for saturated model 46

Figure 4.5 SEM analysis results for theoretical model 48

Figure 4.6 SEM analysis results for competitive model 50

EFA Exploratory factor analysis

CHAPTER 1: INTRODUCTION

In this chapter, the important of becoming learning organization to adapt to changing business environment is demonstrated Briefly tell about the business situation of Vietnam enterprise in last year and propose solution to face the difficult circumstances Furthermore, what is factor influencing organization to make it up learning organization and the outcome of this process are also mentioned in here The aim, scope and significance of the study are also introduced

1.1 Research background

We are living in the world where changing happen continually Currently, organizations confront a turbulent market; business environment becomes fierce competition and unpredictable changing Thus, in order to survive and continue developing, they have to enhance their ability through learning process (Burke et al., 2006) De Geus (as cited in Dimovski, Skerlavaj, Kimman & Hernaus, 2008, p 3063) states that “ability to learn faster than your competitors might be the only sustainable competitive advantage you have” In addition, according to Haley and Lazouskas (2008) the learning organization (LO) is that the successful organization must continually adapt and learn in order to respond to changes in environment and to grow

Besides, adapting with changing environment through learning, organization needs leaders who have ability to confront the chaotic conditions This requires one leadership style that can learn and confront new situation that never know before

Therefore, adaptive leadership (AL) becomes a vital factor, because AL relates to learning capability for adaptive challenges which considers matter as difficult to identify, require changes in values, attitude, and beliefs to work In contrast to technical problems that is easy to recognize and carry out available solutions (Heifetz, Grashow & Linsky, 2009) Cojocar (2008, p 6) states that “Adaptive leadership is not about individuals and how well they are doing; it is about understanding adaptive pressures and dynamics and being able to use those insights to be more successful in leading change.”

Additionally, when the organization adopt the features described as factors of

LO, it will be improved for performance (Senge, Holton & Kaiser, as cited in Haley & Lazouskas, 2008) Hence, the positive result of LO is what the enterprises want to achieve It should be improved in outcome when LO is applied in firm

Presently, Vietnam organizations are coping with difficult situation from macro-economy According to Dinh Thanh reporter come from Vietnam Chamber of Commerce and Industry (VCCI) described that “In 2012, thousands of Vietnam’s enterprises suffered losses, bankruptcy and closed down Entering 2013, according to many experts, although the economy will gradually recover, there won’t be many opportunities for enterprises due to tight credit policies maintained by the Government” Thus, firms are under pressure to restructure and enhance competitiveness to be adaptive to the environment and responsive to change Organizations want to continue surviving and expanding business activities need to absorb knowledge that can help an organization to diagnose the sign of difficulties in the early period before it’s too late This means that building their organization

become organizational learning A lot of organizations had changed their business model; however, some improvement programs meet fail than succeed One of the reasons, leaders do not realize and commitment to learning to adapt and develop sustainably (Garvin, 1993) Hence, leaders have to know how to learn and choose what appropriate model to learn that helps each individual and organization perceive the important role of learning which will transform a normal organization to learning organization

According to discussion between Dr Nguyen Huu Lam director of Center for Excellence in Management Development (CEMD) belong to Ho Chi Minh University

of Economics with Bridge Investment newspaper, he said when business environment changed rapidly and knowledge increase sharply, who learn better and faster will be become winner Beside, learning creates ability to adapt with turbulent market Vietnamese enterprises should improve considering learning as short term vision They need to comprehend learning is a strategy that will engage with mission and vision tightly The organization is the same individual, they want to exist they have to learn and learn to live better (Nguyen, 2011)

1.2 Research questions

LO has been considered to be one of the most important strategies to gain competitive advantage and organizational performance (Marsick & Watkins, 2003), related literature lacks conclusive to support the effect of learning organization on organizational performance (Moilanen, Weldy, as cited in Alipour & Karimi, 2011)

Beside the influence of LO for performance, the impact of leadership styles on organizational performance (OP) has also been a topic of interest among academics and practitioners working in the area of leadership (Fatima & Al-Balqa, 2012) Fenwick have devoted considerable attention to the potential effects of leadership on

