Business Leadership and Stakeholders Relationship in a …gsblibrary.uct.ac.za/researchreports/2009/Weiler.pdf · · 2010-07-02found to be a determining factor for the setting of

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Business Leadership and Stakeholders Relationship

in a Society in Transition: The Case of Moçambique

A Research Thesis

presented to

The Graduate School of Business

University of Cape Town

in partial fulfilment of the requirements for the

Masters of Business Administration Degree

by

Ivo Weiler (WLRIVO001)

April 2010

Supervisor: Associate Professor Eric Wood

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MBA Research Proposal Page ii

Plagiarism

University of Cape Town

Graduate School of Business

2010

Declaration

1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own.

2. I have used a recognised convention for citation and referencing. Each significant contribution and quotation from the works of other people has been attributed, cited and referenced.

3. I certify that this submission is all my own work. 4. I have not allowed and will not allow anyone to copy this essay

with the intention of passing it off as his or her own work.

Accepted by:

Ivo Weiler wlrivo001

Signature:

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MBA Research Proposal Page iii

Declaration

This thesis is not confidential. It may be used freely by the Graduate School of

Business.

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MBA Research Proposal Page iv

Acknowledgements

I want to start by thanking Ass. Prof. Eric Wood, Prof. Kurt April and Ass. Prof. Linda

Ronnie for raising my interest in the subject of leadership and ethics. Although many

of the dilemmas I studied in this thesis have always intrigued me, it was not until

after their classes that I dared to structure my thoughts and ideas into a

researchable question. My supervisor Ass. Prof. Eric Wood has been very patient and

constructive in our discussions, always challenging me to think it through more and

try to formulate my thoughts and ideas in a better way. I owe a great deal of

gratitude to him, he has fulfilled his duty as a supervisor beyond the expectable and

has pushed me to do my best possible.

I’d like to thank the Moçambican chamber of commerce CTA for supporting my

requests to business leaders for an interview about a delicate topic such as business

leadership and ethics. Their support has helped executives open up. Also, I’d like to

thank the business leaders that made themselves available for an interview. Their

honest answers have enriched my research with valuable insights and experiences.

On the personal level, there are also many that deserve my gratitude. Friends have

been patient with my sudden lack of interest in social issues. My fellow students

created such a fantastic environment in which I was allowed to partake. And my

business partners allowed me the time to pursue this degree, and even making time

available to be a guinea pig in different assignments.

But most of all, I’d like to thank my wife and children for their support and

facilitation of my studies. By allowing me to do this MBA, you have made it possible

for me to experience great personal growth. I am eternally indebted to you and I

hope that I am able to reward you by applying what I have learned.

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MBA Research Proposal Page v

Business Leadership and its Relationship with Stakeholders

in a Society in Transition: The Case of Moçambique

ABSTRACT

Leadership is identified as a key factor to the sustainability of private enterprises.

Ethics play an important role in literature on business leadership. The definition of

the circle of stakeholders, the basis and the quality of the relationship the business

leader has with these stakeholders play a key role in the ethical dimension of

leadership. Economies in transition face particular challenges that affect the

relationship with stakeholders. Using grounded theory, this thesis explores these key

elements to ethics in business leadership in the country of Moçambique, which has

gone through major political and socio-economic changes over the last few decades.

This has resulted in some propositions that could help both academics and

practitioners better understand the challenges business leaders face in this specific

country, as well as other countries.

KEYWORDS: Leadership, leadership style, ethics, stakeholder,

relationship, trust, Mozambique, Africa,

Moçambique, centrally planned economies,

transition economies, grounded theory.

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MBA Research Proposal Page vi

TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................... VI LIST OF TABLES ................................................................................................ VIII LIST OF FIGURES ............................................................................................... VIII

1 INTRODUCTION ................................................................................... 1

1.1 RESEARCH AREA AND PROBLEM ........................................................................ 1 1.2 RESEARCH QUESTIONS AND SCOPE ..................................................................... 3 1.3 RESEARCH ASSUMPTIONS ............................................................................... 5 1.4 RESEARCH ETHICS ........................................................................................ 6

2 LITERATURE REVIEW ........................................................................... 6

2.1 STRUCTURE OF LITERATURE REVIEW................................................................... 6 2.2 ENTREPRENEURSHIP ..................................................................................... 8 2.3 LEADERSHIP ............................................................................................. 10 2.4 ETHICS AND LEADERSHIP .............................................................................. 16 2.5 LEADERSHIP IN A SOCIETY IN TRANSFORMATION ................................................... 22 2.6 RECENT HISTORY AND ECONOMY OF MOÇAMBIQUE .............................................. 26 2.7 CONCLUSION ............................................................................................ 28

3 RESEARCH METHODOLOGY ............................................................... 29

3.1 INTRODUCTION ......................................................................................... 29 3.2 RESEARCH APPROACH AND STRATEGY ............................................................... 29 3.3 RESEARCH DESIGN, DATA COLLECTION METHODS AND RESEARCH INSTRUMENTS .............. 32 3.4 SAMPLING ............................................................................................... 34 3.5 RESEARCH CRITERIA .................................................................................... 35 3.6 DATA ANALYSIS METHODS ............................................................................ 35

3.6.1 LEADERSHIP STYLE QUESTIONNAIRE ...................................................................... 36 3.6.2 STRUCTURED INTERVIEWS ................................................................................. 36

4 RESEARCH FINDINGS, ANALYSIS AND DISCUSSION........................... 39

4.1 RESEARCH FINDINGS ................................................................................... 39

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QUESTION 1: STAKEHOLDER GROUPS AND THEIR IMPORTANCE .................................. 39 4.1.1 ....................................................................................................................... 39 4.1.2 QUESTION 2: THE CHARACTERISTICS OF THE RELATIONSHIP ........................... 41 4.1.3 QUESTION 3: LEADERSHIP STYLE AND STAKEHOLDERS .................................. 44

4.2 RESEARCH ANALYSIS AND DISCUSSION .............................................................. 48 4.2.1 THE QUALITY OF THE INTERVIEWS ................................................................ 48 4.2.2 OVERALL QUALITY OF THE DATA ................................................................... 49 4.2.3 QUESTION 1: STAKEHOLDER GROUPS AND THEIR IMPORTANCE ....................... 51 4.2.4 QUESTION 2: THE CHARACTERISTICS OF THE RELATIONSHIP ........................... 53 4.2.5 QUESTION 3: LEADERSHIP STYLE AND STAKEHOLDERS .................................. 59

4.3 LIMITATIONS OF THE STUDY ........................................................................... 62

5 RESEARCH CONCLUSIONS ................................................................. 63

6 FUTURE RESEARCH DIRECTIONS ....................................................... 65

7 REFERENCES AND BIBLIOGRAPHY ..................................................... 67

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MBA Research Proposal Page viii

LIST OF TABLES

Table 2.1. Leadership style, moral development and Moral referent. 20

Table 4.1. Stakeholder Frequency and aggregated ranking, using ranking 11 for blank 40

Table 4.2. Stakeholder Frequency and aggregated ranking, averaging only non-blanks 41

Table 4.3: Coded scores for basis of relationship 42

Table 4.4: Coded scoring for quality of relationship and effect on leadership style 43

LIST OF FIGURES

Fig. 1.1. Drivers and Links for successful innovation and entrepreneurship 1

Fig 2.1 4-P model of entrepreneurship with 2 re-enforcing loops 9

Fig 2.2. Combined Leadership Style matrix 12

Fig 2.3 Extended multi-level leadership model 15

Fig 2.4. Ethical decision making 19

Fig 2.5. Real GDP Mocambique 27

Fig. 3.1 the Research Onion 29

Fig 4.1 Percentage scores for Leadership Style for all frameworks 45

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MBA Research Proposal Appendices Page 1

1 INTRODUCTION

1.1 Research Area and problem

The interest of the researcher lies with the ethics of leadership. For this thesis, the

focus is on how business leaders relate to their stakeholders. This relationship is

found to be a determining factor for the setting of leadership and ethics. (Chryssides

& Kaler, 1993; Price, 2008; White, 1993). The thesis explores business leadership

characteristics typical of corporations that operate in a society that has been going

through a period of multiple changes. It will study the private sector of Moçambique,

a Southern African nation that over the last 40 years has experienced an end to

colonial rule, an extended war period and a change from a centrally planned

economy to a free-market economy. It is also ranked as one of the poorest nations in

the world.

