The effect of leadership style on the relation between management control systems and basic psychological needs

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The effect of leadership style on the relation between management

control systems and basic psychological needs

Robin Vos

Master Thesis Controlling

Groningen, July 2017

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Name student: Robin Vos

Student number: S2806002

Email: r.vos.11@student.rug.nl

Module: Master thesis Controlling

Faculty: Faculty of Economics and Business Education institution: University of Groningen

Academic year: 2016/2017

Place and date: Groningen, 14-07-2017 Word count: 20.280 (excl. references)

Attendant: W. de Munnik & D. van der Bij Second attendant: K. Linke

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Abstract

This research examines the effect of management control systems on the basic psychological needs, and to what extent leadership style influences this relation. Satisfaction of the basic psychological needs provide several benefits; more positive job- and life satisfaction, it allows intrinsic motivation to be present and it facilitates the integration of extrinsic motivation. The basic psychological needs consist of autonomy, competence and relatedness.

In order to test the effect of these relations, a survey consisting of 154 respondents has been conducted. The results provide evidence that belief systems have a positive effect on the satisfaction of competence and relatedness. Where boundary systems have a positive effect on relatedness. Furthermore, the presence of all management control systems results in a negative effect of diagnostic control systems on autonomy. Leadership style is hardly involved; only three moderating effects have been observed. Transformational- and transactional leadership both have a positive moderating effect on the relation between belief system and

competence. Moreover, when the preference of transactional leadership decreases, there is

a positive relation between boundary systems and relatedness.

The results of this research can be used to inform practitioners about the advantages and disadvantages of selection of different types of management control systems and leadership style, and the consequences of these choices on the satisfaction of basic psychological needs. Which enables management to make more informed decisions and to align motivational outcomes to organizational goals.

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Preface

In front of you lies the thesis ‘’The effect of leadership style on the relation between

management control systems and basic psychological needs’’. This thesis has been written as

part of completing the master thesis Controlling at the university of Groningen. This thesis has been written from February 2017 till July 2017.

I would like to express my appreciation to my supervisors for their enthusiastic and useful guidance during this process. In addition, I would like to thank all respondents. Without their cooperation it would not have been possible to conduct this research. I also benefitted from debate with fellow students. Finally, I would like to express my appreciation to my family and friends for their support and believe in me.

I sincerely hope you enjoy the reading of this thesis.

Robin Vos

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3. Methodology ... 23 3.1 Introduction ... 23 3.2 Data collection ... 23 3.3 Survey construction ... 23 3.4 Dependent variable ... 25 3.5 Independent variable ... 26 3.6 Moderating variable ... 28 3.6 Control variables ... 29 3.7 Analysis ... 29 4. Results ... 30 4.1 Introduction ... 30 4.2 Descriptive statistics ... 30 4.3 Normal distribution ... 32 4.4 Correlation ... 33 4.4.1 Correlation autonomy ... 34 4.4.2 Correlation competence ... 34

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4.4.3 Correlation relatedness ... 35

4.4.4 Correlation management control systems ... 36

4.4.5 Correlation control variables ... 36

4.5 Hypothesis testing ... 37 4.5.1 Effect on relatedness ... 38 4.5.2 Effect on autonomy ... 39 4.5.3 Effect on competence ... 40 4.6 Moderating variables ... 42 4.6.1 Transformational leadership ... 43 4.6.2 Transactional leadership ... 44 4.7 Additional tests ... 46

5. Discussion & conclusion ... 50

5.1 Discussion results ... 50

5.2 Limitations ... 52

5.3 Recommendations further research ... 53

5.4 Conclusion ... 54

References ... 55

Appendix ... 60

Appendix 1: Questionnaire ... 60

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1. Introduction

This chapter starts by introducing the topic of the thesis. Then the problem statement will be discussed in detail. Followed by the explanation of the research purpose. Next the research questions will be formulated. Finally, a reader’s guide will be provided.

1.1 Introduction

‘’People are our organization’s most valuable asset’’. Similar statements of corporate leaders of organizations (Forbes; Goldman Sachs), go as far to declare employees to be more important than their customers. Amabile & Kramer (Harvard Business Review, 2011) analyzed and collected data, and found that the employees of the organizations spreading these statements disagree with their employer about the content; employees see these kind of statements as empty platitudes. Using almost 12.000 daily work diaries, Amabile & Kramer (2011) identified one possible reason for the disconnect: managers do not know how to express to employees that they are valued. In reality, employees experience a feeling of undervaluation. Amabile & Kramer (2011) state that this feeling of undervaluation arises through a lack of incentives, but also through negative experiences within the job environment regarding the manner in which employees are motivated, and the manner in which the organization deals with their emotions and perceptions of their work. Amabile & Kramer (2011) argue that this undervaluation can have a negative consequence: employees tend to leave the organization for the first offered job they get, which often results in the loss of talented staff because these talented employees are more attractive to competitors. In addition, Harter et al. (2010) found that when employees have more negative perceptions of their work conditions, the more negative the effect on corporate financial performance and customer loyalty is. While employees who have positive perceptions of their organization and their work, are more intrinsic motivated and tend to perform better (Amabile & Kramer, 2011).

1.2 Problem statement

This paragraph contains the problem statement of the research. First, in subparagraph 1.2.1 the goal of management control systems will be discussed, and how researchers linked the use of management control systems to different research topics. Next, in subparagraph 1.2.2 a gap in existing literature will be elaborated, resulting in the problem statement.

1.2.1 Usage of management control systems

Managers are responsible for the achievement of organizational goals, and use management control systems to ensure that behaviour and decisions of employees are in line with organizational goals and strategies (Merchant & Van der Stede, 2007). To be able to pursue organizational goals, an organization is in need of the knowledge and skills of employees, especially since customers are becoming more demanding and competitive businesses are changing (Simons, 1995).

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8 In this context, Simons (1995) explains that employee initiative and empowerment is a necessity, but on the same time these aspects can result in control problems and exposure to excessive risks. As organizations become more complex, managers are faced with an increased level of competitiveness, decreased amount of time and attention and more opportunities to pursue (Simons, 1995).

