ISSN 0798 1015

Vol. 39 (Number 33) Year 2018 • Page 13

Does leadership style affect organizational effectiveness? A study on food processing industry in Odisha-India

¿El estilo de liderazgo afecta la efectividad organizacional? Un estudio sobre la industria de procesamiento de alimentos en Odisha-India

Bandana NAYAK 1; Chandra Madhab MOHAPATRA 2; Bibhuti Bhusan MAHAPATRO 3; Padma Charan MISHRA 4

Received: 04/03/2018 • Approved: 29/04/2018

Content

1. Introduction

2. Literature Review
3. Need of the study
4. Objectives
5. Hypothesis
6. Research Design
7. Analysis and Interpretation
8. Regression result
9. Discussion and Conclusion
Limitations
References

1. Introduction

The success of any organization depends on its leadership style. A perfect leadership style of managers brings a congenial organizational climate and helps to bring effectiveness in an organization. Leadership is both action and being. Every organization aims not only to sustain but also to function effectively. Thus it is very important to understand the right leadership style needed according to the work environment which can bring success and effectiveness for the organization. A leader’s ability to inspire, motivate and create commitment is the vital work in an organization (Bass, 1997). Traditional leadership theories basically focus on rational process. But theories of transformational and charismatic leadership give importance to emotions and values (Yukl, 1994). The relationship between leader and followers raise one another to higher levels of morality and motivation (Burns, 1978). The main components of transformational leadership are idealized influence, inspirational motivation and intellectual stimulation, individualized consideration, contingent reward, management by exception and Laisez faire. A dynamic leader can influence his or her followers’ behaviour through communication, group dynamics, training, rewards and discipline (Naile, 2014).

2. Review Literature

It is the leadership style which makes the employee to perform with motivation and final result is organizational effectiveness. Leadership style makes the employee perform in the direction where organizational goal is achieved. Burns (1978) first pointed out transformation and transactional leadership as two different leadership styles. According to him the transformation leadership occur when a leader approaches his followers with an intention to shift their values, believes and needs. Transactional leadership is the approach where the leader exchanges information of value to the follower (Burns, 1978). Transformational Leaders are transforming inspiration to followers for better performance; transactional leaders ensure followers compliance with their better performance based upon exchange. Bass (1985) in extending the work with Burns (1978) gave a more cohesive view of transformational and transactional leadership and the impact of these leadership styles on organizational performance. Bass focused on key leadership constructs like task orientation and relationship orientation as well as a leadership function like initiating structure and promoting change in order to define core leadership behaviour.

Kuhnurt & Lewis (1987) abided the work of Bass (1985) through their study about Leadership development and leaders’ motivation. According to him, the transformational leaders motivate employees to take actions which are according to their personal standard and value systems. They also found out that transactional leaders are internally focused and motivated to satisfy their personal goals.

2.1 Transformational Leadership

This style of leadership emphasizes an organization’s mission and becomes the foundation for organization’s strategy, policies and procedures. Transformational leaders work by motivating their co-workers to perform as better as they can (bass, 1985). Mengesha (2015) stated that transformational leadership is the sum of five factors. (a) Idealized Influences (attributed), (b) Idealized Influences (Behaviour), (c) Inspirational Motivation, (d) Intellectual stimulation and (e) Individualized consideration. Bass and Avolio (1992) developed the multifactor Leadership Questionnaire (MLQ) which describes the leadership on seven factors related to transformational leadership which includes Idealized Influence, Inspirational Motivation, Intellectual Stimulation, Individualized Consideration, Contingent Reward, Management-by-exception and Laissez-faire Leadership.

2.2 Task oriented Leadership

Stogdill (1948) described task- oriented leadership as the style in which the leader decides the role of their co-workers, set the level for goal achievement and constructs a well defined pattern of communication. This leadership style believes that employees should follow the top- down communication. The leaders decide and describe the followers what, when and how to perform the task assigned to them.  In this leadership style, employees perform the rules and process, which is developed by the leaders. The effectiveness of the task oriented behaviour includes placing emphasis on planning, coordinating and providing the resources needed by the followers which includes establishment of the goal setting for them.