OP Despite increased research into the leadership-performance relationship, major gaps still remain in our understanding (Fenwick et al., as cited in Fatima & Al-Balqa, 2012)

There are many factors affect to the development of learning organization and therein leadership is emphasized as the key element (Senge, Bass, as cited in Milic, Dudjak & Grubic-Nesic, 2012) However, literature rarely addresses the particular relationship between AL and LO

These queries above lead to critical questions what leadership behaviors will have influence in creating and maintaining learning organizations? After selecting adaptive leadership, the research come up with a new question how the relationship between adaptive leadership and learning organization because two notions also support organization face up to turbulent environment and whether developing a learning organization lead to improved organizational performance or not? This is certainly important questions for organizations in all industries

Three vital questions to check linkage among three constructs:

1/ Whether adaptive leadership affect on the learning organization or not?

2/ Whether learning organization have any impact to organizational performance or not?

3/ Whether adaptive leadership have any effect to organizational performance

or not?

By addressing these research questions which will help the reader know more the gap exist in the literature between adaptive leadership and LO as well as the linkages among adaptive leadership, learning organization and organizational performance

1.3 Research objectives

This research aims to endeavor to bridge a gap in literature by examining the three constructs – adaptive leadership, learning organization, and organizational performance since offering insight for these relationships

Moreover, the research will support some necessary information for organizations that are looking for solutions to overcome the crisis, and adapt to change

1.4 Research methodology and research scope

The aim of this study is to test measurement scale and conceptual model This research uses questionnaire to collect data with sample size 128 in the main research that obtains through snowball sampling method The measurement scale is evaluated through two steps First, the preliminary assessment uses Cronbach alpha and EFA method with SPSS software Then, the measurement scale and research model are examined through SEM method by using AMOS software

The research is conducted at companies which do business in the field of chemical products in Ho Chi Minh City This is one of the most important fields and has made significant contributions to development of the economy

1.6 Research structure

This thesis is divided into five sections:

 The first section gives a brief overview of the main reason lead to research topic, some practical information about Vietnamese enterprises, the important of research goals and major contribution for Vietnam context

 The second section describes some related concepts and linkages among them Thence, building theoretical model and put forward the hypotheses

 In the third section a methodology is presented to appraise measurement scale, research model and hypotheses proposed

 Data analysis is described in the fourth section along with research results

 Conclusions, implications and limitations are drawn in the final section

CHAPTER 2: LITERATURE REVIEW

This section will present some concepts related to three important matters as adaptive leadership, learning organization and organizational performance From these concepts had researched and developed in the world, the hypothesis and model that show the impact of among adaptive leadership, learning organization and organizational performance will be proposed This chapter has four parts: 1/ Points of view for learning organization, 2/ the standpoint for adaptive leadership, 3/ the outlook for organizational performance and 4/ the theoretical model for relationships between these notions

2.1 Learning organization (LO)

We need to know who are pioneers to create and disseminate this concept as well as the current theories for LO In literature review, the “founders” in this field such as: Peter Senge, Chris Agyris, Donald Schon, and Margaret Wheatley have made significant contributions (Cors, 2003)

Senge is father of learning organization in 1990 (Haley & Lazouskas, 2008) According to Senge (1990, p 3) in his publication The Fifth Discipline- The Art and Practice of the Learning Organization, learning organization is an organization “where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together” The five disciplines are:

1/ Systems thinking: understand how their company really works

2/ Personal mastery: learn to be open with others

3/ Mental models: people put aside their old ways of thinking

4/ Shared vision: form a plan everyone can agree on

5/ Team learning: and then work together to achieve that vision

Chris Argyris, is well known for distinguishing between double-loop learning and single-loop learning (Cors, 2003) Single-loop learning mentioned about routine activities which do not require challenging the current situation for organization, it focus on “how” rather than “why” question While double-loop learning deal with complex issues it requires members develop the suitable skills to understand and learn new knowledge throughout asking “why” question Besides two-loop learning, Argyris also explain for triple-loop learning it focus on the ability to use single-loop learning and double-learning effectively by supporting members learn how to learn (Soren & Kellan, 2005)