Fig. 1.1. Drivers and Links for successful innovation and entrepreneurship (based on

Moss, 2006; Tushman, 1996; Schuler & Jackson , 1987; Roberts, 2007; Ferrell,

Fraedrichs & Ferrell, 2002)

Structure

Capabilities and Systems

Succesful Innovation and

Entrepreneurship

Leadership

Culture

Strategic Focus

Vision

Values

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Economic development is key for the government and the people of Moçambique to

achieve their goal of poverty alleviation. “Entrepreneurship is an all important

economic driver” (Seun, 1) for developing nations. Research into the main factors

determining the success of entrepreneurship (and innovation) (Moss, 2006;

Tushman, 1996; Schuler & Jackson , 1987; Roberts, 2007; Ferrell, Fraedrichs &

Ferrell, 2002) show that an organisation’s culture, capabilities and systems, structure

and leadership are the driving forces to the successful pursuit of innovation &

entrepreneurship, linked through strategic focus, vision and values. (See figure 1.1)

Of the 4 drivers, this thesis focuses on leadership.

The moral dimension of leadership, as referred to by Brown & Treviño (2006), plays

an important role in defining a group of leadership styles such as ethical-,

transformational-, spiritual and authentic leadership (Brown et al, 2005). Ferrell,

Fraedrichs and Ferrell state that this moral dimension is the one “…as defined by

stakeholders..” (2004, p 5). Philosophical theory of ethics and leadership also sees a

strong role for perception and definition by business leaders of whom they see as

their stakeholders (Chryssides & Kaler, 1993; Price, 2008; White, 1993), and how

they balance the pursuit of the objectives of the different stakeholders.. (Freeman

2004, in Peterson & Ferrel, 2005; Friedman, In Chryssides & Kaler, 1993; Price, 2008).

Goodpastor (1992, in Chryssides & Kaler, 1993; Price, 2008; White, 1993) One of the

critical dilemmas found in literature on ethics for business leadership is around the

balancing of the pursuit of the objectives of the different stakeholders. (e.g.

Freeman, 2004, in Peterson & Ferrel, 2005) To try to understand this balancing act

better, this thesis focuses on the relationship between business leadership and

stakeholder.

A combination of the 3 fundamental changes to a society mentioned above that

make up the recent history of Moçambique, may seem too case- specific to have any

broader significance. In fact many South- and Central American, African, Eastern-

European and Asian nations have gone through a version of such a series of

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fundamental changes to their economic systems in their countries over the last

decades. Much research has been done into entrepreneurship and leadership in the

transition economies of Russia, China and the Central European economies. Relevant

factors determining style of business leadership are found to be grouped around

power or hierarchy (Tsui, Wang, Xin, Zhang & Fu, 2004; Puffer, 1995), trust

(Manolova, Gyoshev & Manev, 2007; Jansson, Johansson & Ramstrom, 2007),

cognitive development (Tsui, Wang, Xin, Zhang & Fu, 2004; Puffer, 1995; Puffer,

McCarthy & Naumov, 1997), and age (Puffer, McCarthy & Naumov, 1997). These

dimensions are also important dimensions in ethics of leadership, according to Price

(2008).

Research on business leadership and ethics in Africa is relatively scarce and

anecdotal. This thesis tries to fill part of this void, by exploring those dimensions that

have been found to be relevant in Russia, China and the Central European

economies, within the setting of an African nation undergoing a similar change of

economic system. Understanding better what characterises business leadership in

Moçambique and how business leaders relate to stakeholders, may provide some

useful insights that could lead to a better understanding of the dynamics around

business leadership and ethics. This may serve professionals and organisations

interacting with the private sector of this nation, as well as for those nations with a

similar history. A better understanding of the specificities of leadership and ethics

can serve initiatives aimed at supporting local business development, where ethical

business issues such as transparency have become very important.

1.2 Research questions and scope

To explore the area explained in the introduction, this thesis aims at answering the

following question:

“In Moçambique, how is business leadership affected

by its relationship to its stakeholders?”

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This research question has been split into 3 steps:

Question 1: Who are the most important stakeholders business

leaders define as within their circle of interaction?;

Question 2: How do they characterise the relationship with each?;

Question 3: How do they feel their leadership style is affected by their

relationship to these stakeholders?

The focus on leadership is aimed at the senior executive and operating officer (-s),

whether they are also owner-shareholder or not. The requirement of the targeted

entities being private companies is applied to ensure a level playing field between

the different companies and leaders that are studied. Private companies that

operate successfully in a competitive environment, will be confronted with certain

ethical dilemmas with regard to business leadership. In government-owned

companies, these dynamics may be different.

The introduction suggests that the results of this research may inform initiatives

supporting local business development. For this purpose, lessons can be learned

from success stories as well as “failures” (in this case, leaders of companies chosing

business ethics over business success, and which failed as a business). As one of few

studies into this subject in Moçambique, the thesis will focus on the success stories.

Therefore, the primary focus on successful companies is applied to focus research as

much as possible on those companies that have a competitive objective and have

been successful in pursuing it, regardless of their approach to ethics. The author

understands that this sample may include companies that are successful without this

being their primary objective, but expects this to be a minority.

The author understands that there may be many factors that impact on leadership in

Moçambique, such as national culture, colonial rule, civil wars, religious diversity,

illiteracy and poverty. This thesis explores patterns in leadership and its relationship

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to stakeholders, without trying to explain how specific cultural and historical factors

determine these dimensions. It uses the results of research in Russia, China and

Central Eastern Europe as a starting point, and explores if there are any other

dimensions that seem to play a determining role in business leadership and its

relationship to stakeholders.

1.3 Research Assumptions

This thesis aimed at interviewing business leaders of successful companies, to ensure

as much as possible that the main objective of the company was a competitive one,

and that the company is relatively successful in pursuing this objective. The decision

to focus on successful enterprises may exclude certain companies that have forfeited

business success because of certain ethical dilemmas. This group would also be an

interesting one to study, but is not covered in this thesis for reasons of time

constraint.

The private sector in Moçambique has not been studied very much. Statistical

information is scarce, especially for the 1980’s and 90’s. To reliably identify

successful enterprises as objectively as possible, data on their performance

preferably need to come from the same source. The KPMG Moçambique “Cem

Maiores Empresas” (100 Best Companies) (KPMG, 2008) survey is the most

consistent economy-wide long-term data source on company performance regularly

done in Moçambique. The survey ranks companies on their performance, using

turnover, net profit, profit margin, return on equity and return per employee. It is

based on voluntary questionnaires, not on any reviewed data such as audited

financial statements. Therefore, there may be factors at play that influence the

accuracy of this data. (More on this survey in the literature review). The thesis

assumes that this survey contains data that are reliable enough to distinguish a

group of successful companies in Moçambique, after a critical review of the survey

results.

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Literature on leadership and ethics in countries like China and Russia is used as a first

framework to understand leadership and ethics in Moçambique. As a starting point,

it is assumed that what have been found to be determining dimensions in those

countries, may also play a role in Moçambique, because of the history of a centrally-

planned economy it shares with China and Russia. If this is found not to be the case,

this too will be a relevant result of the thesis research.

1.4 Research Ethics

Questionnaires and interviews have been used to gather information about

leadership. To ensure confidentiality for participants, their names and company

details have been kept purely confidential, data have no reference to a specific

company, and the discussion of details about specific respondents have always been

keeping in mind that the level of detail should not give away the actual company’s

identity. The guidelines stipulated in the Commerce Faculty Ethics in Research Policy

have been adhered to strictly.

Individual business leaders have been interviewed during the course of the research

under clear definition on what the results would be used for and how they would be

presented. The questionnaires have been sent to them before the interview, if

requested.

2 LITERATURE REVIEW

2.1 Structure of Literature Review

To enable the full understanding of the dynamics between the different components

that make up the research question, the literature review was aimed at establishing

the boundaries within which the different components of the research question are

to be studied, as well as the potential inter-relationships. To achieve these

objectives, the aim of the literature review was the following:

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Entrepreneurship: The introduction of this thesis starts with a model defining

drivers and links to entrepreneurship, and states that the thesis focuses on

leadership. To understand the model in the introduction in its entirety and link

the topic of this thesis to economic development, the literature review starts

with a brief discussion on entrepreneurship (a key driver to economic

development) as a construct and its link with leadership;

Leadership: the review brings together the different constructs around

leadership, to come to a model for characterising leadership within the setting of

this thesis. It pays extra attention to how leadership relates to entrepreneurship,

society and ethics;

Ethics and Leadership: The literature review studies what role ethics play in

entrepreneurship and leadership. According to Kuper (2006), empirical ethics in

business is seen in a perspective from the social sciences, where behaviour is

recorded in a context of differences between people and organisations as well as

the different external influences. This information is then used to try and predict

behaviour. In contrast, normative ethics adopts a philosophical stance, and looks

at how one should behave. Both angles to ethics have been studied, with specific

attention to those ethical questions related to a transient society such as

Moçambique. This review results in defining the key drivers of ethics in business

leadership;

Leadership in a society in transformation: From literature on business and socio-

political events in different areas of the world, the effects of different kinds of

socio-political change and chaos on entrepreneurship and leadership have been

brought together, to synthesise those factors of leadership that can be expected

to be especially affected by such fundamental changes in society, and

characterise the expected effect;

