Tuesday, May 17, 2011


Leadership vision, organizational
culture, and support for
innovation in not-for-profit and
for-profit organizations

James C. Sarros and Brian K. Cooper
Department of Management, Monash University, Melbourne, Australia, and
Joseph C. Santora
Department of Management, Monash University, Melbourne, Australia and
School of International Management, Ecole des Ponts ParisTech, Paris, France

Generally, NFPs are organized around a social mission (Quarter and Richmond, 2001)
and embrace values such as philanthropy, voluntarism, and their independence to act as advocates and obtainers of services for their clients or members (Alexander and Weiner, 1998; Salamon et al., 2004). Hudson (1999, p. 37) asserts that NFP organizations “are at their most effective when the people involved share common values and assumptions about the organization’s purpose and its style of operation.” Salamon and Anheier (1998, p. 245) emphasize the social origins of NFPs, and suggest that the NFP sector is not an isolated phenomenon but an integral part of a social system and its historical forces.
Acar et al. (2001) explored the ways in which NFP and FP organizations viewed their
social responsibilities, ethically, legally and philanthropically, and beyond the values
attached to their mission or purpose. Acar et al. (2001) found that NFP organizations
placed a significantly greater emphasis on their social responsibilities than did FP
organizations. Similarly, Alexander and Weiner (1998, p. 223) identified values such as
participation, due process, and serving their community as prominent in NFPs, and
maintained these organizations tend to have a very strong “collective conscience” which ensures that their values are sustained.

Lord et al. (2001, p. 311) conclude that there is no universal leadership definition or style because of “innumerable situational and contextual factors.” Recent leadership research, while recognising the emerging importance of NFP organizations as major contributors to social and economic well-being, nonetheless remains focused on traditional frames of reference and methodological approaches. Leadership research may be “new” (Bryman, 1992), but it remains focused on top-level leadership of entire organizations. A major development however is that new leadership research moves the emphasis to leadership of organizations rather than leadership in organizations (Hunt, 1999, p. 134). This approach is supported by the latest research of Alban-Metcalfe and Alimo-Metcalfe (2007, p. 116) who claim that leadership is a relational process that needs to go beyond the “out-dated notions of “heroic” models of leadership that encourage adulation of a few gifted individuals at the top of organizations.” Conger (1999, p. 148) suggests that this attention on senior leadership of organizations occurs because it is these leaders who have “the power and resources to more effectively implement significant organizational transformations in contrast to junior managers.” The new leadership approach focuses on studies of transformational, charismatic, visionary or inspirational leadership (Hunt, 1999) as the qualities of top-level leaders, and emphasises the leader’s role in the management of meaning and the formation of organizational culture (Bryman, 1996; Schein, 1992). These factors of meaning and organizational culture require leadership studies to be context-specific, and are of particular relevance in the leadership of NFP organizations, the context of this study.
Additionally, modern leadership research emphasises team structures, participative management, and increasing individual empowerment, with leadership now being distributed among members of the organization (Edmonstone and Western, 2002). Yukl (1999, p. 292) suggests that “an alternative perspective would be to describe leadership as a shared process of enhancing the collective and individual capacity of people to accomplish their work roles effectively.” This definition essentially sees leadership as facilitating others’ performance, and thus relates well to the view that leadership is found throughout all levels of an organization – not just among senior executives (O’Reilly et al., 2010). This view of leadership is particularly pertinent to the NFP sector, where concepts of leadership are problematic and require further examination, as we indicate below.

Denison (1996, p. 654) asserts that culture is “the deep structure of organizations, which is rooted in the values, beliefs and assumptions held by organizational members.” In other words, when we speak of organizational culture, we refer to the meanings inherent in the actions, procedures, and protocols of organizational commerce and discourse. According to Beugelsdijk et al. (2006), organizational culture is specific to an organization (Smircich, 1983), is relatively constant (Christensen and Gordon, 1999), and can influence inter-organizational relations.
Fishman and Kavanaugh (1989) suggested that the behaviors of leaders shape how people respond to change and innovation in organizational cultures. Similarly, Schein (1992) and Kavanagh and Ashkanasy (2006, p. S82) claim that organizational leaders are a key source of influence on organizational culture. It follows that different organizational cultures respond to and are the result of different leadership approaches. For instance, research by Alimo-Metcalfe and Alban-Metcalfe (2001, 2002, 2005) and Alban-Metcalfe and Alimo-Metcalfe (2007) found that public sector leadership was more akin to Greenleaf’s (1970)servant leadership model compared with the heroic leadership of CEOs in large contemporary American multinational corporations. In other words, this leadership was more about the leadership of others than about leadership per se.

Organizational innovation is encouraged through appropriate cultural norms and support systems. Ahmed (1998, p. 31)claims that “innovation is the engine of change [. . .] [and] culture is a primary determinant of innovation.” Organizational innovation refers to the introduction of any new product, process or systeminto the organization (Suranyi-Unger, 1994). The word “innovation” is derived from the Latin word novus or “new,” and is alternatively defined as “a new idea, method or device” or “the process of introducing something new” (Gopalakrishnan and Damanpour, 1994, p. 95). The first definition views innovation as an outcome (Damanpour, 1991, 1992; Damanpour and Evan, 1984; Kimberly and Evanisko, 1981), and the second as a process (Cooper and Zmud, 1990; Ettlie, 1980; Rogers, 1983). Consistent withWolfe (1994) and for the purpose of our study, we examine innovation as an outcome of various antecedent organizational factors or determinants, namely transformational leadership and organizational culture. These determinants also feature in the meta-analyses of innovation determinants conducted by Damanpour (1991) and King (1990), and in Scott and Bruce’s (1994, p. 583) model of innovative behavior.
The leaders of organizations help define and shape work contexts that contribute to organizational innovation (Amabile, 1998). The leadership style of these top leaders has become an important determinant of innovation (Dess and Picken, 2000). In particular, transformational leadership has been shown to support and promote innovation, which in turn ensures the long-term survival of an organization (Ancona and Caldwell, 1987). In fact, Zahra (1999, p. 38) states that “participation in the emerging global economy requires – in fact, demands – innovation and entrepreneurial risk taking.” According to Jung et al. (2003), transformational leadership enhances innovation by:

* engaging employees’ personal value systems (Bass, 1985; Gardner and Avolio, 1998) and thereby heightening levels of motivation toward higher levels of performance (Shamir et al., 1993); and

* encouraging employees to think creatively (Sosik et al., 1997).

Further,Elenkov andManev’s (2005) study of 270 topmanagers’ influence on innovation in 12 European countries found the sociocultural context was important in the leadership-innovation relationship, and confirmed that leaders and top managers positively influence innovation processes in organizations, consistent with other research findings (Henry, 2001; Howell and Higgins, 1990;West et al., 2003). Taken together, these empirical studies indicate that transformational leadership has a significant relationship with organizational innovation, both in terms of creating the conditions required for innovation (i.e. support for innovation) and as a direct contributor to innovation as an organizational outcome.

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