91)Leadership'S_impact on Employee Engagement

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Leadership’s impact on employeeengagement

Differences among entrepreneurs andprofessional CEOs

Nancy Papalexandris and Eleanna Galanaki Athens University of Economics and Business, Athens, Greece

Abstract

Purpose – The purpose of this study is to identify similarities and differences between the leadershippractices of managing entrepreneurs and professional CEOs and to investigate how these impact on

their immediate subordinates’ satisfaction, commitment, motivation, and effectiveness (engagement).Design/methodology/approach – A multiple-respondents survey, aiming at CEOs and theirimmediate subordinates, was conducted. Factor analysis, correlations and moderated regressionanalysis were used in order to reach conclusions.

Findings – Two leadership dimensions are found to be most influential: being a good manager/mentorand articulating vision. Although good manager/mentor characteristics prove crucial for both types of CEOs, the effect of vision articulation on subordinates is moderated by the type of company the CEO isleading. No significant differences are found in the leadership style that the two types of CEOs adopt,except for their calmness and self-possession, which is lower among entrepreneurs.

Practical implications – The findings raise questions regarding the differences in subordinateexpectations from owners – CEOs, as opposed to professional CEOs; and point at certaincharacteristics which could be developed in order to enhance leadership effectiveness in both groups of top managers.

Originality/value – The study underlines the importance of sound vision development and articulationin entrepreneur-run firms, as it appears that people working for such firms expect more direction from theHead. It is also sustained that good management and mentoring are essential in any kind of firm, in orderto develop an effective, committed and motivated top management team, which will bring corporatesuccess.

Keywords Leadership, Entrepreneurs, Chief executives, Senior management, Employee involvement

Paper type Research paper

IntroductionThe effect of the Chief Executive Officer’s (CEO) leadership style has been largelydebated, as it is considered to have multiple level effects on every employee. Theseeffects may be either direct or indirect, through the impact that CEO leadership has on

upper management. The CEO is the person from whom it is expected to give direction,vision and identity to the firm. This role may be even more prominent in companiesmanaged by the owner or founder. In this paper we attempt to shed some light on theeffect of the CEO leadership style on employee engagement, in companies run by theirowner or founder compared to ones run by professional CEOs.

The underlying hypothesis of the study is the assumption thatowner/entrepreneur[1] chief executives will not only differ from professional ones intraditional entrepreneurial aspects usually attributed to them, such as risk taking

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0143-7739.htm

Leadership’simpact

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Received July 2008Revised September 2008

Accepted September 2008

Leadership & Organization

Development Journal

Vol. 30 No. 4, 2009

pp. 365-385

q Emerald Group Publishing Limited

0143-7739

DOI 10.1108/01437730910961685



propensity, vision, determination, self-esteem, etc. (Baum and Locke, 2004, Kuratkoand Hodgetts, 2004), but also in the way they are perceived and meet the expectationsof their immediate subordinates. This means that the team surrounding the CEO willexpect a different CEO leadership behavior, when the firm is run by the owner, as

opposed to when it is run by a professional CEO.The study is based on the data of a 50-CEOs survey carried out in Greece in 2004, as

part of Phase II of the GLOBE project (Global Leadership and Organizational BehaviorEffectiveness Research Project) (Den Hartog et al., 1999; House et al., 2001a;Papalexandris, 2006). Phase II of the Globe project originally aims at studying theimpact of Chief Executives’ (CEOs) behavior on the psychological state of theirimmediate subordinates, distinguishing between companies run by the entrepreneur ora professional CEO. Aspects of the psychological states assessed are the CEO’ssubordinates’ commitment, effectiveness, motivation and satisfaction[2].

Theoretical background Entrepreneurship and leadershipEntrepreneurship is a relatively new discipline, whose originality and self-sufficiencyas a separate and distinct field of inquiry has often been debated (Shane andVenkatraman, 2000). Arguably, if the results of entrepreneurial research are notsufficiently unique, then the study of phenomena, such as the birth of new firms andthe management of small business, should come under already existing and moreestablished fields of study. Some attribute the emergence of entrepreneurship as adistinct field of study to its dual footings on psychology and economics, which havecontributed to the creation of a separate identity (Vecchio, 2003). Therefore,entrepreneurship, as a field, is based on pure economics if we see it as:

. the mechanism that converts technical information to products and services(Arrow, 1969);

.

the mechanism that enables the discovery and mitigation of economicinefficiencies (Kirzner, 1997); or

. the innovation that drives change in products and services (Schumpeter, 1934).

However, if we approach it from the point of view of the characteristics of theentrepreneur or the entrepreneurial behaviors developed in the process,entrepreneurship draws from organizational behavior and psychology at large.

In the attempt to answer essential questions, concerning the entrepreneur on the onehand and the entrepreneurial process on the other, several approaches and schools of thought have emerged (Cunningham and Lischeron, 1991). For the purposes of thecurrent paper, we will focus on the so-called “Leadership School Of Thought onEntrepreneurship” (Cunningham and Lischeron, 1991) which sustains thatentrepreneurs, as leaders of people, depend on others to accomplish purposes andobjectives. Therefore, in order to succeed, they need to motivate, direct and lead theirpeople. The leadership school of entrepreneurship, as a non-technical managementschool approach, suggests that the successful entrepreneur must also be an effectiveleader/mentor who will define a vision of what is possible and attract people totransform this vision into reality. Moreover, founders serve as leaders/managersduring the entire process and they are engaged continuously in the creation of thefirm’s culture (Schein, 1983). Following the mid-1980’s, when the management and

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leadership attributes of entrepreneurs and small business owners came to the center of interest in the relevant literature (Ratnatunga and Romano, 1997), this School hasfollowed closely the advancements of the Leadership literature in general. As a matterof fact, there have been numerous authors who identify converging and overlapping

themes and theories in the disciplines of Leadership and Entrepreneurship (Cogliserand Brigham, 2004; Vecchio, 2003).

