INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION ON THE EFFECTIVENESS OF TRANSFORMATIONAL LEADERSHIP Jessie Ho*

INTERNATIONAL JOURNAL OF ORGANIZATION THEORY AND BEHAVIOR, 19 (3), 308-343 FALL 2016 INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION ON THE EFFECTIVENESS OF TRANSFORMATIONAL LEADERSHIP Jessie Ho* ABSTRACT. Past research on transformational leadership in organizations has neglected the organizational context in which such leadership is embedded, and the significance of the disposition of followers. The purpose of the present study was to enrich and refine transformational leadership theory by linking it to organizational context and the self-esteem of followers. It was expected that organizational characteristics and subordinates selfesteem could moderate the effects of transformational leadership behavior on job satisfaction, organizational commitment, and organizational citizenship behavior. Results revealed that only organizational-based selfesteem (OBSE) significantly moderated the impact of transformational leadership behavior on organizational citizenship behavior (OCB). Withinand-between-analysis procedures (WABA) were used to determine the appropriate level of data analysis. Research finding suggests that managers should provide individualized performance feedback for high OBSE subordinates and spend more time coaching those subordinates with low OBSE on a one-to-one basis. INTRODUCTION Since its inception more than three decades ago, transformational leadership has received considerable attention in the leadership literature (Bass & Avolio, 2004). Transformational leadership is defined as influencing followers by broadening and elevating followers goals and providing them with confidence to perform beyond the expectations specified in the implicit or explicit ------------------ *Jessie Ho, Ph.D., is a Senior Lecturer, Hong Kong Community College, Hong Kong Polytechnic University. Her research interests include leadership, self-leadership, work motivation, personality, job satisfaction and crosscultural psychology. Copyright 2016 by Pracademics Press

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 309 change agreement (Dvir, Eden, Avolio, & Shamir, 2002, p. 735).Transformational leaders inspire loyalty, encourage followers to express their ideas and opinions, and also make followers proud to be associated with them (Yukl, 1998; Avolio & Bass, 1988). By building followers self-efficacy and self-esteem, such leaders have a strong, positive influence over time on followers motivation and goal achievement (Yukl, 1998; Hater & Bass, 1988). Empirical studies have demonstrated that transformational leadership is a valid determinant of desirable employee outcomes, including task performance (Judge & Piccolo, 2004), organizational citizenship (Organ, Podsakoff, & McKenzie, 2006; Piccolo & Colquitt, 2006) and proactive behavior (Morgeson, DeRue, & Karam, 2010). Traditionally, it has been assumed that transformational leadership is a universal management practice that is equally applicable to all organizational situations (Shamir & Howell, l999). Consequently, numerous studies have focused on examining how transformational leadership influences followers behavior (Avolio, Zhu, Koh, & Bhatia, 2004; Gong, Huang, & Farh, 2009; Piccolo & Colquitt, 2006) but less attention has been paid to how context affects leadership behavior and outcomes (Avolio, Walumbwa, & Weber, 2009). Porter and McLaughin (2006), having conducted a comprehensive review of the leadership literature, lamented that despite significant progress in understanding when transformational leadership behavior is most effective, it is apparent that the impact of the organizational context on leadership is an under-researched area (p. 573). In fact, a close relationship between organizational context and leadership has long been realized by some researchers. For example, Perrow (1970) claimed that leadership style is a dependent variable which depends on something else. The setting or task is the independent variable (p. 6). In addition, issues surrounding the disposition of the followers of transformational leaders have not been adequately explored (Bono & Judge, 2003; Yukl, 1999). Clark and Clark (1994) asserted that leadership acts are social processes that are always carried out by both leaders and followers to produce exceptional effects. While a leader s personality is vital to leadership effectiveness, it is not the sole determinant. The personalities of followers are equally important in determining leadership effectiveness. To date, leadership theory and research have mainly focused on the impact of the leader s traits

310 HO and behavior on followers attitudes and behavior (Howell & Shamir, 2005). There has been relatively little research examining the role of follower characteristics in determining the effects of transformational leadership on work outcomes (Zhu, Avolio, & Walumbwa, 2008). In sum, the theory of transformational leadership assumes that it is equally applicable to all organizational situations. The existing literature on transformational leadership in organizations has neglected the effect of organizational context and followers dispositions on leadership effectiveness. In particular, little research has been done to determine whether organizational characteristics and followers personality moderate the relationship between transformational leadership and follower criteria in Chinese organizational settings. To address this concern, the purpose of the present study is to examine whether organizational characteristics and subordinates self-esteem moderate the effects of transformational leadership behavior on subordinates organizational commitment, job satisfaction, and organizational citizenship behavior (OCB) in Hong Kong context. By identifying those organizational and followers characteristics that may substitute or enhance the leader s behaviors, leaders in organizations can adapt their transformational actions accordingly. This paper also integrates a levels-of-analysis framework into the development of transformational leadership theory. By analyzing data through within and between analysis (WABA), the study seeks to determine whether the moderated processes and associations of transformational leadership operate at the individual level or the group level. In the following session, how followers dispositions and organizational characteristics influence the emergence of transformational leaders would be discussed. Next, within and between analysis (WABA), results and discussion of the findings are also presented. Finally, the managerial implications and directions for further research are discussed in the final section. THEORY AND HYPOTHESES Moderating Role of Follower Characteristics Previous researchers (Bass, 1985; Conger & Kanungo, 1998) have suggested that individuals may differ in their reactions to the

