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Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study



Mansour Mohammad Alharbi, Ebrahim Mohammed Al-Matari, Rushami Zien Yusoff and Norazuwa Bt Mat
 
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ABSTRACT

The primary aim of the present study is to examine the impact of transformational leadership and organizational culture on the managerial effectiveness of Saudi ministries. The study employed a questionnaire for data collection from 23 government ministries, with the sample size consisting of 295 culled from the initial distribution of 357. The study made use of the Partial Least Squares (PLS) structural equation modeling for data analysis. More importantly, the study results supported the first hypothesis (H1) proposing that a positive and significant relationship exists between transformational leadership and managerial effectiveness among Saudi ministries. Finally, this study provided some suggestions for future researchers at the end of the study.

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Mansour Mohammad Alharbi, Ebrahim Mohammed Al-Matari, Rushami Zien Yusoff and Norazuwa Bt Mat, 2016. Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study. Research Journal of Business Management, 10: 36-43.

DOI: 10.3923/rjbm.2016.36.43

URL: https://scialert.net/abstract/?doi=rjbm.2016.36.43
 
Received: January 12, 2016; Accepted: March 30, 2016; Published: June 15, 2016



INTRODUCTION

Throughout the previous decades, researchers have defined managerial effectiveness from various viewpoints and attempts have been made to reach a consensus of this construct’s definition. In the viewpoint of employee’s specific role in the organization, managerial effectiveness is considered as a product of the effective/ineffective work related behaviors of the individual (Drucker, 2001; Page et al., 2003). In other words, managerial effectiveness is assessed based on the individual’s role-specific skills and the level to which he/she is able to achieve the organizational goals. The construct is also stressed on the organizational and environment contexts wherein the manager is employed (Page et al., 2003).

With regards to the determination of factors which are the top influencing factors on manager’s duty to effectively achieved organizational goals, Wood et al. (2004) and Drucker (2001) concentrated on what a manager does and the way he does it. On the other hand, Deming (1982) contended that prior to judging a manager in terms of effectiveness, the whole organization has to be transformed into an effective one, following which effectiveness will be the outcome. Despite the difference in views concerning the path to effectiveness, researchers are of the consensus that managerial effectiveness arises when a manager’s effort leads to the continuous satisfaction of organizational goals. The term ‘Satisfying’ here indicates that goals are satisfied in a way that a sustainable repeatability within the organization and its environment is realized (Page et al., 2003).

A number of factors have been hypothesized to influence the provision of managerial effectiveness. Among the famous and influential factors are the leadership styles that are being practiced by the leaders in the organization and also the organizational culture adopted in the organization. In the phenomenon of leadership in managerial practices, Northouse (2010) and Yukl (2007) viewed leadership as a process of interaction between leaders and followers in which the leader attempts to influence followers so as to achieve a common objective beneficial for the organization. In this study, the construct of leadership is seen as a process between leaders and followers whereby a leader attempts to influence the behavior of followers so that organizational goals are achieved. Northouse (2010) and Yukl (2007) added that the success of the organization in goal achievement hinges on the leaders and their adopted leadership styles. Through a suitable leadership style, leaders are able to bring about employee job satisfaction, commitment and productivity. There is enough evidence to reinforce the relationship between leadership styles and managerial effectiveness. Accordingly, Raja and Palanichamy (2011) claimed that leadership is the core of effective management. The intentional or unintentional attitudes and actions of leaders influence those of their subordinates.

Apart from leadership styles and its influence on managerial effectives, the culture of organization plays a critical role in influencing managerial effectiveness keeping in mind that organizations are a collection of people who share information and knowledge as part of their daily routine (Nonaka, 2005). Simultaneously, organizational culture and leadership styles are interrelated as the culture in an organization is strongly shaped and affected by the personality and outlook of the owner-managers (leaders) since they have a strong dominance in the firm (Wong and Aspinwall, 2005). Thus, there seems to be some interrelated nature of relationships between the constructs of leadership, organizational culture and managerial effectiveness.

