CRITICAL REVIEW ASSIGNMENT - Transformational and Transactional Leadership impact on Management Innovation with regards to Organisational Size

by stephensec (student)

University Degree Business and Administrative studies

Stephen Coudounaris z3288792. Thursday 1-2pm

MGMT2001 – CRITICAL REVIEW ASSIGNMENT

Introduction

The article I have selected is an empirical piece of work conducted by Vaccaro et al. (2012) that considers the relative impact of transformational and transactional leadership styles on management innovation with regards to organisational size. This article determines that organisation size is crucial to determining which style of leadership is effective. The authors expect transactional and transformational leadership to be effective in smaller organisations, whilst achieving little in large organisations. To their surprise, the authors uncover that transformational leadership is in fact useful in large organisations to promote management innovation. Through focus on the two articles by Birkinshaw et al. (2008) and Mol & Birkinshaw (2008), they help expand our view on leadership behaviours and their impact on management innovation.

Brief Definitions

Transformational leadership involves a leader inspiring others to effect change which is executed through support from members of the group. In comparison, transactional leadership involves the setting of clear goals and objectives to be reached for followers with either rewards or punishment (Vaccaro et al. 2012).

Relevance to Theory

Vaccaro et al. (2012) cite Birkinshaw et al.’s (2008) definition of management innovation as the “generation and implementation of a management practice, process, structure or technique that is new to the state of the art and is intended to further organisational goals.” Through this definition here we can see the relevance to this course; this article explores the notion of innovation and how it is implemented at a managerial level and the concept of how innovation can mean being ‘new’ to an organisation. However, without the use of relevant examples of management innovation, I believe there certainly are some limitations to my chosen article (outlined in valuation of the paper).

Key Arguments

Vaccaro et al. (2012) cite through Egra & Herman (2000) and Yang et al. (2010) that previous studies have indicated transformational leadership is more receptive towards management innovation simply amongst smaller organisations. In comparison, they propose that leadership effectiveness on management innovation is diminished as organisational size increases. Through increased frequency of communication and interaction with members of a smaller organisation, leaders are able to achieve a level of commitment to management innovation that was thought to be unreachable in larger organisations. Another central component of transformational leadership is the ability of the leader to inspire and motivate others, and it is believed this is more easily captured in organisations of smaller size and scope (Vaccaro et al. cite Berson et al. 2001). In comparison, the concern for organisations as they increase in size is they are more impersonal, and thus a leader will find it difficult to communicate their vision (cites Atwater & Bass 1994).

The authors also put forward the argument that they expect transactional leaders to have a positive influence towards management innovation on smaller organisations, however, not towards larger organisations. Thus, similarly to transformational leadership, transactional leadership is considered to be ineffective as organisational size grows. A central component of transactional leadership is the concept of completion of ‘contracts’ amongst leaders and followers (Atwater & Bass 1994). Thus as organisational size grows, the greater number of ‘contracts’ are required, giving rise to further bureaucracy.

Vaccaro et al. (2012) also argue sustainable competitive advantage and increased competitiveness occurs as a ...

This is a preview of the whole essay

Vaccaro et al. (2012) also argue sustainable competitive advantage and increased competitiveness occurs as a result of management innovation due to leadership qualities (which also induces the relevance to theory) (Birkinshaw and Mol 2006.) Changes in management innovation are considered difficult to replicate, thus a sustainable competitive advantage is likely to arise from such a situation (Birkinshaw & Mol 2006; Hamel, 2007; Teece 2007). However, as it is important to remember with innovation, innovation does not necessarily mean creating an entirely ‘new to the state of the art’ concept, rather ‘new to the organisation’ is similarly a form of innovation (Birkinshaw et al. 2008). One example of management innovation explored by Vaccaro et al. (2012) is the ‘self-managed teams’ implemented at Procter & Gamble during the 1980s where teams became responsible for all their work patters including deadlines. Through initiating change in the structures, processes and practices of the firm, leaders brought about management innovation (Birkinshaw et al. 2008).

Findings/Main Conclusions

Vaccaro et al. (2012) express surprise in discovering that transformational leadership in fact had a positive influence on management innovation in both small and large, complex organisations. Initially the authors iterated large organisations were simply too large and complex for transformational leadership to inflict management innovation. However, through communicating a shared vision and developing a certain type of organisational culture (such as that developed at Procter & Gamble), leaders have the ability to unite workers who feel uncertainty in both small and large, complex organisations (Vaccaro et al. 2012 cite Birkinshaw et al. 2008). Vaccaro et al. cite Sarros et al. (2002) in proposing a potential reason for such an occurrence; that perhaps individuals in the organisation felt transformational leadership eclipsed the negative impact of bureaucracy and hierarchy, giving them some guidance in a complex system. Another proposal states that through hierarchical echelons of the organisation the central management innovation idea may be expressed, whereby the upper echelons transmit a message to lower echelons which they in turn enact (Walman & Yammarino 1999). Thus there are different ways in which this transformational leadership can have a positive effect on management innovation in large organizations.