Approaches to leadershipSeveral theories prevailed in the early days of leadership, but very few of them weresubsequently applied in the study of entrepreneurship (Cogliser and Brigham, 2004).Indicatively, we should mention: the Traits Theory (Stogdill, 1948), the ManagerialMotivation Theory (McClelland, 1965), the task-oriented/relations-oriented behavior(Likert, 1961), the Managerial Grid (Blake and Mouton, 1964), Path-Goal Theory(House, 1971) and the Contingency Theory (Fiedler, 1971). Although some of theseapproaches have been applied in the study of entrepreneurship, they have not beenused to investigate the leadership profile of the entrepreneur, but rather to answer

questions of other Schools of Thought of Entrepreneurship, such as the Classic or thePsychological Characteristics School of Thought (Ratnatunga and Romano, 1997). Forexample, McClelland’s Managerial Motivation Theory has been extensively used inEntrepreneurship, but mostly applying the motive imagery profile to explain thedecision to “entreprendre” (Apospori et al., 2005). More recently, some later leadershiptheories have been applied more extensively in the study of entrepreneurial firms and,what is more, in agreement to the notion of the Leadership School of Entrepreneurship.Such theories are the Charismatic Leadership (House, 1977; House et al., 2001b),Transformational Leadership (Bass, 1985), Visionary Leadership (Westley andMintzberg, 1998), Authentic Leadership (Luthans and Avolio, 2003) and the SharedLeadership (Ensley et al., 2003) theory. We will develop in brief some of these theoriesand the way in which they have been applied in the study of entrepreneurship, as theyhelp to shed some light in the topic under study.

Charismatic, transformational, and visionary leadershipWith the original work of House (1977), in the mid-1970’s a new genre of leadershiptheory has emerged in the organizational literature, alternatively referred to as“charismatic”, “transformational”, “visionary” or “inspirational” (House and Shamir,1993; Conger and Kanungo, 1987; House et al., 2001b; Shamir et al., 1993; Den Hartoget al., 1999; Waldman and Yammarino, 1999; Podsakoff et al., 1996). This set of theoriesfocus on exceptional leaders who display extraordinary effects on their followers. Suchleaders transform the values, needs, preferences and aspirations of followers fromself-interests to collective interests, while at the same time, they cause highcommitment of the followers to the leader’s mission so that they “perform above andbeyond the call of duty” (House and Shamir, 1993, p. 577).

The connecting element of those leadership theories is the leader’s vision and itsadoption by followers. As Baum et al. (1998) have put it, all those approaches sharethree common components:

(1) communicating a vision;

(2) taking various actions to implement the vision; and

(3) possessing a charismatic personality style.


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In Charismatic Leadership, vision and its effective communication leads to its deeplyheld adoption by the followers. In Transformational Leadership, as opposed totransactional leadership, leaders and followers coordinate their efforts to reach higherlevel goals that result in major changes, dictated by vision (Ensley et al., 2006, Visser

et al., 2005, Ardichvili, 2001). Transactional Leadership, on the other hand, is focusedon exchange relationships between leaders and their followers: the leader clarifiesexpectations, administers rewards and punishments and closely monitorssubordinates to ensure goals are met. Finally, visionary leadership is performedthrough the leader’s vision.

The concept of charismatic or transformational leadership has been used toinvestigate the success of entrepreneurs as leaders in diverse research settings.Indicatively, we mention studies and theoretical frameworks on the effect of transformational leadership on new venture, individual, and organization- levelperformance (Ensley et al., 2006; Waldman and Yammarino, 1999; Ardichvili, 2001).Vision, in particular, and vision communication at large, have been extensively studiedas determining factors of the success of the entrepreneur as a leader (Baum and Locke,2004; Baum et al., 1998; Tarabishy et al., 2005).

Shared leadershipThe notion and importance of shared leadership, a new stream of leadership theory,emanated ironically from the critique on leadership theory and the belief thatleadership may not have as much of an impact as all the interest in it would suggest(Ensley et al., 2003). Interest on shared leadership comes from the admission of the roleof teams and especially top management teams in entrepreneurial success (Ensley et al.,2000). Research on shared leadership in intrapreneurial teams and entrepreneurialteams (Ensley, 1999) suggests that shared leadership is more important for teameffectiveness than the leadership exhibited by the team leader.

Entrepreneurial leadershipFinally, a new term, introduced in some studies is “Entrepreneurial leadership”. Onestudy worth mentioning was conducted by Gupta et al., in 2004 and it effectivelyintroduced and defined the concept of entrepreneurial leadership. This study wasbased on Globe phase I data (therefore achieving globally useful conclusions) andproposed a construct for entrepreneurial leadership (Gupta et al., 2004). This constructconsisted of two major functions of the entrepreneurial leader, i.e. scenario enactmentand cast enactment. The former consists of framing the vision, absorbing uncertaintyand clarifying the path for the followers, whereas the latter consists of buildingcommitment and specifying the limits of follower’s behavior.