Due to the changing competitive environment and more demanding customers, Simons (1995) states that managers should stimulate flexibility, creativity and innovation of employees, but on the same time the behaviour of employees should be controlled. Stimulation of creativity can be desirable when a clear relation between input, process and output is missing (Von Nordenflycht, 2010). Simons (1995) explains that managers should stimulate the creativity in such situations, but on the same time managers want to maintain control over the behaviour of employees. These contradictions can result in tensions, therefore Simons (1995) created the four Levers of Control were the focus lies on creativity and control. Each of the Levers of Control has a different purpose for managers to control the creativity of employees (Simons, 1995). Together these four Levers of Control are set to reinforce each other and ensure managers that benefits of innovation and creativity are achieved, but that the level of control maintains (Simons, 1995). The Levers of Control framework exist of four control systems: belief systems, boundary systems, diagnostic control systems and interactive control systems (Simons, 1995).

Creativity is a concept which is frequently mentioned in the work of Simons (1995). As mentioned, creativity can be desirable when a task does not have a clear relation between input, process and output (Von Nordenflycht, 2010). On turn, to enable creativity and to exercise tasks which are in need of creativity, intrinsic motivation is required (Amabile, 1983). Researchers (Christ et al., 2012; Van der Kolk, 2016) hypothesized and found evidence that management control systems influence intrinsic motivation. Subsequently, intrinsic motivation has been investigated to have an effect on performance (Van der Kolk, 2016; Baard et al., 2004). Figure 1 provides a visual representation of the above mentioned. The next subparagraph explains the gap in existing literature.

Figure 1: Research topic prior research

1.2.2 Gap in existing literature

This subparagraph explains the gap in literature. As mentioned, the relation between management control systems and intrinsic motivation has been investigated by researchers (Christ et al., 2012; Van der Kolk, 2016). Intrinsic motivation on turn depends on the satisfaction of nutriments (Deci & Ryan, 2000). Satisfaction of these nutriments provide an environment which allows intrinsic motivation to be present, facilitates the integration of

Management control

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9 extrinsic motivation and specifies the conditions in which individuals can realize their potential (Deci & Ryan, 2000). These nutriments can be described as the basic psychological needs for

autonomy, competence and relatedness (Deci & Ryan, 2000). Prior research assessed these

basic needs with job characteristics in order to predict work outcomes, job satisfaction and motivation (McClelland & Burnham, 1976). At this moment it is unknown how management control systems relate to satisfaction of the basic needs. Consideration of the basic needs provides a starting point for the determination of whether attainment of goals will be associated with well-being outcomes (Deci & Ryan, 2000).

Thus, management control systems aim at aligning behaviour and decisions of employees with organizational goals and performance (Merchant & Van der Stede, 2007). Performance depends on intrinsic motivation (Baard et al., 2004). While intrinsic motivation depends on the satisfaction of nutriments, which allow intrinsic motivation to be present, and facilitates integration of extrinsic motivation (Deci & Ryan, 2000). By examining the effect of management control systems on performance, one step has been skipped so far, as the visual representation in figure 2 indicates. While the basic psychological needs are an important parameter to predict work outcomes and the amount of motivation present (Deci & Ryan, 2000). Therefore, the effect of management control systems on basic psychological needs, provides a contribution to the aforementioned process. This will be investigated in this research. By doing so, insight in the step-to-step relation of management control systems on performance can be enlarged.

Figure 2: Gap in literature

In this research the effect of leadership style will also be investigated. Burns (1978) states that the amount of motivation of followers can be influenced by the leadership style of the leader. Burns (1978) states that a leaders’ approach can shape individuals through enhancing motivation, moral and performance. Gagné & Deci (2005) state that leadership style can play an important role with regard to satisfaction of the basic psychological needs. Mainly because leaders have influence on the work environment of employees (Gagné & Deci, 2005). However, at this moment it is unclear to what extent leadership style influences the relation between management control systems and basic psychological needs. The question that is stated central within this thesis is:

‘’What is the effect of leadership style on the relation between management control systems and basic psychological needs?’’

Management control

systems Motivation Performance

Basic psychological needs

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10 Central in this research is the focus on perceptions of employees. In this research leadership will be established from the perspective of the employee. There will be examined how an employee ideally experiences leadership, instead of how employees perceive the leadership of their manager in practice. The reason behind this comes from the work of Bass (1990a), who states that a leader does not express the same type of leadership throughout a variety of situations. Leadership may depend on the workforce, stability of the market or even state of technology (Bass, 1990a). Thus the type of leadership can vary per department, and even per day (Bass, 1990a). Therefore, it provides a better matching to investigate the preference leadership of employees involved in these situations.

1.3 Research purpose and relevance

This paragraph is stated central about the research purpose and the relevance of this research. The purpose of this research is to investigate what the perceptions of employees towards management control systems are, and how this relates to their satisfaction of the basic psychological needs. Furthermore, the effect of leadership style on this relation is being examined.

This research adds to existing literature is several ways. Van der Kolk (2016) found in his research that personnel- and cultural controls positively associate with intrinsic motivation of employees. Furthermore, Van der Kolk (2016) found that result controls positively associate with extrinsic motivation, and both intrinsic- and extrinsic motivation associated with performance. Although Van der Kolk (2016) hypothesized the effect of management control systems on intrinsic motivation through the theory of basic psychological needs, he does not examine the actual effect of management control systems on basic psychological needs. Since satisfaction of these needs allow intrinsic motivation to be present, and facilitates integration of extrinsic motivation (Deci & Ryan, 2000), this is a valid step in examining the effect of management control systems.

Christ et al. (2012) found that controls influence the intrinsic motivation of employees. In their research they distinguish preventive- and detective controls. Main contribution of the work of Christ et al. (2012), is that the results indicate that preventive controls reduce intrinsic motivation. However, the research of Christ et al. (2012) alsodoes not consider the effect of management control systems on the basic psychological needs which allow intrinsic motivation to be present (Deci & Ryan, 2000).

Frey et al. (2013) suggests that a decent selection of management control systems is of importance for aligning the motivation of employees towards the goals of an organization. This research contributes to the work of Frey et al. (2013) by investigating the effect of management control systems on the basic psychological needs. These needs on turn relates to motivation (Deci & Ryan, 2000). The results of this research can be used to inform practitioners about the advantages and disadvantages of selection of different types of

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11 management control systems and preference leadership style, and the consequence on the satisfaction of basic psychological needs of employees. Which enables management to make more informed decisions and to align motivational outcomes to organization goals.

The scientific relevance of this research finds its origin in the relative modest knowledge with regard to the effect of management control systems and leadership style on the basic psychological needs. This research links the key concepts of management control systems to behavioral psychology. In doing so, the link is made explicit in a manner that is new to the literature. Prior research focused on the effect of management control systems on intrinsic and extrinsic motivation and/or performance (Van der Kolk, 2016; Christ et al., 2012). This research investigates steps that go beneath this relationship. By doing so, insight in the step-to-step relation of management control systems on performance can be enlarged.