More specifically, Saudi managerial environment enjoys high power distance and an influential collective mentality. Thus, Saudi employees face autocratic leadership style, which is offset by the support given to follower’s families. Moreover, Elenkov (1998) explained that American concepts of leadership encourage the follower’s participation in manager’s decisions (small power distance) and urge the individual ability to negotiate with boss (high individualism). Such figuration is similar to the large power distance/low individualism of Saudi managerial culture. Nevertheless, such analysis does not indicate that transformational leadership is not a proper method to be practiced in Saudi Arabia because leadership can be taught and learned. In this study, Bass (1985) claimed that "Gone are the days in which leadership was considered an inherent quality, one which could not be obtained". Furthermore, leadership does not discriminate against genders, cultures, classes, races, or environments. Rather, willingness and dedication is the true core of leadership.

This study takes a step further by examining the multiple relationships between the two variables as the goal of this research is to investigate the impact of leadership styles and organizational culture on managerial effectiveness in Saudi Arabia public organizations.

It is believed that transformational leaders are responsible for encouraging employees to achieve extraordinary expectations (Hater and Bass, 1988). It is also suggested that a transformation leader satisfies his follower’s order needs and moral values and inculcates both passion and commitment of followers for the organization’s vision and mission, while at the same time, developing pride and faith in followers, communicating personal respect, intellectually stimulating them and urging them to employ creative thinking and promote challenging goals (Carless et al., 2000; Hetland and Sandal, 2003; Humphrey, 2012; Judge and Piccolo, 2004; Piccolo and Colquitt, 2006). In this background, the leader is responsible for the future of the organization and encourages followers as opposed to forcing them (Trott and Windsor, 1998), urging them to commit and work towards the organization’s success (Barbuto, 1997).

According to transformational leadership theory, the notion that the transformational leader’s behavior lies in the emotional attachment to the leader and followers is suspected. Considering the leader as transformational lies in the extent to which he or she affects the follower, who sense trust and respect towards leaders and are motivated to perform extraordinary behaviors (Barbuto, 1997). Presently, it was reported that transformational leadership behaviors are not limited to executives and world-class leaders but is widely available to managerial aspects in various settings (Hater and Bass, 1988). In a related study, Judge and Bono (2000) evaluated the association between leader personality and transformational leadership behavior and they stated that transformational leadership behavior results in leadership satisfaction, organizational commitment, work motivation and leadership effectiveness. However, no linkage was revealed between this type of leadership and subordinate’s overall job satisfaction. According to the above discussion concerning the transformational leadership-managerial effectiveness relationship, the researcher proposes the following hypothesis 1:

Transformational leadership is positively related to managerial effectiveness

Culture is significant in various aspects of business life, particularly in business requiring interface with customers, employees, suppliers or stakeholders. Following 12 years of negotiation, in October, 2005, Saudi Arabia successfully joined the World Trade Organization (WTO) that considerably influenced the Kingdom’s long preserved economy (Evans and Davis, 2005). Furthermore, foreign investments will contribute to bring in the required funds for huge projects and businesses as the laws and regulations of Saudi Arabia begin adhering to international standards. Nevertheless, this will impact the economy as well as the culture of the country.

Organizational culture encapsulates values and norms common to the members of the society. These values and norms reflect the appropriate way to deal with others (Schein, 1990) and are manifested in actual patterns of behavior. In this study, culture is believed to lighten the relationship between leadership styles taking into consideration that they originate from their cultural beliefs, attitudes and effective managerial practices.

The impact of organizational culture on managerial effectiveness stems from two reasons; first, culture has been defined as schemata (Bartunek and Moch, 1987), which stresses that the subjective theories relating to the world operates as culture and guides the search and information explanation (Harris and Ogbonna, 1999) and that organizational members are concerned about the existence or non-existence of behaviors that are at the core of its culture. Second, culture acts as a mechanism of social control (O'Reilly et al., 1991) with deviations from cultural norms (Sorenson, 2002). Hence, if culture concentrates on the development of correlation, individuals refrain from violating their cultural norms and beliefs in order so that their practices are not criticized/questioned by their followers.

Moreover, organizational culture is deemed to be relative to the performance of the perceived role that culture can play in producing competitive advantage (Scholz, 1987). According to Krefting and Frost (1985), organizational culture may develop competitive advantage by outlining the organizational boundaries in such a way that it facilitates individual interaction or by limiting the information processing scope to appropriate degrees. It is also argued that the values widely shared allow management to predict the reactions of their employees to specific strategic options and hence limiting the scope for adverse outcome (Ogbonna, 1993). Accordingly, the following main hypothesis 2 is generated:

Organisational culture is positively related to managerial effectiveness

MATERIALS AND METHODS

This study made use of a probability sampling method known as the stratified random sampling method. As mentioned, the study population comprises middle managers of Saudi Government Ministries. Specifically, there are 5061 ministers working as middle managers in 13 government Saudi ministries (Saudi Statistics Department, 2014). It is notable that the total government ministries in the country are 23.