Importance of the CEO’s leadership style. As shown from the above analysis, the

leadership style of the entrepreneurial firm’s leader has attracted the interest of numerous leadership and entrepreneurship researchers in the past. It has moreoverbeen shown that the leadership style of the CEO on one hand (Hoffman and Hegarty,1993; Waldman et al., 2001; Baum and Locke, 2004; Baum et al., 2001; Tarabishy et al.,2005), as well as of the top management team (Hambrick and Mason, 1984; Ensley et al.,2000; Ensley et al., 2003), on the other, is pivotal for the organizational performance intotal. This conception is in overall agreement with the classic Upper Echelons Theory(Hambrick and Mason, 1984).

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The effects of CEOs’ leadership on organizational performance, although suggestedin numerous studies (Podsakoff et al., 1996), have been studied in a very limitednumber of studies (Tarabishy et al., 2005).

As a matter of fact, CEO leadership is important for two distinct effects that it bears

on organizational performance:(1) Effect on organizational performance, as a result of distant leadership, i.e.

leadership bypassing middle levels of management and felt directly at lowerechelons (Yammarino, 1994; Waldman and Yammarino, 1999).

(2) Effect on organizational performance as a result of the higher effectiveness of the top management team surrounding the CEO, due to the direct CEOleadership effects on top managers- members of the top management team.

For the aims of the present study, we focus on the latter effect, i.e. the effect of CEOleadership on the commitment, effectiveness, motivation, and satisfaction of his/herimmediate subordinates/ collaborators, i.e. top managers of the firm. As shown in

previous studies (Podsakoff et al., 1996; Pearce et al., 1997), the CEO’s leadership styleaffects all the above measures of subordinate performance. For the sake of economy of space and in order to avoid repetition, we will refer to this set of characteristics/ states of the collaborators of the CEO, as “Engagement”. We believe that engagement, as a“positive, fulfilling, work-related state of mind that is characterized by vigor, dedicationand absorption” (Salanova and Schaufeli, 2008), successfully portrays the compositestate of “commitment, effectiveness, motivation and satisfaction”, used in this study. Onthe other hand, the reader should bear in mind that there is a wide range of literature onengagement which is worth studying, but which falls outside the scope of this paper.

Objectives of the studyIn view of the above, the present study sets the following objectives:

(1) To measure CEO leadership dimensions.(2) To establish which CEO leadership dimensions have an immediate effect on

their subordinates’ commitment, effectiveness, motivation, and satisfaction(engagement).

(3) To investigate whether the relation between leadership dimensions andimmediate subordinates’ engagement is affected by the type of CEO (i.e. owner/entrepreneur or salaried/ professional manager).

Research hypothesesBased on transformational leadership and entrepreneurial leadership theories developedabove, ourfirst objective isto confirmthatthe leadership behaviorof the CEOwill consist

of two distinct axes: transformational and transactional effects (transformational/transactionalleadershipapproach),or,otherwise,scenarioenactmentandcastenactment(as termed in the entrepreneurial leadership approach). This leads to the first propositionand the subsequent hypotheses that the paper aims to confirm:

P1. The leadership behavior of CEOs consists of two major dimensions, inagreement to the entrepreneurial leadership theory: one related withclarifying expectations, rewarding, and monitoring and another one relatedwith vision, vision communication and charismatic effects.


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H1.1. CEOs will exhibit a set of leadership attributes that are connected with goodmanagement-mentor practice, such as clarifying expectations, rewardingand monitoring.

H1.2 . CEOs will exhibit a set of leadership attributes that are connected with thearticulation and enabling of vision realization.

The second objective is to examine the relation of CEOs’ position on the differentleadership dimensions with the commitment, satisfaction motivation and effectiveness(engagement) of their immediate subordinates (top managers). This leads to the second

proposition and subsequent hypotheses.

P2 . Specific leadership patterns of the CEO are connected with highersubordinates’ engagement.

H2.1. Better management and mentoring skills will be related with higher

subordinates’ engagement.

We expect that better management and mentoring practice increases the satisfaction,motivation and commitment of the subordinates of a leader in all cases, as it reducesuncertainty, while it allows to take initiatives and therefore increases the interest in the

job, as a substantial amount of research has shown in the past (Ambrose and Kulik,1999; Tammy and Kimberly, 2006).

H2.2 . Better articulation of vision will be related with higher subordinates’engagement.

As several studies, either in leadership or in entrepreneurship have shown, effectivecommunication of the vision by the top has direct effect on venture growth (Baum andLocke, 2004; Baum et al., 1998; Ensley et al., 2000). This can be attributed to the fact

that knowledge of “where we are heading”, reduces uncertainty, gives direction andallows for the setting of clear goals.

H2.3. Better self-management and inner balance will be related with highersubordinates’ engagement.

To be on good terms with oneself, to be calm, to have introspection, to be fair andself-poised is a leader’s safeguard for handling challenging situations effectively.Therefore, it reduces uncertainty among his immediate subordinates and increases

credibility, thus improving engagement. These leadership qualities fall within therecently introduced notion of self-leadership (Neck et al., 1999)

H2.4. Better collaboration with people/sociability will be related with higher

subordinates’ engagement.

Collaboration with people and sociability should be connected with subordinate’shigher engagement, as the leader will most probably establish relations with his/hersubordinates. Although recent research has shown the importance of some solitude forthe leader in order to excel (Bourantas, 2005), leadership, as an interactive functioninvolving two parties, demands from the leader to develop meaningful relationships

with his immediate subordinates, and this becomes very important for their

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engagement. Moreover, as noted above, good relations with at least some of thesubordinates is an essential part of Transformational Leadership.