Figure 2.1 Learning loops

Source: Soren, E., & Kellan, L (2005) Models of organizational learning Kollner group

Garvin (1993, p 3) has proposed a definition of learning organization “A learning organization is an organization skilled at creating, acquiring and transferring knowledge and at modifying its behavior to reflect new knowledge and insights” Thus, to transform organization into a learning organization, Garvin proposed five activities:

1/ Solving problems systematically

2/ Experimenting with new approaches to work

3/ Learning from pass experience

4/ Learning from other companies and from customers

5/ Transferring knowledge throughout your organization

Marsick and Watkins (as cited in Milic et al., 2012) define the learning organization as one that is characterized by continuous learning for continuous organizational improvement, and by the capacity to transform itself They developed the Dimension of Learning Organization Questionnaire (DLOQ) to identify the learning activities in organizations The instrument has been widely employed to determine the characteristics of a learning organization It is organized into seven sections addressing individual level, team level, and organization level learning The seven variables include:

1/ Create continuous learning opportunities: opportunities for continuous

learning to support people equip knowledge for themselves and work better

2/ Promote inquiry and dialogue: allow people express their ideas and ability

to discuss with the views of others through questioning and feedbacks

3/Encourage collaboration and team learning: work is done through the use of

employees' groups; members of the groups can become familiar with different ways of thinking, it is expected from the groups to learn and work together; organizational culture supports collaboration and rewards it

4/ Create systems to capture and share learning: systems for sharing learning

are created and used in the work, and employees have free access to accumulated knowledge

5/ Empower people toward a collective vision: People are encouraged to learn,

create and shared vision and they are who make decision process and be responsible for their action

6/ Connect the organization to its environment: people in the organization can

use necessary sources into their enterprise to solve and adapt their work and the

organization is connected to external communities

7/ Provide strategic leadership for learning: Leaders have a significant impact

for learning and to get better business results leaders consider learning as completed strategy

The DLOQ is selected for this research since it is the most appropriate instrument for the learning organization According to Ortenblad (as cited in Haley & Lazouskas, 2008) evaluated some perspectives of learning organization and stated that

the theoretical framework which developed by Marsick and Watkins (1993) covers most opinions areas of the concept in the literature

Differences between organizational learning and learning organization

Organizational learning is a process that aims to create a learning organization (Tsang, as cited in Ortenblad, 2001)

The terms of organizational learning and learning organization have been used interchangeably in the literature However, Mojab and Gorman (as cited in Haley & Lazouskas, 2008) note different meanings of these two terms They state that organizational learning is the sum of individual learning within an organization, with emphasis on individuals’ responsibility in learning and the collective outcome, while the learning organization is the outcome of organizational learning

2.2 Adaptive leadership (AL)

Leadership has received much attention in the several years It is one of important concepts nowadays with a lot of definitions Leadership is not just about vision, its process is associated with a competency to encourage, motivate people to develop their expertise to fit the around environment and simultaneously bring commitment, loyalty, trust from follower Thus, in order to become effective leader and lead organization overcome difficult situation to continue lasting developing is becoming meaningful for research

The study takes a glance for existing leadership theory According to Sherron (2000) he mentioned several critical theories of leadership in his dissertation:

1/ Great Man theory: is based on the idea that the leader is born with innate

leadership skills

2/ Trait theory: based on assumption leaders have been given superior qualities

physical attributes, mental attitudes, and personality characteristics that make them

“differentiable” from others

3/ Behavioral theory: involve the person’s behavior and actions instead of

underlying traits

4/ Situational theory: views leadership as specific to a situation rather than to a

particular trait, personality, behavior, or some combination of these It is based on the notion that different circumstances require different forms of leadership

5/ Contingency theory: developed from situational theory Contingency theory

attempts to select situational variables that best indicate the most appropriate leadership style to suit the circumstances

