How transformational and transactional leadership impact post-‐merger acceptance

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How transformational and

transactional leadership impact

post-‐merger acceptance

MSc BA Strategy & Innovation

Thesis

J.M.S. Lessing

S1800760

University of Groningen, Faculty of Economics and Business

1

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_{Supervisor:
dr.
T.L.J.
Broekhuizen}

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Abstract

This study investigated the effect of two leadership styles, namely transformational and transactional leadership, on team members’ acceptance rate in the post-‐merger phase. Moreover, it explored the mediating effect of communication execution and perceived degree of adjustment on this relationship. The results indicated that transformational leadership, rather than transactional leadership, is strongest in impacting the quality of communication execution. This is an important finding because it appeared that it is the most effective way for leadership to increase post-‐merger acceptance. Improving the quality of communication execution will, according to this study, lead to an increased post-‐ merger acceptance rate.

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Inhoudsopgave

1 Introduction 5 1.1 Problem definition 7 1.2 Outline 8 2 Literature review 9 2.1 Introduction 9 2.2 Leadership styles 9 2.2.1 Transformational leadership 9 2.2.2 Transactional leadership 11

2.2.3 Transformational and transactional leadership across cultures 12

2.3 Transformational and transactional leadership during change 13

2.3.1 Transformational leadership during change 13

2.3.2 Transactional leadership during change 14

2.4 Conceptual Model 14

2.4.1 Post-‐merger issues 15

2.4.2 Communication execution 17

2.4.3 Perceived degree of adjustment 19

2.4.4 Direct influencers of leadership styles on post-‐merger acceptance 21

2.5 Control variables 22 2.5.1 Objective change 22 2.5.2 Employee age 23 2.5.3 Employee gender 23 3 Research Methodology 24 3.1 Research Design 24 3.2 Sample 25 3.3 Measures 25

3.3.1 Transformational and transactional leadership 25

3.3.2 Communication execution quality 26

3.3.3 Perceived degree of adjustment 26

3.3.4 Post-‐merger acceptance 26

3.3.5 Control variables 27

3.4 Principal component analysis 27

Table 1 Results of principal component analysis 28

4 Results 29

4.1 Assessment of correlations 29

4.2 Multiple linear regression analysis 30

4.2.1 Dependent variable: communication execution 30

4.2.2 Dependent variable: perceived degree of adjustment 31

4.2.3 Dependent variable: post-‐merger acceptance 32

4.3 Mediation 33

4.3.1 Mediation tests 33

4.3.2 Sobel test: indirect effect test 35

5 Conclusion & Discussion 37

5.1 Discussion of results 37

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1 Introduction

The question of ‘why so many mergers have failed’ has been raised by numerous academics (Bohlin, Daley & Thomson, 2000; Epstein, 2004; Fendt, 2006). Most of the interest has been on the underlying reasons why companies fail to succeed in the post-‐merger phase, such as failure due to inadequate integration planning, overestimating the synergies available, and overpaying (Pautler, 2003). Fendt (2006) emphasizes that the right leadership in post-‐ merger organizations is critical to the merger’s success and that previous research provides countless checklists of post-‐merger leadership recommendations. These include, for instance, ensuring a focus on customers and providing sufficient, clear, honest and constant communication to all stakeholders. However, in many cases top management fails to succeed in their job, as it often does not know how to add real value, to be more specific financial value, during a merger integration effort (Bancel & Duval-‐Hamel, 2008; Fubini, Price & Zollo, 2006). Indeed, this creates a complicated situation with most likely the dissatisfaction of parties involved, however an interesting case to look into.

According to Covin, Kolenko & Sightler (1997), leadership, and leadership styles in particular, should be a key consideration for planning a merger since they found that leadership style does impact merger satisfaction. “Leaders need to be competent and trained in the process of transforming organizations to ensure that individuals within the organization accept the changes prompted by a merger” (Kavanagh & Ashkanasy, 2006). Negative effects of mergers do not simply go away with time, but rather appear to get more serious when not tackled (Covin et al., 1997). The right leadership style, therefore, is critical for a merger, and may be beneficial in the post-‐merger phase. Maybe even more important is a focus on how leadership can impact post-‐merger acceptance.