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 311 same leadership behavior. Yukl (1971) proposed that subordinate personality characteristics may create subordinate preferences for leadership. When those preferences are compatible with the leader s actual behavior, subordinates are more motivated to perform well and are more satisfied with and committed to their jobs. It is also argued that followers self-concepts are related to preferences for leadership, which may in turn influence how followers react to specific leadership styles (Shamir, House, & Arthur, 1993). Ehrhart and Klein (2001) found that followers who rated higher on selfesteem were more likely to be drawn to transformational leaders. This finding suggests that transformational leadership may be more effective for some followers than for others. However, no previous studies have examined whether follower self-esteem interacts with leadership style to influence work-related attitudes and performance. Self-esteem is a person s overall evaluation of his or her selfworth (Rosenberg, 1979). Individuals with high self-esteem tend to view themselves as highly capable, significant, successful, and worthy (Gardner & Pierce, 1998, p. 51). According to self-consistency theory, people tend to behave in a manner that is consistent with their self-concept (Korman, 1970). Shamir et al. (1993) asserted that followers with high self-esteem are attracted to a transformational leader who communicates expectations of high performance and challenges them to take on greater responsibility. Associating with such a leader would be consistent with followers who view themselves positively and believe in their own ability to accomplish challenging goals (Conger, 1989; Shamir et al., 1993). In essence, transformational leadership may depend in part on the dynamics of exclusion to ensure both follower commitment and high performance outcomes (Conger, 1999). The leader may use exclusion from an inner circle to stimulate followers to greater effort and in turn induce higher performance levels. When followers self-concepts depend on the leader s approval, followers with high self-esteem are more motivated to gain inclusion in the inner circle through heightened personal efforts and commitment (Shamir et al., 1993). In contrast, followers with lower self-esteem may view the transformational leader as a threat to their view of self, as they may doubt their ability to live up to their leader s performance expectations.

312 HO In addition to heightened motivation, transformational leadership has also been demonstrated to enhance employee satisfaction, organizational commitment, and organizational citizenship behavior (Dumdum, Lowe, & Avolio, 2002; Judge & Piccolo, 2004; Lowe, Kroek, & Sivasubramaniam, 1996; Podsakoff, MacKenzie, Paine, & Bachrach, 2000). Given the above discussion, it is expected that: Hypothesis 1: Transformational leadership is positively related to followers job satisfaction, organizational commitment, and organizational citizenship behavior (OCB). Hypothesis 2: Transformational leadership is more likely to be effective on followers who have high self-esteem than those who have low self-esteem in promoting subordinates job satisfaction, organizational commitment, and OCB. Specifically, increased levels of self-esteem will strengthen the positive relation between transformational leadership and organizational commitment, job satisfaction, and OCB. Organizational Characteristics as Substitutes for Leadership Another approach of leadership research that is explicitly designed to advance our understanding of the contextual factors is Kerr and Jermier s (1978) Substitutes for Leadership model. According to the tenets of this model, the key to improving leadership effectiveness is to identify the situational variables that can either substitute for, neutralize, or enhance the leader s ability to influence his/her subordinates performance and attitudes (Farh, Padsakoff, & Cheng, 1987; Podsakoff, Niehoff, MacKenzie, & Williams, 1993b). The substitutes-for-leadership approach assumes that leaders can create substitutes in their environment to supplement or enhance their effectiveness (Podsaoff, MacKenzie & Fetter, 1993a). In early research, Kerr and Jermier (1978) identified several organization characteristics (organizational formalization; organizational inflexibility; group cohesiveness and the degree of spatial distance between supervisors and subordinates) that are potential leadership substitutes. Organizational formalization is characterized by explicit plans, goals, areas of responsibility, guidelines, and ground rules; organizational inflexibility is characterized by rigid rules and procedures (Kerr & Jermier, 1978). Employees working in those organizations with high degree of organizational formalization and

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 313 inflexibility could follow the standard guidelines, rule or procedures for problem solving. Thus they are less likely to rely on the transformational leaders for individualized support or professional coaching for goal achievement. In contrast, for those dynamic organizations with low degree of organizational formalization and inflexibility, employees cannot rely on a set of rules and regulations for solution when problems arise. In other words, there are no common methods or procedures to tell the person exactly what to do. Workers are more likely to be frustrated and discouraged by temporary setbacks, lack of progress, and ill-structured problems. In this condition, while creativity is required, transformational leaders articulation of visions and group goals and intellectual stimulation for encouraging innovation and problem solving are expected to have strong impact on subordinates job attitude and organizational citizenship behavior (OCB). Close-knit, cohesive, interdependent work groups provide information, guidance, and performance feedback that may substitute for what a leader might offer. Close-knit, cohesive work groups can also furnish emotional support, encouragement, and friendship, and thus reduce the need for individualized support and intellectual stimulation from the transformational leaders (Podsakoff, Mackenzie, & Bommer, 1996) Spatial distance between superior and subordinates is also an organizational substitute. Bass (1990) noted that when subordinates work at a great physical distance from their leaders, many leadership practices have limited usefulness as a result of reduced social interaction and richness of information transmission (Daft & Lengel, 1984). For example, both charisma and inspirational aspect of transformation leaders employ non-verbal and verbal cues to motivate their subordinates (Kirkpatrick & Locke,1996). These transformational behaviors that are emotional in nature may occur less frequently when the spatial distance between superior and subordinates is high. Despite the fact that Kerr and Jermier (1978) explicitly indicated that they intended their notion of substitutes to be applicable to a wide variety of different organizational and cultural settings, the substitutes model has never been applied to the study of transformational leadership within the context of Chinese culture. This research is the first study designed to fill this gap and examine