6/ Transformational theory: Whereas transactional leadership models are based

on the extrinsic motivation of an exchange relationship, transformational leadership is based on intrinsic motivation As such, the emphasis is on commitment rather than compliance from the followers

7/ Servant leadership theory: is a practical philosophy that supports people

who choose to serve first and then lead as a way of expanding service to individuals and institutions

8/ New science theory: the new sciences provide equally powerful insights for

changing the ways of designing, leading, managing, and viewing organizations

The new science theories include adaptive leadership theory It is own theory not derivative theory origin from situational or transformational leadership (Cojocar, 2008)

Avolio and Bass proposed (as cited in Antonakis, Avolio & Sivasubramaniam, 2003) “full range leadership theory” FRLT includes three types of leadership behavior

transformational, transactional and nontransactional laissez faire leadership

According to Heifetz et al (as cited in Randall & Coakley, 2007) Adaptive leadership is based on the premise that leadership is more of a process rather than individual personal capabilities This process requires people to focus on the specific problems at hand and to modify the way they have worked in the past This type of leadership should compel all stakeholders involved to work towards a solution through debate and creative thinking, identifying the rewards, opportunities, and challenges they will face Dimensions of adaptive leadership:

1/ Identify the type of problem

2/ Focus attention

3/ Frame the issues

4/ Secure ownership

5/ Manage stakeholder conflict and maintain stress

6/ Create a safe haven

Hence, AL characterize learning ability, it acquires knowledge lead to change behavior to obtain goals, mission and vision While transformational leadership emphasizes in culture with changing beliefs, values and attitude

The another definition for Adaptive leadership (AL): The mobilization of people and units that frequently have different needs, priorities and perspectives toward new ways of working and ways of thinking (Heifetz et al., 2009)

AL come from the reality changing environment it required leader has ability to solve difficult problems or complex situation According to Glover (as cited in Hogan, 2008) AL is built based on two terms: assimilation and accommodation He emphasized on theory related to decision making of leader in the changing environment This model gives skill to help leader have alternative choices for decision situation and a lot of choices it means that leader will have ability to choose the best solution This model show with order:

1/ Cultural competency: Leader has to have ability to observe, evaluate the

vital of culture as well as variety among cultures then make appropriate changes culture if necessary

2/ Managing knowledge: mentioned to ability to enhance awareness to catch,

keep and transfer knowledge that allows leaders to know more their environment

3/ Creating synergy: find win-win solutions for complex cases by involving all

1/ Navigating the environment: Adaptive leaders embrace uncertainty and

adopt new approaches to chart a course and turbulent conditions

2/ Leading with empathy: Adaptive leaders create a shared sense of purpose

and manage through influence

3/ Learning through self-correction: Adaptive leaders encourage and even

insist on experimentation Some experiments will fail, but that is how they learn

4/ Creating win-win solutions: Adaptive leaders focus on sustainable success

for the company and its network of stakeholders

John Clarkeson, former CEO of BCG, anticipated this new model of leadership

20 years ago: Leadership will flow to those whose vision can inspire the members of the team to put their best abilities at the service of the team These leaders will create rather than demand loyalty; use diverse points of view to reach new insights; exert influence by the values they reinforce; and make leaders of their team members (Torres & Reeves, 2011)

2.3 Organizational performance (OP)

Performance is a set of financial and nonfinancial indicators which offer information on the degree of achievement of objectives and results (Lebans & Euske,

2006 after Kaplan & Norton, as cited in Gavrea, Ilies & Stegerean, 2011)

The most important goal for all organizations tries to achieve the highest possible output and performance (Alipour & Karimi, 2011) Performance can be defined as the output of goods and services over which the organization exercises considerable control (Scott, as cited in Alipour & Karimi, 2011)

The balanced scorecard and the EFQM excellence model have received wide publicity and have recently been adopted by many organizations worldwide, particular

in the USA and Europe (Wongrassamee, Gardiner & Simmons, 2003)

The BSC is a framework containing a set of finance and non-finance measures chosen to aid a company in implementing its key success factors, which are defined in

the company’s strategic vision This framework includes four major perspectives: 1/