Added to this, the researcher ensured equal distribution of samples among the 13 ministries of Saudi Arabia by using a stratified sampling method, from which 357 samples were gathered. Stratified sampling, based on Sekaran and Bougie (2010) refers to one where a pre-determined proportion of people are sampled from various groups, based convenience.

Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study
Fig. 1: Research framework, ME: Managerial effectiveness, TRL: Transformational leadership and OC: Organisational culture

Table 1: Distribution of items used to measure transformational leadership
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study

Table 2: Survey items related to organizational culture
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study

More specifically, stratified sampling method was employed in this study owing to the available sampling frame (Cooper and Schindler, 2008; Saunders et al., 2009). Moreover, transformational leadership was measured by using a 7 items proposed adopted from Carless et al. (2000) and as listed in Table 1.

Moreover, the organizational culture was measured by using a short version of the Wallach (1983), Organizational Culture Index with 9 items as provided in Table 2.

Statistical analysis: The reliability and the validity of the outer model were established using the Partial Least Squares (PLS) and prior studies have stressed on the confirmation of both prior to testing the hypotheses. The study model consists of several variables namely transformational leadership, organizational culture and managerial effectiveness. The variables relationships were investigated through Chin et al. (1998) 2-step technique (Fig. 1).

The construct validity and reliability of the model has to be established prior to testing the proposed hypotheses.

RESULTS

Outer model (Measurement): The testing of both the validity and reliability of constructs were made prior to confirming the measurement model’s goodness of fit. They were tested via different validity tests namely content validity, discriminant validity and convergent validity. The next sections detail the process.

Content validity: Studies on multivariate analysis confirmed content validity of the construct by comparing it with the other constructs in the model, where Chin et al. (1998) and Hair et al. (2010) stated that factor loadings are used to confirm content validity. This is done by making sure that items that loaded higher to other constructs other their own are dropped.

Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study
Fig. 2: Hypotheses testing results, ME: Managerial effectiveness, TRL: Transformational leadership and OC: Organisational culture

Table 3: Cross loadings of the items
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study

Table 4: Convergent validity analysis
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study
a: CR: (Σ factor loading)2/{(Σ factor loading)2)+Σ (variance of error)}, b: AVE: Σ (factor loading)2/(Σ (factor loading)2+Σ (variance of error)}, CR: Composite reliability and AVE: Average variance extracted

Table 5: Correlation and discriminant validity
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study

All the constructs loadings are presented in Table 3 and it is evident from the table that all the constructs loaded higher on their own variables confirming the content validity of the measurement model.

Convergent validity: Hair et al. (2010) described convergent validity as the level that a group of items converge with the aim of measuring a particular variable. Studies dedicated to SEM confirmed the testing of composite reliability, loadings and Average Variance Extracted (AVE) to confirm convergent validity. High loading of items and their significance is depicted by a value that is not less than 0.7, AVE of 0.5 and over and composite reliability of 0.7 and over. As evident from Table 4, the above conditions were achieved and thus, the outer model’s convergent validity was established (Bagozzi and Yi, 1988).

Discriminant validity: The SEM studies referred to discriminant validity as the level that the items can differentiate a construct from other constructs in the model. The items of every construct should be different from those of other constructs in the model. The values listed in Table 5 shows the diagonal line of values containing the AVE square root and the constructs correlations. Discriminant validity is established by ensuring that the diagonal line values are greater compared to their respective columns and rows as recommended by Fornell and Larcker (1981).

Inner model (structural model) and hypotheses testing: Following the establishment of the construct’s validity and reliability, the researcher moved on to the next step, which involves hypotheses testing through Algorithm and Bootstrapping in PLS the results of which are displayed in Fig. 2 and Table 6.

According to the Fig. 2 and Table 6, H1 is supported as a positive and significant effect was revealed at the level of significance of 0.01 (β = 0.227, t = 2.318, p<0.001). While a relationship was also revealed between organizational culture and managerial effectiveness, it was insignificant. Thus, the first hypothesis of the study (H1) is supported.