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Recent history of Moçambique: The literature review gives a descriptive review

of the recent socio-economic and political history of Moçambique;

2.2 Entrepreneurship

“Entrepreneurship is a particular type of mindset, a unique way of looking at the

world, a creative kind of adventure, and the ultimate instrument toward self-

realization and fulfilment. At the heart of entrepreneurship lies the desire to achieve,

the passion to create, the yearning for freedom, the drive for independence, and the

embodiment of entrepreneurial visions and dreams through tireless hard work,

calculated risk-taking, continuous innovation, and undying perseverance. People who

dare such dreams and commit their spirit, soul, and entire life’s work to realize their

dreams are the privileged bunch that we call entrepreneurs.” (Ma & Tan, 2006)

Ma and Tan’s somewhat romanticised elaboration around what entrepreneurship is,

forms the introduction of their attempt to create a theoretical model of the drivers

behind entrepreneurship: 1) “Pioneer, denoting the entrepreneur as an innovator or

champion for innovation” (p 710) which is (partly) determined by a “perseverance”

(p 711) and “passion” (p 711); 2) “Perspective, denoting the entrepreneurial

mindset” that “challenge[s] the status quo and find[s] new ways of doing things” (p

708) which is (partly) determined by a sense of “purpose” (p 709) and a “winning

formula” (p 710); 3) “Practice, denoting the entrepreneurial activities” (p 705) which

is composed of leadership (“persuasion” (p 713)) and the “pursuit of opportunities”

(p 714) , and 4) “Performance, denoting the outcome or result of entrepreneurial

actions and activities” (p 705) focussed at creating wealth and “improving people’s

lives” (p 717). Using the Systems Thinking concept, ( for example O’Connor &

MacDermott, 1997), a re-enforcing loop may be argued where performance

enhances the passion and perseverance of the pioneer, as well as the winning

formula of the entrepreneurial mindset. The overall dynamics are depicted in figure

2.1.

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Fig 2.1 4-P model of entrepreneurship (Ma & Tan, 2006, p 719), with 2 re-enforcing

loops

Stevensen, Roberts and Grousbeck (1989, p. 5)) describe the behavioural

phenomenon of entrepreneurship as “an approach to management” defined as

“…the pursuit of opportunity without regard to resources currently controlled.” On

the one side, they define the limits of entrepreneurial behaviour between “the

promoter“ on the one side, with a dominant disregard of control over resources. On

the other extreme, “the trustee” is defined, who typically focuses on efficient

resource utilization. In their exploration of corporate entrepreneurship, Covin and

Miles (1999) focus on “…cases where entire firms, rather than exclusively individuals

or “parts” of firms that act in ways that generally would be described as

entrepreneurial”. In her historic study on the concept of “sustainable competitive

advantage (SCA)”, Hoffman (2000) lists a series of contributions to the development

of SCA that are almost all based on a certain access to and/or control of resources.

This would indicate that SCA is more related to the trustee type of entrepreneurial

behaviour then the promoter type. But Ma & Tan (2006) and Drucker (2002) put

innovation at the heart of entrepreneurship.

According to Stevenson and Jarillo (1990), Stevenson et al (1989) and Shane and

Venkataram (2000), successful entrepreneurship is linked to spotting the

opportunity, and being willing and able to pursue it. Stevensen and Jarillo (1990, p

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23) highlight the relativistic nature of the concept “opportunity” because of the

influence of individual capabilities and desires, the individual perception of these

two factors, and time. They distinguish 3 key factors for success: 1) detection of the

opportunity; 2) willingness to pursue; and 3) confidence and possibilities of

succeeding.

Stevenson et al (1989) and Shane and Venkataram (2000) and Ma & Tan’s (2006)

found the following dimensions of business practice to be critical for

entrepreneurship: 1) strategic orientation; 2) commitment to opportunity; 3)

resource commitment process; 4) concept of control over resources, 5) concept of

management; and 6) compensation policy. These show great similarity to those

found to determine leadership. (See next chapter)

This thesis looks at entrepreneurship as a component of leadership (see also next

chapter) as found in the Practice of Ma & Tan’s 4P model (2006). Its contribution to

the style of leadership is characterised by a unique combination of vision and drive,

(Ma & Tan, 2006; Stevenson & Jarillo, 1990; Stevenson et al, 1989) and less about

the efficient application of resources, although this can be part of the “winning

formula” Ma & Tan (2006, p 717) are talking about. This entrepreneurship can be

individual or corporate.

2.3 Leadership

“Be willing to make decisions, that is the most important quality in a good leader.”

General Patton’s statement about leadership was done in a military context, but it

can be argued that it has relevance for any context. According to Bass (1990, in

Pierce & Newstrom, 2006), leadership can be approached from many angles, that

range from a focus on group processes or an emerging effect, an instrument to

achieve goals or structure, a differentiated role, to personality and its effects or acts.

The US Military define 4 factors in leadership: the leader, the led, the situation and

the communication. (US Department of Defence, 1973, p.1), which cover the

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approaches of Bass (1990, in Pierce& Newstrom, 2006). In this thesis, leadership will

be studied in a differentiated role perspective where the actual business leader is

targeted in his/ her interaction with the different stakeholders.

Pierce & Newstrom (2006) state that leadership definitions seem to “revolve around

[…] such concepts as: influence, power, and securing compliance”(p 8). They

mention a study done by Rost (1991) analysing 221 definitions of leadership, and

concluding that the academic world will probably never settle on one definition for

leadership.

De Jong & Den Hartog define leadership as the “process of influencing others

towards achieving some kind of desired outcome” (2007, p 44). Holander and Julian

(1969) support this definition in the context of a “social exchange process” (in Pierce

& Newstrom, 2006, p 30), and specify the outcome as “certain mutual goals” (Pierce

& Newstrom, 2006, p 19). In this thesis, leadership is approached as the process

defined by De Jong & Hartog, as the “working relationship” (Pierce & Newstrom,

2006, p 29) between leader and follower. It will focus on the agent(-s) of this

process, the leader in the relationship, and how this agent approaches “influence,

power and securing compliance” (Pierce & Newstrom, 2006, p 8) in its relationship

with followers.

Blake and Mouton (1985) developed a model for leadership style based on a matrix

depicting “concern for people” and “concern for task” as the 2 dimensions that

define 4 different leadership styles. Minett, Yaman & Denizci (1985) as well as

Blanchard and Yersey (1982) both define 4 similar leadership styles each using

different names, while Bowser (2008) defines 3 basic styles. These 4 sets of

leadership styles have been combined in figure 2.2. Of the many different typologies

for leadership have been developed, most authors mentioned that each style has a

positive and a negative side, and that a complete leader will use different styles for

different situations.

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Fig 2.2. Combined Leadership Style matrix. (Black & Mouton (1985) in normal font,

Minett et al in italics (1985), Blanchard and Hersey (1982) in bold underlined, and

Bowser (2008) in bold italics).

Although Task and Team orientation are understood to be important in leadership,

Bolman & Deal (2008) sees leadership behaviour in a broader 4 “frameworks” that

characterise leadership style: structural, human resources, political and symbolic.

This seems a more complete model to capture the different dynamics of leadership.

Within leadership and management literature, the most quoted set of leadership

styles is the 6 styles proposed by Goleman, Boyatzis & McKee’s (2004):

Visionary, aimed at moving people towards “a shared dream” (p 55), with a

strongly positive impact on climate, appropriate when a new vision or clear

direction is needed;

Coaching, connecting individual goals to the group goal, with a highly positive

impact on climate, and appropriate to improve individual performance;

Task Orientation

People Orientation

Authoritarian Impoverished

Country Club Team Leader

Manipulative

Free Reign

Professional Management

Autocratic

Transformational Leadership

Democratic

Bureaucratic

Selling

Delegating Telling

Participating

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Affiliative, connecting people with each other, with a positive impact on climate,

and appropriate to heal or strengthen team bond, or to motivate during times of

pressure;

Democratic, valuing individual’s inputs in a process of participation, with a

positive impact on climate, and appropriate to create consensus;

Pace setting, aimed at meeting external challenges or goals, with usually a

negative impact on climate because of poor execution, but appropriate for a

highly motivated and competent team;

Commanding, using clear commanding direction with usually a negative impact

on climate because of poor execution, but good in crisis situations.

Pierce & Newstrom (2006) use a set of 6 styles of which 4 are equal to the list by

Goleman et al.. They are: 1) Autocratic or Coercive, which is similar to Goleman’s

Commanding; 2) Transactional which links to Pace Setting in Goleman’s typology; 3)

Coaching, which is also found in Goleman’s list; 4) Team leader, which is similar to

Goleman’s Democratic. The two other styles are: 5) Transformational; and 6) Servant

leader. They cover similar style aspects as the Affiliative and Visionary of Goleman,

but go beyond.