H2.5 . More bureaucratic leadership style will be negatively related with higher

subordinates’ engagement.Putting much emphasis on processes is a leadership approach, connected with thetheories of Max Weber (Weber, 1947) and the bureaucratic approach to running abusiness. Although bureaucracy sometimes proves necessary (Hales, 2002), it isusually negatively connected with employees’ commitment and motivation, especiallywhen emphasis on processes overshadows other motivational effects.

The third objective of the study is to explore the relationship of the above mentionedmajor leadership style dimensions and their different way of affecting the commitment,effectiveness, motivation and satisfaction (engagement) of subordinates, depending onwhether a company is entrepreneurial or not. This has been studied in differentresearch settings, where it has been found that Entrepreneurs are more effective whenadopting a transformational, rather than transactional leadership style (Ensley et al.,2006; Waldman and Yammarino, 1999; Ardichvili, 2001)as well as when effectivelycommunicating their vision (Baum and Locke, 2004; Baum et al., 1998; Tarabishy et al.,2005).

P3. The leadership style of the CEO will be connected with subordinates’engagement, in a different way, depending on whether the CEO is anentrepreneur or a professional manager.

H3.1. The firm being run by the owner instead of a professional CEO willmoderate the relationship of diverse CEO leadership dimensions withsubordinates’ engagement

Research methodologySampleThe level of analysis of the study was the CEO of each company. In each case,information on the CEO was taken by the CEO in person and by his immediatesubordinates and top managers of the firm. A total of 24 entrepreneur- CEOs and 27professional CEOs participated in the study. A very high response rate (72.86 percent)was achieved, as 51 out of the 70 CEOs initially contacted provided usable data.

By entrepreneurial companies (run by entrepreneur-CEOs), we mean companiesmanaged by 1st of 2nd generation founder or members of the founder’s family. Inestablished companies (run by a professional CEO) management is taken up byprofessionals or is in the hands of third or further generation owners.

All companies studied employed over 30 employees, following guidelines of theGlobe II project and were very successful in their respective fields of activity. Anattempt was made to match activities of companies in the two groups, so that theiractivities would have a minimal effect on subsequent analyses.

Data collectionThe survey consisted of three types of questionnaires, which were designed by RobertHouse and his team for the purposes of Globe phase II project:


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(1) A questionnaire for the CEO’s immediate subordinates (questionnaire A). Thiswas completed by at least two subordinates of the CEO who collaborated veryclosely with him.

(2) A questionnaire for members of top management who are immediatesubordinates of the CEO, but who don’t necessarily have a very close or dailycollaboration with him (questionnaire B). This questionnaire was completed byat least two members of the top management in each company examined.

(3) A questionnaire for the CEO that focused on information regarding thecompany and its main strategic focus. This was completed by the CEOpersonally (CEO questionnaire).

Double completion of each subordinates’ questionnaire was applied in order to increaseinterrater reliability and reduce common source bias (Dionne et al., 2002; James et al.,1993). First, agreement to participate in the research was achieved by the CEOs, whowould then propose a number of immediate subordinates, based on the research

guidelines. All CEO leadership characteristics were measured through a combinationof questions from questionnaires A and B, according to the Globe phase II design.

Methods of data analysisConfirmatory Factor Analysis and Reliability Analysis were first conducted in order toconfirm the scale composition for the 30 behavior concepts (leadership characteristicsof CEOs and commitment, effectiveness, motivation and satisfaction of thesubordinates), according to the Globe phase II design.

Later on, Exploratory Factor Analysis was applied on the leadership characteristicsof the CEOs, in order to extract some pertaining leadership types of CEOs and checkfor H.1.1 and H1.2 . At this stage five factors/major leadership dimensions wereidentified.

Pearson correlations were computed in order to examine the direction of relationsamong the five main leadership types of CEO and subordinates’ engagement. Thosewere separately computed for entrepreneurial and established firms, in order to checkfor the type of company effect on the way CEO leadership styles affect engagement of the immediate subordinates.

Finally, linear regression analysis was used, in order to check for the leadershipdimensions predicting subordinates’ commitment, effectiveness, motivation andsatisfaction (engagement). When conducting regression analysis interaction termswere introduced to check for the effect of the company type (entrepreneurial orestablished) on the relation (Baron and Kenny, 1986; Frazier et al., 2004).

The SPSS 14 statistical software was used throughout the above analyses.

Questionnaire itemsA set of 28 CEO behavior characteristics, according to the Globe research framework,was studied:

(1) Autocratic.

(2) Decisive.

(3) Diplomatic.

(4) Face saver.

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(5) Visionary.

(6) Inspirational.

(7) Integrity.

(8) Bureaucratic.(9) Administratively effective.

(10) Autonomous.

(11) Malevolent.

(12) Performance-oriented.

(13) Power sharing.

(14) Humane.

(15) Calmness.

(16) Information source.

(17) Communicator.(18) Role clarification.

(19) Directive.

(20) Shows self-confidence.

(21) Fair.

(22) Intellectually stimulating.

(23) Follower confidence.

(24) Team-oriented.

(25) Risk taker.

(26) Non-contingent praise.

(27) Self-protective.

(28) Indirect.

The scales used for measuring each of these characteristics, as well as those used formeasuring subordinates’ commitment, effectiveness, motivation and satisfaction wereused in previous studies, where they had exhibited high structural reliability(Cronbach’s a . 0.6) (House et al., 2001b). The scales were initially tested andconfirmed during the Phase I Globe project and they were subsequently agreed uponby researchers (CCIs) in 60 countries for Phase II. As a matter of fact, most of the scalesused were cross- culturally confirmed (Den Hartog et al., 1999) during Phase I of theGlobe Project.