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of acceptance, and whether this can be better reached through improving the quality of communication execution and decreasing the perceived degree of adjustment. As for transformational leadership, this style is mostly concerned with providing employees with an appealing vision, as well as to inspire and motivate them to perform beyond expectations (Bass, 1985; Vasilaki, 2011). With regard to transactional leadership, these leaders set strong expectations, which result in either rewarding or disciplining employees based on their performance (Bass, 1985; Blanchard & Johnson, 1985). The research will be conducted on team level due to teams’ highly valued contribution to organizational success. Moreover, it is most likely that leadership has indeed a strong influence on their teams.

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1.1 Problem definition

It is tempting for an organization to be involved in a merger when expecting, amongst others, synergies and more market power, however, a majority of mergers fail (Trautwein, 1990; Weber & Camerer; 2003). Rather than solving a problem readily occurred, problems should be avoided. It is questionable to what extent this is feasible; however, it is more likely to be achieved when the operational level within an organization is satisfied with the merger. Having the right leaders would enhance this possibility and in this study, two specific styles will be investigated. Transformational leaders are known for providing admirable visions to motivate employees, whereas transactional leaders are straightforward by providing strong expectations with rewards and ‘punishments’ (Bass, 1985; Blanchard et al., 1985; Vasilaki, 2011). Keeping this into consideration, it gives place for the following research goal:

To find out the effects of transformational and transactional leadership on team members’ acceptance rate in the critical post-‐merger phase

This results in the following main research question:

To what extent do transformational or transactional leadership influence a team’s acceptance rate in the critical post-‐merger phase?

This in turn can be divided into the succeeding sub questions:

1. What is the difference between transformational and transactional leadership? 2. What problems arise during the post-‐merger?

3. How do transformational and transactional leadership facilitate/ hinder change and increase acceptance by overcoming issues?

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1.2 Outline

Chapter 2 presents the relevant background information by way of a literature review. To be more specific, the chapter starts with defining the two leadership styles, namely transformational and transactional leadership, and its main characteristics. Furthermore, this chapter will go into depth regarding these leadership styles during times of change. This is followed by the introduction of the post-‐merger phase and the related problems. This paragraph will shed light on two issues in particular, communication issues and uncertainty. Moreover, chapter 2 presents factors, which are found to influence the post-‐ merger acceptance rate. Chapter 3 presents the methodology used in this research, followed by chapter 4, which presents the conceptual model.

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2 Literature review

2.1

Introduction

This chapter will show how two specific leadership styles, transformational leadership and transactional leadership, can facilitate change and acceptance. In the first place, this chapter will provide a general explanation of the two leadership styles and will clarify the differences between the two; followed by, as previously mentioned, ways these leaders can facilitate change and acceptance. Throughout the course of this research, leaders will, in fact, be considered as team leaders, rather than, for instance, CEOs. Moreover, the chapter will look into the issues arising in the post-‐merger phase, with the quality of communication execution and perceived degree of adjustment in particular.

2.2 Leadership styles

2.2.1 Transformational leadership

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Hartog, van Muijen & Koopman, 1997; Judge & Piccolo, 2004; Lowe, Kroeck & Sivasubramanian, 1996) based their research on previous work of Bass (1985) and Bass, Avolio & Goodheim (1987) to explain transformational leadership. For that matter, this research will also adhere to these specific dimensions, which include the following:

Idealized influence Employees are able to identify with the leader, because the leader behaves in an admirable way. Moreover, the leader provides a clear vision and mission, as well a sense of pride, respect and trust.

Inspirational motivation The leader communicates a vision that is appealing, motivating and inspiring to the employees. Furthermore, the leader exhibits optimism and enthusiasm about goals and future states.