1.4 Research questions

This research distinguishes three concepts: management control systems, basic psychological needs and leadership style. Important to emphasize is that these concepts will be investigated from the perspective of employees. The definitions of these concepts and the selection of literature will be further discussed in the theoretical framework. As earlier mentioned, the research question is: ’’What is the effect of leadership style on the relation between

management control systems and basic psychological needs?’’. In order to be able to answer

the research questions, some additional questions need to be addressed. These questions are drawn from the main concept and are relevant to answer. The research questions used in this research are formulated as follows:

 What are management control systems, and what is their purpose?  What are basic psychological needs, and what do they do?

 What is the effect of management control systems on the basic psychological needs?  What is leadership, and what types of leadership exist?

 What effect does leadership style have on the relation between management control systems and basic psychological needs?

1.5 Reader’s guide

The research has been divided in a number of chapters: Introduction, Literature review, Methodology, Results and Conclusion. In chapter two the focus lies on the literature, which results in a conceptual model and the development of hypotheses. Chapter three addresses the methodology. In chapter four the results of the analysis are stated central. Chapter five discusses the conclusion, as well as restrictions, limitations and recommendations for future research.

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2. Literature review

2.1 Introduction

This chapter contains the literature review. The chapter is initiated with the topic of management control systems. Followed by the concept of basic psychological needs. Next the literature regarding leadership is highlighted. The chapter ends with a representation of the conceptual model.

2.2 Management control systems

In this paragraph the focus lies on the theory regarding management control systems. This paragraph is stated around the research question: what are management control systems, and what is their purpose?

Management control systems can be described as the resources used by management to ensure that behaviour and decisions of employees are in line with organizational goals and strategies (Merchant & Van der Stede, 2007). Different theories regarding management control systems exist. Simons (1995) for example created the Levers of Control (LOC) framework. The work of Simons (1995) aimed at focusing on how top managers implement new strategies and how this affect employees, systems and strategies. Central in the LOC framework is the enhancement of creativity in a controlled manner (Simons, 1995). In certain situations, it can be useful for managers to stimulate creativity of employees. For example: when an employee executes tasks where there is no clear relation between input, process and output (Von Nordenflycht, 2010). The work of Simons (1995) enables the stimulation of creativity in such a situation, but ensures that this happens in a controlled manner.

The relevance of the theory of Simons (1995) for this research finds its origin in that it offers a broad range of different controls (allocated together as systems), and that it explains why controls are employed, and how the controls are used by (top) managers (Simons, 1995; Ferreira & Otley, 2009). In addition, the framework of Simons offers a lot of attention to behavioral aspects of employees (Mundy, 2010), which offers an opportunity to link the concept of management control systems towards the basic psychological needs, which also is concerned with behavioral aspects of individuals (Deci & Ryan, 2000). Since, this research links to concept of management control systems to behavioral psychology (the basic needs), the emphasis of management control systems on behavioral aspects is considered to be desirable. The concept of the Levers of Control will be elaborated below.

Simons (1995) created his framework to aid managers in dealing with control failures with regard to empowered employees. The main reason behind this is that managers do not have the time available to assure that every subordinate is doing what is expected, nor is it realistic to think that managers can achieve control by setting the right goals, or hiring the right people

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13 (Simons, 1995). The idea of the LOC framework is to manage tensions between for example empowerment and accountability, or for example between freedom and constraining (Simons, 1995). These tensions can be seen as positive- or negative control systems. Positive control systems are concerned with motivation, rewarding and guiding of employees (Simons, 1995). Whereas negative control systems focus on punishment, prescribing and coercing of employees (Simons, 1995). The LOC framework consists of four levers, known as: belief systems, boundary systems, diagnostic control systems and interactive control systems (Simons, 1995), as represented in figure 3. In the LOC framework belief systems and interactive control systems are viewed as positive forces (Simon, 1995). Boundary systems and diagnostic control systems are considered as negative forces. (Simon, 1995). These control systems will be elaborated below.

Figure 3: Overview Levers of Control

Source: Adapted from Simons (1995)

Simons (1995) describes that belief systems can be used to communicate the corporate mission and core values throughout the organization. Belief systems express core values that corporate leaders want the employees to embrace, and are often used to motivate and inspire employees (Simons, 1995). The main goal of belief systems is to create a mutual agreement among employees on how to act in day to day activities, and can be used to empower employees and encourage them to explore new opportunities to create value for the organization (Simons, 1995).

Simons (1995) explains that boundary systems can be seen as minimum standards. Typically established through rules and ethical guidelines and focus on telling people what not to do (Simons, 1995). From a creative point of view boundary systems can be considered to be a company’s brakes. Simons (1995) explains that boundary systems and belief systems together can create a dynamic tension between punishment and commitment. Together, boundary systems and belief systems assure that managers and employees are motivated, inspired, and protected against damaging opportunistic behaviour (Simons, 1995).

Diagnostic control systems are according to Simons (1995) typically used to measure and monitor performance, or other critical performance variables. These type of control systems can be used to track progress towards goals and to compare outputs with standards which allows management to fine-tune input and the business processes involved (Simons, 1995). One of the main purposes of diagnostic control systems is to lighten the burden of a manager to be in a state of constant monitoring (Simons, 1995). On turn, Simons (1995) argues that

Levers of control Focus on

Belief systems Core values

Boundary systems Risks to be avoided

Diagnostic control systems Critical performance variables

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14 diagnostic control systems can create pressures that lead to control failures; after performance standards are established, managers tend to move on to other issues.

The last Lever of Control is interactive control systems. Simons (1995) describes interactive control systems as formal information systems that managers use from time to time to involve themselves in decisions of subordinates. One of the keywords in interactive control systems is communication, which can be used to create a dialogue throughout the organization and identify key strategic issues (Simons, 1995). Interactive control systems are designed to collect data that can challenge the current corporate vision and strategy (Simons, 1995).

Summarizing, the research question in this paragraph was: What are management control systems, and what is their purpose? Management control systems can be described as the resources used by management to ensure that behaviour and decisions of employees are in line with organizational goals and strategies (Merchant & Van der Stede, 2007). Simons (1995) created the LOC framework: belief systems, boundary systems, diagnostic control systems and interactive control systems. The framework of Simons (1995) offers a lot of attention to behavioral aspect of employees (Mundy, 2010), which offers an opportunity to link the concept of management control systems towards basic psychological needs, which also is concerned with behavioral aspects of employees (Deci & Ryan, 2000) Since the research is stated about the effect of management control systems on basic psychological needs, this is considered to be a decent match. The next paragraph explains the concept of basic psychological needs.