Financial, 2/ customer, 3/ internal business process, and 4/ learning and growth

The basic of the EFQM model is the principle of total quality management (TQM), this model includes nine criteria to carry out self-assessment, which enables them fully to understand their organizational position and then use this benchmark

data to pursue continuous improvement Excellence model contain nine areas: 1/

leadership, 2/ people management, 3/ policy and strategy implementation, 4/ resource

management, 5/ process management, 6/ people satisfaction, 7/ customer satisfaction, 8/ impact on society and 9/ business results

Marsick and Watkins (2003) developed two organizational outcome variables include knowledge and financial performance Two variables are considered as key results through learning process Thus, the research uses these factors as representative for organizational performance

Therein, financial performance is used as perceptual measures The reason given for using perceptual measures rather than objective financial data were that confidentiality or unavailability made the latter difficult to obtain from respondents However, the most frequently cited reason for using perceptual measures was the evidence of their strong correlation to actual measures of financial performance (Covin et al., Dawes, Dess & Robinson, as cited in Goh, Elliott & Quon, 2012) It reflects perceptual measures were considered to be a valid proxy measure for actual financial performance (Dawes, as cited in Goh et al., 2012)

2.4 Relationship among AL, LO and OP

According to Haley and Lazouskas (2008) leadership development has impact

to learning organization Garvin, Edmondson, and Gino (2008) state that leadership reinforces learning and Marsick and Watskin (2003) also think that: strategic leadership has influence to learning In some researches for learning organization, some researchers also point out the relationship between leadership and LO (Berson,

Nemanich, Waldman, Galvin & Keller, 2006; Vera & Crossan, as cited in Mazutis & Slawinski, 2008)

However, what leadership style has an influence to LO and its strong or weak impact still lack of much research Some researches mention leadership style including transactional and transformational leadership affect to learning organization (Singh, 2008; Vera & Crossan, 2004; Milic et al., 2012) Mazutis and Slawinski

(2008) research about authentic leadership impact to learning organization

Previous works have only focused on transactional or transformational leadership is an effective way for organizational learning without paying attention on adaptive leadership Therefore, in order to examine influence of adaptive leadership

on characteristics of the learning organization, at the individual, group and organizational levels, the proposal relationship is drawn with employing of the Dimension of Learning Organization Questionnaire (DLOQ) (Marsick & Watkins, 2003) along with applied Adaptive Leadership Questionnaire (ALQ) It is possible to discover correlations among them that are statistically significant By linking these two concepts researchers could provide a new insight on learning organization and leadership that has not been considered previously

Hypothesis 1: Adaptive leadership positively influences learning organization

In accordance with many similarities as well as update new proper elements between different concepts for AL, AL based on the concept of Torres and Reeves (2011) is chosen Because it covers almost every aspect of Heifetz who is considered create the AL concept For instance, the construct: navigating the environment of Torres and Reeves has a lot of similar points for “identify the type of problem” of

Heifetz, two constructs also mention the role of leader who has to identify the adaptive challenges to handle it in the context flexible It is similar to most of other constructs of the researchers

Leadership and organizational learning are both fundamental to effective organizational functioning (Berson et al., 2006)

According to Yang (2003), there is important potential relationship between learning organization and perceived changes in knowledge and financial performance

In the next research is done by Yang, Watkins, and Marsick (2004) show that having positive relationship between learning capability and financial performance Moreover, LO is considered as a valuable strategy for creating enhancement in OP to remain competitive in market (Davis & Daley, as cited in Alipour & Karimi, 2011) Additional study of Goh et al (2012) conclude that there is a positive relationship between learning capability and organizational performance with a stronger results for non-financial than financial performance Some above studies lead to the hypothesis for learning organization and organizational performance

Hypothesis 2: Learning organization positively influences on organizational

performance

In the same way to choose appropriate construct for LO, the measurement scale

of Marsick and Watkins is selected instead of Garvin Because there are many similar points between two researchers’ outlook Nonetheless, measurement scale is developed by Marsick and Watkins is tested by some different researchers and it also

contains questionnaire for organizational performance Thus, the direction of research will be employed conveniently