Bass (1985) defined 4 dimensions of transformational leadership behaviour, namely

1) idealized influence and charisma; 2) inspirational motivation; 3) intellectual

stimulation; and 4) individualized consideration. Jansen, Vera & Crossan (2009) find

that transactional leadership behaviour facilitates exploitative innovation while

transformation leadership behaviour contributes significantly to explorative

innovations.

Greenleaf (1998) sees servant leadership as “building trust by serving others first”,

aiming at developing employees to their fullest potential. (Liden et al, 2008). Liden et

al (2008) state that this trust aims at employees, customers and communities. Their

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study of servant leadership confirms it as a distinct theory from other leadership

theories, which can serve to understand how leaders “influence their immediate

followers, and ultimately …the organisation and…the larger community…” (p 175).

This shows great similarity to engaging leadership defined by Alimo-MetCalfe et al

(2008) as “someone who encourages and enables the development of an

organisation that is characterised by a culture based on integrity, openness and

transparency, and the genuine valuing of others and of their contributions”. It also

links to African tribal leadership as defined by De Liefde. (2002)

The characterisation of each of the 6 styles quoted above refer to issues that relate

to the 4 frameworks of Bolman & Deal (2008). Also, the 4 frameworks from Bolman

& Deal (2008) could be argued to be (largely) confirming the drivers of the model

presented in the introduction of this report: “structure” is a driver in the model and

a framework in Bolman & Deal; “human resources” in Bolman & Deal covers

“capabilities and systems” in the model; and “political” could be seen as part of

“culture” in the model.

Terminology seems to be used differently by different sources. For instance what is

referred to as leadership behaviour by Bass & Steidlmeier (1999), is referred to as

leadership behaviour frameworks by Bolman & Deal (2007) as well as De Jong & Den

Hartog (2007), and leadership styles by Blake & Mouton (1985), Minett et al (2009),

and Bowser (2008).

It seems many constructs on entrepreneurship find resonance in those on

leadership. This is confirmed by Vecchio (2003) who concludes that until there is

enough empirical evidence to distinguish them from other leaders, entrepreneurs

should be seen as a style or type of leadership. Johnson (2005) confirmed Vecchio’s

conclusion in his LEMON leadership type model by including the “Entrepreneur” as a

type of leader. This does not tally with Mintzberg’s comment that leadership must

be earned (in Coomber, no date) because entrepreneurship is not something that

others bestow in you. As stated in the final paragraph of the chapter 2.2, this thesis

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supports Ma & Tan’s view on entrepreneurship as a component of leadership that

contributes to the leadership style. This position allows for entrepreneurship to be

one of the factors to be studied in the context of leadership, without having to

choose between Mintzberg and Vecchio.

Hunt (1981) created a 3 layer model of leadership that within an external

environment strive for organisational effectiveness. Each leadership layer related to

a different time span, and with its own critical tasks, individual capacities and

organisational culture. See fig. 2.3.

Fig 2.3 Extended multi-level leadership model, (Hunt, in Wong et al, 2003)

This thesis adopts the Bolman & Deal (2008) proposition that there are 4 frameworks

at play in leadership, because of its comprehensiveness. The 4 frameworks are used

to characterise leadership styles encountered in the research, while attempting to

create a link to a specific leadership style from those proposed by Pierce &

Newstrom (2006) and Goleman, Boyatzis & McKee’s (2004). Hunt (1991, in Wong

2003) shows us that the time horizon of activities will demand different styles of

leadership, and that the external environment plays an important role.

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2.4 Ethics and Leadership

Leadership will always be fraught with challenges and dilemmas. While many will

point out the importance of the pursuit of profits in free markets for creating a

context of innovation and high performance, problems can emerge when adherence

to such classic business values are not balanced with seemingly nobler ends. (Manz et

al, 2008, p 390)

Ferrell, Fraederichs and Ferrell ( 2004) define ethics as the “…inquiry into the nature

and grounds of morality where the term morality is taken to mean moral judgment,

standards and rules of conduct” (p. 5). The field of ethics pursues “…the study and

philosophy of human conduct with an emphasis on the determination of right and

wrong” (p 5). Business ethics thus looks at human conduct in a business setting.

Their definition is supported by other literature (Chryssides & Kaler, 1993; Price,

2008; White, 1993). Ferrell, Fraedrichs and Ferrell (2004) add to their definition of

business ethics that the morality is the one “…as defined by stakeholders..” (p 5),

explaining that although stakeholders may not be correct in their views of morality,

it is their views that will determine whether conduct is acceptable to society or not.

This would imply that the morality to which any actor would feel herself bound to is

defined by whom she sees as her stakeholders.

This view of who defines the scope of morality is in line with contractarian ethical

theory, which is based on a principle that parties of a community enter into a

contract in the form of a set of rules of conduct, which provides protection to all

parties in exchange for compliance (Chryssides & Kaler, 1993; Price, 2008; White,

1993). A typical characteristic of this philosophy is that it only protects those within

the community, and that it does not create the same bargaining power for all

parties, thereby resulting in unequal protection. Philosopher John Rawls gave rise to

the contractualist theory of ethics, modifying the contractarian theory by creating a

starting point for the negotiation where all were equally protected under the

principle of justice as fairness (Price, 2008). Other philosophical theories around

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ethics relevant to business are based on the maximization of either self-interest

(Egoism) or common happiness (Utilitarianism); on the premises that an individual’s

behaviour is driven by a sense of duty (Deontology); on the understanding of right

and wrong to be based on the individual’s or group’s experiences such as culture,

history, upbringing etc (Relativism); on the aspiration of becoming a morally good

person (Virtue ethics); and on justice as fairness (Chryssides & Kaler, 1993; Ferrell,

Fraedrichs & Ferrel, 2004; Price, 2008; White, 1993).

Stakeholders as a concept play a very important role in business ethics, especially in

leadership ethics. Treadway, Adams, Ranft & Ferris (2009) found that business

leaders and their organisations need to satisfy one or more of their constituencies of

stakeholders to achieve organisational effectiveness. These constituencies can be

employees, shareholders, customers and others. Most literature discussing business

ethics position their discussion around Friedman’s article “The social responsibility of

business is to Increase its Profits” (1970). Milton Friedman is quoted as stating that

the “…CEO should conduct the business in accordance with the employer’s desires,

which will generally be to make as much money as possible while conforming to the

basic rules of society both those embodied in law and in ethical custom” (1970, in

Price, 2008, p 174). Freeman argued for the shareholders in Friedman’s shareholders

to be expanded to include all stakeholders (2004, in Chryssides & Kaler, 1993; Price,

2008). Goodpastor (1992, in Chryssides & Kaler, 1993; Price, 2008; White, 1993)

argues that this would result in society at large would become stakeholder, and that

treating them all equally would be impossible. He proposes to add to the CEO’s

fiduciary responsibility to shareholders a “…morally significant, non-fiduciary

obligation to stakeholder..” (In Price, 2008, p 176). This has similarities to Rawl’s

contractualist theory.

Ethics in leadership, according to Price (2008), has as its central component the

beliefs around justification for rule-breaking. Hollander (1992, in Price, 2008)

described the process of growing into a leadership position around the concept of

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idiosyncrasy credit: conformity serves to maintain or increase status early on in the

interaction, while later, status allows a greater degree of latitude for non-

conformity. Price (2008) states that rule breaking seems to be intrinsic to the process

of establishment of leadership, as it was the recognition by the group of an

individual’s differences that gave rise to the individual’s ascent to a position of

leadership (Price, 2008, p. 33).

Price’s (2008) search for moral justification for rule breaking in ethical leadership

within philosophical theory on ethics, concluded that although there may be certain

justification in extreme situations, situations in everyday leadership do generally not

find any philosophical justification for rule breaking. This conclusion was also based

on empirical evidence that leaders cannot be trusted to objectively allocate priority

to their objectives, as they tend to intrinsically give more importance to their

individual or their group’s objectives than to others.

Bass & Steidlmeyer (1999, p 182) argue that ethics of leadership are made up of “1)

the moral character of the leader; 2) the (dys-) connection between a leaders vision,

communication and acts, and the ethics of his/ her followers; and 3) “the morality of

the processes of social ethical choices and action in which the leaders and followers

engage and collectively pursue.” Pierce & Newstrom (2006) argue that this creates

different perspectives on ethics in leadership. Ferrell, Fraedrichs & Ferrell’s general

framework (2002) for ethical decision-making states that an (un-) ethical act comes

out of an intention that is evaluated based on business ethics in that organisation,

which is in turn defined by the ethical intensity of the issue (the relevance and

importance given to the ethical issue, determined by awareness and priority of

ethics in an organisation (Ferrell, Fraedrichs& Ferrell’s, 2002, p 105)), the individual’s

moral development, and the corporate culture around ethics, obedience and

rewarding. Brown and Trevino’s (2006) model on ethical behaviour and decision-

making shows a similar interaction between individual and situational factors, each

affected by moderating influences. (See fig 2.4 below) These two models confirm

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Bass & Steidlmeyer (1999) in that the leader in their model is the individual in Ferrell

et al (2002) and Brown & Trevino (2006).