All items were measured at a seven-point Likert-type scale. They were furthertested for structural reliability, using the data of the current study. TheKaiser-Meyer-Olin (KMO) Measure of Sampling Adequacy (KMO . 0 .5 isconsidered acceptable, with values close to 1 considered as ideal) and the Bartlett’stest of Sphericity ( p , 0:05 is the rule of thumb) were used in order to assess whetherFactor Analysis is appropriate for the data in hand (George and Mallery, 2002, p. 256).The Cronbach’s a indicator was used to assess structural reliability of each scale.Confirmatory Factor Analysis Results and Reliability Analysis results for the 28 scales


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in the current study are summarized in Table I. As mentioned in the ResearchHypotheses above, an additional trait we examined was the composite measure forcommitment, effectiveness, motivation and satisfaction (engagement) of themanagers/CEO subordinates. Confirmatory Factor and Reliability Analysis results

for this scale are also summarized in Table I.As can be noticed from Table I, most scales were characterized by good structural

reliability and appear to be measuring the same underlying concept. Most problematicseem to be the concepts of “risk taking”, and “directiveness”, which were thereforeexcluded from subsequent analyses.

FindingsAt the second stage of the analysis, Exploratory Factor Analysis was applied on theabove 28 leadership aspects, in order to identify major CEO leadership dimensions,which was the first objective of the study.

Leadership characteristicNumber of

items in scale

KMO test forappropriateness of

FABartlett’s test of

sphericity Cronbach’s a

1. Autocratic 6 0.637 0.000 0.7982. Decisive 3 0.501 0.000 0.7433. Diplomatic 4 0.544 0.000 0.6904. Face saver 2 0.500 0.068 0.4105. Visionary 9 0.777 0.000 0.8306. Inspirational 7 0.665 0.000 0.8297. Integrity 10 0.725 0.000 0.8728. Bureaucratic 3 0.629 0.000 0.7939. Administratively effective 4 0.776 0.000 0.817

10. Autonomous 4 0.680 0.000 0.73211. Malevolent 6 0.801 0.000 0.81512. Performance-oriented 5 0.672 0.000 0.80913. Power sharing 6 0.711 0.000 0.73414. Humane 7 0.700 0.000 0.79015. Calmness 4 0.628 0.000 0.74016. Information source 2 0.500 0.000 0.74717. Communicator 2 0.500 0.000 0.78018. Role clarification 9 0.860 0.000 0.91519. Directive 2 0.500 0.144 0.35020. Shows self-confidence 5 0.731 0.000 0.81721. Fair 4 0.498 0.013 0.48622. Intellectually stimulating 7 0.733 0.000 0.80423. Follower confidence 3 0.580 0.000 0.75024. Team-oriented 5 0.643 0.000 0.64125. Risk taker 3 0.520 0.373 0.31126. Non-contingent praise 2 0.500 0.000 0.41327. Self-protective 5 0.532 0.000 0.56828. Indirect 2 0.500 0.000 0.569Commitment, effectiveness,motivation and satisfaction(engagement) 20 0.667 0.000 0.855

Table I.CFA and reliabilityanalysis results summaryfor 28 leadershipcharacteristics

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Table II summarizes the factor analysis results for the main CEO leadership types. Thefactors were extracted using Principal Component Analysis with Varimax Rotationand Kaiser Normalization.

As can be seen in Table II, five factors were extracted. The first factor gathers

characteristics that are often related with good management practices, such as“administratively effective”, “performance oriented”, “role clarifying”, “integrity”,“self- confident” and “intellectually stimulating”, whereas others are related with goodmentoring/ people developing practices, such as “follower confident”, “power sharing”,“communicator”. This is why we decided to call this factor “Management/MentoringSkills”. The second factor is related to vision, articulation of vision and setting the basefor future success, such as: “inspirational”, “visionary”, “decisive”, “informationsource”, “team oriented”, and “humane” and we named it “Articulation of Vision”. Thethird factor is related to self management and inner balance and gathers the followingcharacteristics: “calm”, “(non) autocratic”, “diplomatic” and “fair”. A person scoringhigh on this factor is expected to be a person with inner balance and self management,so that except from calmness and fairness, he/she will be able to act as a diplomat andto avoid showing an autocratic face to followers. The fourth factor is comprised by

Managementand

mentoringskills

Articulationof vision

Self-managementand inner

balance

Collaborationwith otherpeople –

sociability

Processes/bureaucraticinclinations

Follower confident 0.809 20.021 0.376 20.144 20.072Power sharing 0.771 0.173 0.347 20.185 20.069Communicator 0.767 0.154 0.346 20.247 20.233Role clarifying 0.763 0.463 0.224 0.131 0.029

Intellectually stimulating 0.763 0.415 0.235 2

0.034 0.176Performance-oriented 0.728 0.459 20.146 20.126 0.275Self-confident 0.694 0.073 20.016 20.257 0.383Administratively effective 0.647 0.395 0.003 0.056 0.411Integrity 0.576 0.309 0.400 20.475 0.019Inspirational 0.328 0.875 0.189 20.133 0.024Visionary 0.298 0.821 0.269 20.088 0.007Decisive 0.072 0.811 0.170 20.372 0.061Team-oriented 0.438 0.691 0.242 20.340 20.089Information source 0.127 0.617 20.070 20.512 0.184Humane 0.377 0.589 0.422 20.219 20.087Calmness 0.138 0.159 0.734 20.041 0.307Autocratic 20.327 20.038 2 0.676 0.391 0.235Diplomatic 0.085 0.527 0.666 20.119 0.286