In regard to leadership style and organizational performance aspect, some studies have suggested that effective leadership style can increase performance in difficult circumstances (McGrath & MacMillan, Teece et al., as cited in Obiwuru, Okwu, Akpa & Nwankwere, 2011) Additionally, leadership behavior has considered

as potential management tool as well as sustained competitive advantage for organizational performance (Avolio, Lado et al., Rowe, as cited in Obiwuru et al., 2011) The particular relationship has found out as follows: transactional leadership makes organizations fulfill current goals effectively (Zhu et al., as cited in Obiwuru et al., 2011), visionary leadership also creates the high levels of performance such as commitment, trust, motivation, satisfaction, and so on (Zhu et al., Avolio, McShane

& VonGlinow, as cited in Obiwuru et al., 2011) According to Obiwuru et al (2011) showed that transactional leadership and transformational leadership had positive impact on performance, however, transactional leadership had stronger effect on performance than transformational leadership

As a result, leadership style is viewed as one of the key driving forces for improving a firm’s performance Hence, AL is proposed as one of those leadership styles

Hypothesis 3: Adaptive leadership positively influences organizational performance

The hypotheses and research model

These relationships above lead to research model and following hypotheses:

Figure 2.2 Research model

There are total three hypotheses established for this study:

H1: Adaptive leadership positively influences learning organization

H2: Learning organization positively influences on organizational performance

H3: Adaptive leadership positively influences organizational performance

In summary, this chapter shows conceptual background of each notion in research model Besides, it also points out the positive effect on linkages among three concepts adaptive leadership, learning organization and organizational performance

on the basic of previous researches These concepts are studied and analyzed seriously

to find out the suitable constructs correspond to each concepts such as LO and OP will use some dimensions of Marsick and Watkins, the other AL will use some variables of Torres and Reeves From the discussion and argument in literature above, three hypotheses are proposed for this study The next chapter will discuss about research procedure, methodology that used to analyze the data collected

Adaptive

leadership

Learning organization

Organizational performance

CHAPTER 3: RESEARCH METHODOLOGY

This chapter introduced research method used to adjust and evaluate measurement scale, theoretical model and hypotheses This chapter included four parts: 1/ research design, 2/ measurement scale for each of concept, 3/ pilot research, 4/ introduce the main research

3.1 Research design

3.1.1 Research method

The research was conducted by two periods: pilot research and main research The sample of this study was chemical companies worked in the fields of foodstuff, rubber, paper, paint & coating, dyeing, trading, packaging, gypsum, synthetic polymer, detergent, etc These enterprises were appropriate structure to assure that organizational and strategy variables apply (Miller, as cited in Luu, 2013) There were 29 companies altogether which attended the survey and reached two criteria:

1/ revenue is at least Vietnam Dong 25 billion According to Ministry of Planning and Investment, 2008 (as cited in Luu, 2013) based on average sales of small enterprises in Vietnam market context

2/ at least 100 employees are working

In regard to survey sampling, the data was collected by snowball sampling method; it based on the relationship with old friends who are working at chemical companies The hard copies were printed and send to some target middle managers

through introducing from the author’s friends Additionally, the respondents were encouraged to recommend the questionnaire to other managers who belonged to the target population of interest (Malhotra & Birk, as cited in Luu, 2013), i.e sale & marketing, finance, accounting, human resource, and technical department In addition, the soft questions also sent via email to respondents, however, this form was account for only 13.28 percent Middle management members involved in the survey since they have a great advantage to observe high as well as low levels of organizational structure than would lower level members (Luu, 2013) Moreover, middle managers were considered as bridge to exchange of ideas a learning culture (Rush, as cited in Luu, 2013) Another reason was the measurement scale for performance that individuals at different level in organization can take the survey, however often; only middle or higher level manager will feel comfortable giving answer for performance questions (Marsick & Watkins, 2003) All of the responses had been collected within six weeks