Fig 2.4. Ethical decision making (from Brown & Treviño, 2006)

Brown et al’s definition of ethical leadership is “the demonstration of normatively

appropriate conduct through personal actions and interpersonal relationships, and

the promotion of such conduct to followers through two-way communication,

reinforcement, and decision-making” (Brown et al., 2005, p 120). Brown and Treviño

(2006) define a category of leadership that includes ethical leadership, spiritual,

authentic and transformational leadership, which “all tap into the ethical dimension

of leadership” (p 596) and “are concerned with the moral dimension of leadership”

(p 613). In this thesis, we have concerned ourselves with the moral dimension Brown

and Treviño (2006) talk about, without trying to label a specific morally-based

leadership style.

Ferrell, Fraedrichs & Ferrell’s general framework (2002) shapes the individual factors

in their model around Kohlberg’s model (1969), in Ferrell, Fraedrich & Ferrel, 2002)

of cognitive moral development which is made up of 6 stages. Graham (1995)

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combines Kohlberg’s model with Gilligan’s (1982, in Graham, 1995) levels of moral

reasoning, resulting in a 3 level, 6 stage model. These six stages coincide with

philosophical theories around ethics. A similar parallel between moral awareness

and philosophical theory of ethics is argued by Hitt (1990, in Minett, Yaman &

Denizci, 2009). The use of the term “stages” in Kohlberg’s model suggests that moral

cognitive development should strive for the highest stage, which is based on

universal inalienable rights, which is referred to as Moral Cosmopolitanism in

philosophy (for instance Price, 2008). However, this would deny the leader’s specific

responsibility to her goals, objectives, and those of her group. This is the root of

some of the ethical dilemmas faced by business leaders: balancing the pursuit of

individual objectives, those of the group and those of society at large.

Table 2.1. Leadership style, moral development and Moral referent. (Graham, 1995,

in Pierce & Newstrom, 2006, p. 56)

Minett, Yaman & Denizci (2009), Graham (1995) and Ferrell, Fraedrich & Ferrel

(2002) argue a link between leadership style and ethical awareness. Graham (1995)

gives a table linking leadership style, level of moral development, moral referent and

Leadership Style Level of Moral Development Moral Referent

Autocratic or Coercive Uncritical obedience to external authority Authoritive Rules and

Instructions

Transactional Instrumental Compliance with exchange

agreement

Enforcible contracts and

job descriptions

Coaching Meet interpersonal role obligations Personal relationship with

supervisor

Team leader Fullfill social duties from group

membership

Cultural expectations

Transformational Utilitarian Calculus Costs and benefits for all

Stakeholders

Servant Leader Discern and Apply universal principles Principles of Justice

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organisational citizenship behaviour, which is given above edited to the use of the

same leadership styles given in the previous chapter (Table 2.1). Within the ethical

decision model discussed above, this would imply that the leadership style will

influence the way ethical decisions are taken. This is a very important parameter in

the research of this thesis.

Minett et al (1985) saw a pattern related to age, leadership style and decision

making style. Younger managers seemed to be more manipulative (linked to

Machiavellian-bureaucratic leadership and utilitarian decision making) while older

managers use more transformational-professional styles.

Maitland (1997) listed trust, self-control, empathy, fairness and truthfulness as the

virtues that support business. The Palanski & Yammarino (2007) study of different

constructs around integrity in moral philosophy and organisational literature

confirms Maitland’s list in its moral meaning in organisational literature, but added

meanings of character, courage and authenticity in moral philosophy. Trust is seen

by many as one of the pivotal factors in leadership (Palanski & Yammarino, 2009;

Covey, 2006; Kuper, 2006; Michie & Gooty, 2005).

Concluding from the literature, studying the moral dimension of leadership (Bass &

Steidlmeyer, 1999; Brown et al, 2005; Ferrell, Fraedrich & Ferrell, 2002; ) will need to

focus on bringing to light what the individual characteristics and the situational

influences are of leadership in each case, as well as look at the moderating factors.

The virtues studied are trust, self-control, empathy, fairness and truthfulness, which

were found to be most relevant to business leadership (Maitland, 1997; Palanski &

Yammarino, 2009; Covey, 2006; Kuper, 2006; Michie & Gooty, 2005).

The link between leadership style, moral development and moral referent, as argued

by Graham (1995) and Ferrell, Fraedrich & Ferrell (2006) has directed questioning

about where leadership sees the balance between individual goals, community goals

and universal goals. It is therefore also important to define what leadership in each

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case defines as its stakeholders, its community, and how the different interests

(including the leadership’s personal interest) are balanced. Furthermore, based on

Minett et al (1985) who found a connection between leadership style, decision

making style and age, the dimension of age has been taken into account in this

research.

2.5 Leadership in a society in transformation

The world has gone through tremendous structural socio-political changes since the

end of the second world war: the dismantling of colonial empires through

independence struggles or other transition periods, the rise and fall of Marxist

Leninism and communism in Russia and Central Eastern Europe combined with the

Cold War and its imperialistic effects, the creation of the Bretton Woods institutions

dominating economic policy-making. Political instability plagued the African

continent all the way to the change of the millennium. According to Addison (2001),

there were conflicts in 16 of the 54 African nations in 1999.

Research on managerial aspects of centrally-planned economies, or economies in

transition for centrally-planned to free-market, is dominated by research looking at

Central Eastern European countries, Russia and China. Danis (2003) makes a point of

distinguishing economies in transition, which are on a defined path “from the

planned model to the market model” (p 225) and those in transformation, where the

new economic form is not yet clearly defined. Using his distinction, one could refer

to Russia as a transition economy while the economy of China is in transformation.

Tsui, Wang, Xin, Zhang & Fu (2004) described 4 major forces that are shaping

contemporary leadership in China, of which communist ideology and current

economic reform are linked to the socio-economic and –political setting, while

Confusian values and infiltration of foreign western philosophies are linked to

national culture. Confusian values are based on 4 major virtues: the honouring of

five main relationships (emperor-subject, father-son, husband-wife, older-younger

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brother, and friend-friend), obedience along the hierarchy of the five relationships,

the value of self-control and the virtue of renqing which refers to kindness and

reciprocity. Tsui, Wang, Xin, Zhang & Fu (2004) argue that these virtues result in

“Chinese business leaders tend[-ing] to exhibit extremely high degrees of

authoritarianism, while also showing benevolence towards subordinates and

demonstrating a high level of moral character…” Although these 4 major values may

be part of the philosophy of Confucius, it is clear to see that many of these values

find resonance in other cultures including Western and African. Tsui, Wang, Xin,

Zhang & Fu (2004) suggested in their research on Chinese CEO’s that the way the

“executive’s own cognitive styles, values and preferences” (p 17) influenced their

leadership style depended on the external environment. This creates an interesting

dilemma for leaders in societies undergoing rapid change, where the collective

external environment is constantly changing, as well as every person’s “own

cognitive styles, values and preferences”, including that of the leader herself as well

as her followers.

The Puffer, McCarthy & Naumov (1997) study into Russian managers’ beliefs about

work showed a dominant humanistic belief that work should be meaningful,

satisfying and a means of self-expression, followed by organisational beliefs that

valued group interaction more than individual work, together with individual work

ethics that relate to self-reliance. Their work showed a difference between older

managers leaning more to values related to the communist system, while younger

managers seemed to maintain a “higher degree of flexibility in their thinking” (p.

267). This study confirms the age dimension signalled by Minett et al (1985).

Manolova, Gyoshev & Manev (2007) quote several articles describing transition

economies as “low trust economies” (p 108), based on “low regard for formal

institutions, the rule of law or contracts.” (p 108). They argue however that in order

to better understand trust and how it is embedded in the specific characteristics of

an economy in transition, one needs to differentiate between 3 kinds of trust (from

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Zucker, 1986): institution-based trust which looks at trust based on rules en rights;

process-based trust which is trust based on experience with other party; and

characteristic trust which is trust based on group beloning and reputation. Their

research showed that when the institutional support is missing, entrepreneurs

depend more on process-based and, with time characteristic trust. This dimension to

trust is important in the framework of this thesis, because the 3 differentiated trusts

link to the cognitive development stages of Kohlberg (1969) and Gilligan (1982),

which have been linked to leadership styles in chapter 2.1.3.

Puffer (1995) studied changes in leadership traits (as defined by Kirkpatrick & Locke,

1991) in Russian enterprise from the period of communist rule to the reform period

of perestroika. Within the framework of this thesis, the most important are in the

focus of power (moving from centralised to shared power), honesty and integrity

(moving from dual ethical standards combined with personal integrity to rampant

unethical behaviour combined with personal trust) and cognitive ability (changing

from party loyalty over intelligence to “channelling intelligence” towards solving

complex business problems.)