Fair 0.345 0.308 0.660 20.094 20.121Indirect 20.149 20.113 20.015 0.717 0.198Autonomous 0.049 20.363 20.116 0.691 0.045Malevolent 20.179 20.232 20.500 0.645 20.121Self-protective 20.255 20.088 20.475 0.608 0.116Bureaucratic 0.108 0.020 0.104 0.192 0.840 Cronbach’s a 0.938 0.931 0.809 0.786 –

Note: Rotation converged in 17 iterations

Table II.Rotated component

matrix of exploratoryfactor analysis for main

CEO leadership types


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characteristics considered as generally negative, at least for leaders, such as “indirect”,autonomous”, “malevolent” and “self- protective”. Altogether, this factor indicates poorcollaboration with other people and low sociability. Finally, “bureaucratic” did not loadon any other factor, so it should be considered as a factor in itself. A bureaucratic

leader establishes and follows closely procedures, rituals, norms, policies, rules andconventions.

As stated above, Pearson Correlations were computed, in order to explore therelations among the scores on major leadership dimensions and subordinates’commitment, effectiveness, motivation and satisfaction. Those were computedseparately for entrepreneurial and established firms, in order to check for differentpatterns in these two groups of companies.

Tables III-IV summarize statistically significant Pearson correlations. Thosemarked with two asterisks are significant at the 0.001 level (two-tailed). Correlationsamong different leadership dimensions are not depicted, as they are not significant,because the leadership dimensions were computed based on varimax exploratoryfactor analysis, so they are orthogonal and thus uncorrelated.

As can be seen from Tables III-IV, the CEO leadership dimensions that are mostlyrelated with higher subordinate commitment, effectiveness, motivation andsatisfaction differ between entrepreneurial and established firms.

Managementand

mentoringskills



balance


sociability


Commitment,effectiveness,

motivation andsatisfaction(engagement) 0.520 * 0.684 * 0.171 0.044 0.125

p 0.000 0.000 0.424 0.839 0.559

Note: * Significant at 0.001 level (two-tailed)

Table III.Significant correlations

for CEO leadershipdimensions and“commitment,effectiveness, motivationand satisfaction” (only forentrepreneur-CEOs)

Managementand

mentoringskills



balance


sociability


Commitment,effectiveness,motivation andsatisfaction(engagement) 0.697 * 0.015 0.321 20.234 0.274

p 0.000 0.942 0.102 0.239 0.167

Note: * Significant at 0.001 level (two-tailed)

Table IV.Significant correlationsfor CEO leadership typesand “Commitment,effectiveness, motivationand satisfaction” (only forprofessional CEOs)

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That is, in both types of firms, people management and mentoring capabilities of theCEO are highly correlated with subordinates’ commitment, effectiveness, motivation,and satisfaction (engagement). However, in entrepreneurial firms, for the CEO to bevisionary and future oriented (decisive, visionary and inspirational) and to involve

his/her subordinates in his vision (information source, humane, team oriented) arepositively related with higher subordinates’ engagement ( H2.1, H2.3 ). This is not thecase in established firms, though, where only the “good manager and mentor”dimension is related with higher subordinates’ engagement ( H2.1 ). As for theremaining leadership dimensions identified through factor analysis, none hadsignificant correlation with subordinates’ engagement ( H2.5 , H2.7 , H2.9 notsustained).

It should be noted at this point that no significant difference in the ratings of entrepreneurial and Professional CEOs at the five leadership dimensions was found,except for the “inner balance” dimension (calm, non-autocrat, fair, diplomatic), wherethe entrepreneurial CEOs appear to score significantly lower than professional ones( t ¼ 2:866, P ¼ 0:006, df:49). Entrepreneur- CEOs are perceived by their subordinatesas less calm, more autocratic, less diplomatic and more unfair than professional CEOs.This may be attributed to the higher stress that entrepreneurs generally experience,due to higher risk and complexity situations they are facing (Kuratko and Hodgetts,2004). Scoring similarly on all other leadership types, though, it is sustained that thetwo groups studied are similar in terms of leadership dimensions, so these do notexplain the different relations we may find in the way leadership dimensions affectengagement in each of the groups.

Linear regression analysisIn order to test for the moderation effect of the type of company on the relation amongCEO leadership dimensions and subordinates’ engagement the above analysis of

correlations was not considered sufficient, so the Baron and Kenny methodology (1986)was used. At first, a series of stepwise linear regression analyses was applied, in orderto identify the leadership dimensions that actually may have an effect on subordinates’engagement. This series of analyses is not presented here for economy of space. Theyagree though with the above correlation analysis, as the “good manager” and “visionarticulation” leadership dimensions appear to predict subordinates’ engagement,whereas other leadership dimensions do not explain a high percentage of the overallvariance of engagement.

So, stepwise linear regression was used, in order to check whether the introductionof the interaction term (otherwise product term), in this case “articulates vision *type of company” improved the predicting power of the model. In other words, the interactionterm was introduced to check whether the fact that a company is entrepreneurial or

professional affects significantly the weight of the effect of the leadership dimensionson subordinates’ engagement.