2.3 Basic psychological needs

The next part of the theory is concerned with the basic psychological needs. Central in this paragraph is the research question: What are basic psychological needs, and what do they do? The topic of basic psychological needs is a theory originated from psychology (Deci & Ryan, 2000). The use of these psychological theories in organizational studies is not unusual (Salanic & Pfeffer 1977). The concept of the basic psychological needs is heavily embedded within the topic of motivation (Deci & Ryan, 2000). The basic needs will be explained below.

The basic psychological needs underlie motivational mechanisms and have been identified to be essential nutriments for the determination of an individual’s optimal functioning (Deci & Ryan, 2000). Satisfaction of the basic needs enhances motivation, which on turn results in more positive work outcomes in the shape of more effective performance, improved conceptual understanding, job satisfaction and more positive work attitudes (Deci & Ryan, 2000). The basic needs can be viewed as universal necessities which are important for all individuals (Gagne & Deci, 2005). The basic psychological needs consist of autonomy,

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15 The need for autonomy refers to an individual’s desire to experience a freedom of choice and psychological freedom when executing an activity, moreover autonomy may also occur when following orders from managers (Deci & Ryan, 2000). This last point might appear to impair the independence of an individual, however if managers can provide a rationale for following orders, an individual might act willingly because the orders are perceived to be meaningful by the individual (Van den Broeck et al. 2010). The need for competence can be described as an individual’s desire to act in an effective manner with the environment (Deci & Ryan, 2000). This psychological need enables an individual to explore the environment and to test and improve skills (Deci & Ryan, 2000). Satisfaction of competence allows individuals to adjust to changing environments, whilst frustration of competence often results in a situation where there is forceless and a lack of motivation (Deci & Ryan, 2000). The third psychological need refers to relatedness. This need is defined as the propensity to feel a connection to other individuals or members of a group, or to be a member of a group (Baumeister & Leary, 1995). Furthermore, relatedness refers to the propensity to love and to be loved, and to care and be cared for (Baumeister & Leary, 1995). Deci & Ryan (2000) observe that this need is satisfied when people develop relationships with others and experience some sort of community.

Satisfaction of these three nutriments provide an environment which allows intrinsic motivation to be present, facilitates the integration of extrinsic motivation and specifies the conditions in which individuals can realize their potential (Deci & Ryan, 2000). Intrinsic motivated individuals engage in certain activities at work because they find it interesting, or they experience some sort of joy from it (Gagné & Deci, 2005), whereas extrinsic motivated individuals engage in activities because some tangible rewards result from the activity, rather than that satisfaction comes from the activity itself (Gagné & Deci, 2005). Furthermore, satisfaction of the three nutriments allows internalization to function optimally (Gagné & Deci, 2005). Internalization refers to a situation where individuals take over values, attitudes, or work structures (Gagné & Deci, 2005). For example: when individuals work hard even though they know that their boss is not watching (Gagné & Deci, 2005). Internalization can be considered to be an overarching term that includes three processes: introjection, identification and integration (Gagné & Deci, 2005). Introjection contains a regulation that has been included by an individual, but is not accepted to be his or her own (Gagné & Deci, 2005). Identified regulated people experience greater autonomy because their behaviour is more in line with their personal identity and goals (Gagné & Deci, 2005). Individuals with integrated regulation are fully aware that their behaviour is a part of who they are (Gagné & Deci, 2005).

The three basic needs are universal and to function optimally all three needs must be satisfied, satisfaction of one or two needs is not enough to function optimally (Deci & Ryan, 2000). When relatedness and competence are together satisfied, an individual will tend to internalize certain behaviour, but the degree of autonomy determines whether identification, integration of introjection takes place (Gagné & Deci, 2005). And thus, all three needs are necessary to be satisfied if an individual want to be effective in the social world (Gagné & Deci, 2005).

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16 If the social world of an individual disables them from satisfying the three basic needs, this may have significant psychological consequences in the shape of anxiety, exhaustion and depression (Deci & Ryan, 2000; Van den Broeck et al., 2010). Every individual has a different way in which they satisfy their basic needs. This can depend on culture or age, but at the end of the line every individual is likely to benefit from satisfaction of the basic needs (Van den Broeck et al., 2010).

Summarizing, the research question in this paragraph was: What are basic psychological needs, and what do they do? The theory of basic psychological needs is related to the topic of motivation (Gagné & Deci, 2005). In this paragraph has been discussed that the basic psychological needs for autonomy, competence and relatedness, have been identified to be a parameter of an individual’s functioning in different domains (Gagné & Deci, 2005). Satisfaction of the basic psychological needs allows intrinsic motivation to be present and promotes internalization of extrinsic motivation, while frustration of the basic needs can lead to anxiety and depressions (Deci & Ryan, 2000). Satisfaction of all three needs is necessary to be able to function optimal (Deci & Ryan, 2000). The next paragraph focuses on the relation between management control systems and basic psychological needs.

2.4 The effect of management control systems on basic psychological needs

This paragraph focuses on the research question: What is the effect of management control systems on the basic psychological needs. The topics of management control systems and basic psychological needs have been discussed in the previous paragraphs. All three basic needs have to be satisfied independent from each other to state that an individual can perform optimally (Deci & Ryan, 2000). Therefore, the hypothesis-section aims at the effect of management control systems on each of the three basic psychological needs independent from each other. However, this will only be done if a relation can be argued based on theory.

The first hypothesis is stated central about belief systems and relatedness. Belief systems can be used to translate corporate values throughout the organization (Simons, 1995). These corporate values express core values that corporate leaders want employees to embrace, which can create a mutual agreement among employees on how to act in day to day activities (Simons, 1995). The basic need for relatedness refers to the desire of an individual to feel a connection with other individuals, groups or the environment, and the propensity to love and be loved (Baumeister & Leary, 1995). Through the use of belief systems management spreads core values in an attempt to create a mutual agreement among employees. By doing so, this can result in a situation where different individuals share specific values, and therefore experience a deeper connection with each other. This in turn result in an enhanced feeling of

relatedness with the organizational environment and its members. Resulting in the following

hypothesis.

