Value Based Leadership Theory

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Value Based Leadership Theory

Moscow 1999

“Leaders are dealers in hope” Bonaparte Napoleon

“We will build a winning tradition” Vince Lombardi to the Green Bay Packers

Consider the above quotations. These statements of leaders reflect commitment to a value position. In this paper I am going to describe a brand new theory of leadership, developed by Professor House - the Value Based Leadership Theory. I will also present a preliminary test of several hypotheses derived from Value Based Theory. The tests of hypotheses are based on data descriptive of 25 relationships between chief executives and their immediate subordinates. As a concrete example, I am going to present the results of the real interviews, which took plase in Russia in 1999 among the CEOs. In the process of testing these hypotheses I replicate the study of charismatic leadership in the U. S. presidency conducted by House, Spangler & Woycke (1991) using a sample of chief executive officers and different measurement methods. What I am trying to prove in this paper is the following: It was considered to think that managers are always the leadres in the organization. This opinion was proved to be wrong. According to the first research which appaered in press in the end of 70-s: manager is the position, and leader is the person who leads others to the desired result. According to the personal trends and characteristics, managers should be leaders, and they are, but not always. The question of leadership is a very interesting topic for me, personally.

I am deeply interested in the question of leadership, and I do think, that this question and the existing theories have a long life to live. Leadership is a real fact, which has already been proved. You can be a born leader, but you also can create the leader in yourself. You can manage to influence, motivate and enable others. You can succeed, because there is nothing impossible for a human being. Especially, if he is intelligent on the one hand and really wishes to achieve something on the other.

A BRIEF HISTORICAL REVIEW

During the period between the mid-seventies and the present time a number of theories have been introduced into the leadership literature. These new theories and the empirical research findings constitute a paradigm shift in the study of leadership. The theories to which I refer are the 1976 Theory of Charismatic Leadership (House, 1977), the Attributional Theory of Charisma (Conger & Kanungo, 1987), and the Transformational Theory (Burns, 1978; Bass, 1985), and Visionary Theories of Leadership (Bennis & Nanus, 1985; Sashkin, 1988; Kousnes & Posner, 1987).

I believe these theories are all of a common genre. They attempt to explain how leaders are able to lead organizations to attain outstanding accomplishments such as the founding and growing of successful entrepreneurial firms, corporate turnarounds in the face of overwhelming competition, military victories in the face of superior forces, leadership of successful social movements and movements for independence from colonial rule or political tyranny. They also attempt to explain how certain leaders are able to achieve extraordinary levels of follower motivation, admiration, respect, trust, commitment, dedication, loyalty, and performance.

The dependent variables of earlier theories are follower expectations, satisfaction, and normal levels of performance. The dependent variables of the more recent theories include a number of affective consequences such as followers’ emotional attachment to leaders; followers’ emotional and motivational arousal, and thus enhancement of follower valences and values with respect to the missions articulated by leaders; followers’ trust and confidence in leaders; and values that are of major importance to the followers. These more recent theories also address the effect of leaders on several follower conditions not addressed in earlier theories, such as followers' self-worth and self-efficacy perceptions, and identification with the leader’s vision.

Earlier theories describe leader behavior that are theoretically instrumental to follower performance and satisfy follower needs for support, generally referred to as task-and person-oriented leader behaviors (Fleishman & Harris, 1962; Katz & Kahn, 1952; Likert, 1961; Feidler, 1967; House, 1971, House, 1996). In contrast, the more recent theories stress the infusion of values into organizations and work through leader behaviors that are symbolic, inspirational and emotion arousing.

Earlier theories take follower attitudes, values, desires, and preferences as given. The more recent theory claim that leaders can have substantial, if not profound effects on these affective and cognitive states of followers. Accordingly, leaders are claimed to transform both individuals and total organizations by infusing them with moral purpose, thus appealing to ideological values and emotions of organizational members, rather than by offering material incentives and the threat of punishment, or by appealing to pragmatic or instrumental values.

Also, McClelland (1975) introduced a theory intended to explain leader effectiveness as a function of a specific combination of motives referred to as the Leader Motive Profile (LMP). As will be shown below, this theory complements the newer theories referred to above.

Since the early 1980s, more than fifty empirical studies have been conducted to test the validity of the more recent theories of leadership. Empirical evidence is discussed in more detail below. First, however, the valued based leadership theory will be described.

EMPIRICAL EVIDENCE

There is extensive empirical evidence with respect to the effects of behaviors specified by value based leadership theory. Charismatic, visionary, and transformational theories of leadership are precursors of the leader behaviors specified by value based leadership theory. Tests of these theories have been based on various operationalizations that qualify as measures of value based leadership including interviews (Howell & Higgins, 1990), laboratory experimentation (Howell & Frost, 1989; Kirkpatrick & Locke, 1996), questionnaires (Lowe, Kroeck & Sivasubramaniam, 1995), and quantified archival data (House, Spangler & Woycke, 1991). In all of these tests, the leader behavior measured consists of articulating an organizational vision and behaving in ways that reinforce the values inherent in the vision, thus qualifying as indirect evidence relevant to the effects of value based leadership. Space limitations prevent a detailed review of the evidence. However, Bass and Avolio (1993), House and Shamir (1993), Lowe et al,. (1995), and Yukl (1994), present overviews of these studies. With surprising consistency these empirical studies have demonstrated consistently that value based leader behavior predicts unusual levels of leader effectiveness directed toward enhancing organizational performance.

