THE INFLUENCE OF EMPOWERING LEADERSHIP BY SENIOR-LEVEL LEADERS AND THE LEADER POWER DISTANCE ORIENTATION ON EMPOWERING LEADERSHIP

THE INFLUENCE OF EMPOWERING LEADERSHIP BY SENIOR-LEVEL LEADERS AND THE LEADER POWER DISTANCE ORIENTATION ON EMPOWERING LEADERSHIP

Master thesis, MSc, Human Resource Management University of Groningen, Faculty of Economics and Business

May, 2017

LEANDER POTZE Studentnumber: 2377187 Nieuwe Ebbingestraat 75

9712 NG Groningen Tel.: +31 (0)6 13 89 99 69 e-mail: l.n.potze@student.rug.nl

Supervisor J. Oedzes

Second assessor:

Katinka Bijlsma-Frankema

2 ABSTRACT

Empowering leadership is related to many positive outcomes, like job satisfaction and team performance. Although the outcomes are well documented, the antecedents are less so. Research to the antecedents of empowering leadership is in its early phase. This research focuses on identifying leaders’ power distance orientation as an important antecedent of empowering leadership. Additionally, empowering leadership by senior-level leaders strengthen this negative relation through the cascading effect of leadership. However, when senior-level leaders use empowering leadership, the personal factor power distance orientation has no influence on the use of empowering leadership of lower-level leaders

Keywords: empowering leadership, power distance orientation, senior-level empowering

leadership

3 1. INTRODUCTION

Empowering leadership has a lot of benefits, therefore organizations increasingly advocate the use of empowering leadership styles (Mills, 2005). The consequences are, for example job satisfaction, increased affective and organizational commitment from the employees (Avolio et al., 2004) and an increase of the firms’ performance (Carmeli, Schaubroeck & Tishler, 2011). Although the effects of empowering leadership are well documented, its antecedents are less so (Sharma & Kirman, 2015). That is, we have little understanding of what traits or

situations lead to empowering leadership. By identifying these antecedents, organizations can encourage leaders to conduct empowering leadership. Therefore, this research will focus on these antecedents.

Empowering leadership involves providing authority to employees and promoting autonomous decision making, coaching, knowledge sharing and asking for input (Chen, Lam &

Zhong, 2007). So, this basically means that leaders who want to empower their employees have to share their power with them. The extent to which leaders are willing to share power depends on the personality of an individual, as some find it easier to share power than others. One personality trait that is likely to be associated with willingness to engage in empowering

leadership is power distance orientation. Power distance orientation is defined as the willingness to accept an unequal distribution of power. Power distance oriented individuals prefer a formal relationship with respect for authority and where subordinates do what is said by their leader (Clugston, Howell & Dorman, 2000). Accordingly, I expect that power distance orientation is negatively related to empowering leadership.

Even though I argue for a negative relation between power distance orientation and

leadership, I expect this relation to be stronger depending on the situation in which leaders find

4 themselves. In fact, theoretical work points to the importance of incorporating situational

characteristics when studying the effects of personality, as situations may determine the extent to which personality traits are triggered or not (Mischel, 1977; Schneider, 1983). One of the most prominent features of the situation on which people base their behavior is the behavior of others, especially those they look up to. The behavior of senior-level leaders is an important situational characteristic (Ambrose, Schminke & Mayer, 2013). Senior-level leaders are likely to set an example for those lower in the organizational hierarchy, as we see in research about cascading leadership (behavioral influence of the senior-level manager transmitted down to the middle managers and to lower-level managers). When senior-level leaders use empowering leadership, high power distance oriented leaders will see that the organization expects this behavior even though a leader does not like to share power. The other way around, when empowering leadership by senior-level leaders is low, a high-power distance oriented leader does not get influenced through the cascading effect of empowering leadership. The preference to not share power stays dominant.

I will test my hypothesis in a field study among a wide range of teams from different industries. In doing so, this research will be one of the first to study the antecedents of

empowering leadership. I will offer an explanation which personal factor and situational factor

leads to empowering leadership. Additionally, the present research contributes to the theory

about the person-situation interaction (Mischel, 1977) by exploring the ratio between person and

situation factors that antecedes empowering leadership. Mischel (1977) argued that behavior is a

combination of personal and situational factors. More specific, the way in which individuals

behave depends on their personality and the situation that the individual encounters. Personal

preferences for specific behavior can get overruled by a situation. This will lead to more

5 appropriate behavior given the circumstances (Fleeson, 2007). So, this research gives insights into the amount of influence senior-level leaders have on the personal preference of their subordinates to use empowering leadership.