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17 Boundary systems are used to establish rules and minimum standards, used to assure that subordinates act according with the established codes (Simons, 1995). Boundary systems can be characterized by their focus on punishment, prescribing and coercing (Simons, 1995). Boundary systems are an example of a constraining control (Tessier & Otley, 2012) used to limit freedom and increase predictability (Simons, 1995). The need for autonomy refers to an individual’s desire to experience a freedom of choice and psychological freedom when executing an activity (Deci & Ryan, 2000). By using boundary systems, management aims at controlling the behaviour of their employees (Simons, 1995). The coercive nature of boundary systems prevents employees from acting entirely free. This on turn, conflicts with an individuals’ desire to experience a feeling of freedom and autonomy. When an individual’s freedom is limited, the feeling of autonomy is perceived to be low. Therefore, it is expected that boundary systems have a negative effect on autonomy. The psychological need for

competence refers to an individual’s desire to explore the environment and to test and

improve skills (Deci & Ryan, 2000). Boundary systems contain rules and minimum standards (Simons, 1995). From individuals is expected to comply with these rules in standards in order to increase predictability of outcomes (Simons, 1995). The pre-determined standards of boundary systems prevent individuals from exploring the environment and to improve and develop new skills. Thus, boundary systems make it difficult for individuals to work on their

competence, since derogating from the standards is likely to result in punishment. Resulting

in the following hypotheses.

H1 B1: Boundary systems have a negative effect on autonomy. H1 B2: Boundary systems have a negative effect on competence.

An individuals’ autonomy refers to the desire to experience freedom in executing an activity (Deci & Ryan, 2000). Diagnostic control systems are used to measure and monitor performance, or other critical performance variables (Simons, 1995). Diagnostic control systems can be used to track progress towards goals (Simons, 1995). When executing an activity, the performance is typically being compared to the standard (Simons, 1995). An individual has with diagnostic control systems little freedom to execute labor in the desired manner, since any deviation from the standard results in questions from the manager with regard to how the deviations are originated (Simons, 1995). Thus, an individual has little freedom to execute activities to their preference, since there is being monitored what the output is compared to the standard. Which result in a negative effect of diagnostic control systems on autonomy. Competence aims at exploring the environment, and test and improve skills (Deci & Ryan, 2000). Diagnostic control systems focus on comparing deviations between standard and actual output (Simons, 1995). When an individual is aware that progress is being tracked, and performance is being monitored, the desire to explore the environment and to practice skills, is less beneficial and may not be desirable at all. Therefore, an individual is less motivated for example to use other methods, or other tools. And so, individuals do not improve their skills. Therefore, a negative effect of diagnostic control systems on competence is being expected. Resulting in the following hypothesis.

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18 H1 C1: Diagnostic control systems have a negative effect on autonomy.

H1 C2: Diagnostic control systems have a negative effect on competence.

Simons (1995) describes interactive control systems as formal information systems that managers use to involve themselves in decisions of subordinates. Interactive control systems can be used to create a dialogue throughout the organization, and can be used to identify key strategic issues (Simons, 1995). Competence focuses on exploring the environment, and test and improve skills (Deci & Ryan, 2000). When management uses interactive control systems to identify new strategies, employees are actually challenged to further explore their environment, and employees are inspired to use their skills to identify strategic issues. It is than expected that interactive control systems have a positive effect on competence.

Relatedness refers to the desire to feel a connection with other members or groups

(Baumeister & Leary, 1995). By creating an organization wide dialogue with the members of the organization, the employees might feel more connected with the organization. The face-to-face dialogue can create emotional connections, and thus an enhanced feeling of

relatedness. Resulting in the following hypotheses.

H1 D1: Interactive control systems have a positive effect on competence. H1 D2: Interactive control systems have a positive effect on relatedness.

Summarizing, this paragraph focused on the research question: What is the effect of management control systems on basic psychological needs. In this paragraph the relation between management control systems and basic psychological needs have been reasoned. Figure 4 presents the expected outcomes. The next paragraph is concerned with the topic of leadership style.

Figure 4: Overview of expected outcomes

Belief systems Relatedness

Boundary systems Autonomy

Boundary systems Competence

Diagnostic control systems Autonomy

Diagnostic control systems Competence

Interactive control systems Competence

Interactive control systems Relatedness

-+ -+ +

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19 2.5 Leadership style

The next paragraph explains the concept of leadership. Central within this paragraph is the research question: What is leadership, and what types of leadership exist?

Bass (1990a) defines leadership as an interaction between two or more members of a group. These interactions involve most of the time a structuring or restructuring of situations, and the corresponding perceptions and expectations of the members involved (Bass, 1990a). The importance of leadership is emphasized by Burns (1978) who states that individuals can be influenced and motivated by leaders. Stogdill (1950) dominated the leadership literature for a long time with his distinction between consideration and initiating structure. Consideration refers to leaders who exhibit a people-oriented type of leadership. Whereas initiating structure is more concerned with a task-oriented type of leadership. The concept of Stogdill (1950) maintained until researchers started using the distinction between transactional- and transformational leadership. (Bass, 1990a; Bass, 1990b; Vera & Crossan, 2004). These two styles will be elaborated below.

The first style of leadership is transformational leadership. Transformational leaders are concerned with providing individuals with inner satisfaction by stimulating intelligence and rationality (Bass, 1990a). Likewise, transformational leaders coach, give personal attention and advise individuals (Bass, 1990b). Transformational leaders are able to share a vision, mainly because their inspiration to subordinates result in an emotional connection (Bass, 1990a). A transformational leader uses this connection to maneuver his-or herself to act as a developer, or even mentor (Bass, 1990b). Bass (1985a) notices that subordinates on their turn have little influence on the leader, mainly because they are placed on a pedestal by individuals.

The second style of leadership contains transactional leadership. The process of transactional leadership often contains a bargaining process with subordinates to accomplish motivated behaviour (Bass, 1990b). This type of leadership is concerned with satisfying physical needs of employees (Bass, 1990b). Which means that managers with a transactional leadership style provide typically rewards for effort and performance. Furthermore, this type of leadership can be characterized as that interventions only take place when standards are not met (management by exception), or when rules or standard are derogated (Bass, 1990b).

The earlier stated types of leadership imply that a leader is either transactional or transformational. However, prior research (Avolio et al. 1999; Bass, 1998) has indicated that most leaders use both transactional- and transformational leadership in different intensities. The type of leadership depends on circumstances. For example: whether the organizational environment is stable, or the working climate, or even the state of technological developments (Bass, 1998). Thus, the type of leadership may vary per day (Bass, 1990a).