2.3 Authoritative Leadership

It is a style of corporate leaders, where the leaders formulate the policies and procedures, decides the goal for achievement directs the subordinates and controls all the action without any meaningful participation of the subordinates. The leader bears a complete control over the subordinates with low autonomy within the group. The group completes the assigned task with a very close supervision by the leader.

2.4 Organizational Effectiveness

Organizational effectiveness is the key factor in business and education and it is the main reason of survival of an organization. Rieley (1993) opine that the study of organizational effectiveness is very important because it occupies a dominant place in the organizational environment (Ghorpade 1970). Zammuto, (1984) defined organizational effectiveness as the attainment of goal, without imposing strains on organizational system, exploitation of the organizational environment for resources, and in terms of meeting, criteria that can be established by constituency of an organization. According to the views of many proponents, there are three approaches for the study of Organizational Effectiveness. They are goal approach, system approach and process approach.

Goal approach measures the Organizational Effectiveness according to the abilities of the organization to achieve the desired objective (Frisby 1986). These are the operative goals for the individual who make most of the decisions and can impact the actions of the organization. This approach focuses on objective or the goal of the organization.

System approach focuses on the ability to acquire the scared resources. Yuchtman and Seashore (1967) stated that it is a conceptualization of relationship between organization and its environment which acts as the major source for the information for the organizational effectiveness.

The process approach focuses on internal processes and general functioning within an organization, such as, work environment and employee satisfaction. This approach focuses on conversion of input to output. An organization is considered as effective if its internal functioning is smooth, efficient and goal directed (Chelladurai & Haggerty, 1991; Soucie, 1994).

3. Need of the study

The study aims to find the relationship between leadership style and organizational effectiveness, focusing the theoretical literature and empirical studies about them. The researcher will study how the nine leadership style as considered in this study influences the organizational effectiveness.

4. Objectives

To study the relationship between leadership style of managers and supervisors and organizational effectiveness in food processing units in Odisha.

To find out which type of leadership style is more affecting the organizational effectiveness.

5. Hypothesis

There are nine hypothesis developed to identify the impact of Leadership style factor on organizational effectiveness.

H1:  There is significant relationship between idealized influence behaviour of leadership style with organizational effectiveness in food processing units in Odisha.

H2: There is a significant relationship between inspirational motivation behaviour of leadership style and organizational effectiveness.

H3: There is a significant relationship between laissez -faire leadership style and organizational effectiveness.

H4:  There is a significant relationship between task oriented behaviour of leadership style and organizational effectiveness.

H5: There is a significant relationship between authoritative leadership style and organizational effectiveness.

6. Research Design

A quantitative research approach and a correlational research design were formulated for this study. The data was collected using survey method. The independent variables were dimensions of different leadership style and dependent variable was organizational effectiveness. The Leadership Measurement Scale (MLS) includes the dimensions as idealized influence, inspirational motivation, intellectual stimulation, individualized consideration, contingent reward, management by exception, Laisez faire, task oriented and authoritative leadership styles as perceived by the employees. Organizational effectiveness is shown in research instrument.

6.1 Population and Sampling

The respondents were all belonging to food processing units of Odisha. The study population was consisting of supervisors, line managers and middle managers. A total of 227 employees made the sample size. They were selected from two food processing units of Odisha. A convenience sampling technique was used and only those employees are selected who have consented to participate as the sample. In some cases, reluctant behaviour was also observed by many employees to participate in this study because of the sensitive nature of the topic.

6.2 Research Instrument

Multifactor Leadership (MLQ7X) questionnaire, developed by Bass and Avolio (1995), was used to measure the leadership styles of managers and supervisors, with a small modification, based on the subject experts, content validity and personnel expert of HR department. Reliability was measured by Cronbach’s Alpha using SPSS 23.0, which resulted as .914 for Leadership Measurement Scale and .842 for organizational effectiveness Scale.  The modified scale of leadership style has added two dimensions more as task oriented leadership and authoritative leadership style, based on Daftuar, (1985) and Nayak and Mishra (2005). Organizational effectiveness was used with 7 dimensions (as Consensus, Legitimation, Need for independence, Self control, Job involvement, Innovation and Organizational attachment). The organizational effectiveness scale has been developed basing on (Daftuar 1985 and Nayak & Mishra 2005). Further, it was modified initially by face validity by discussing with HR experts and the targeted industry employees of food processing units. Further, validity was measured by using exploratory factor analysis, where 0.5 and above variables was taken for the study.  A five point Likert scale was used to obtain the participants responses for the questionnaire.