Predictive relevance of the model: In the present study, Stone-Geisser test of predictive relevance was also applied using blindfolding procedures to ascertain the predictive relevance of the PLS model (Geisser, 1974; Stone, 1975). The Stone-Geisser test of predictive relevance is usually used as a supplementary assessment of goodness-of-fit in PLS path modeling (Duarte and Raposo, 2010).

Table 6: Hypotheses testing results
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study

Table 7: Prediction relevance of the model
Image for - Effect of Transformational Leadership and Organisational Culture on the Managerial Effectiveness in Saudi Arabia: Empirical Study

Furthermore, Chin (2010) argued that "The prediction of observables or potential observables is of much greater relevance than the estimator of what are often artificial construct-parameters" (p.320).

The predictive power of the model was tested through the employment of R-square, cross-validated redundancy and cross-validated communality. The R-square values are deemed to be substantial at 0.26, moderate at 0.13 and weak at 0.02 (Cohen, 1988). The R-square values obtained were all substantial. Also, the cross-validated redundancy and cross-validated communality assessed the quality of the model, through PLS blindfolding procedure. Values of more than zero reinforce the predictive quality of the model (Fornell and Cha, 1994). The values are depicted in Table 7 and they are all higher than zero establishing the prediction quality of the model.

DISCUSSION

Transformational leadership and managerial effectiveness: In the present study, it is hypothesized a positive relationship is hypothesized between transformational leadership and managerial effectiveness (H1). The findings supported a significant positive relationship between the two suggesting that transformational leadership behavior promotes managerial effectiveness; for instance, achieving an aim, communicating effectively with employees and developing employee’s potential (Erkutlu, 2008; Fernandes and Awamleh, 2004; Lowe et al., 1996; Rukmani et al., 2010). This finding is aligned with the premise of the contingency theory (Duncan, 1972; Fiedler, 1964; Gresov, 1989; Lawrence and Lorsch, 1967) that posits a positive transformational leadership-managerial effectiveness relationship.

Organisational culture and managerial effectiveness: Regarding hypothesis 2, the results of the study no supported that organizational culture positively relates to managerial effectiveness. The main justification of this finding maybe that the cultural impacts on business executives and managers in Saudi Arabia have led to difficulties in improving organizational performance. The top challenges of every organization include cultural issues and work practices that constrict the degree of employee performance when compared to their Western counterparts. Developing and maintaining an extensive range of skilful workforce in Saudi Arabia is a great challenge as Saudis are more driven by status and position. According to Bell (2005), many Saudi youth were raised in luxury and their parents, with well-paying jobs and high status are their role models.

Furthermore, in majority of organizations, supervisors fail to provide honest and clear performance reviews to prevent damaging the employee’s self-esteem (Beer et al., 1985). In other words, in Saudi Arabia, clear feedback on employee performance is considered to be an unfriendly and aggressive act. In fact, in the Arab culture, feedback is often given through an intermediary to avoid dispute or erroneous messages (Gopalakrishnan, 2002). This mostly occurs when Saudi employee’s performance is compared to their expatriate counterparts with the benefit going to foreign workers not the Saudi ones.

CONCLUSION

This study investigated the effect of transformational leadership and organizational culture on the managerial effectiveness of Saudi Arabia ministries. In addition, this study used primary data collected through questionnaires distributed to 23 government ministries, with the sample size comprised of 295 usable returned questionnaires from 357 questionnaires. Aside from this, this study employed the Partial Least Squares (PLS) structural equation modelling in order to analyze the data. Also, the study results obtained supported the first hypothesis (H1) that proposed a positive and significant association between transformational leadership and managerial effectiveness among Saudi Arabian ministries. On the contrary, this study failed to find a positive relationship between organizational culture and managerial effectiveness among Saudi Arabian ministries.

Moreover, this study has some limitations and suggestions for future researchers; first of all, this study only focused on the Saudi environment so that future research should consider others countries in the Gulf Cooperation Council like Qatar, Oman and Bahrain. Secondly, this study examined the direct relationship between independent variables and dependent variable so future studies could take a third variable into account. Thirdly, this study focused on two variables and therefore, future researchers could consider more variables in order to improve the level of the companies’ performance.

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