In her business case on a business venture in Belarus, where trust and integrity

towards the clients based on the values held by the entrepreneurs was combined

with a blatantly illegal business model, Ivanova (2007) shows that entrepreneurship

(and leadership) can be ethical along personal values, even though it goes against

the laws of the country. This apparent paradox shows the relevance of the Moral

Referent discussed in the previous chapter in table 2.1.

For nations with a socialist or communist regime or past, the role of leadership is

quite different. Bayona & Locay (2009) studied growth patterns in centrally planned

economies, and found that managers have to use part of their time to lobby for

resources, whereas in free-market economies market forces would tend to

automatically allocate resources to those areas that give those activities that give the

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best returns. Secondly, leadership is more egalitarian towards its followers, which

results in less entrepreneurial behaviour.

In their study of Western European, Russian and Chinese business networks, Janson,

Johansson and Ramstrom (2007) argue that the way business strategy is developed

defines how business networks are set up and maintained. They highlight three

dimensions as important: patience (“the preparedness and propensity to wait for

positive results…” (p 964), suspicion ( the (un-) willingness to “…rely on others…”(p

964) and the importance of performance (the quality of achievements). This would

imply that the way the business sees its network (and arguably this is valid beyond

the business network) is dependent on how the business (and thus arguably its

leaders) is configured around these 3 dimensions.

Research on leadership and ethics within other settings such as colonialism, poverty

or war, is much less abundant, anecdotal and descriptive to specific cases. During the

research, other angles that are suspected to have relevance are discussed, such as

those just mentioned.

Research in to the reformation process in China, Russia and Eastern European

countries distinguishes countries in transition and those in transformation,

determined by whether there is clarity of the final market model the country is

working towards. Tsui, Wang, Xin, Zhang & Fu (2004) show how Chinese CEO’s have

to balance their own cognitive setting, their related leadership style and the

constantly changing external environment. A dominant humanistic basis combined

with communal responsibilities was found in Russian managers, where age played a

determining role in the flexibility of thinking (Puffer, McCarthy & Naumov, 1997).

Manolova, Gyoshev & Manev (2007) explain that to better understand leadership in

transition economies, trust should be split in institution-based, process-based and

interpersonal cognitive trust. Puffer (1995) singles out power, honesty, integrity and

cognitive ability as key leadership traits in these economies. Janson, Johansson &

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Ramstrom (2007) show how the definition of the business network is driven by

patience, suspicion and the importance of performance.

The research of this thesis targeted these factors in business leadership in

Moçambique to look for similarities that could arguably be caused by a similar

transitional status, as well as differences potentially caused by the unique factors of

Mocambique compared to the nations mentioned above.

2.6 Recent History and Economy of Moçambique

'All these guns make for lazy minds'. (Bishop Dinis Sengulane of Mozambique)

Moçambique’s war period started in the 1970’s with its independence war against

the Portuguese colonial regime. It gained independence in 1975, straight after the

deposition of Salazar’s fascist regime during the April revolution in Portugal. The

resistance movement FRELIMO assumed government and installed a regime based

on Marxist-Leninist principles. This government implemented a nationalization of

most production assets and companies. Soon after, the country found itself the

target of destabilization insurgencies supported by the white-minority regimes of

Rhodesia and later-on Apartheid South Africa, which were in turn supported by the

USA within the setting of Cold War politics in Africa. The guerrilla-movement

RENAMO was used for these insurgencies, and were quite successful in laming the

infrastructure basis of the country’s already weak economy. In 1992, a peace

agreement between the FRELIMO government and the RENAMO was signed in

Rome. The first multi-party elections were held in 1994, which were won by the

FRELIMO party. Its political economic policy changed to a more free-market

economy (Addison, 2001; Castel-Branco et al, 2001; Castel-Branco, 2002). From the

mid 1990’s the FRELIMO government slowly started (re-)privatising certain state-

owned companies, and in the last decade of the 20-th. Century, privatisation of

state-assets was in full swing.

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The Ministry of Planning and Development published a discussion paper on the

growth perspective of Moçambique, stating that the historic economic growth path

of the country since independence in 1975 was determined by a prolonged internal

conflict (Moçambique does not consider it a civil war, because of the outside driving

force and financial support behind the rebel movement) and the change from a

centrally planned government to a free-market economy. Key historic moments have

been indicated in Fig. 2.5 that depicts real GDP growth. The post-independence

period from 1975 to 1992 showed “an overall contraction of 45%” (MPD, 2006, p. 6)

in GDP. In contrast, the democratic and free-market period of 1992 to 2004 showed

a growth of 36% compared to 1973, the year that showed the previous highest level

of GPD.

From the clear policy choice to move towards a free-market economy, Moçambique

can be classified as an economy in transition (Danis, 2003).

Fig 2.5. Real GDP Mocambique (from MPD, 2006)

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2.7 Conclusion

Moçambique has gone through an extended period of political and economic

changes (Addison, 2001; Castel-Branco et al, 2001; Castel-Branco, 2002). Research

into entrepreneurship, management and leadership in countries that are in

transition from a centrally-planned economy to a market has shown specific

characteristics of how leadership and ethics interact (Tsui, Wang, Xin, Zhang & Fu,

2004; Puffer, 1995; Manolova, Gyoshev & Manev, 2007; Jansson, Johansson &

Ramstrom, 2007; Puffer, McCarthy & Naumov, 1997). Leadership styles, as listed by

Pierce & Newstrom (2006) have been used to characterise leadership, looking at

aspects of leadership in the 4 frameworks of Bolman & Deal (2008).

Research focussed on the interaction between the individual factors, situational

influences and moderating factors (Bass & Steidlmeyer, 1999; Ferrell et al, 2002;

Brown & Trevino, 2006). A link between leadership style and cognitive moral

development was found by Minett, Yaman & Denizci (2009), Graham (1995) and

Ferrell, Fraedrich & Ferrell (2002). The responsibility towards shareholders and

stakeholders is a balancing act for leaders that has a strong ethical aspect, which was

found to be an important aspect of leadership in Russia and China. One of the main

virtues that were found to be relevant especially in the transition economy is trust.

This thesis explores the interaction between leadership style, and the two drivers

found to be key in business leadership and ethics, namely the view of the business

leader on who her-his stakeholders are, and the quality of the relationship between

business leadership and stakeholders.

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3 RESEARCH METHODOLOGY

3.1 Introduction

This chapter defines how the subject defined in the previous chapter has been

approached. The different components of a research methodology discussed in this

chapter are shown in Fig 3.1 in the “Research Onion” (Saunders, Lewis and Thornhill,

2000, p 85).

Fig. 3.1 the Research Onion, (Edited from Saunders, Lewis and Thornhill, 2000)

3.2 Research approach and strategy

The thesis studies leadership within the specific setting of Moçambique, paying

special attention to aspects related to drivers of business leadership ethics. Its main

approach is qualitative, using grounded theory as its main strategy. Its research is

Positivism

Phenomenology

Inductive

deductive Experiment

Survey

Case Study

Grounded Theory

Ethnography

Cross-sectional

Longi-tudinal

Sampling, secondary data, observations, interviews, questionnaires etc.

Action Research

Philosophy

Approach

Strategy

Time Horizon

Data Collection methods

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predominantly of a qualitative nature, in the naturalist tradition as per Gubrium and

Holstein (1997, from Bryman & Bell, 2003, p403). However, certain quantitative

parameters have been used for sample selection. Data used to select the first sample

of entrepreneurial companies are numerical and quantitative, such as turn-over,

profitability, total asset value, number of employees, and other parameters. The

research collects information on the preference of the business leader towards

applying management practices related to the 4 frameworks of Bolman & Deal

(2008), which is qualitative information. The research also collects information about

the relationship between the business leader and stakeholders, which is mostly

qualitative, but has some quantitative components. Limited statistical analysis of the

results from the survey has been used to find patterns in the collected information.

The thesis does not have any starting hypothesis as such, but uses grounded theory.

It has focused on the chief executive officer(-s), managing director or managing

partner(-s) of successful private companies. It explores the question of how business

leadership is affected by its relationship with stakeholders. It does this in three steps

by defining the stakeholders and their relative importance, by describing the

respective relationships and by describing the effect of the relationship on

leadership.

The thesis explores how business leaders see these components of the main

research question, searches for patterns that emerge from data collection, links

them back to literature to then derive a theory or idea. Ideally this cycle should have

been repeated until any newly collected data do not raise any more questions or

bring other aspects into the picture that have not been covered by the final theory.

This was however not possible within the timeframe.