3.1.2 Research procedure

Research procedure was presented in Figure 3.1

Figure 3.1 Research procedure

The pilot research was implemented through two methods: qualitative and quantitative method The aim of pilot qualitative found, modulated to increase suitability level in the context of Vietnam and determined other factors the participants interested in to add some suitable observations The step made the measurement scale become more proper for Vietnam context and easy to understand for respondents This method conducted deeply interview with five target participants

Qualitative research

(n=5)

Draft measurement 1 1scale 1

Preliminary quantitative research (n = 90)

Cronbach alpha

Cronbach alpha’s coefficient

Item – total correlation test

EFA

Total variance extracted test

Rotated Component Matrix

Draft measurement 2 2scale 2

Main quantitative research (n = 128)

CFA

Composite reliability, Variance extracted, Unidimensionality test Convergent validity and discriminant validity test

SEM

Theoretical model test

Competitive model test

Theoretical model estimation

by Bootstrap

who were in charge of manager position and had experience for the research topic, along with instruction, comments, and advices from supervisor In order to adjust wording, received their comment to explain queries more clearly and ignore some puzzling questions Total six questions were deleted due to not appropriate with business activities in organization and difficult for participants to understand These questions were shown in Appendix 3.3 Therefore, the questionnaire reduced from 47

to 41

The pilot quantitative evaluated preliminary reliability and validity of measurement scale and adjusted to make it more fitting for target respondents The sample for pilot research was 90 samples; the data was collected by snowball sampling method from the 18 chemical companies After this step, the questionnaire reduced from 41 to 23

In main quantitative research, total 29 companies attended survey with total

128 people; the snowball sampling was also used to collect data The questionnaire included 23 items

3.2 Measurement scales

The LO and OP measurement scale was used from the existing scale in the market As concerns AL measurement scale was used based on the new standpoint in

2011

3.2.1 Learning organization

This construct was measured by Dimension of Learning Organization Questionnaire (DLOQ-A) (Marsick &Watkins, 2003), this was a short version which consisted of 21 statements and used a six-point rating system These questions divided into three levels: learning at an individual, team, and organizational level The first level was the individual level, which composed of two dimensions of organizational learning: continuous learning along with dialogue and inquiry The second element was the team or group level, which was reflected by team learning and collaboration The third factor was the organizational level, which had four dimensions of organizational learning: embedded systems, system connections, empowerment, and provide leadership for learning (Marsick & Watkins, as cited in Yang, 2003)

The short version included three adequate measurement items for each of the seven dimensions and had better psychometric properties in terms of the formation of

an adequate measurement model This was multidirectional measurement scale with three levels

3.2.2 Adaptive leadership

A 14 items instructed adapted from Torres and Reeves (2011) was utilized to measure Adaptive leadership dimensions And 14 items was divided into four dimensions included: navigating the environment, leading with empathy, learning through self-correction, creating win-win solutions

3.2.3 Organizational performance

Organizational performance was measured through Marsick and Watkins (2003) diagnostic survey questionnaire, which encompassed 12 statements under two dimensions: perceptual financial performance (6 statements), knowledge capital (6 statements) and used a six-point rating system

These concepts had different Likert scale and had been transformed to scores

on a scale from 1 to 5 to ensure consistency

Table 3.1 Measurement scale ADAPTIVE LEADERSHIP

Navigating the environment

1 Leaders manage the context in which people interact, not the instruction set

2 Leaders cultivate a diversity of perspective to generate many options

3 Leaders allow leadership to be shared and emerge from the given context

4 Leaders constantly question the world around you

Leading with empathy

5 Leaders see the world through the eyes of others

6 Leaders create a shared sense of purpose

7 Leaders reward accomplishment with autonomy

Learning through self-correction

8 Leaders enable people to learn through experimentation

9 Leaders develop your signal advantage

10 Leaders increase the agility with which the organization is able to correct itself

Creating win - win solutions

11 Leaders build platforms for collaboration

12 Leaders deploy leadership influence beyond the boundaries of the firm

13 Leaders align the business model with a broader ecological context to create social advantage and strengthen business sustainability