Support for the effects of value based leadership is illustrated by a recent meta-analysis of the charisma subscale of the Bass and Avolio (1989) Multifacet Leadership Questionnaire (MLQ). The MLQ charisma subscale describes relationships between subordinates and superiors. Superiors who receive high scores on this scale are described by subordinates as having an exciting vision of the future for the organization they lead, and being exceptionally motivational, trustworthy, and deserving of respect.

Support for the theoretical main effects of value based leader behavior has been demonstrated at several levels of analysis including dyads, small informal groups, major departments of complex organizations, overall performance of educational and profit making organizations, and nation states. The evidence is derived from a wide variety of samples including military officers, educational administrators, middle managers, subjects in laboratory experiments and management simulations, US presidents and chief executive officers of Fortune 500 firms (Bass & Avolio, 1993; House & Shamir, 1993; Waldman, Ramirez & House, 1996).

The evidence shows that the effects of value based leader behavior are rather widely generalizable in the United States and that they may well generalize across cultures. For instance, studies based on the charisma scale of the MLQ have demonstrated similar findings in India (Periera, 1987), Singapore (Koh, Terborg & Steers, 1991), The Netherlands (Koene, Pennings & Schreuder, 1991), China, Germany, and Japan (Bass, 1997).

In summary, the studies based on various operationalizations of value based leadership clearly show that this genre of leadership results in a high level of follower motivation and commitment and well-above-average organizational performance, especially under conditions of crises or uncertainty (Pillai & Meindl, 1991; House, Spangler, & Woycke, 1995; Waldman, Ramirez & House, 1996; Waldman, Atwater & House, 1996).

NEWLY INTEGRATED THEORIES

The value based theory of leadership integrates the precursor theories discussed above with a number of assertions advanced in several psychological theories of motivation and behavior. Following is a brief review of the psychological theories that are integrated into the Value Based Leadership Theory.

McClelland's Theories of Non-conscious Motivation

According to this theory, the motivational aspects of human beings can be understood in terms of four non-conscious motives in various combinations (McClelland, 1985). These motives are the achievement, power, affiliation, and social responsibility motives. McClelland has developed a theory of entrepreneural effectiveness based on the role of achievement motivation, and a more general theory of leader effectiveness consisting of theoretical assertions concerning the optimum combination of the above four motives for effective leadership. This theory is entitled the Leader Motive Profile Theory (LMP). In the following sections we discuss the four motives discussed by McClelland and the LMP theory.

Achievement Motivation

Achievement motivation is defined as a non-conscious concern for achieving excellence in accomplishments through one's individual efforts (McClelland, Atkinson, Clark, & Lowell, 1958). Achievement motivated individuals set challenging goals for themselves, assume personal responsibility for goal accomplishment, are highly persistent in the pursuit of goals, take calculated risks to achieve goals and actively collect and use information for feedback purposes. Achievement motivation is theoretically predicted to contribute to effective entrepreneurship (McClelland, 1985) and effective leadership of small task oriented groups (House et al., 1991). Litwin and Stringer (1968) demonstrated experimentally that small groups led by managers who enacted achievement oriented and arousing behaviors were more effective than groups with managers who did not.

In management positions at higher levels in organizations, and particularly in organizational settings where technical requirements are few and impact on others is of fundamental importance, managerial effectiveness depends on the extent to which managers delegate effectively and motivate and co-ordinate others. Theoretically, high achievement motivated managers are strongly inclined to be personally involved in performing the work of their organization and are reluctant to delegate authority and responsibility. Therefore, high achievement motivation is expected to predict poor performance of high-level executives in large organizations. House et al. (1991) found that achievement motivation of U.S. presidents was significantly inversely related to archival measures of U.S. presidential effectiveness.

Affiliative Motivation

Affiliative motivation is defined as a non-conscious concern for establishing, maintaining, and restoring close personal relationships with others. Individuals with high affiliative motivation tend to be non-assertive, submissive, and dependent on others (McClelland, 1985). Theoretically, highly affiliative motivated managers are reluctant to monitor the behavior of subordinates, to convey negative feedback to subordinates even when required, or to discipline subordinates for ethical transgressions or violations of organizational policies. Highly affiliative motivated managers are also theoretically expected to manage on the basis of personal relationships with subordinates and therefore show favoritism toward some. House et al. (1991) found that the affiliative motive was significantly negatively correlated with U.S. presidential charismatic leadership and archival measures of U.S. presidential effectiveness.