Leadership is a social construct that is created between leader and follower, created

through social interaction. Studying leadership is therefore within the constructionist

ontology, as per Eriksson & Kovalainen (2008), which describe critical realism as

accepting that “…there is an observable world independent of human

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consciousness…” (p 19) but also that “…knowledge about the world is socially

constructed…” (p 19). This thesis takes a philosophical position of critical realism,

whereby leadership exists independently of human consciousness, but that it is a

construct of the social world.

Using Bryman’s formulation (2008, p 6) and Saunders, Lewis and Thornhill (2000, p

45), this thesis has collected data to build theory, thus using an inductive approach.

Theory is seen in this thesis as per Gill and Johnson’s (1997) definition (from

Saunders, Lewis and Thornhill, 2000, 26): “a formulation regarding the cause and

effect relationship between two or more variables which may or may not be tested.”

Saunders, Lewis and Thornhill quote Hussey and Hussey (1997)in calling grounded

theory “…an inductive/deductive approach…” (2000, p. 95) where collected data are

analysed and used for prediction which in turn is checked against new data.

Grounded theory is used in the research component into the ethical dilemmas facing

business leadership, whereby the literature review of chapter 2 is used to establish

the first pointers for the interviews.

Empiricism is defined by Miller & Wilson (from Cooper & Schindler, 2003, p. 33) to

“…denote observations and propositions based on sensory experience and/or

derived from such experience by methods of inductive logic, including mathematics

and statistics.” (See also Bryman & Bell, 2003). Grounded theory as a research

strategy is typically empirical by this definition, where observations are used to

develop ideas and theory. Because of a lack of specific research on entrepreneurship

and/or leadership in Moçambique, the literature review targeted literature on

leadership in countries with a similar history of economic reform. The literature

review (which has preceded the data collection on the case of Moçambique) has

gathered theory and experiences from other countries, which have been used to

create a first “theory” on what parameters the data collection would focus on. This

in itself is part of the cyclical approach of grounded theor (E.g. from Bryman & Bell,

2003).

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3.3 Research design, data collection methods and research

instruments

The research of the thesis is a cross-sectional design which looks at a selection of

companies across the economy at the same moment in time. This has been done

using two data collection methods combined, namely a questionnaire and a

structured interview. The direction of questioning was designed based on results of

the literature review.

The research component on leadership style of the interviewee used a questionnaire

to collect information on the preference or priority given by the business leader to

certain management practices. The questions were grouped around the 4

frameworks of Bolman and Deal (2008). The parameters studied in this component

were all qualitative. Basic statistical and visual analysis of the results from the survey

is used to find patterns in leadership skills and styles. The questionnaire was done

first to also serve in familiarizing the interviewee with the different facets of

leadership before the interview focussed on a specific component of leadership.

The questionnaire was designed to rank the importance a business leader gives in

her daily routines as a business leader to key management practices grouped around

the four frameworks for leadership of Bolman & Deal (2007). Using a Likert-scale

from 1 (not applicable at all) to 5 (strongly applicable) 4 x 4 statements were put to

business leaders mentioning the preference of using a certain management practice.

As an example, in the “structural framework” one of the statements is “I set up a

clear and well-defined reporting structure.” The results of this questionnaire were

are used by the researcher to characterise the style of leadership of the interviewee,

using a pie chart to graphically show the relative dominance of one or more of the

frameworks in the way a business leader defines and shapes her job. (The

questionnaire is attached in Appendix II).

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The structured interviews focussed on 2 drivers of business leadership ethics, namely

the definition of stakeholders and the quality of the relationship with these

stakeholders. The discussion during the structured interview is guided by the

following questions:

1. Who does the business leader see as the relevant stakeholders of her business,

and how is their importance-relevance ranked: this question aimed at defining

which groups have an influence on the decisions of the business leader, and

ranked their importance. Specific stakeholder groups such as government

entities, family and friends, and general society were prompted if not mentioned

directly by the interviewee;

2. What is the basis of the relationship between the business leader and these

stakeholders: to understand how the interviewee views the relationship, the

basis of the relationship was explored;

3. How does the business leader describe the quality of the relationship: in this

component, the interviewee was asked to describe the quality of the relationship

purely from their perspective, not taking into account the perspective of the

stakeholder. The researcher prompted terms as found in the literature as the

virtues of leadership such as trust, empathy, honesty, fairness, courage and

authenticity. Also, the interviewee was asked to give a general characterisation

of the quality of the relationship as positive or negative;

4. Does this relationship enhance or frustrate her style of business leadership: after

having discussed the quality of the relationship, the interviewee was asked to

indicate whether this relationship enhances or frustrates the business leader in

applying their business leadership style;

(The structured interview questions are found in Appendix II).

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3.4 Sampling

For the research, a population is determined using incremental discriminatory

criteria regarding the level of commercial success and business sector. Companies

need to have a long enough track record to be able to establish their success. As

discussed previously, the 100 Maiores Empresas Survey of KPMG (2008) was used to

as a first step to determine the population. For reasons of insufficient availability of

these companies with the available time frame, the research had to add companies

that were not listed.

From the population, companies were targeted from each of the economic sectors

that are active in Moçambique, giving preference to the main economic sector such

as construction, construction materials, car sales, banking, insurance, trade,

beverages, as indicated by the KPMG’ survey (2008) as the main sectors.

Theoretical sampling is a technique linked to grounded theory, where a next

company or number of companies to be interviewed is selected specifically to test a

certain new hypothesis. Using this important technique has not been possible due to

factors of time and ability of companies to participate in the interview. In the end,

interviews were done with 5 companies from the above-mentioned sectors of

construction, construction materials, motor vehicle, and banking. In addition, 3

interviews were done with companies from the sectors of services and tourism. Five

of these companies were ranked in the KPMG survey, while three were not.

Privatisation of state assets began in the 1980’s, so certain companies have passed a

part of their history as state-owned companies. Although this is a relevant part of

their history with potential consequences for leadership styles, these companies

have not been excluded as such. The sample included companies that were foreign

or national owned, as long as their current shareholding structure was not

dominated by government or a clear political connection.

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Interestingly enough there may be an innate bias in this population. The willingness

to make available financial figures of one’s company for the 100 Maiores Empresas

Survey of KPMG, may be based on a certain ethical position of the leadership of that

company. Companies operating in a less-than transparent financial way, or that for

instance don’t want the taxman to know about their financial performance, would

not participate in the KPMG survey. But this also says something about the

leadership of the company. There is therefore an automatic bias in the initial

population towards more transparent companies.

3.5 Research criteria

For qualitative research, Lincoln and Guba (1994, from Bryman and Bell, 2003)

propose 2 criteria for assessing a study: trustworthiness and authenticity.

Trustworthiness would normally be pursued by assuring sufficient numbers of

respondents in the context of this thesis. Because of practical constraints, this has

not been achieved. Therefore, trustworthiness of the results of this research can

only be achieved by taking careful note of the limited applicability of extrapolation of

any trends and patterns found for the rest of the population. Similarly, authenticity

would be pursued by reaching sample saturation, which has not been the case in this

research.

The researcher is fully cognitive of this limitation, and has taken this into account in

the formulation of the conclusions and the recommendations at the end of this

thesis.

3.6 Data analysis methods

The data from the two research tools were analysed first separately for each

component, and then brought together to identify any trends. Per component or

subject, all data were first collated to find overall patterns regarding business

leadership in Moçambique, regardless of any specific characteristics of the

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companies in question. Afterwards, the results of a group of companies with a

specific characteristic were compared to the results of the rest of the group. These

specific characteristics were related to ownership structure and line of business.

Reporting on this is always done in a fashion that guarantees the anonymity of the

interviewees.

3.6.1 Leadership Style Questionnaire

Business leaders were asked to score on a Likert scale from 1 to 5 whether a certain

statement regarding a certain management practice was aplicable to their

leadership, with 5 being highly applicable. (See also 3.3) The scores on the 16

statements on leadership style were collated for all the interviews to look at total

scores per statement and subsequently per Leadership Framework (Bolman & Deal,

2008). Using graphical display of results, dominance of certain components within

the aggregate was studied. This was done at the level of Leadership Framework

(Bolman & Deal) and of the 4 statements per Framework. After analysing the

aggregated scores for all interviewees, scores were compared between a sub-sample

with a specific company characteristic (see also page 42) and the rest of the sample.

This analysis also looked at how each of the 4 framework statements contributes to

a different score for a specific framework. The differences between the scores

should have been scrutinized for significance, but because of the tendency for giving

high scores (see also ch. 4.1.3) as well as the small sample size, any difference over

10% was already seen as significant enough to mention.

3.6.2 Structured Interviews

For the structured interviews, coding is the main tool for analysing the data

collected. Bryman and Bell (2008) lists three types: 1) open coding, which yields

concepts and afterwards categories; 2) Axial coding, where codes are linked to

“…contexts, to consequences, to patterns of interaction, and to causes” (p 586); and

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3) Selective coding, where coding is structured around a central category. All three

were used in this research, with open coding being used during the literature review

to identify the concepts, while axial coding and selective coding were used mainly

during the design of the interviews. With time being limited, the point of saturation

has not been reached.