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20 Vera and Crossan (2004) state that the effectiveness of a leadership style can depend on the nature of an organization’s management control systems and management accounting. Vera and Crossan (2004) argue that having accounting information such as targets and performance measures will support the transactional leadership style. While the absence of such accounting information results in a situation where it is difficult for a transactional leader to arrange expectations and therefore a transformational leadership will be far more effective in this situations (Vera and Crossan, 2004). Bass (1990b) argues that transactional leaders are less effective than transformational leaders, mainly because the management by exception-style result in a situation that employees are not very eager to exert any extra effort for their transactional leader. However, Bass (1990b) reasons that decent contingent rewards can mitigate this lack of extra effort. Figure 5 displays the characteristics of the types of leadership.

Figure 5: Characteristics of transformational- and transactional leadership

Source: Adapted from Bass (1990a)

Summarizing, the question that was stated central in this paragraph was: What is leadership, and what types of leadership exist? Bass (1990a) defines leadership as some sort of interaction between two or more members of a certain group. Bass (1990a/b) distinguished two leadership styles. Transformational leaders provide inner satisfaction by stimulating intelligence and rationality of individuals. Managers with a transactional leadership style provide typically rewards for effort and performance. Figure 5 gives an overview of characteristics. The next paragraph focuses on the moderating role of leadership style on the relation between management control systems and basic psychological need.

2.6 The moderating effect of leadership style

The next paragraph aims at the moderating effect of leadership style. The question stated central in this paragraph is: What effect does leadership style have on the relation between management control systems and basic psychological needs? The previous paragraph explained two leadership styles. Like management control systems and psychological needs, leadership will be viewed from the perspective of the employee. The leadership style in this research can be conceived as preference leadership style of the employee. The reason behind this comes from the work of Bass (1990a), who states that a leader does not express the same type of leadership throughout a variety of situations. Thus the type of leadership can vary per day (Bass, 1990a) on circumstances that cannot be mapped at this moment. Therefore, it provides a better matching to investigate the preference leadership of employees involved in these situations

Transactional leadership

Contigent Reward : Contracts exchange of rewards for effort, promises rewards for good performance, recognizes accomplishments. Management by Exeption (active) : Watches and searches for deviations from rules and standards, takes corrective action. Management by Exeption (passive) : Intervenes only if standards are not met.

Laissez-Faire: Abdicates responsibilities, avoids making decisions.

Transformational leadership

Charisma : Provides vision and sense of mission, instills pride, gains respect and trust.

Inspiration: Communicates high expectations, uses symbols to focus efforts, expresses important purposes in simple ways. Intellectual stimulation : Promotes intelligence, rationality, and careful problem solving.

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21 Transformational leaders focus on inspiring their employees by satisfaction of inner needs and stimulation of intelligence and rationality (Bass, 1990a). Typically, these leaders provide vision and share this with subordinates, which in turn results in an emotional connection (Bass, 1990a). Transformational leaders are seen as trustworthy and can be characterized by their coaching, advising and their disposition to give personal attention (Bass, 1990b). Autonomy, experiencing freedom within the job activity and a certain psychological freedom (Deci & Ryan, 2000), shows similarities with this particular style of leadership. Transformational leaders stimulate intelligence and vision, without constraining subordinates. Therefore, it is expected to positively effect the feeling of autonomy. Competence, the desire to test and improve skills (Deci & Ryan, 2000), can also be strengthen using transformational leadership since these leaders stimulate intelligence and provide personal attention, which can contribute to an individual’s skill. Relatedness, a connection with other members or groups (Baumeister & Leary, 1995), can also be strengthened using transformational leadership since transformational leaders are concerned with creating an emotional connection with subordinates (Bass, 1990a).

Summarizing, typical features of transformational leadership show a lot of similarities with the three basic psychological needs. Therefore, a positive moderating effect of transformational leadership is being expected on management control systems and the basic psychological needs. Whereby a positive relation between management control systems and basic psychological need will be strengthened, and a negative relation between management control systems and basic psychological need will be weakened. Resulting in the following hypotheses.

H2 A1: Transformational leadership strengthens the positive effect of management control systems on basic psychological needs

H2 A2: Transformational leadership weakens the negative effect of management control systems on basic psychological needs

Transactional leaders are concerned with satisfaction of physical needs of individuals (Bass, 1990b). This satisfaction of physical needs is often expressed in the shape of rewards for effort and performance (Bass, 1990b). Transactional leaders often only intervene when standards are not met (management by exception), or when rules or standard are derogated (Bass, 1990b). Therefore, an individual’s feeling of autonomy, freedom within the job environment (Deci & Ryan, 2000), is expected to be negative, since transactional leaders do not allow subordinates to work outside the pre-determined standard. Competence, the desire to improve skill (Deci & Ryan, 2000), is also expected to be negatively influenced by transactional leaders, since these type of leaders are not concerned with enhancing intelligence, or improvement of skill (Bass, 1990a). Transactional leaders express a management-by exception style, while relatedness aims at connecting with others (Baumeister & Leary, 1995). Therefore, a negative effect is expected.

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22 Summarizing, from the above comes forward that transactional leaders do not pay much attention towards autonomy, competence and relatedness. Bass (1990b) validates this by stating that transactional leaders are not concerned with stimulating employees, but rather focus on the satisfaction of outer needs in shapes of rewards. Therefore, a negative moderating effect of transactional leadership is being expected on all management control systems and the basic psychological needs, whereby a positive relation between management control system and basic psychological need will be weakened, and a negative relation between management control system and basic psychological need will be strengthened.

H2 B1: Transactional leadership strengthens the negative effect of management control systems on basic psychological needs.

H2 B2: Transactional leadership weakens the positive effect of management control systems on basic psychological needs.

The conceptual model of this research has been provided in figure 6. The visual representation is in line with the earlier stated main themes (management control systems, basic needs, leadership). To summarize: The perception of a single employee towards each of the four management control systems will be investigated, followed by the effect of these perceptions on the basic psychological need. In addition, the effect of the perception of the preference leadership style will be examined. This serves as moderating variable in this research.

Figure 6: Conceptual model

Management controls Motivation

Belief systems Autonomy

Boundary systems H1 Competence

Diagnostic control systems Relatedness

Interactive control systems

H2

Leadership style

Transactional Transformational

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3. Methodology

3.1 Introduction

This chapter contains the methodology section of the research. The chapter starts with a description of how the data are collected and how the sample has been selected. Next, the methodology concerning management control systems, basic psychological needs and leadership style is being discussed. Followed by the control variables used in this research. The chapter finishes with some remarks regarding outliers and the research design.