Intellectual stimulation The leader stimulates employees’ effort to be innovative and creative and, thus enables them to think in new ways as well as to take new perspectives for solving problems and completing tasks. Besides, mistakes by individual employees are not criticized. Individualized consideration The leader acts as a mentor or coach for

each employee, in a way that the employee’s individual needs and desires are recognized

Table 1. Transformational leadership dimensions

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exhibit behaviours, as mentioned before, that could influence their employees toward achieving goals and facilitate various positive behaviours (Nemanich & Keller, 2007). Furthermore, these leaders have good relationships with their supervisors and make a good contribution to the organization. Besides, employees are actually willing to exert a lot of extra effort on behalf of managers who are transformational leaders (Bass, 1990). These are aspects characterizing transformational leadership, and were the foundation of its previously mentioned definition.

2.2.2 Transactional leadership

Before defining transactional leadership, it is worth mentioning that transactional leadership and transformational leadership are not to be seen as two opposite ends of the spectrum (Marturano & Gosling, 2008). Transactional leadership is concerned with leaders setting strong expectations, in which the responsibilities are clarified, to reward or discipline an employee contingent on the adequacy of his performance (Bass, 1985; Blanchard et al., 1985). In the case of transformational leadership it was explained that former literature provided scales, which were the foundation for describing the concept. Regarding the criteria used to describe transactional leadership, it will be also constructed on this identical work (Bass, 1985; Bass et al., 1987). The following three scales were identified and defined as the characteristics of transactional leadership:

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Contingent reward The leader clarifies what is expected from the employees, and provides rewards based on whether the employees perform in accordance with these expectations.

Active management by exception The leader watches and searches for deviations from rules and standards, takes corrective action.

Passive management by exception Rather than actively seeking for problems, the leader only intervenes if standards are not met.

Table 2. Transactional leadership dimensions

2.2.3 Transformational and transactional leadership across cultures

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indicating that transactional leaders are more prevalent and effective in such countries. However, the Netherlands is a relatively low power distant society, and an egalitarian country, so it is expected that team members be rather led by transformational leaders (Den Hartog et al., 1999). Lastly, the Netherlands is a very individualistic country, and according to Jung & Avolio (1999), these countries’ employees are more motivated by short-‐term focused transactional leadership. In collectivistic countries, the emergence of transformational leaders is easier than in individualistic cultures (Bass, 1997; Jung, Bass & Sosik, 1995). Again based on the cultural dimensions, employees in the Netherlands are expected to prefer a combination of transformational and transactional leadership, rather than one in particular.

2.3 Transformational and transactional leadership during change

“The only certain thing about organizational change is that nothing is certain” (Davy, Kinicki, Kilroy & Scheck, 1988). Leadership can try to make an effort to facilitate this change in the best way possible. The next section will provide an overview of the roles of both transformational and transactional leadership during times of change.

2.3.1 Transformational leadership during change

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performance (Gardner & Avoli, 1998). In addition, a strong identification with the leader, a characteristic of transformational leaders, is important since it enhances employees’ intrinsic motivation to work on behalf of the change (Herold, Fedor, Liu & Caldwell, 2008). Secondly, they stimulate employees’ learning experiences so as to think in new ways, and encourage them to challenge their own traditions, beliefs, and values (Hater & Bass, 1988). Lastly, Bass (1985) found that transformational leadership is more suitable for non-‐routine situations, and that employees will be more receptive to transformational leadership when adaptation is necessary.

2.3.2 Transactional leadership during change

Whereas there is a range of authors reviewing the relationship between transformational leadership and change management, the opposite holds for transactional leadership. It seems that the characteristics of transactional leadership, contingent reward, active and passive management by exception, are less suitable in dealing with change. In case of maintaining status quo and achieving specific goals that do not require a substantial change from employees there may be a better fit with transactional leadership (Gersick, 1988). Moreover, it was argued that “transformational leadership is more likely to reflect social values and to emerge in times of distress and change while transactional leadership is more likely to be observed in a well-‐ordered society” (Bass, 1985).

2.4 Conceptual Model

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acceptance. Finally, the control variables age, gender and objective change are incorporated in the model.

Figure 1. Conceptual model

2.4.1 Post-‐merger issues

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phase is critical because it often seems to be the case that when companies succeed in the post-‐merger integrations on the long term, the employees of the organization can identify much easier with the new organization, its purpose and potential (Bohlin et al., 1998).