Power Motivation

Power motivation is defined as a non-conscious concern for acquiring status and having an impact on others. Individuals with high power motivation tend to enjoy asserting social influence, being persuasive, drawing attention to themselves, and having an impact on their immediate environment including the people with whom they interact. Theoretically, if enacted in a socially constructive manner, high power motivation should result in effective managerial performance in high level positions (McClelland, 1975; 1985). However, unless constrained by a responsibility disposition, power motivated managers will exercise power in an impetuously aggressive manner for self aggrandizing purposes to the detriment of their subordinates and organizations.

High power motivation induces highly competitive behavior. Therefore, when unconstrained by moral inhibition, power motivation is theoretically predictive of leader effectiveness when the role demands of leaders require strong individual competitiveness, aggressiveness, manipulative exploitive behavior, or the exercise of substantial political influence. The power motive was found by House et al. (1991) to significantly predict presidential charismatic behavior and archival measures of presidential effectiveness.

Responsibility Disposition

According to McClelland, individuals who have a high concern for the moral exercise of power will use power in an altruistic and collectively-oriented manner. Indicators of high concern for responsibility are expressions of concern about meeting moral standards and obligations to others, concern for others, concern about consequences of one’s own action, and critical self judgment.

Winter and Barenbaum (1985) developed and validated a measure of concern for moral responsibility, which they label the responsibility disposition1. The measure is based on quantitative content analysis of narrative text material. Winter (1991) demonstrated that the responsibility disposition, in combination with high power and low affiliative motivation, was predictive of managerial success over a sixteen-year interval.

The responsibility motive should be predictive of leader integrity and leaders' concern for the consequences of their own actions on others. Leaders with high responsibility disposition are expected to stress the importance of keeping one's word, honesty, fairness, and socially responsible behavior. Thus, we expect the responsibility disposition to be associated with value based leader behavior, supportive leader behavior, fairness, follower trust and respect for the leader and commitment to the leader’s vision, and consequently organizational effectiveness.

IMPLICATIONS

In this section we first discuss the implications of the findings with respect to the value based leadership. Next we discuss the implications of the findings for each of the five theories that were integrated in the models tested. We then discuss the more general implications of the study for the discipline of Organizational Behavior.

Value Based Leadership

Thomas (1988), House et al. (1991), and by Waldman, Ramirez and House (1996)

demonstrate longitudinally, and with adequate controls for spurious relationships, that leaders have substantial effects on the performance of the organizations they manage. However, there have been no studies, other than the U.S. presidential study (House et al., 1991), that investigate the leader motives and behavior that lead to such leader effects. Thus there has been a "black box" concerning how leader processes influence overall organizational performance that remains to be explained.

Collectively, the findings of the present study help to understand the phenomena in the "black box." More specifically, the findings show, in some detail, important relationships between chief executives' motives and behavior and subordinates' motivation and commitment to their organization. Having shown how the components function, it is now possible to test linkages between leader behavior, subordinate responses, and organizational effectiveness using longitudinal quasi experimental designs.

Implications for Specific Theories

In this section we discuss the implications of the study findings for each of the theories that are integrated to form the Value Based Theory of Leadership.

Moral Responsibility Theory

The bivariate relationships between the moral responsibility disposition and value based leader behavior, leader fairness and CEMS, and the moderating effect of responsibility on the relationships between the power motive, and CEMS, leader charisma, and support/reward behavior all provide support for Moral Responsibility Theory. Moral responsibility motivation is clearly an important disposition that deserves further investigation and attention.

Path Goal Theory

As predicted by the Path-Goal Theory of Leadership (House, 1996), leader contingent

recognition and supportive behaviors are predictive of CEMS, and leader directiveness is more strongly negatively related to CEMS in entrepreneurial firms. Thus Path-Goal theory is provided additional support in the present study.

CONCLUSION

The major conclusions that can be drawn from the above findings and discussion are: 1) the value based theory of leadership successfully integrates five prominent theories of leadership (transformational, charismatic, visionary, LMP, and path-goal theories) and assertions drawn broadly from established psychological theories of motivation and behavior; 2) the components of the value based theory of leadership are rather strongly and quite consistently supported, although their exact combinations remain to be established; 3) the psychological theories integrated within the value based theory are largely supported; 4) the value based theory of leadership, with various kinds of operationalizations, has rather broad generalizability; 5) the theory supported by the U.S. presidential study holds for CEOs with respect to effects of leader behaviors on subordinates' cognitions and affective responses; 6) a re-specification of the boundary conditions of LMP should be further investigated; and 7) the motives that are most appropriate for effective leadership are contingent on the orientation of the collective being led.

Beginning with the 1976 theory of charismatic leadership (House, 1977), a new leadership paradigm has emerged. This paradigm consists of several theories of similar genre (House, 1977; Bass, 1985; Conger & Kanungo; 1987; Bennis & Nanus, 1985; 1987; Sashkin, 1988) and concerns the determinants of exceptionally effective or outstanding leadership. According to this paradigm, value based leaders infuse organizations and work with ideological values which are intrinsically and powerfully motivational. Value oriented motivation is stronger, more pervasive, and more endurable than pragmatic oriented motivation. The theories of the new paradigm are now integrated and formalized as the Value Based Theory of Leadership. Hopefully, this theory and the supporting research will stimulate further leadership research and further development of leadership and organizational behavior theory.