3.2 Data collection

The analysis has been conducted using data received from surveys. The fitness of surveys for this research finds its origin in that surveys are a convenient tool for quantitative research, and moreover because this research focuses on latent constructs; variables that cannot be directly observed and lie hidden (Keller, 2012). In addition, surveys can be used to scale the responses of the respondents and specify their level of agreement for the various statements (Keller, 2012).

Apart from that the necessary data are not directly observable, the data are also not publicly available. Therefore, conducting a survey within an organization is a necessary activity. The company of PostNL has been approached through personal connections. The organization was willing to cooperate in this research, and therefore has been selected to conduct a survey. A second reason for the selection of PostNL is that the organization provides to all employees a document containing core values, corporate mission and (ethical) guidelines. Therefore, it is expected that all employees have knowledge of those constructs. Which is especially useful when establishing the presence of management control systems, since these questions require knowledge of core values and the corporate mission. Which will be further discussed in paragraph 3.5.

PostNL is a commercial organization that delivers parcels and letters in the Netherlands. The survey has been send digitally to employees of PostNL, within the region Groningen. As stated in chapter one, the focus of this research lies on perceptions of employees. This means that the unit of analysis aims at all employees, at all levels of Post NL region Groningen. Thus, people who are currently employed at PostNL Groningen in paid labor are approached. The data have been collected using the program Qualtrics. The data are analyzed using SPSS. The next paragraph explains how the survey has been constructed.

3.3 Survey construction

Before the survey has been spread across the organization, there are several aspects that needed to be taken into account. How the questions related to management control systems, basic needs and leadership are retrieved will be discussed in the following paragraphs. This

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24 paragraph focuses on measures and actions that improve cooperation of individuals, and aspects that contribute to completion of the survey. This will be explained below. The first element that should be considered is the language of the survey. The validated questionnaires from paragraph 3.4-3.6 are stated in English, where the respondents are Dutch speaking. These questionnaires have been translated to Dutch using the procedure of translate and translate back. The translation has been done by five students, and three members of PostNL. Subsequently, these translations have been compared to each other in order to come to the established translation.

The second element that has been considered is whether the survey tool functions adequately, and whether the questions are clear and understandable. Again, five fellow students and three members of PostNL have been involved in the testing. The results of the testing indicated a problem with regard to leadership style. Test members experienced difficulty whether the questions of leadership related to the leadership style of their manager, or whether it referred to a preference leadership style. This issue has been resolved by emphasizing at the questions related to leadership style, that respondents need to indicate a preference leadership style.

The third element that has been taken into account is the length of the survey. As suggested by Smith (2015, p134), the respondents should be able to complete the survey within 20 minutes, if their motivation and interest in completing the survey is to be preserved. At the testing phase comes forward that all test members were able to complete the questionnaire within 15 minutes. This means that the length of the survey is considered to be appropriate.

The fourth element that has been considered is top management support. Blumberg et al. (2014) state that individuals might be reluctant to fill in the survey as filling in takes precious time. Therefore, they suggest that in this context it might be useful to ask top management for cooperation. The respondents were encouraged by the management of PostNL to complete the survey in the shape of a mail with the request to participate.

The fifth element focuses on the importance of the survey, and the confidentiality. Blumberg et al. (2014) state that in order to create a positive attitude towards the survey, that it is wise to emphasize the importance of the participants’ responses, and to close with an appreciation towards the willingness to take the survey. This has been indicated in the digital mail containing the request to participate. Additionally, there has been emphasized that the entire survey will be threated confidential, and will not be distributed to third parties.

The sixth element is the sequence of the questions of the survey. Parker (1992) suggests that short and relatively easy questions should be stated at the beginning, followed by relatively more difficult questions, and closing with then again relatively easier question. The work of Bryman (2001) suggests that early questions should be relevant about the research topic and

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25 should not be concerned with general question as for example gender, age and educational background. With the above in mind, the questions related to the basic needs are stated first since these questions are relative short, and do not require much additional background information to be able to answer. This in contrast to the questions regarding to management control systems, which require knowledge of for example corporate core values or the mission statement. These question have been stated second. Followed by the questions with regard to leadership style. The survey closes with the general questions, referring to age, gender etc. As suggested by Dillman (1978), two reminders have been send with the request to fill in the questionnaire if not done yet.

The survey has been filled in completely by 154 respondents. This research only considers completely returned surveys. The complete questionnaire can be found in appendix one. The following paragraphs explain how the questions related to basic needs, management control systems and leadership style have been selected.

3.4 Dependent variable

This paragraph focuses on the dependent variable. Within this research the basic psychological needs are considered to be the dependent variable. As discussed in the theoretical framework, the basic psychological needs consist of: autonomy, competence and

relatedness.

The dependent variable is a variable that is expected to depend on a cause (Field, 2014). In this research it is expected that the basic needs depend on management control systems. And thus, the basic needs can be considered as dependent variable. Moreover, the basic needs can be considered to be a continuous variable. A continuous variable can be characterized by that only one score per individual can be provided, and can take only one value on the measurement scale (Field, 2014). The establishment that the basic needs are a continuous variable is important for the next chapter, when the correlation and regression takes place.

To capture the amount of satisfaction of autonomy, competence and relatedness it is important to have access to a validated questionnaire. Van den Broeck et al. (2010) created a questionnaire in order to investigate an individual’s satisfaction of autonomy, competence and

relatedness. At the development-phase of the questionnaire, Van den Broeck et al. (2010)

considered several criteria. First, the need satisfaction-scale needed to reflect perceptions of employees rather than potential consequences of need satisfaction. Second, specific settings at work are eliminated so that the scale is applicable to a variety of contexts.

The consideration of these two criteria is useful for this research, since this research focuses on the perception of employees, and the scale is applicable in different settings. The final questionnaire has been created using a collaboration between Van den Broeck et al. (2010) and a panel of four academic judges who are familiar with the basic psychological needs.

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26 The questionnaire of Van den Broeck et al. (2010) exists of 18 questions: 6 for autonomy, 6 regarding competence and 6 questions for relatedness. The questionnaire has been provided in Dutch and English by the corresponding authors. Both are validated. Therefore, the in paragraph 3.3 mentioned translation-procedure is unnecessary for the dependent variable. The questionnaire of Van den Broeck et al. (2010) starts by stating that the questions focus on the personal experiences of the respondents within their work environment. The respondents were asked to provide scores on a five-point Likert scale ranging from 1 (totally disagree) to 5 (totally agree). The questionnaire of Van den Broeck et al. (2010) included positive- and negative (frustration) items, mainly to prevent participants from agreeing with all items. This has consequences for the analysis. The frustration items needed to be multiplied by -1 in SPSS in order to receive the corresponding values.