14 Leaders use different leadership styles flexibility for different environment

LEARNING ORGANIZATION Individual level composed: create continuous learning (1->3);

promote inquiry (4->6)

1 In my organization, people help each other learn

2 In my organization, people are given time to support learning

3 In my organization, people are rewarded for learning

4 In my organization, people give open and honest feedback to each other

5 In my organization, whenever people state their view, they also ask what others

think

6 In my organization, people spend time building trust with each other

Team level was reflected by team learning and collaboration (7->9)

7 In my organization, teams/groups have the freedom to adapt their goals as needed

8 In my organization, teams/groups revise their thinking as a result of group

discussions or information collected

9 In my organization, teams/groups are confident that the organization will act on their recommendations

Organization level included: embedded systems (10->12),

empowerment (13->15), system connections (16->18), and provide

leadership for learning (19-> 21)

10 My organization creates systems to measure gaps between current and expected

performance

11 My organization makes its lessons learned available to all employees

12 My organization measures the results of the time and resources spent on training

13 My organization recognizes people for taking initiative

14 My organization gives people control over the resources they need to accomplish

their work

15 My organization supports employees who take calculated risks

16 My organization encourages people to think from a global perspective

17 My organization works together with the outside community to meet mutual needs

18 My organization encourages people to get answers from across the organization

when solving problems

19 In my organization, leaders mentor and coach those they lead

20 In my organization, leaders continually look for opportunities to learn

21 In my organization, leaders ensure that the organization’s actions are consistent

with its values

ORGANIZATIONAL PERFORMANCE Perceptual financial performance

1 In my organization, return on investment is greater than last year

2 In my organization, average productivity per employee is greater than last year

3 In my organization, time to market for products and services is less than last year

4 In my organization, response time for customer complaints is better than last year

5 In my organization, market share is greater than last year

6 In my organization, the cost per business transaction is less than last year

Knowledge capital

1 In my organization, customer satisfaction is greater than last year

2 In my organization, the number of suggestions implemented is greater than last year

3 In my organization, the number of new products or services is greater than last year

4 In my organization, the percentage of skilled workers compared to the total

workforce is greater than last year

5 In my organization, the percentage of total spending devoted to technology and

information processing is greater than last year

6 In my organization, the number of individuals learning new skills is greater than last year

For Adaptive leadership, after discussing with target participants via mail and hand phone, the amount of questions remained the same 14 questions However, the content when translated in Vietnamese was corrected many times to easy understand for respondents

Regarding to learning organization, two questions are deleted because the first question, respondents did not state that the organization actually give time for everyone in organization to learn, it did not fit for company current situation The second question, people should find out the answer inside the organization, however,

there were still gap between divisions in each organization, therefore it made people feel complicated to discuss and get information at different departments in firm

As concerns organizational performance, four questions were deleted because using many specialized words which caused a complex awareness for many respondents and some questions were stated that not appropriate with culture as well

as reality business activities of Vietnamese companies

The detail was showed in Appendix 3.3

3.3 Pilot research

The measurement scale was preliminary tested by pilot research before making

main research The pilot research used quantitative method with snowball sampling at

90 samples The two tools used in pilot research 1/ Reliability test through Cronbach alpha’s coefficient and Exploratory Factor Analysis (EFA)

Reliability was checked with Cronbach’s alpha coefficient for all of concepts Those constructs or observed variables are accepted if the reliability value is greater than or equal to 0.6, on the contrary the value is smaller than 0.6, those constructs should be deleted In addition, items total correlation parameter also consider carefully, and if the corrected item total correlation is lower than 0.3, the item should

be deleted if this does not affect to content validity (Nunnally & Burnstein, as cited in Nguyen, 2009) In EFA method, the principal axis factoring with promax rotation was used due to this method evaluated more exactly for the structural model than principal

components with varimax rotation (Gerbing & Anderson, as cited in Nguyen &

Nguyen, 2011) and all of factors extracted at eigenvalue 1 In EFA analysis, the