Figure 2. The three stages of a merger (Bohlin et al., 1998).

Dooley & Zimmerman (2003) stress that mergers create problems rather than being the solution. It has been found that employees’ problems accounted for approximately one-‐half of all failed mergers and that the problems are more likely to affect a merger’s long-‐term success than financial problems (Davy et al., 1988). The problems originate from the fact that employees do not really know what to expect and are most likely to anticipate the worst. Moreover, many employees relate change to uncertainty due to, among others, new duties to be mastered, and new superiors and peers to adjust to (Mirvis et al., 1992). This research focuses on two important issues in particular. First of all, communication will be studied, for reason that merged companies with problems often originate from not communicating well with people, which led to the employees not getting involved in the transition (Mirvis et al., 1992). Second of all, the perceived agree of adjustment will be researched. In this the importance of the degree of change from the perspective of employees will be highlighted.

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2.4.2 Communication execution

According to the research of Merrill Corporation (2009), communication is considered the most important factor in determining a merger’s success. Moreover, they stress, “Communication is often the one component of post-‐merger integration on which all others depend” (p. 9). The most common threats to a deal’s success often stem directly from communication problems. Bešter (2004) adds that an inadequate communication strategy to the employees, is indeed one of the mistakes made in the post-‐merger phase. It may be, for that matter, that resolving differences through communication may be the key to either success or failure in the post-‐merger phase (Dooley et al., 2003). Therefore, an effective communication plan must be developed and executed, since it ensures that the right communication flows are provided to the right stakeholders at the right time (Stahl & Mendenhall, 2005). To develop such a communication plan, four considerations should be reflected upon, namely audience, time, mode and message (Ashkenas, DeMonaco & Francis, 1998; Bakker & Helmink, 2000; Stahl et al., 2005). The audience to which the communication is concerned could be, for instance, the senior managers of both organizations, the integration manager and the team, or as in this research, the team leaders of certain departments and their employees (Ashkenas et al., 1998). Moreover, communications should be made as soon as possible (Stahl et al., 2005; Bakker et al., 2000). With regards to choosing an effective communication media, Stahl et al. (2005), state, that the best way to communicate major changes is through two-‐way communication, and preferably face-‐to-‐face. Besides, multiple, consistent communications, such as also sending regular change updates via email, are useful in helping people understand and absorb the true content of the messages (Galpin & Herndon, 2007). Lastly, the message, which is communicated, should be honest. Rather than withholding the truth, people should be made aware of the realistic limits and goals (Galpin et al., 2007). In fact, the more people know about what is happening, the more they will be able to accept change (Ashkenas et al., 1998). The following is concluded:

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H1: The quality of communication execution is positively associated with post-‐merger acceptance.

In terms of what kind of leadership is best for creating and executing a communication plan, leaders should be able to reach certain goals. Bakker et al. (2000) mention that the main objective is to inform the stakeholders about the change, followed by getting the employees committed to the planned change. When leaders communicate anything related to the change to their team, it is best to keep the gap between communication and reality as small as possible since it will affect the leaders’ credibility. Such credibility is of main importance in gaining team members’ commitment to the change (Stahl et al., 2005). On the one hand, it seems that transformational leaders would actually be the desired form of leadership. This is because transformational leaders are characterized by providing clear visions, respect and trust, as well as by being inspirational in such a way that employees get motivated. They are able to enhance commitment, involvement, loyalty, and performance of employees (Bass, 1998). Based on that transformational leaders are seemingly very convincing in communication of the change, the follow is concluded:

H2: Transformational leadership is positively associated with the quality of the communication execution.

On the other hand, transactional leaders are clear in setting expectations for their employees, which is also needed in communicating change. Transactional leaders wait until problems become severe before they will intervene and they may induce more stress, which is in times of change obviously less satisfying (Bass, 1998). Although transformational leaders would indeed seem to be more suitable for the job as compared with transactional leaders, they would also be able to create a good communication plan due to them being straightforward. However the advantage would only be on short-‐term. Moreover, the quality of the information provided by transactional leaders influences employees less strongly because it is only on what has to be changed, and less on why things are changed. Thus:

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H3: Transactional leadership is positively associated with the quality of the communication execution.