314 HO whether organizational characteristics may serve as moderators of the effects of transformational leaders in Hong Kong. Thus: Hypothesis 3: Organizational characteristics are expected to moderate the impact of transformational leadership on subordinates job satisfaction, organizational commitment, and OCB. Specifically, heightened organizational characteristics weaken the positive relationship between transformational leadership and organizational commitment, job satisfaction, and OCB. Multiple Levels of Analysis According to Yammarion and Dansereau (2008), it is possible that the relationships among variables specified in the above hypotheses may operate at the individual or group levels. In particular, the level of analysis at which the moderated processes and associations of transformational leadership may hold has never been examined in Chinese contexts. However, traditional raw-score analyses such as correlation and hierarchical multiple regression do not allow examination of a phenomenon s locus/level of analysis. Thus, WABA is used to overcome these shortcomings by determining whether the raw-score bivariate, multivariate, and moderator effects found in this study should occur within group, between group, both within and between group (individual level), or neither (Schriesheim, 1995). In a comprehensive review of the leadership literature, Yammarino, Dionne, Chun, and Dansereau (2005) concluded that transformational leadership is primarily conceptualized, measured, and inferred to hold at the individual level of analysis. Another objective of this research is to determine whether the relationships found in this study are consistent with interpretations at the individual level of analysis. Using a levels-of-analysis approach in this study results in four conceptual views of the interaction between a leader and his or her followers (Avolio & Yammarino, 1990). These four views can be tested statistically using the procedures of within and between analysis (WABA) developed by Dansereau, Alutto, and Yammarino (1984). First, transformational leaders may exhibit a similar style or behavior toward an entire group of followers (Kerr & Schriesheim, 1974). In other words, leaders relationships with followers are

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 315 identical within the group but may vary among different leaders (Kerr & Schriesheim, 1974). This model of leadership follower interaction is referred to as the average leadership style (ALS) approach or whole group model (Dansereau et al., 1984). For example, in terms of the individualized dimension of transformational leadership (Bass, 1985), all followers of a particular leader might develop a supportive relationship with him or her, while all followers of another leader might have a poor relationship with that leader (Yammarion & Bass, 1990). The effectiveness of transformational leadership may be based on a whole group ALS approach (Bass & Yammarino, 1988). Second, the leader may exhibit a different style or behavior toward each follower within a group (Avolio & Bass, 1988; Bass, 1985). The nature of each leader follower relationship differs within the group and each is managed by the leader relative to the others in the group. When leaders of other groups act similarly, there is a lack of differences between groups in leader follower relationships (Dansereau, Graen, & Haga, 1975; Seers & Graen, 1984). This approach has been labeled the leader member exchange (LMX) approach. A third perspective on leader follower relationships can be termed the individual differences approach. This view asserts that leaders treat their followers differently and interactions between a leader and his or her followers depend on how individuals perceive and interpret their leader s behavior, independent of group membership (Eden & Leviation, 1975; Rush, Thomas, & Lord, 1977). In this case, each follower perceives his or her leader uniquely, and there are differences both within and between leaders. Thus leader follower interactions are individualized and not group based (Yammarino & Dubinsky, 1994). A fourth possibility is that the focus for leader follower interactions is neither individual nor group based. In this case, no differences are found within or between leaders. If this case is found, it suggests that the level of analysis chosen to compare one leader with another was indeterminate.

316 HO Participants METHOD The participants comprised 150 superior subordinate dyads in 58 work groups. In an attempt to increase the variability of the organizational characteristics measures, the respondents were recruited from 20 companies with varying size (50 to more than 500 employees) representing a wide range of industries (printing, manufacturing, electronics, governmental agencies, insurance and health care), departments (e.g., production, accounting, marketing and personnel), and organizational levels (entry level to Directors). For the subordinates, 50% were male, 60% were between 18 and 35 years old, and 40% were between 36 and 55 years old; a bachelor degree was held by 43%, 53% had completed high school and 4% had completed primary school; the average tenure in the organization was 8 years; 50% had clerical positions, 23% were junior level executives, and the remaining 25% were middle level executives. For the supervisors, 72% were male, 35% were between 18 and 35 years old, and 65% between 36 and 55 years old; 73% had a bachelor degree, and 27% had completed high school; the average tenure in the organization was 11 years; 4% had clerical positions, 20% were junior level executives, 53% were middle level executives, 19% were senior level executives, and 3% were directors or CEOs. The effective response rate was 18% for subordinates and 25% for superiors. Potential participants were dropped from the analyses if (1) a subordinate report was provided but a matching superior report was not; (2) a superior report was provided but a matching subordinate report was not; and (3) a supervisor was only rated by a single subordinate. It was a requirement of the study that supervisors were rated by at least two subordinates, to investigate the group effect. Procedures A complete set of questionnaires (one supervisor questionnaire and three subordinate questionnaires) were distributed in person to respondents who were part-time students in diploma or master degree courses in business management. The respondents were asked to distribute the questionnaires to either their supervisors or subordinates. Accompanying each questionnaire was a letter from the