7. Analysis and Interpretation

Descriptive statistics shows in below table which is derived using SPSS 23.0.

Table 1
Mean and Standard Deviation of Leadership Measurement Scale (LMS) at Food Processing Units

The mean and standard deviations of leadership style (MLS) variables are presented in the above table-1. It shows a higher mean value of task-oriented leadership style in comparison to other leadership styles. It is clear that the managers and supervisors are more task- oriented (X=3.0338). The mean score of Laisez-faire (X=2.2812) is comparatively low. This clearly represents that in food processing industry leaders are emphasizing the task more and gives less importance to other leadership dimensions. As the selected food processing units are private sector, job security is comparatively less than other sectors, so the leaders appear to be tough persons and less generous to the inefficient workers. Further, very less variation (SD=0.83046) is found in individualized consideration variable and more (1.00123) is found in Idealized Influence variable.

Table 2
Mean and Standard Deviation of Organizational Effectiveness Scale (OES) at Food Processing Units

The above table-2 depicts that the mean and standard deviations of Organization effectiveness variables. It represents a higher mean score in self-control variable (X=3.132) and less in Innovation (X=2.738) variable. It represents that the self control of the employees leads a more effect to organizational effectiveness. Here the higher level leadership is good in establishing self control in the employees. But here employees are not focussing on the innovation aspect, which may be due to any other reason like job security or task pressure. Although the managers and supervisors have given the employees complete freedom in their work but this dimension of innovation is still in stake. Further, very less variation (SD=.775) is found in job involvement variable and more (SD=2.100) is found in Need for Independence.

Table 3
Co-relation matrix for the Leadership Styles (LMS) and Organization Effectiveness (OES)

Table-3 shows the co-relation matrix for the leadership styles and Organizational effectiveness in food processing units in Odisha. It represents the significant correlations between Idealized Influence leadership behaviour with self control dimensions of the employees (r=.112*). But it does not get significant relationship with consensus, legitimation, need for independence, job involvement, innovation and organizational attachment. But strong positive correlations are found between inspirational motivation behaviour of leadership with consensus, legitimation, job involvement, Innovation and organizational attachment dimension of Organizational effectiveness (.160*, .237**, .242**, .165* & .133* respectively). Intellectual stimulation behaviour has a negative significant relationship with innovation behaviour (r- -.111*). Individualized consideration and contingent reward do not show any significant relationship with any dimensions of organizational effectiveness, whereas, management by exception dimension of leadership shows a significant relationship with consensus, self control and job involvement (r=.204**, .163* and .140* respectively). Laisez faire leadership shows a significant positive relationship with legitimation, job involvement and innovation dimensions (0.366**, 0 .260**, 0.287**) (p= <.01) of organizational effectiveness. Task oriented leadership did not show any significant relationship with any of the dimensions of organizational effectiveness. Authoritative leadership style shows positive significant relationship with consensus and self control (r=.168* and .221** respectively) behaviour of organizational effectiveness.

Idealized influence dimension does not carry positive and significant relationship with organizational effectiveness because here r = .073 and P value is not significant. This proves that null hypothesis is accepted and alternative hypothesis H1 is rejected. Inspirational motivation carries a positive and significant relationship with Organizational effectiveness because here r = .218** and P value is less than 0.01. Hence, H2 is accepted. Intellectual motivation has no positive and significant relationship with Organizational effectiveness, because here r= -.111 and P value is not significant. Individualized consideration and contingent reward do not show any significant relationship with any dimensions of organizational effectiveness because r value is .100 and .066 respectively and P value is not also significant. Management by exception carries a positive and significant relationship with Organizational effectiveness because here r = .137* and P value is less than 0.05. Laisez faire have positive and significant relationship with organizational effectiveness, because here r= 0.264 and P value is less than 0.01, which rejects the null hypothesis and accepts alternative hypothesis-3. Task oriented have no positive and significant relationship with organizational effectiveness, because here r= 0.040 and P value is not significant, which rejects the alternative hypothesis H4 and accepts null hypothesis-4. Authoritative leadership have positive and significant relationship with organizational effectiveness, because here r= 0.134 and P value is less than 0.05, which rejects the null hypothesis and accepts alternative hypothesis-5.