And:

H4: The relationship between “transformational leadership à quality of communication execution” is stronger than the relationship between “transactional leadership à quality of communication execution”.

2.4.3 Perceived degree of adjustment

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problems are still related to the uncertainty of organizational change. The following is therefore concluded:

H5: The perceived degree of adjustment is negatively associated with post-‐merger acceptance.

Due to the importance of organizational success, there cannot be a lack of attention to these adjustment problems. Therefore, effective leadership plays an important role in ensuring that the implementation of change goes according to plan and will reduce the possibility of any problems associated with mergers. Transformational leaders are able to do the necessary job of motivating employees to take on new, unfamiliar jobs and to do far more work than they were used to do (Appelbaum, Gandell, Shapiro, Belisle & Hoeven, 2000). Moreover, the transformational leaders give employees the feeling that they care about them and that they are also trying to take care of them, which will result in less stress for the employees. Appelbaum et al. (2000) add that employees are, in times of adjustment, in need of leaders who are able to convey a clear vision of what exactly is going to happen, communicate clear guidelines of how it is going to be managed, and are attentive to employees’ needs and concerns. Indeed, this is almost a sound description of a transformational leader. This type of leadership is able to reduce uncertainties, which leads to a reduced perceived degree of change, and therefore:

H6: Transformational leadership is negatively associated with the perceived degree of adjustment.

Transactional leaders provide clear directions, which would increase the chance that the change goes according to plan. However the question remains, would these leaders be able to motivate the employees and reduce their perceptions of change when they perceive the change as such that there is the need for a lot of adjustment. Employees are most likely to just accept the change, for instance new tasks, so the perceived degree of adjustment will not be changing. Therefore:

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H7: Transactional leadership is not associated with the perceived degree of adjustment.

2.4.4 Direct influencers of leadership styles on post-‐merger acceptance

As has been stated before in this study, “Mergers increase employee uncertainty, and with that increase there seems to be a rise in stress and a decrease in, amongst others, satisfaction, commitment and intentions to remain with the organization” (Covin et al., 1997: p. 22). Satisfaction, commitment and intentions to remain with the organization are in this study the variables explaining post-‐merger acceptance.

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(2002), found that “group members working with leaders who used more transformational behavior may have had a higher level of intention to stay with their current group due to a heightened level of motivation and satisfaction, which in turn increased cohesion in their team” (p. 327). Moreover, Avey, Hughes, Norman & Luthans (2007), state that transformational leaders are able to decrease employees’ intentions to leave the organization by showing how the goals and values of the group, employee, leader, and organization are in basic agreement.

All in all, transformational leadership affects satisfaction, commitment and turnover intention in such a way that it positively influences the post-‐merger acceptance rate. Therefore:

H8: Transformational leadership is positively associated with post-‐merger acceptance.

And:

H9: Transactional leadership does not have a significant relationship with post-‐merger acceptance above and beyond transformational leadership

2.5 Control variables

Some variables need to be considered to provide a stronger test for the model.

2.5.1 Objective change

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characterized by employees’ feelings about the change. Thus, it refers to the employees’ experiences of a particular change. When there is little objective change, so for instance few changes in duties, the subjective change is more likely to be small. This study focuses on how leadership can make sure the subjective change is as small as possible, and since this depends on objective change, the latter will be controlled for.

2.5.2 Employee age

Whether an employee is young, middle-‐aged, or old, it could possibly make the difference in forming an opinion in the post-‐merger. For instance, employees from different generations are interested in different rewards from their job. Moreover, older employees seem to be more rationally committed to the company than younger employees (Bhola, 2010). For that matter, this study will focus on age as a control variable in order to check whether different age groups will be different in their response to leadership and the post-‐merger.

2.5.3 Employee gender

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3 Research Methodology

This chapter will depict the methodology used to conduct this research. Firstly, the research method that was used for this study will be explained.