Practically, it is important to understand when empowering leadership occurs, because empowering leadership influences team performance and job satisfaction positively (Avolio et al., 2004). Mapping the relation between power distance orientation and empowering leadership has implications for selection programs. Companies could hire new employees more accurate by using power distance orientation as a selecting tool. Furthermore, cascading leadership

influences the use of empowering leadership of leaders. The general manager and top-managers should be aware of the effect of cascading leadership. They can change the behavior of lower level leaders, simply by changing their own behavior.

2. THEORY BACKGROUND

2.1 The relationship between power distance and empowering leadership

Empowering leadership is the behavior that encourages subordinates to share opinions and ideas, promotes collaborative decision making and supports knowledge sharing (Arnold et al., 2000; Fong & Snape, 2015). This means that, leaders in order to be empowering, should share their power with subordinates and foster employee autonomy (Kirkman & Rosen, 1999;

Chen, Kirkman, Kanfer, Allen & Rosen, 2007).

The extent to which leaders are willing to exhibit empowering leadership depends on the

traits of an individual, because some individuals are more willing and find it easier to share

power. One trait that is likely to be associated with empowering leadership is power distance

orientation. This phenomenon is defined as an individual’s willingness to accept an unequal

6 distribution of power (Hofstede, 1980) in organizations and institutions (Clugston, Howell &

Dorman, 2000). High power distance oriented leaders prefer employees that are more hierarchically ordered and they like to have a power difference between them and their subordinates. Oppositely, low power distance oriented leaders prefer an informal relationship with their employees. (Offerman & Hellmann, 1997). Low power distance oriented leaders also tend to feel more comfortable in situations when their subordinates are treated as equals and have more decision-making influence (Offerman & Hellmann, 1997).

Empowering leader behavior includes sharing power, giving away authority and

encouraging self-directed employee activities (Kirman & Rosen, 1999). That is quite remarkable, since it is not in line with the behavior of the high power oriented leaders, for they prefer the opposite (Offerman & Hellman, 1997). On top of that, previous research found a negative relation between power distance orientation and delegation (Yukl & Fu, 1999). Delegation and empowering leadership have some characteristics in common, like making employees

autonomous. However, the leadership style delegating misses the aspect of coaching and

motivational influences of the leader (Kirkman & Rosen, 1999). Additionally, individuals ranked low on power distance orientation prefer informal methods and will be more comfortable

working in environments where some empowerment elements are provided (Lawrence, 1990).

However, individuals high on power distance orientation are used to work in centralized

environments where leaders can expect that team members do what they are told to do (Hofstede,

1993; Morris & Pavett, 1992) and hesitate to take initiative or make decisions without consulting

supervisors (Chen & Fahr, 2001). Therefore, I expect a negative relation between high power

distance orientation and empowering leadership.

7 Hypothesis 1. Power distance orientation of a leader is negatively related with

empowering leadership.

2.2 The moderating role of empowering leadership by senior-level leaders on the relationship between power distance and empowering leadership

According to Mischel (1977) individual differences and the situation are important predictors of behavior. He found an interactive effect between dispositions and situations to the way people behave. It is not possible to explain expressed behavior only by looking at individual differences (Mischel & Shoda, 1995). Person’s beliefs, goals, values and characteristics are constrained and guided by the circumstances of a situation (Shoda, 1999). Therefore, it is important to account for organizational context when investigating the role of power distance orientation on empowering leadership. The most important situational factor that could influence the use of empowering leadership is the behavior of senior-level leaders, because they affect the development of the lower-level leaders (Bass & Avolio, 1994) and frame and shape the use of behavior of a leader (Ammeter, et al., 2002). More specifically, leader behavior patterns exhibited by senior-level managers are reflected in similar behavior patterns in lower-level managers, (Bowers & Seashore, 1966) which is known as the cascading effect of leadership.

Previous research on the cascading effect of leadership demonstrates that leadership styles of

leaders cascade and affect the leadership style to lower hierarchical echelons through role

modelling and learning by example. Leaders adapted their own leadership style to become more

consistent with the high amount of transformational leadership by senior-level leaders (Bass et

al., 1987), for example. Individuals integrate observed behavior in the organization into their

own behavior (Feldman, 1984) through imitation and modelling (Bandura, 1977). Specifically, I

8 suggest that the organizational norm of using empowering leadership, which is influenced by the cascading effect of leadership, influences the personal preference of using empowering

leadership. However, the extent to which power distance orientation leads individuals to engage in empowering leadership may depend on the leadership exhibited by other leaders in the organization.