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 317 author promising confidentiality, and a pre-addressed stamped envelope for the questionnaires to be returned directly to the researcher. Measures To pre-validate the measures, the questionnaire items were translated into Chinese using Brislin s (1980) translation/backtranslation procedure. Survey items were translated into Chinese by the author, who is bilingual in Chinese and English, and backtranslation was provided by another bilingual academic. Finally, another academic examined the original version in English and the back-translated English version and found no discrepancies. Predictor Variables All of the measures of the predictor variables were answered by the subordinates. They were measured on five-point Likert scales ranging from (1) strongly disagree to (5) strongly agree. Transformational Leadership Transformational leadership behaviors were measured using 27 items from the multifactor leadership questionnaire (MLQ) by Bass (1985). Ten items related to charisma, including sample items: Commands respect from everyone in the organization. Seven items related to individual consideration, a sample item being: Makes me feel we can reach our goals without him/her if we have to. Seven items related to inspiration, a sample item being: He/She inspires loyalty to the organization. Three items related to intellectual stimulation, a sample item being: Has provided me with new ways of looking at things which used to be a puzzle for me. Previous research has shown that the four dimensions are highly correlated (Judge & Piccolo, 2004). In this study, the average correlation coefficient (r) among the four dimensions was.71. Thus, consistent with previous studies (e.g. Bono & Judge, 2003; Liao & Chuang, 2007; Walumbwa, Avolio, & Zhu., 2008), I combined the four dimensions to form a composite transformational leadership index (α =.95). Organizational Characteristics Organizational characteristics as substitutes identified by Kerr and Jermier (1978) were measured with a reduced version (74 items)

318 HO of the substitutes-for-leadership scales modified by Podsakoff et al., (1993). Four dimensions of organizational characteristics measures are included: (1) organizational formalization (4 items); (2) organizational inflexibility (4 items); (3) closely knit, cohesive, interdependent work groups (4 items); and (4) spatial distance between superior and subordinate (3 items). Previous research (Podsakoff et al., 1993a; Podsakoff et al., 1996) has demonstrated that this scale possesses adequate psychometric properties. Factor analysis using varimax rotation was performed on the organizational characteristics items and resulted in four factors. Factor 1 tapped into the organizational formalization dimension; factor 2 tapped into spatial distance dimension; factor 3 tapped into the group cohesiveness dimension; and factor 4 tapped into the organizational inflexibility dimension. Two organizational inflexibility items loaded weakly and thus were dropped from this factor. The reliabilities of organizational formalization, organizational inflexibility, group cohesiveness and spatial distance are.80,.60,.86 and.75, respectively. Self-Esteem The organizational-based self-esteem (OBSE) concept developed by Pierce, Gardner, Cummings, and Dunham (1989) was used to measure the self-esteem of the subordinates. OBSE is defined as the degree to which an organizational member believes that he or she can satisfy their personal needs by participating in roles within the context of an organization. I measured OBSE using eight items. Sample items included, I count around here, and I am taken seriously around here. The reliability of this scale in this sample was 0.85. Criterion Variables Three criterion variables were examined. Two of these criterion variables job satisfaction and organizational commitment were selfreport measures, whereas measures of organizational citizenship behavior were provided by the supervisors of each of the respondents.

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 319 Job Satisfaction Subordinates satisfaction was assessed by the Job Descriptive Index (JDI), developed by Smith, Kendall, and Hulin (1969). It was chosen because the evidence regarding its validity and reliability has generally been quite favorable (Johnson, Smith, & Tucker, 1982; Schriesheim & Kinicki, 1982). A 5-point scale was used, ranging from (1) very dissatisfied to (5) very satisfied. The reliability of this scale in this study was 0.77. Affective Organizational Commitment Affective commitment was measured with four items chosen from Meyer and Allen s (1984) 8-item Affective Commitment Scale (ACS); a sample item is I do not feel emotionally attached to this organization. These four items were chosen based on high loadings in McGee and Ford s (1987) factor analysis. A 5-point scale format was used, ranging from (1) strongly disagree to (5) strongly agree. Overall affective organization commitment was measured by taking an average of these four items. The reliability of this scale in this sample was.76 Organizational Citizenship Behavior (OCB) Employees OCB was measured by supervisor ratings. OCB refers to employees behavior that is discretionary in nature and beyond the level of formal requirements (Organ, 1988). Due to space constraints, ten items representing five dimensions of OCB (two items for altruism, two items for courtesy, two items for conscientiousness, two items for civic virtue, and two items for sportsmanship) were chosen based on high loadings on these five factors found in Farh, Early, and Lin s (1997) factor analysis. A 4-point scale was used, ranging from (1) never happens to (4) always happens. A principle components factor analysis using varimax rotation for this sample results in the emergence of three factors. All of the altruism and civic virtue items combined to form Factor 1, which was labeled Consideration because of its emphasis on helping others or organizations. The second factor included two sportsmanship items and one courtesy item that loaded weakly. Thus it was dropped from this factor. The third factor contained two conscientiousness items. One courtesy item was eliminated as it loaded on two factors that were uninterpretable and were subsequently dropped from further