As can be seen from Table V, the introduction of the interaction term improves thepredicting power of the model, since model 2 is able to explain 54 percent ( R 2 ) of thetotal variance of engagement, as opposed to 48%, when the interaction term was notincluded (model 1). What is more, the coefficient of the interaction term appears to besignificant at the 0.05 level (Table VI), therefore making its introduction meaningful.Therefore, it appears that the articulation of vision by the CEO improves subordinates’


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engagement, but only in the case of entrepreneur CEOs, not professional ones.Therefore, according to the Beta values in Table VI, the model 2 regression is asfollows:

ENGAGEMENT ¼ 0:005 þ 0:587*ðgood manager=mentorÞ

þ 0:056*ðarticulates visionÞ

þ 0:483*ðarticulates vision* entrepreneur CEOÞ

Finally, Figure 1, is provided to graphically depict the above relationship. In simplewords, it shows that the vision articulation improves subordinates’ engagementconsiderably in Entrepreneurial companies (noted as 1), while it does not have anyremarkable effect on subordinates’ engagement in Professionally managed companies.

DiscussionAccording to the above analysis, we can see that most of the original hypotheses aresustained from the current data. This means that all three propositions ( P1, P2 , and P3 )are supported from the current data and may be further tested in future analyses.

Specifically, in accordance to the first proposition, as well as to the subsequenthypotheses H1.2 and H1.3, the leadership behavior of CEOs exhibits five dimensions,of which two major ones can be considered as relative to Vision/Vision Articulation onthe one hand and setting goals, clarifying expectations, rewarding and monitoring onthe other.

Moreover, hypothesis H1.1 is also confirmed, as, according to the factor analysisconducted, leadership behavior of CEOs can be effectively synopsized into five diversedimensions:

Model R R squareAdjusted R square F change df1 df2

Sig. F change

1 Predictors: constant, articulatesvision, good manager-mentor 0.694(a) 0.481 0.458 21.315 2 46 0.000

2 Predictors: constant, articulatesvision, good manager-mentor,articulates vision * entrepr 0.736(b) 0.541 0.510 5.888 1 45 0.019

Table V.Model summary-stepwise regression for“Commitment,effectiveness, motivationand satisfaction” asdependent

B Std error Beta t Sig.

1 (Constant) 0.000 0.105 0.004 0.997Good manager-mentor 0.602 0.104 0.614 5.784 0.000Articulates vision 0.315 0.104 0.321 3.019 0.004

2 (Constant) 20.005 0.100 20.048 0.962Good manager-mentor 0.587 0.099 0.599 5.919 0.000Articulates vision 0.056 0.146 0.057 0.382 0.704Articulates vision *entrepr 0.483 0.199 0.361 2.427 0.019

Table VI.Model summary-regression coefficients for“Commitment,effectiveness, motivationand satisfaction” asdependent

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(1) good management and mentoring;

(2) vision articulation;

(3) self-management and inner balance;

(4) collaboration with others; and

(5) bureaucratic inclinations.

In addition to that, we can see that our second proposition, P2 is also sustained, as the

scores of the CEOs on some of the five leadership dimensions appears to be related

with engagement of their immediate subordinates. Thus, it appears that “good

management and mentoring” is a good predictor for engagement in both types of

companies, whereas “articulation of vision” is a good predictor in the case of entrepreneurial companies only. This means that hypotheses H2.1 and H2.2 are

sustained. No significant relation with other leadership dimensions of the CEOs was

established, which means that H2.3, H2.4 and H2.5 are not sustained by our data.

Therefore, inner balance, collaboration/sociability and bureaucratic aspects are notconnected to subordinates’ engagement, as originally hypothesized.

Finally, it was shown, through correlation analysis and regression with interaction

term analysis, that the relationship of some leadership style dimensions affect in a

different way the commitment, effectiveness, motivation and satisfaction (engagement)

of subordinates, depending on whether a company is its owner or not. Specifically, the

way that “vision articulation” affects subordinates’ engagement is moderated by the

type of firm. So, including the “vision articulation” quality of the leader helps predict

Figure 1.

Interaction graph of typeof vision articulation withcompany type

(entrepreneur/owner runor not) on subordinates’

“Commitment,effectiveness, motivation

and satisfaction”


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subordinates’ engagement in a better way in the case of entrepreneurial companies, butnot in professional ones. This may be attributed to different aspirations of peopleworking in companies whose head is the owner from those working in companies runby a salaried professional.

ConclusionsThe objectives of this study were to measure CEO leadership dimensions, to establishwhich CEO leadership dimensions have an immediate effect on their subordinates’engagement and to investigate whether the above relation among leadershipdimensions and engagement is affected by the type of CEO (i.e. entrepreneur orprofessional manager).

The CEO leadership dimensions were established through Exploratory FactorAnalysis. As shown in Table II, five factors were extracted, “Manager/mentor skills”,“Articulation of vision”, “Self-management and inner balance”, “Collaboration withother people/Sociability” and “Bureaucratic”

Of these five sets of characteristics, only two were found to be related withsubordinate’s engagement: “Good manager/Mentor”, for both entrepreneurs andprofessional CEOs and “Articulation of vision”, only for Entrepreneurs. In addition tothat, a moderating effect of the type of CEO (owner or professional) was found to existon the effect of CEO leadership dimensions on subordinate engagement.

We believe that this study presents particular theoretical and practical interest,because there is limited previous research work identifying leadership styles of entrepreneurs and professional top managers. Although, intuitively, many haveclaimed that entrepreneurs top managers have different leadership attributes, the mostcommonly proven difference among entrepreneurs and professional managers isactually transformational as opposed to transactional leadership (Ardichvili, 2001;Visser et al., 2005). According to the present study’s findings, leadership styles of

entrepreneurs are not too different from professional CEOs. They actually only differsignificantly in calmness and autocratic behavior, probably because, in agreementwith conventional wisdom, entrepreneurs having to bear the risk involved inentrepreneurial activities operate, as a rule, in very stressful situations and are under alot of uncertainty (Kuratko and Hodgetts, 2004). However, as it was shown, differentleadership styles motivate, satisfy, commit and increase the effectiveness of subordinates in each group.