Before the questions can be used, it is essential to confirm that the questions are in fact reliable. The reliability of variables can be determined using Cronbach’s alpha (Field, 2014). Nunnally et al. (1967) state that a Cronbach’s Alpha of 0.5 can be used for research. Although, they argue that 0.5 can be considered to be an absolute minimum. Preferably a Cronbach’s alpha of at least 0.7 should be used (Field, 2014). The Cronbach’s alpha of the research of Van den Broeck et al. (2010) and this research has been provided in figure 7. The numbers indicate that the questions are reliable, and are therefore appropriate to use in this research. The Cronbach’s alpha of Van den Broeck et al. (2010) is slightly higher than this research. A possible explanation for the difference between Cronbach’s alpha is the use of a smaller sample size (Field, 2014).

Figure 7: Cronbach’s alpha basic psychological needs

3.5 Independent variable

This paragraph is stated central about the independent variable. Within this research, management control systems are considered to be the independent variable. As discussed in paragraph 2.2, management control systems exist of: belief systems, boundary systems, diagnostic control systems and interactive control systems.

The independent variable is a variable that is expected to be a cause on another variable (Field, 2014). In this research it is expected that management control systems cause the amount of satisfaction of the basic needs. Like the basic needs, the management control systems can also be considered to be a continuous variable, since only one score per individual can be provided, and can take only one value on the measurement scale (Field, 2014). The establishment that management control systems are a continuous variable will be fruitful in the next chapter, when correlation between variables is being examined.

This research

Autonomy 0.81 0.79

Competence 0.85 0.86

Relatedness 0.82 0.76

Van den Broeck et al. (2010)

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27 Widener (2007) created a questionnaire to measure the presence of the four management control systems. Which is necessary since management control systems are latent constructs, and thus are not directly observable. Widener (2007) focused in her research on risks and strategic uncertainty, and how these factors influence the different management control systems. Moreover, the purpose of Widener (2007) was to investigate antecedents of management control systems and how they relate to each other. In addition, Widener (2007) pays a lot of attention to behavioral aspects and performance. These aspects are important characteristics considering the focus of this research lies on employee behaviour. While the focus on performance is fruitful since this research purpose is to contribute to the step-to-step relation between management control systems and performance, as mentioned in chapter one. The questions related to belief systems focus on the communication of core values and the corporate mission, where the questions related to boundary systems focus on a business conduct of the organization (Widener, 2007). Widener (2007) pre-tested her questionnaire on three business professors and five financial managers. In this pre-testing phase attention has been paid to understandability, validity and ambiguity.

The questions of Bedford et al. (2016) have been used to measure the presence of diagnostic control systems and interactive control systems. Bedford et al. (2016) focus more on the use of budgets and performance measurement systems (PMS) than Widener (2007). This focus is deemed appropriate since budgets and PMS are commonly used as input for accounting information (Henri, 2006). Bedford et al. (2016) pre-tested their instrument with ten managers and nine academics where the focus lied on content validity.

For each of the management control systems question are addressed. These questions can be answered by the respondent by giving points on a 7-point Likert scale. For each of the management control systems, there is an average score between 1 and 7. The higher the score, the more the respondent percept the presence of the control system. Widener (2007) formulated four questions for belief systems, and four questions for boundary systems. The questions from Bedford et al. (2016) contains five questions for diagnostic control systems and five questions for interactive control systems. Which brings the total questions of management control systems to eighteen.

Again, before the questions can be used the reliability needs to be assessed. The reliability of variables can be determined using Cronbach’s alpha (Field, 2014). The Cronbach’s alpha has been calculated and compared to those of Bedford et al. (2016) and Widener (2007), as represented in figure 8. The Cronbach’s alpha of this research is above the minimum of 0.7 (Field, 2014) and seem therefore trustworthy. By stating the questions from the work of Widener (2007) and Bedford et al. (2016), there can be observed to what extent the respondents experience the presence of the different management control systems within their enterprise.

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Figure 8: Cronbach’s alpha management control systems

3.6 Moderating variable

This paragraph is concerned with the moderating variable. In this research leadership style is considered to be moderating variable. From the theoretical framework comes forward that two styles of leadership are used: transformational leadership and transactional leadership. A moderator variable, or interaction effect, is a combined effect of two variables on another variable (Field, 2014). In this research leadership style is the moderating variable. Together with management control systems the effect of leadership style on basic psychological needs will be investigated. Leadership can be viewed as continuous variable, since only one score per individual can be provided, and one value on the measurement scale appears (Field, 2014).

To capture the amount of preference leadership style that an individual desire, a validated questionnaire needed to possessed. Ismail et al. (2010) adapted the instrument of Avolio et al. (1991) into fifteen question which focus on transactional- and transformational leadership. Of those fifteen questions, ten are used to determine transformational leadership, and five are used to capture the amount of transactional leadership. These items can be measured using a 7-item Likert scale. For both leadership styles there is an average score between 1 and 7. The higher the score, the more the respondent prefers a type of leadership.

Just as with this research, Ismail et al. (2010) targeted with their instrument on preferences of employees towards leadership. The questionnaire can be used to determine the preference of the respondents towards transformational- and transactional leadership. Therefore, this instrument is considered to be useful for this research. Ismail et al. (2010) pilot tested the instrument with participants. Feedback has been used to verify the and develop the content of the instrument. The validity of the test can be analyzed using Cronbach’s Alpha (Field, 2014). The Cronbach’s alpha using the 15 questions from Ismail et al. (2010), resulted in 0.95 for transformational leadership, and 0.72 for transactional leadership, as represented in figure 9. Thereby, both constructs meet the standard of Cronbach’s alpha of 0.7 (Field, 2014)

Figure 9: Cronbach’s alpha leadership

Prior research This research

Belief systems* 0.91 0.88

Boundary systems* 0.87 0.82

Diagnostic control systems** 0.89 0.97 Interactive control systems** 0.78 0.92 * Widener (2007)

** Bedford et al. (2016)

Ismael et al. (2010) This research

Transformational leadership 0.95 0.95

The effect of leadership style on the relation between management control systems and basic psychological needs