3.1 Research Design

The research objective is to identify how transformational and transactional leadership influence team members in accepting the post-‐merger phase, and whether or not there is a difference between these leadership styles in influencing post-‐merger acceptance. In order to optimally measure these objectives, a survey approach was taken in a research appropriate company. This particular company in the semi-‐public sector (Rijksoverheid, 2011), or health care sector to be exact was chosen for several reasons. Firstly, the fact that it was recently merged was advantageous for having reliable survey answers. Secondly, this hospital has a lot of departments, thus a variation in leader performance was to be expected. Thirdly, the case study is not strongly influenced by hostile feelings. Lastly, the merged companies were both Dutch, so no problem of cultural differences could be distorting the correct image. The data was collected from individual team members of this company by way of an online structured questionnaire, which the team members were able to access in June 2012 after receiving the link via email. The online questionnaire was chosen over traditional survey methods, because of its advantages, which include reduction in research costs, flexibility, and ease of use (Lumsden & Morgan, 2005). All the questions were first translated from English to Dutch by a Dutch native speaker then back translated by an English native speaker to ensure that the questions would be rightly posed. The researcher was present in the organization at various prearranged times to answer questions or could be contacted by email.

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3.2 Sample

For this study, 6 departments were recruited from the chosen company. The participating teams were among others intensive care and gynaecology, indicating that this research aimed at the operational layer. In total 92 completed the survey and therefore a response rate of 48%. Moreover, the respondents’ age ranged from below the twenties to above the fifties (M = 3.71, SD = 1.04) and the average team tenure was 9.48 years (SD = 8.84). Furthermore, the team members were generally female. Because confidentiality was assured, the name of the organization and the participating employees will not be presented.

3.3 Measures

Using a 7-‐point Likert scale, the employees had to respond to the given survey questions. The scales ranged from strongly disagree (1) to strongly agree (7).

3.3.1 Transformational and transactional leadership

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3.3.2 Communication execution quality

The communication execution scale was based on research conducted by Ashkenas et al. (1998), Stahl et al. (2005) and Bakker et al. (2000). Built on their research, the researcher of this study was able to create proper survey questions. Respondents indicated in the questionnaire on a 7-‐point Likert scale whether they agreed that, for instance, the communication within the team is generally face-‐to-‐face or whether communication within the team is honest. The scale displayed a Cronbach’s alpha of α = .932, indicating that the items have a high internal consistency.

3.3.3 Perceived degree of adjustment

This measure included the items ‘I had to adjust a lot due to the merger’ and ‘in the post-‐ merger phase there are still quite some adjustments to be made’. Respondents indicated how much they agree or disagree on a 7-‐point Likert scale. The scale displayed a Cronbach’s alpha of α = .709, which suggests that the items have good internal consistency.

3.3.4 Post-‐merger acceptance

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Caldwell & Herold, 2006). As a consequence, commitment should be even more critical during the merger phases, due to the high level of uncertainty. The measure was derived from research of Angle & Perry (1981) and included items such as ‘I am proud to tell others that I am part of this team’ and ‘I am willing to put in a great deal of effort beyond that normally expected in order to help this team be successful’. The scale displayed a Cronbach’s alpha of α = .787, which suggests that the items have a relatively high internal consistency. Lastly, turnover intention is the general tendency to leave the organization. Employees often realize that mergers involve instability, which they rather avoid by looking for relatively stable organizations (Cartwright & Cooper, 1993). Indeed, when this is the case, it is easy to conclude that employees did not accept the post-‐merger, but which should be avoided nevertheless. Employees should have the feeling that they are cared for, that they feel emotionally valued and supported in order to increase the likelihood to stay with the organization (Van Dick, Ullrich & Tissington, 2006). The measure was grounded on research of Cole & Bruch (2006) and comprised items such as ‘I intend to look for a job outside of [company name] within the next year’ and ‘I intend to remain with this [company name] indefinitely’. The scale showed a Cronbach’s alpha of α = .768, indicating a relatively high internal consistency. For all three measures the respondents indicated how much they agree or disagree on a 7-‐point Likert scale.