Theoretical implicationsA major finding of the present research is that the leadership behavior adopted byCEOs has different effects on motivation, commitment and satisfaction of theirimmediate subordinates, depending on the type of company they are in. Although this

is in accordance with traditional contingency leadership approaches, the finding thatimmediate collaborators have different expectations from their CEO, depending onwhether he/she is a professional manager or an entrepreneur is quite new. Our findingsimply that there is a dialectic relation between the leadership style of the CEO and theexpectations of the employees that shape their engagement.

More specifically, entrepreneurs/owner CEOs are expected not only to be goodmanagers and mentors, but also to be visionary and to pass on their vision to theirfollowers, in order for the latter to be committed, motivated and satisfied. This implies

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that entrepreneur- CEOs’ capacity to articulate vision diminishes subordinates’uncertainty and makes them feel that they can count on the CEO. On the other hand,professional CEOs are not expected to convey this message of visionary-scenarioenacting leadership, probably because subordinates perceive them as less identified

with the organization’s destiny than entrepreneur- CEOs.

Practical implicationsAlthough vision, idea generation and determination are traditional characteristicsattributed to entrepreneurs, notably at the initial stages of creating an enterprise, it isshown in this study that the entrepreneur as a leader, as opposed to the leader of anestablished company, is expected to continuously provide vision to his/her followers.In other words, vision is a prerequisite in order to create a new company, but it is also aprerequisite at the later stages of the company’s life cycle (for example when thetransition from “entrepreneurial” to “professional/established” is taking place), as itappears to increase motivation among collaborators of the entrepreneurial leader.

This is important, if we take into account the low survival rate of new companies,especially at the growth stage, when succession and firm control issues usually arise.At this stage, entrepreneurs are usually encouraged to develop a more managerialprofile (Kuratko and Hodgetts, 2004; O’Neil, 1983; Terpstra and Olson, 1993).According to the present research, however, entrepreneurs should be mostlyencouraged to safeguard their entrepreneurial inclinations, especially visiondevelopment and articulation, as this proves necessary for their success as leadersof their companies.

Certainly, both types of CEO need to be good managers, able to impact on theirsubordinate’s engagement at the same time. This points to the importance of developing managerial/leadership competencies, especially for those aspiring to topmanagement positions. Entrepreneurial CEOs need to have extra abilities in conveying

their vision to their immediate subordinates. This is not just a positive attribute, but itbecomes imperative, in order to achieve high subordinates’ engagement. Although thisshows a distinction in the leadership styles that entrepreneur and professional CEOsuse, stronger vision development and articulation can be a real challenge forprofessional CEOs as well. Given the fact that established/professionally run firms facechange and transition at a constantly growing rate, their people’s engagement will tendto demand more and more the better understanding and involvement in a company’sfuture plans and vision, as well as the reassurance that a visionary articulate leader canoffer. Furthermore heads of units or divisions often encouraged to act as“intrapreneurs” in large companies, should adopt a leadership style that putsemphasis on the visionary characteristics usually portrayed by entrepreneurs.

Last but not least, this study has once more underlined the importance of basic

leadership factors, which we named “good management-mentoring”. This is the bestpredictor for subordinates’ engagement, in any type of firm. Back to the basics, then,with good and sound management practices and administrative effectiveness, which atthe same time encourages subordinates to develop ideas, take initiatives and contributewith all kinds of innovative input to their company’s improved performance. Thisemphasizes once more the necessity for management and leadership developmentprograms within firms, well designed internal communication programs, opportunitiesfor interaction and sharing of mission and objectives.


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With reference to this study’s limitations, we must admit that we faced the seriouslimitation of small sample size that is common when the study involves gatheringinformation from multiple sources, as a way to avoid common source bias.Nevertheless, given that the propositions put forward from the current data have

substantial theoretical implications, we propose that they should be further tested inlarger samples, preferably in a cross-country setting, in order to validate the presentfindings. Also, the fact that the authors used the methodology and questionnairedeveloped by a number of Scholars (Globe Project) implies that the findings can befurther used in comparing cross country data and derive useful information concerningentrepreneur- CEO behavior and ways of enhancing it in international settings.

Notes

1. From this point on, the terms owner/founder and entrepreneur will be used interchangeably,and they will refer to CEOs who are the owners or founders of the firm.

2. The authors would like to thank Professors Robert House and Mansour Javidan for their

invaluable contribution that made the project Globe possible.

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About the authorsNancy Papalexandris, PhD, is the Director of the MSc in Human Resource Management andex-Vice Rector of Academic Affairs and Personnel of the Athens University of Economics andBusiness. She holds a Master’s degree from New York University and a PhD from the Universityof Bath in the UK. She has written several books and published many articles in the area of human resource management, organizational behavior and culture, issues in publicadministration, corporate communications and women in management. She has published

articles in various international journals and has organized and participated in a number of international conferences. Nancy Papalexandris is the corresponding author and can becontacted at: [email protected]

Eleanna Galanaki holds a BSc in Economics, an MSc in Human Resource Management and aPhD in Human Resource Management. She is a lecturer at the Athens University of Economicsand Business, Department of Marketing and Communication. Her research interests includeoutsourcing of management functions, management information systems, leadership andentrepreneurship. She has published in several scientific journals and books and lectured invarious undergraduate and postgraduate classes in business courses. More information on hercan be found at her personal web site: www.mbc.aueb.gr/hrm/galanaki


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