Thus, when senior-level leaders use empowering leadership, low power distance oriented leaders get encouraged to use empowering leadership through cascading leadership. This does not affect low power distance oriented leaders because they use empowering leadership

anyways. However, normative behavior in an organization will become mentally associated with a specific situation. This behavior is seen as appropriate to individuals (Harvey & Enzle, 1981).

This results in shaping a behavioral guideline that individuals will apply automatically when they are in similar circumstances. High power distance oriented leaders will see that the organization expects this behavior, so they will inhibit their intention to not share power and use empowering leadership instead.

Furthermore, when there is low use of empowering leadership by senior-level leaders, there is no activation of particular behavior that we believe other people expect from us (Cialdini

& Trost, 1998). As a result, high power distance oriented leaders will not feel obligated to use the empowering leadership style, so the preference to not share power stays dominated. Whereas low power distance oriented leaders keep their preference to use the empowering leadership style, even though they are not encouraged to use empowering leadership from their

environment. From these findings hypothesis 2 has been established:

Hypothesis 2. Empowering leadership by senior-level leaders strengthen the negative

relationship between leader power distance orientation and empowering leadership (figure 1).

9 Figure 1

4. METHOD

Sample and Procedures

To examine the hypotheses, the survey was sent to 54 different organizational work teams from the Netherlands, Bulgaria, Italy, Belgium, Hungary and Germany. We sent an e-mail with a personal link of the online questionnaire to the 54 leaders and 217 subordinates. Four different surveys, created with Qualtrics, were distributed: a Dutch team member survey, an English team member survey, a Dutch leader survey and an English leader survey. In the leader survey, leaders rated power distance orientation and the value of empowering leadership of their senior-level leader. Team members rated empowering leadership of their leader in the team member survey. Furthermore, there was no compensation for participation and confidentiality was assured.

In the end, we succeed to have a dataset of 45 leaders and 156 employees. However, some participants did not respond or did not fulfill the two requirements. For the current research, it is important that an organization has a general leader and lower-level leaders. Only

Leader power distance orientation

Empowering Leadership

Empowering

leadership by

senior-level

leaders

10 then it’s possible to get influenced by at least one senior-level leader. Secondly, it was necessary to receive usable data from the leader and at least one employee to create meaningful pairs.

These requirements led to the exclusion of another 6 teams, so the final sample consists of 39 teams with 115 team members. These teams operate in diverse business sectors covering construction, financial institutions, trade and repair, ICT, industry, education, government, transport and storage, business services, healthcare and other sectors. On average, the team size was 2.95 (SD =1.47). The average team member age was 37.10 (SD = 12.35), and 39% were man. The employees had an average tenure of 7.78 years (SD = 8.09) in their organization, and 63% was higher educated. Among leaders, the average age was 43.87 years (SD = 10.67), 61%

was women, and the average work team tenure was 11.92 years (SD = 9.5). 73% of the leaders was higher educated.

Measures

Empowering leadership. Empowering leadership of the leader was measured in the team

member questionnaire with seven items provided by Lorinkova et al. (2013) assessed with a 7- point scale. A sample item of the English survey is: “The team leader encourages team members to express ideas/suggestions”. A sample item of the Dutch survey is: “Onze teamleider moedigt teamleden aan om informatie met elkaar uit te wisselen”. The Cronbach’s alpha for the

empowering leadership scale in this research was α = 0.95.

Empowering leadership of senior-level leaders. In order to assess the degree of

empowering leadership of senior-level leaders there were seven adjusted items from the

questionnaire of Lorinkova et al. (2013) in the leader survey. Instead of rating the direct leader,

leaders had to rate the empowering leadership of their senior-level leaders.

11 Power Distance Orientation. Clugston, Howell and Dorfman (2000) have developed a

six-item scale that I used for measuring the power distance orientation of the leader. This questionnaire was implemented in the survey intended for the leaders. A statement that will be shown in the English survey is “Managers should avoid off-the-job social contact with

employees” and sample of a statement of the Dutch survey is “Managers zouden niet werk- gerelateerde sociale contacten met werknemers moeten vermijden”. The response set ranged from 1 (strongly disagree) to 7 (strongly agree). The Cronbach’s alpha for the empowering leadership scale in this research was α = 0.82.

Data analysis

The standardized values of the power distance orientation, empowering leadership by senior-level leaders, their interaction effect and the control variables age and gender will be compared with the values of empowering leadership using PROCESS macros for SPSS (Hayes, 2016) Through this method, the unique variance of the independent variable, moderator variable and control variables will be analyzed. The assumptions of multicollinearity, homoscedasticity and linearity are not violated.