3.3.5 Control variables

The control variables included objective change, age and gender. Only objective change was based on more than one item, and the item showed a Cronbach’s alpha of α = .600, which indicates a relatively low internal consistency, but satisfactory.

3.4 Principal component analysis

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performed due to the necessity to check whether all the variables fit together and can in the end be computed into one variable. The results of the analysis after the final deletion are shown in Table 3. Transformational leadership and transactional leadership were tested together and the other variables were tested separately. During this analysis, an item of transformational leadership seemed to better fit with transactional leadership. Deletion was viable when factor loadings were smaller than .5.

Name Abbreviation Items

Average standardized loading α Transformational leadership TFL 11 .885 .976 Transactional leadership TAL 4 .687 .886 Communication execution CE 9 .802 .932 Perceived degree

of adjustment PDA 2 .885 .709

Objective change OC 5 .617 .600

Job satisfaction JS 4 .786 .829

Team

commitment TC 5 .731 .787

Turnover

intention TI 3 .826 .768

Table 3 Results of principal component analysis

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4 Results

Several statistical tests are conducted before drawing conclusions about the dataset. The purpose of this chapter is to present and examine the results of the quantitative data. This chapter starts with the assessment of correlation, followed by the linear regression analysis and the mediation test.

4.1 Assessment of correlations

A correlation analysis is conducted in order to examine the associations between the constructs. Table 4 shows the interrelationships among the variables. The results indicate that the highest correlations are between transformational leadership and transactional leadership (r=.802), communication execution and transformational leadership (r=.694), and finally between objective change and perceived degree of adjustment (r=.629).

TFL TAL CE PDA PMA Age Gender OC

TFL TAL .802*** CE .694*** .591*** PDA -‐.152 -‐.048 -‐.227* PMA .345*** .329*** .375*** .096 Age .143 .093 .028 .227* .003 Gender .016 .056 -‐.154 .095 .023 -‐.298** OC -‐.213* -‐.089 -‐.269** .629*** .015 .265* .008

Table 4 Results of bivariate correlations between constructs

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Gender: 0=male, 1=female

4.2 Multiple linear regression analysis

Regression analysis is a statistical technique to examine the relationships between quantitative variables. Multiple linear regression, to be more specific, involves one dependent variable and two or more independent variables (Gaurav, 2011). In this study, the hypotheses were formed in such a way that the regression analysis had to be performed three times with changing independent variables and dependent variables. The following section will go into detail concerning these analyses.

4.2.1 Dependent variable: communication execution

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transactional leadership is significant when tested in isolation. Besides, the table also depicts the strength of affiliation, measured by the unstandardized beta coefficient. Transformational leadership scores 0.477, whereas transactional leadership scores 0.140, suggesting that transformational leadership has a stronger effect on the dependent variable than transactional leadership. For that matter, H4 is accepted. Also, it seems that females are more positive about communication execution than males.

Model 1 Model 2 Model 3 TFL TAL .477*** .140 .596*** Age Gender OC .070 -‐.463 -‐.297** -‐.107 -‐.696* -‐.110 -‐.032 -‐.677* -‐.217* R² .099 .539 .431

Table 5 Test of the relationship between communication execution and the IVs

* = p < .05 ** = p < .01 *** = p < .001

4.2.2 Dependent variable: perceived degree of adjustment

In this section, the dependent variable is the perceived degree of adjustment, with transformational and transactional leadership being the independent variables. The R2

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rejected but H7 is accepted. The insignificant effect can be explained by the strong role of objective change. In isolation there is a significant effect of transformational leadership on perceived degree of adjustment. As for transactional leadership, the effect remains insignificant when tested in isolation.