Table 4
Relationship between Dimensions of different leadership style and Organizational Effectiveness (ANOVAa)

The ANOVA table-4 shows the significant model {F (9,217) = 3.389, p < 0.05}. This means that at least one of the 9 predictor variables can be utilized to model Organizational Effectiveness.

8. Results

Results of the regression analysis between different leadership style dimensions (idealized influence, inspirational motivation, intellectual stimulation. individualized consideration, contingent reward, management by exception, Laisez - faire, task oriented and authoritative style of leadership) and dependent variable (organizational effectiveness) are presented in the following table.

Table 5
Model Summaryb

Depending on the results in above table-5, R-square value = 0.123. This means that 12.3% of the variation of Organizational effectiveness can be explained by variation in any or all of the predictor variables. Durbin Watson value= 1.897 which is between acceptable range of 1.5 and 2.5. The above value implies that independence residual is accepted in the model and there is no autocorrelation error in the data.

Table-6 shows there is significant negative relationship between intellectual stimulation behaviour of leadership style and organizational effectiveness (b= -0.229, p< 0.05) where as Laisez faire leadership style and organizational effectiveness have a positive and significant relationship (b = 0.245, P < 0.05). However, the relationship between idealized influence and organizational effectiveness (b = -0.001, p >0.05) is insignificant.

Table 6
Coefficient values of Leadership Style (LMS) and Organizational Effectiveness (OES)

The relationship between inspirational motivation and organizational effectiveness (b = 0.156, p >0.05), individualized consideration  and organizational effectiveness (b =- 0.056, p >0.05), contingent reward and organizational effectiveness (b = -0.066, p >0.05), management by exception and  organizational effectiveness (b = 0.111, p >0.05) , task oriented leadership and organizational effectiveness (b = - 0.037, p >0.05) and authoritative leadership and organizational effectiveness (b =  0.138, p >0.05),was found to be not significant. The above tabled results indicate that all the significant variables have low variation inflation factor (VIF) values (<10), indicating that there is no problem with multicollinearity.

9. Discussion and Conclusion

The prime objective of this study was to determine the relationship between different leadership styles, like idealized influence, inspirational motivation, intellectual stimulation, individualized consideration, contingent reward, management by exception, Laisez faire, task oriented and authoritative style and organizational effectiveness in medium scale food processing industries of Odisha. Five different hypotheses were proposed to be tested in this study. The result showed that there is significant relationship between Laisez faire leadership style and organizational effectiveness. This result is not consistent with the previous researchers who have tried to found relationship between the two variables. Laisez faire style of leadership does not affect the organizational performance in more density in comparison to other styles of leadership (Koech & Namusonge 2012). Idealized influence behaviour of Leadership was found to be not significantly related to organizational effectiveness.  The reason for lack of significant relationship could be food processing units being bureaucratic organizations, where the managers and supervisors are not perceived as being able to exude great charisma and personal vision as they are answerable to their superiors. Due to lack of proper trained employees available to the food processing industry, it may be a vital reason for this insignificant relationship. The food processing industry performs similar type of customized work every day. For these reasons supervisors, mangers may face difficulties to establish any other style of leadership.

Limitations

The study was limited to food processing units of Odisha. The sample size was limited to 227. Again, there may be more dimensions of organizational effectiveness which could have been added to leadership styles of employees at different levels.  Few respondents were reluctant to participate in this study because of the sensitive nature of the topic.

References

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1. Associate Professor, Symbiosis Institute of Business Management, Bengaluru, Symbiosis International University, Pune, India. Email:dr.bandananayak@gmail.com

2. Research Scholar, Faculty of Management Sciences, (IBCS), Siksha O Anusandhan (Deemed University), Bhubaneswar, Odisha, India. chandan687@gmail.com

3. Head of Department, Industrial Relations & Personnel Management, Berhampur University, Odisha, India. Email: aharnis@rediffmail.com

4. Dy. Manager (Electrical), The Bisra Stone Lime Company Limited, Birmitrapur, Odisha, India and Research Scholar, IBCS, Siksha O Anusandhan (Deemed University), Bhubaneswar, Odisha, India. Email: pcmishra71@gmail.com