320 HO analyses. Prior work studying the relationship between transformational leadership and OCB has always combined various OCB dimensions (e.g., Blader & Tyler, 2009; Dijke, Cremer, Brebels, & Quaquebeke, 2015) in order to examine the effects of transformational leadership and interaction effects on overall OCB. I therefore created an overall variable of OCB by averaging the mean scores of consideration, sportsmanship and conscientiousness. The reliability of this scale in this sample was 0.69. Validity Issues RESULTS Given the relatively small sample size in relation to the measurement items, item parceling procedures were used to achieve an adequate sample-size-to-parameter ratio. For the multidimensional constructs (i.e. transformational leadership, organizational characteristics, and organizational citizenship behaviors), I averaged items into dimension and treated the different dimensions as indicators of their corresponding constructs. For the unidimensional constructs with more than 5 items (i.e., OBSE and job satisfaction), parcels were created by randomly assigning items from their respective scales. Next, prior to testing the hypotheses, the author conducted a series of confirmatory factor analyses to examine the discriminant validity of the measures. The hypothesized six-factor model (transformational leadership, organizational characteristics, OBSE, job satisfaction, OCB and affective organizational commitment) was used as the baseline model. Six alternative models were examined against the baseline six-factor model. As shown in Table 1, this baseline six-factor model fit the data reasonably well (χ 2 (155) = 243, CFI =.94; GFI =.90; RMSEA =.06), whereas the other alternative models all exhibited significantly worse fit than the baseline model. These results justified the examination of transformational leadership, organizational characteristics, OBSE, job satisfaction, OCB and affective organizational commitment as distinct constructs. Table 2 presents the variable means, standard deviations, coefficient alpha internal consistency reliabilities, and Pearson product-moment intercorrelations. Transformational leadership was

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 321 TABLE 1 Comparison of Measurement Models for Study Variables Model Description χ 2 df χ 2 CFI GFI RMSEA Baseline model: Six factors Transformational leadership, organizational characteristics, OBSE, job satisfaction, OCB and affective organizational 243 155.94.90.06 Model 1: Five-factors Model 2: Five factors Model 3: Four factors Model 4: Four factors Model 5: Two factors Model 6: One factor commitment Transformational leadership and organizational characteristics were combined as one factor Transformational leadership and OBSE were combined as one factor Transformational leadership, organizational characteristics and OBSE were combined as one factor OCB, affective organizational commitment and job satisfaction were combined as one factor Transformational leadership, organizational characteristics and OBSE were combined as one factor; OCB, affective organizational commitment and job satisfaction were combined as another All parcels and items were loaded on a single factor 314 160 71**.87.82.08 465 160 222**.73.74.12 565 165 322**.65.68.13 283 164 40*.89.84.07 601 170 358**.62.67.13 628 171 385**.60.67.14 Note. CFI = comparative fix index; GFI = goodness of fit index; SRMR = standardized root mean squared residual; RMSEA = root mean square error of approximation. **p <.01, two-tailed.

322 HO TABLE 2 Means, SD, Reliabilities and Intercorrelations of Leader Behaviors and Employee Outcome Variables (N = 150) Variables M* SB Al* 1 2 3 4 5 6 7 8 1. Transformational Leadership 3.48.55.95 2. Organizational Formalization 3.18.78.80.17 a 3. Organizational Inflexibility 3.35.64.60.02.60 b 4. Group cohesiveness 3.78.69.86.30 b.22 b.24 b 5. Spatial Distance 2.30.81.75 -.21 b.26 b -.15 -.25 b 6. Organization-Based Self Esteem (OBSE) 3.51.52.85.40 b.28 b.25 b.35 b -.23 b 7. Job Satisfaction 3.46.84.77.50 b.18 b.10.42 b -.29 b.46 b 8. Organizational Citizenship Behavior 4.21.48.69.00.15 -.03 -.08 -.07.17 a.07 9. Affective Organizational Commitment 3.16.77.76.49 b.23 b.12.37 b -.28 b.47 b.47 b.09 Note: a p 0.05, b P 0.01. M* = Means; Al** = Alpha. significantly related to the three dimensions of organizational characteristics (organizational formalization, r =.17, p <.01; group cohesiveness, r =.30, p <.01; spatial distance, r = -.21, p <.01), OBSE (r =.40, p <.01), job satisfaction (r =.50, p <.01) and affective organizational commitment (r =.49; p <.01). However, OCB did not significantly correlate with transformational leadership (r =.00, n.s.). Furthermore, job satisfaction and affective organizational commitment were positively associated with OBSE (r =.46, p <.01;r =.47, p <.01), organizational formalization (r =.18, p <.01; r =.23, p <.01), group cohesiveness (r =.42, p <.01; r =.37, p <.01) and negatively associated with the spatial distance between the superior and subordinate (r = -.29, p <.01; r = -.28, p <.01). Tests of Hypotheses The data set of this study included a nested structure (i.e., on average, 2.59 subordinates under one supervisor). As transformational leadership and four separate dimensions of organizational characteristics are shared group property, I computed the intra-class correlation coefficients based on ICC(1) and ICC(2) to justify the