5. RESULTS

Means, standard deviations, and zero-order Pearson correlations among the variables are

presented in Table 1. As expected, power distance orientation was negatively correlated with

empowering leadership (r=-.54 p<0.01). Table 1 also shows some interesting correlations. The

most unexpected relation is the positive correlation between empowering leadership of senior-

level and empowering leadership (r=.47, p<0.01). Besides a moderating effect, empowering

leadership by senior-level leaders could have a main effect on empowering leadership. The

12 control variables will not be implemented as covariates in the analyses via PROCESS macro, because there is no significant relation between the control variables and empowering leadership.

Hypothesis 1 predicted a negative relation between power distance orientation and empowering leadership. The outcomes of the multiple regression are shown in Table 2. The results indicate a negative relation between the independent variable, power distance orientation, and the dependent variable, empowering leadership (B = -.39, SE = .12, p = .003). Therefore, the first hypothesis was confirmed.

Hypothesis 2 stated that empowering leadership by senior-level leaders has a positive effect on the relation between power distance orientation and empowering leadership. Table 2 reveals that the interaction effect explains a unique variance of empowering leadership (B = .23, SE = .10, p = .022). Simple slope analysis revealed that power distance orientation was not significant with empowering leadership when empowering leadership of senior-level leaders is high (+1 SD: B = -.16, SE = .17, p = .35), while power distance orientation was negatively related with empowering leadership when empowering leadership of senior-level leaders is low (-1 SD: B = -.62, SE = .15, p < .001). Therefore, hypothesis 2 was accepted.

TABLE 1: Correlations among variables

Predictors Mean SD 1 2 3 4

1. Age 43.87 10.66

2. Gender .56 .50 .318*

3. Empowering Leadership of Senior-level Leaders

5.97 .97 .287 .171

4. Power Distance Orientation 2.79 1.20 -.087 -.167 -.268

5. Empowering Leadership 5.48 1.03 .162 .258 .572** -.538**

Note. N=39

*p<.05, two tailed significance

**p<.01, two tailed significance

13 As reported in Table 1, empowering leadership of senior-level leaders is positively correlated with empowering leadership. Table 2 confirms the main effect of empowering

leadership of senior-level leaders on empowering leadership (B = 4.40, SE = .12, p = .003). The moderation and main effects on empowering leadership are depicted in Figure 2.

Figure 2

TABLE 2: Multiple Regression (N=39)

Predictors B SE B Sig.

Constant 5.539 .117 .000

Empowering Leadership of Senior-level Leaders

.404 .124 .003

Power Distance Orientation -.390 .121 .003

Interaction Effect .234 .097 .022

R² .560

Note. Dependent Variable: Empowering Leadership p<.05

R² = .56, F(3,35) = 14.82, p < .001

Significant values are based on two outliers. I have chosen to keep the information of these participants in the dataset, because the value of empowering leadership is the average score of three subordinates and they were consentient in their rating.

4 4,5 5 5,5 6 6,5

Low Power Distance Orientation

High Power Distance Orientation

Low Senior-level

Empowering

Leadership

High Senior-level

Empowering

Leadership

14 6. DISCUSSION

The purpose of this study was to examine the antecedents of empowering leadership. The expectation was that power distance orientation is negatively related with empowering leadership and empowering leadership by senior-level leaders strengthens this negative relation. This was supported by the findings. Interestingly, this research found a significant main effect of

empowering leadership by senior-level leaders with empowering leadership as well as well.

Theoretical implications

Prior research is primary focused on the outcome of empowering leadership (Sharma &

Kirkman, 2015). This study is one of the first to uncover the antecedents of empowering leadership. Firstly, the results demonstrate that personality variables and context variables are both predictors of empowering leadership, and can strengthen each other. The findings of this research confirm the theory of Mischel (1977) and Schneider (1982) that behavior is a

combination of situational and personal factors. Stogdill (1948) found a relation between intelligence and leadership effectiveness. However, according to Fiedler (2002) this relation is moderated by stress experienced by leaders. Regardless of their intelligence, leaders with a high stress-level will not be effective leaders. However, the context in which leaders are embedded, in this case senior-level empowering leadership, could overrule the impact of personal factors in predicting the use of empowering leadership. When senior-level leaders use empowering leadership, the personal factor power distance orientation has no influence on the use of empowering leadership of lower-level leaders. It could be that flexibility and emotional

intelligence of the lower-level leader are more important in situations where senior-level leaders

use empowering leadership.