Model 1 Model 2 Model 3 Model 4 TFL TAL -‐.088 .071 -‐.326* .225 -‐.096 Age Gender OC .123 .462 .683*** .140 .471 .662*** .374** .697 .346** .710 R² .413 .416 .134 .088

Table 6 Test of the relationship between perceived degree of adjustment and the IVs

* = p < .05 ** = p < .01 *** = p < .001

4.2.3 Dependent variable: post-‐merger acceptance

The four IVs explain 13% of the variance in post-‐merger acceptance. Again, the results of the F-‐test show a p-‐value of 0.008, suggesting that there is a relationship between the dependent variable and the independent variable. Table 7 shows that only communication execution is significant (p<0.05). Therefore, H1 is accepted, while H5, H8 and H9 are rejected. Again, the impact of transformational leadership on post-‐merger acceptance would be significant when tested in isolation. In fact, transactional leadership would also have a significant effect on post-‐merger acceptance when tested in isolation.

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Table 7 Test of the relationship between post-‐merger acceptance and the IVs

* = p < .05 ** = p < .01 *** = p < .001

4.3 Mediation

To test whether the effect of transformational leadership and transactional leadership are partially or fully mediated, this study conducts mediation tests, as suggested by Baron & Kenny (1986).

4.3.1 Mediation tests

Table 8 shows the outcomes of the mediation test with communication execution as the mediating variable. The results display that both the relationship between the independent variables, transformational leadership and transactional leadership, and the mediating variable, as well as the relationship between the independent variable and the dependent variable are significant (p<0.05). However, the relationship between independent variable

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and the dependent variable becomes insignificant when controlling for the mediating variable (p>0.05). Thus, Table 8 shows that with communication execution as a mediator, there is full mediation, thus the relationships are through the mediating variable. This suggests that communication execution is very important.

Equation 1: Mediator = f(independent) Equation 2: Dependent = f(independent) Equation 3: Dependent = f(independent and mediator)

Independent variable Coefficients for the IVs Coefficients for the IVs Coefficients for the IVs Coefficients for the MV TFL .572*** (.063) .425*** (.122) .201n.s._(.167) _{.391*
(.202)} TAL .601*** (.087) .500*** (.151) .250n.s._(.183) _{.416**
(.180)}

Table 8 Mediation tests with communication execution as mediating variable

* = p < .10 ** = p < .05 *** = p < .001

Table 9 shows the results of the mediation test with perceived degree of adjustment as the mediating variable. In this case the only relationship being significant is between the independent variables and the dependent variable, also in equation 3. However Table 9 shows that there is no form of mediation supported since the effect of the mediating variable is not significant.

(35)

Equation 1: Mediator = f(independent) Equation 2: Dependent = f(independent) Equation 3: Dependent = f(independent and mediator)

Independent variable Coefficients for the IVs Coefficients for the IVs Coefficients for the IVs Coefficients for the MV TFL -‐.137n.s._(.094) _{.425***
(.122)} _{.454***
(.122)} _.209n.s._(.136) TAL -‐.054n.s._(.117) _{.500***
(.151)} _{.508***
(.151)} _.154n.s._(.136)

Table 9 Mediation tests with perceived degree of adjustment as mediating variable

* = p < .10 ** = p < .05 *** = p < .001

4.3.2 Sobel test: indirect effect test

In this section we perform the Sobel test in order to test whether the indirect effect of the independent variable on the dependent variable via the mediator is significantly different from zero. Table 10 shows that there is indeed significant mediation for both transformational leadership and transactional leadership at a 10% significance level.

z-‐value p-‐value

TFL 1.89 .058

TAL 2.19 .028

Table 10 Sobel tests with communication execution as mediating variable

Table 11 shows the Sobel test with perceived degree of adjustment as the mediating variable. In this case it is clear that there is no indirect identified (p>0.05).

(36)

z-‐value p-‐value

TFL -‐1.06 .290

TAL -‐043 .669

(37)

5 Conclusion & Discussion

The goal of this research is to find out the effects of transformational and transactional leadership on a teams members’ acceptance rate in the critical post-‐merger phase. This chapter answers the research question by discussing the results of the analyses, and the theoretical and managerial implications of the results. Moreover, it covers the limitations of this study and the suggestions for future research and it ends by presenting a final conclusion.

How transformational and transactional leadership impact post-­‐merger acceptance