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 323 aggregation of individual perceptions of these variables to the focal leader of analysis (Bliese, 2000). The ICC(1) values of transformational leadership, organizational formalization, organizational inflexibility, group cohesiveness, and spatial distance ranged from 0.13 to 0.18, whereas the ICC (2) values ranged from 0.28 to 0.51. James (1982) recommended a cutoff point of 0.12 for ICC(1) and Bliese (2000) suggested ICC(2) values of 0.70 or above as a cutoff point to justify aggregation. Although all ICC(1) values of these five constructs were slightly greater than the cutoff point of 0.12, most ICC (2) values were far below the recommended value of 0.7. Taken together, statistical justifications for aggregation of these five constructs were not sufficient in this study. Therefore no aggregation was conducted before running the analysis of regression. Hypotheses 1 3 were then tested using hierarchical multiple regression. In the moderated regression procedure, transformational leader behavior as a predictor variable was entered into the equation first. Then, the four dimensions of organizational characteristics as moderators were entered in the second step. Finally, a cross-product term (transformational leadership each dimension of organizational characteristics, e.g. TL x Organizational Formalization) was added to each regression to assess the unique variance contributed by the interaction of organizational characteristics and the perceived transformational leader behavior variable. The same procedures were repeated for another moderator, organizational-based self-esteem (OBSE). As shown in Table 3 (step 1), transformational leadership was positively and significantly related to job satisfaction (β =.50, p <.05) and affective organizational commitment (β =.49, p <.05), but was not significantly related to OCB (β =.02, n.s.). Thus, Hypothesis 1 was partially supported. Step 3 in Table 3 displays the results for the TL OBSE interaction and TL four dimensions of organizational characteristics interactions. Only one interaction term was significant. The transformational leadership OBSE interaction was significantly related to OCB (β = - 1.57, p < 0.05), but not significantly related to job satisfaction (β = 0.35, p > 0.05), and affective organizational commitment (β = -.73, p > 0.05). Furthermore, all of the four dimensions of organizational characteristics did not significantly moderate the influence of transformational leadership on job satisfaction, OCB or affective organizational commitment. Therefore,

324 HO Hypothesis 2 was partially supported and Hypothesis 3 was not supported. Follow-up analyses were conducted when a significant ΔR2 value was obtained for the interaction term. These analyses were performed by: (1) calculating separate regression equations (Y values) at values one standard deviation above and below the mean of the moderator variable, (2) plotting these results graphically to visualize the nature of the moderating relation, and (3) testing whether the slopes of two simple regression lines differed significantly from zero. TABLE 3 Raw-Score Moderated Regression Results for the Dependent Variable Step and Independent Variable Added Unstandardized Partial Regression Coefficient (ß) Independent Variables Step 1 Step 2 Step 3 Δ R 2 Total R 2 Job Satisfaction (Dependable Variable) 1.Transformational Leadership (TL).50.38**.71.25**.25** 2.Organizational formalization (OF).03.68.10**.35** Organizational inflexibility (OI) -.01 -.24 Group cohesiveness (GC) Spatial Distance (SD) 3. TL x OF TL x OI TL x GC TL x SD.28** -.12.22.23 -.86.30.11 -.35.01.35** 1. Transformational Leadership (TL).50* 0.37**.16.25**.25** 2. OBSE 0.31**.11.08**.33** 3. TL x OBSE.35.00.33** Step 1 Step 2 Step 3 Δ R2 Total R2 Organizational Citizenship Behavior (Dependable Variable) 1.Transformational Leadership (TL).02 -.01.25.00.00 2.Organizational formalization (OF).19.55.04.05 Organizational inflexibility (OI) -.14.13 Group cohesiveness (GC) Spatial Distance (SD) 3. TL x OF TL x OI TL x GC TL x SD -.10 -.11 -.38.04 -.49 -.36.47 -.14.01.06 Transformational Leadership (TL).02 -.06.89.00.00 OBSE.20* 1.11*.03*.03* TL x OBSE -1.57*.02*.05*