15 Furthermore, existing work has proven that leaders imitate their senior-level behavior in the form of abusive (Mawritz et al., 2012), transformational (Bass et al., 1987), and ethical leadership (Mayer et al., 2009), which is the cascading nature of leadership. This study proves that the cascading effect of leadership is applicable on empowering leadership as well, where senior-level leaders serves as role models. Empowering leadership will probably be more complex to imitate then other leadership styles, because it involves sharing of power which can be difficult in certain situations.

Practical implications

There are two practical implications of the present study. Firstly, when companies desire the use of empowering leadership in their organization, the selection of low power distance oriented individuals for a leadership position would be advisable. Especially when senior-level leaders are not using empowering leadership. Secondly, senior-level leaders should be aware of the impact of their behavior to lower-level leader through the cascading effect of leadership and should use empowering leadership itself. Especially when they desire the use of empowering leadership of lower-level leaders. Otherwise the expectation is that lower-level leaders will not use empowering leadership.

Limitations and Further Research

Several limitations can be identified in this study. First of all, this research is a field study and the measures were all collected at the same time. Because of this method, it is not possible to ensure if power distance orientation leads to empowering leadership or the other way around.

Causality is not guaranteed, although personal characteristics are very stable over time (Conley,

1985) and theoretical arguments that would argue with the alternative causal model are not

logical. Secondly, the sample size is relatively small. This reduces the statistical power of the

16 analyses and reduces the probability of finding smaller effects. Additionally, the power distance orientation was a self-report, so it is likely that a self-reporting bias has occurred or social desirable answers were given.

To ensure the causal relation between power distance orientation and empowering leadership, longitudinal research is advisable. In that case, variables will be measured on two or more different moments, because of this you know how subordinates shift their own leadership style more closely to their senior-level leader. Additionally, this research found that the tendency of lower-level leaders to imitate behavior, in this case empowering leadership, of their senior- level leaders is stronger than the preference of using this leadership style by personal factors.

Further research could focus on a more robust understanding of which personal and which situational factor will affect the use of empowering leadership. My suggestion is to do research to the personal factor of uncertainty avoidance orientation of leaders and the situational factor of stress experienced by leaders. Firstly, uncertainty avoidance orientation refers to feelings of threat individuals experience when they are in an ambiguous situation. Individuals who have a high uncertainty avoidance orientation desire to avoid these situations, where low uncertainty avoidance oriented individuals feel comfortable with change and ambiguity (Clugston et al., 2000). High uncertainty avoidance oriented leaders might feel uncomfortable in giving

subordinates more power, because this will lead to less control in uncertain situations. Secondly, my expectation is that stress experienced by leaders will influence the use of empowering leadership. Previous research found that stress experienced by leaders moderates the relation between intelligence and leadership effectiveness (Fiedler, 2002). As a result of stress,

individuals induce anxiety, fatigue and deterioration of information processing (Ganster, 2005).

Leaders who experience stress find it difficult to be consistent with role requirements (Ganster,

17 2005). Thus, I predict that stress experienced by leaders will be negatively related with

empowering leadership.

.

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23 APPENDIX

Survey Items Empowering leadership

1. The team leader encourages the team to set performance goals

2. The team leader encourages team members to coordinate their efforts and work together 3. The team leader encourages team members to express ideas/suggestions

4. The team leader encourages team members to exchange information 5. The team leader gives the team autonomy and freedom for action

6. The team leader encourages team members to search for solutions to problems on their own initiative

7. The team leader encourages team members to assume responsibilities on their own Power Distance Orientation

1. Managers should make most decisions without consulting subordinates

2. It is frequently necessary or a manager to use authority and power when dealing with subordinates

3. Managers should seldom ask or the opinions of employees

4. Managers should avoid off-the-job social contacts with employees 5. Employees should not disagree with management decisions 6. Managers should not delegate important tasks to employees Empowering leadership by senior-level leaders

1. Leaders/supervisors in this organization encourage employees to set performance goals

themselves

24 2. Leaders/supervisors in this organization encourage employees to coordinate their efforts

and work together

3. Leaders/supervisors in this organization encourage employees to express ideas and suggestions

4. Leaders/supervisors in this organization encourage employees to exchange information 5. Leaders/supervisors in this organization give employees autonomy and freedom

6. Leaders/supervisors in this organization encourage employees to search for solutions to problems on their own initiative

7. Leaders/supervisors in this organization encourage employees to assume responsibilities

on their own