Similarly, transactional leadership has garnered increased importance amongst smaller organizations for management innovation. Vaccaro et al. (2012) cite Bass (1985) arguing ‘contracts’ are more easily monitored and established in smaller organisations as there is less divergence from the status quo. In these smaller organisations, there is more face-to-face time between transactional leaders and followers which instills a greater component of trust between parties (Vaccaro et al. 2012 cite Ehrlich et al. 1990; Shamir, 1995). Interestingly, Vaccaro et al. (2012) enlighten us to the possibility that transactional leadership also applies to different phases of an organisation. Their assumption is that smaller organisations are under greater pressure to achieve short-term goals which requires more short-term transactions from workers, for which they receive reward and through this process build trust.

My Independent Valuation of the Paper

This journal article is certainly insightful in considering the relative importance of transactional and transformational leadership styles on management innovation in different sized organisations. However, I did feel the article lacks the use of relevant examples to portray their evidence. I feel it would have been more constructive had they presented real examples of their findings as opposed to simply discussing the theory behind their results.

I also feel there are a number of limitations in this paper, with one being the fact that no concrete reason is given as to why transformational leadership still had an impact despite larger organisational sizes. There is mere speculation in reference to reasons why they felt transformational leadership style was effective in large organisations. Through the use of weak language such as “potential explanation” (Vaccaro et al. 2012 p43) one does not feel confident in explaining exactly what attributed the positive influence of transformational leadership on management innovation in large organisations.

Lastly, I believe to some extent this article lacks reliability. Vaccaro et al. (2012) acknowledge the fact that only one member of the TMT per organisation was relied on for this article. Thus the presented data could easily have been warped or presented in such a manner whereby the representative had aspirations of change or good press for their organisation.

Why I Chose this Article

I found this article of particular intrigue due to the fact it focused on the role of management innovation in organisations as opposed to product innovation. The dominant discourse in media is the attention given to product and technical innovation in companies. Where this article is different and interesting to me is the fact that management innovation can also bring about changes to an organisation and what we learn is the relative importance of transactional and transformational leadership in achieving innovation. Furthermore, one learns that through effective and talented leadership, changing an organisation on a managerial level has no bounds.

Conclusion

This article states the relative importance of transactional and transformational leadership in organisations with regards to size and management innovation. It is clear that these respective forms of leadership are effective in organisations depending on their size and complexity. Management innovation is most likely to occur in both large and small organisations through transformational leadership, whilst transactional leadership is effective in smaller organisations. Through these respective forms of leadership, firms can utilise leadership to create effective change in any organisation.

Word Count: 1350 (excluding headings, citations).

Reference:

Vaccaro et al. (2012), Management Innovation and Leadership: The Moderating Role of Organizational Size, Journal of Management Studies, 49:1, January 2012.

References cited:

Birkinshaw, J., Hamel, G. and Mol, M. J. (2008). ‘Management innovation’. Academy of Management Review, 33, 825–45.

Egri, C. P. and Herman, S. (2000). ‘Leadership in the North American environmental sector: values, leadership styles, and contexts of environmental leaders and their organizations’. Academy of Management Journal, 43, 571–604.

Ehrlich, S. B., Meindl, J. R. and Viellieu, B. (1990). ‘The charismatic appeal of a transformational leader: an empirical case study of a small, high technology contractor’. Leadership Quarterly, 1, 229–48.

Koene, B. A. S., Vogelaar, A. L. W. and Soeters, J. L. (2002). ‘Leadership effects on organizational climate and financial performance: local leadership effect in chain organizations’. Leadership Quarterly, 13,193–215.

Mol & Birkinshaw (2008), Giant Steps in Mangaement: Innovations that Change the Way We Work, Dorchester: FT Prentice Hall.

Sarros, J. C., Tanewski, G. A., Winter, R. P., Santora, J. C. and Densten, I. L. (2002). ‘Work alienation and organizational leadership’. British Journal of Management, 13, 285–304.

Waldman, D. A. and Yammarino, F. J. (1999). ‘CEO charismatic leadership: levels-of-management and levels-of-analysis effects’. Academy of Management Review, 24, 266–85.

Yang, J., Zhang, Z. and Tsui, A. S. (2010). ‘Middle manager leadership and frontline employee performance:bypass, cascading and moderating effects’. Journal of Management Studies, 47, 654–78.