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 325 Step and Independent Variable Added TABLE 3 (Continued) Unstandardized Partial Regression Coefficient (ß) Independent Variables Step 1 Step 2 Step 3 Δ R 2 Total R 2 Affective Organizational Commitment (Dependable Variable) 1.Transformational Leadership (TL).49**.37**.96.24**.24** 2.Organizational formalization (OF) Organizational inflexibility (OI) Group cohesiveness (GC) Spatial Distance(SD) 3. TL x OF TL x OI TL x GC TL x SD.11 -.02.21** -.12.14.15.35.56 -.04 -.23 -.22 -.67.08**.01.32**.33** 1. Transformational Leadership (TL).49**.35*.80 0.24**.24** 2. OBSE.33**.75 0.08**.32** 3. TL x OBSE -.73 0.01.33** Notes: * p 0.05.; ** p 0.01. Figure 1 presents a graphical plot of the interaction effect. The influence of transformational leaders in motivating subordinates OCB was more effective on those subordinates who had high OBSE than on those who had low OBSE. In addition, a test of the regression line shown in Figure 1 for two subgroups (high vs low OBSE) finds that both slopes were significantly different from 0 (β = 0.78, p < 0.05 for the high OBSE group; β = 0.60, p < 0.05 for the low OBSE group). Level of Analysis WABA was employed to assess whether the significant main and moderator effects found in the above analysis could best be viewed as individual-level, group-level, or null phenomena. There are three steps in WABA. WABA I is used to determine whether the variation of each variable is primarily between, within, or both between and within groups. Within and between Etas are used to assess variation in variables and their differences are tested with F-tests of statistical significance and E-tests of practical significance. WABA II is used to assess each relationship among variables at a particular level to

BCO 326 HO FIGURE 1 Effect of Interaction between Transformational Leadership and Organizational-Based Self-Esteem on Organizational Citizenship Behavior 0.8 0.6 0.4 0.2 0-0.2-0.4-0.6-0.8 OBSE High OBSE Low Transformational Leadership determine whether the co-variation among variables is primarily between, within, both between and within, or neither between nor within the groups (Schriesheim, 1995). The total correlation between two variables is broken down into a between-groups correlation and a within-groups correlation and their differences are tested with Z-tests of statistical significance and A-tests of practical significance. In addition, using t- and R-tests, each between- and within-cell correlation is tested for statistical and practical significance. Finally, using the WABA equation (Yammarino & Dubinsky, 1990), the results of the first two steps are combined to draw an overall conclusion from the data. In particular, the within and between components are examined to draw an inference about the level of analysis at which effects operate. (For a complete description of the WABA procedures, see Dansereau et al., 1984; Schriesheim, 1995.) In WABA analysis, the results of the first condition, average leadership style, may indicate that between-group variation or co-variation is more likely to occur than those of within groups. The leader would display a consistent style toward the entire group and subordinates ratings

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 327 within a group about a leader would be similar. In the second condition, the leader member exchange approach, WABA test results may show that within- rather than between-group differences are more likely to occur. In this case, a leader would portray a different but interdependent style toward each subordinate. In the third condition, the individual differences (nongrouped or equivocal) approach, there is variation or co-variation both within and between groups. This finding suggests that variation and co-variation exist between leaders and among the subordinates ratings of the same leader. Thus a leader s behavior would be perceived as unique to each subordinate. Under this condition, the total correlation rather than either the between-groups or within-groups correlation should be used as the basis for analysis. Finally, under the fourth condition, the traditional null condition, WABA results may show a lack of systematic variation or co-variation both within and between groups. Within-And-Between Analysis I: Variance Results The variance of the variables in WABA I was examined to determine whether the variable varied primarily between, within, or both between and within groups (individual level). Table 4 presents the WABA I results, which include the composite variables that were calculated according to the multivariate WABA procedures suggested by Schriesheim (1995). As shown in Table 4, the between-group etas of TL, OBSE and OCB were larger than the within-groups etas. All of the F-tests for these variables were significant. However, none of the E-tests were statistically significant. Therefore, the between groups effect was weak. As such, all of the variables were interpreted as equivocal (individual differences), varying both within and between groups. These results suggest that individual differences in subordinates perceptions may lead to leadership ratings and outcome measures (e.g., job satisfaction) independent of their group membership (Yammarino, Dubinsky, & Spangler, 1998). That is, the leader s style would be viewed differently by each follower, and this pattern would be found across different leaders. Within-And-Between Analysis II: Co-variance Results As shown in Table 4, all relationships were clearly nongrouped (equivocal) because both the A- and Z-tests were not significant (Yammarino, 1998). This result suggested that the differences between within-group and between-group correlations were not

328 HO practically and statistically significant. As such, all of these relationships did not hold at the group level of analysis. These results showed that subordinates ratings of transformational leadership measures and outcomes co-varied within and between leaders, implying that individual differences in the perceptions of the interactions among leaders and followers were most likely. Inference of Within-And-Between Analysis Components When the results of WABA I and II are combined, the key question is, Are the results consistent? Table 4 also presents the decomposed raw-score correlations and an overall inference. Note that the within- and between-groups components total the raw score (individual level) correlation for each relationship. Only one relationship (TL/job satisfaction) where the components did differ from one another. However, the results of WABA II indicated that this relationship was held at the individual level. Based on the evaluative criteria of Dansereasu et al. (1984), the between-group (TL/job satisfaction) effects should probably be considered very weak. The remaining three relationships including the moderator effect were clearly nongrouped, because the within and between components were not significantly different from one another. In sum, the WABA results suggested that all main and interaction effects found in the analysis of hierarchical multiple regression mentioned above were all operated at the individual level of analysis. TABLE 4 Results of within and between Groups Analysis (WABA) WABA I: Variation Source Variable Eta Ratio Inference Within Between E F a Transformational leadership (TL).65**.74** 1.13 2.06** Between (weak)/ ID Organizational-Based Self.69**.73** 1.06 1.80** Between Esteem (OBSE) (weak)/id Job Satisfaction.74**.68**.92 1.37 ID Affective Organizational.76**.64** 0.84 1.14 ID commitment Organizational Citizenship Behavior (OCB).54**.83** 1.55+ 3.86** Between

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 329 TABLE 4 (Continued) WABA I: Variation Source Eta Ratio Variable Within Between E F a Inference WABA II: Covariation Source Relationship Correlation Ratio Betwee Inference Within b n c A- Test Z-test d TL and job satisfaction.61**++.69**.11.83 ID TL and affective organizational commitment.46**.51**.06.38 ID Commitment TL and OCB.18* -.07 -.25-1.47 ID OCB and TL x OBSE interaction & OCB.31+**.18 -.13 -.78 ID WABA Component Relationship Overall Within Between Inference TL and job satisfaction.29 -.34 e ID TL and affective organizational commitment.23.24 ID Commitment TL and OCB.06 -.04 ID OCB and TL x OBSE.15.08 ID Notes: ID = Individual Differences. a All F-tests with one independent variable have df = 92, 57; b for k = 1 independent variables, df (t) = 19; c for k = 1 independent variables, df (t) = 56; d for k = 1 independent variables, df (Z) = 55, 90; e between-group component is statistically and practically differ from within-group component; A- and Z-tests are used to test for practically and statistically significance; + Significant by the 15º test; ++ Significant by the 30º test; * p 0.05; ** p 0.01. DISCUSSION The purpose of the present study is to determine the potential interaction effects that organizational context and followers

330 HO disposition have on the relationship between transformational leadership behavior, followers attitudes, and organizational citizenship behavior. In addition, this study seeks to use WABA analysis to determine the appropriate level of analysis where such main and interaction effects would operate. An examination of the effects of transformational leader behavior, organizational characteristics, and organizational-based self-esteem (OBSE) on subordinates job attitudes and organizational citizenship behavior (OCB) produced a number of interesting findings. First, the data reported in Table 3 indicated that transformational leadership only had a main effect on subordinates job satisfaction and organizational commitment; no significant main effect was found for subordinates OCB. According to the WABA analysis, these main effects operated at the individual level, suggesting that the leader follower interactions are individualized, rather than group based. Thus, subordinates ratings about leaders differed both within and between groups. I can conclude that subordinates of the various leaders perceive a unique interaction with their leader, independent of other followers. These results are compatible with much theoretical and empirical work on transformational leadership. For example, in terms of charisma, the qualities of a leader that generate admiration and respect in some subordinates can breed contempt and distrust in others (Yammarino & Bass, 1990). Likewise, an attempt to inspire subordinates may be viewed by some as spirited encouragement or support and by others as nonsense. Thoughts and actions that stimulate subordinates intellectually are often an individualized phenomenon tailored to each subordinate. Also, showing individualized consideration to subordinates often requires focusing on the uniqueness of each subordinate. Such results suggested that regardless of situational factors (subordinates self-esteem and organizational characteristics), transformational leaders generate confidence and inspiration in individual followers rather than in a group of followers, leading to high job satisfaction and organizational commitment (Yummarion & Dubinsky, 1994). Moreover, OBSE, although it has no main effect on OCB, can significantly moderate the impact of transformational leadership behavior on OCB. Thus, Hypothesis 2 is partially supported. Transformational leadership is more effective on followers who have

INFLUENCE OF ORGANIZATIONAL CONTEXT AND FOLLOWER S DEPOSITION 331 high self-esteem than those who have low self-esteem in promoting subordinates OCB, and this moderation effect operated at an individual level. This result suggested that interactions between a superior and his or her followers depend on how each individual perceives and interprets the leader s behavior or actions, independent of other followers (Yummarion & Dubinsky, 1994). Issues surrounding the dispositional character of followers of transformational leaders have been poorly explored. The moderation effect identified in the present study merits further discussion. Subordinates with a high level of perceived organizational-based selfesteem are more willing to take up challenges. Such behavior provides the leaders with more scope to offer intellectual stimulation and expect high performance, which in turn leads to higher levels of OCB. In addition, according to Conger (1989) and Shamir and colleagues (1993), the leader s expression of high expectations would also promote a sense of obligation in followers to continually live up to their leader s expectations. As this relationship deepens, the personal approval of the leader becomes a principal measure of a subordinates self-worth in an organization. A dependency then develops to the point that the leader increasingly defines the subordinates level of performance and ability. Subordinates can only validate the leader s trust in them and win their approval through expending effort beyond the formal job requirements as measured by OCB. In contrast, subordinates who have low perceived OBSE may view the intellectual stimulation and high expectation of their leaders as a threat rather than a personal challenge and opportunity for growth (Shamir et al., 1993). Thus, they are less likely to comply with the leaders standard of performance, leading to a failure to meet expectations. Eden (1992) suggests that the views leaders hold of subordinates may affect the leaders own behavior, which in turn may shape their subordinates performance. Leaders with high expectations may gear their activities toward facilitating high performance, which Eden (1992) calls the Pygmalion effect; leaders with low expectations may do little to facilitate subordinate success. Due to the lack of affirmation about their achievements, subordinates are less motivated to perform beyond expectations, leading to lower subordinate OCB.