Question 1: Stakeholder groups and their importance

Interviewees were asked to name and rank stakeholder groups they saw as relevant

to their role as business leader. The list of stakeholder groups used in the analysis

was the result of open coding using the literature review and the data gathered from

the interviews. This aggregated list consists of 11 groups. To create an understanding

of how wide the business leader in Moçambique typically sees her circle of influence,

the typical stakeholder groups were ranked by frequency of mention. The average

ranking of a stakeholder group was used to understand its relevance and importance

for the business leader.

The aggregated ranking of stakeholder groups was arrived at in several steps. First, a

ranking number between 1 and 11 was given by the interviewee to each stakeholder

mentioned in a specific interview, with 1 being the most important. The researcher

edited the list in the following way. Stakeholder groups with the same ranking were

all given the same next available ranking. The next ranking was counted down from

the previous by the number of groups given the previous rank. For instance, with

two groups being ranked number 1 by the interviewee, the next most important

would get a ranking of 3. If stakeholder were mentioned but not ranked, they got the

next highest ranking.

The information coming from this part of the analysis was the frequency of a

stakeholder group being identified as relevant, and the ranking being given to this

stakeholder group. As a last step, the average ranking and the standard deviation

were calculated.

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To check on sensitivity to methodology towards blank spaces, the calculations were

done in three ways. The first calculation attached a ranking of 11 to all stakeholder

groups not mentioned by an interviewee, the second left it blank and calculated the

average over the non-blank answers, and the third one attached the average of the

ranks between 1 and 11 not yet filled.

For the rest of the analysis, only those stakeholder groups that had been mentioned

by more than half the interviewees were analysed.

Question 2: The characteristics of the relationship

The interviewees were taken through a series of questions that were aimed at

characterising the relationship between the business leader and the stakeholder

group, using the basis and the quality of the relationship as the two relevant angles.

The analysis of the basis of the relationship was done again by coding the responses,

using an open coding approach. The results of the interviews were then analysed by

frequency of mention, to see what the dominant basis of the relationship was

between business leaders and a specific stakeholder. When more than one basis was

mentioned, the most important was only counted.

The data on the quality of the relationship as perceived by the business leader was

coded, looking for the virtues of ethical leadership found in the literature review :

trust, self-control, empathy, truthfulness, fairness, courage and authenticity

(Maitland, 1997; Palanski & Yammarino, 2009; Covey, 2006; Kuper, 2006; Michie&

Gooty, 2005). These answers were scored -1, 0 and 1. As an example, scores would

be -1 for distrust, 0 no trust and 1 trust. The aggregated scores indicated an overall

quality of relationship on that category between the business leaders and

stakeholder group in Moçambique. The answers on the question whether the

business leader viewed the relationship generally as positive or negative were again

scored -1, 0 and 1 for negative, indifferent and positive respectively. The aggregated

score indicates the overall qualification of the relationship between the business

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leaders and stakeholder group in Moçambique. In the discussion of the results, trust

was given extra attention because of its importance to business leadership in

transient economies. (Manolova, Gyeshev & Manev, 2004)

Question 3: Leadership Style and Stakeholders

The data on the way the relationship with a certain stakeholder group influenced

style of leadership the business leader employs was scored -1, 0 and 1 for enhancing,

no influence and frustrating respectively. The aggregated scores were used as an

indicator of the overall influence of a stakeholder group on business leadership in

Moçambique.

4 RESEARCH FINDINGS, ANALYSIS AND DISCUSSION

4.1 Research Findings

4.1.1 Question 1: Stakeholder groups and their importance

The stakeholders that were mentioned by more than 50% of the interviewees as

relevant were Direct family, Shareholders / Board-members, Employees, Clients,

Extended Family and Friends, Government Entities, and Universities and Training

Institutions. General Society, Competition, Associated Firms and Suppliers were

mentioned less, with Suppliers being only mentioned once (Table 4.1). Using a score

of 11 for blank answers, (see ch. 3.6.2) the ranking of the stakeholders showed a

high importance given to Clients and Employees. Shareholders / Board members

were ranked third most important, while Direct Family, Government Entities,

Extended Family and Friends and Universities / Training Institutions were ranked

fourth, fifth, sixth and seventh respectively. See table 4.1. above for all the results.

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Rank Name stakeholder Frequency Average rank Standard Dev. 1 Clients 100% 1,625 1,408

2 Employees 100% 2,375 1,408

3 Shareholders / Boardmembers 100% 3,375 1,061

4 Direct Family 100% 4,000 2,726

5 Government Entities (non-client) 88% 5,875 2,748

6 Extended Family and Friends 88% 6,250 3,059

7 Universities and Training inst. 75% 7,500 2,619

8 General Society 50% 7,875 3,720

9 Competition 50% 8,250 3,536

10 Associated Firms 50% 8,750 2,550

11 Suppliers 13% 10,250 2,121

Table 4.1 Stakeholder Frequency and average ranking, using ranking of 11 for blank

answers.

Using the average ranking for blank answers (see ch. 3.6.2) did not change the order

of importance. However, leaving out the blank answers (see ch. 3.6.2) changed the

average ranking results significantly for the lower ranks, pushing Government

Entities, Extended Family and Friends and Universities / Training Institutions down

two to three ranks, while bringing up the General Society and Suppliers to fifth and

sixth respectively. These results are given in Table 4.2 on the next page.

Using the standard deviation as an indicator for agreement on the importance of a

stakeholder between the different interviewees, it can be said in general that the

variation in answers grows with decreasing frequency. This standard deviation is

obviously quite sensitive to the way blank answers are included in the aggregate

scores.

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Rank Name stakeholder Average rank Standard Dev.

1 Clients 1,625 1,408

2 Employees 2,250 1,389

3 Shareholders / Boardmembers 3,250 1,035

4 Direct Family 3,875 2,532

5 Suppliers 4,000 n.a.

6 General Society 4,750 2,500

7 Government Entities (non-client) 5,143 1,952

8 Extended Family and Friends 5,429 2,440

9 Competition 5,500 3,000

10 Universities and Training inst. 6,167 1,722

11 Associated Firms 6,250 1,708

Table 4.2 Stakeholder Frequency and aggregated ranking, averaging only non-blank

answers

The standard deviation shows for all stakeholder groups that the variation in the

ranking of that stakeholder group is larger than its difference with the next ranked

group. For instance, the difference between the average ranking of Clients and

Employees is 0,650, while the standard deviation of each is 1,408.

4.1.2 Question 2: The characteristics of the relationship

The next two questions were only analysed for those groups of stakeholders that

were mentioned by more than 50% of the respondents (see ch 3.6.2), which were for

both questions Clients, Employees, Shareholders/Board members, and Government

Entities.

Open coding of the data regarding the basis of the relationship with the stakeholder

group resulted in 4 categories. “Personal Values” refer to those relationships that

tend towards a friendship rather than a professional or contract based relationship,

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and sees a commitment beyond what is put on paper or what would be logical in

professional or commercial terms. “Rules and Contracts” are those relationships that

are defined clearly for all parties, be it in writing or in a psychological contract.

“Professional- Commercial” refers to those relationships based on commercial

transactions or professional interaction, and “Historic” is added to refer to those

relationships that are not really moving towards friendship, but by pure history are

more than “professional-commercial” or “rules and contracts” based.

Of these four categories, the majority of the respondents characterised the basis of

their relationship with the first three stakeholder groups Direct Family,

Shareholders/Board members and Employees as “Personal Values” -based. Business

leaders described their relationship with Clients as being based on “Professional-

Commercial” connection but also on a “Historic” basis. Their relationship with

Government Entities was characterised to be based mostly on “Rules and Contracts”,

and with Universities/Training Institutions mainly on “Professional-Commercial”

interests. The coded scores for the basis of the relationship between leader and

stakeholder are given in Table 4.3 below.

Name stakeholder Personal Values Rules/ Contracts Professional Historic

Direct Family 6 1 0 0

Extended Family and Friends 5 0 0 1

Shareholders/Boardmembers 5 2 1 0

Employees 5 2 1 0

Clients 1 1 3 2

Government Entities 1 5 1 0

Unversities and Training Inst. 0 0 4 1

Table 4.3: Coded scores for basis of relationship

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Coding of the data on the quality of the relationship was based on the virtues of

ethical leadership found in the literature review (Maitland, 1997; Palanski &

Yammarino, 2009; Covey, 2006; Kuper, 2006; Michie& Gooty, 2005). Also (See also

ch. 3.6.2) The coded scores are given in table 4.4 below. The table includes the

scoring on the general characterisation of the relationship as positive, neutral or

negative.

Name stakeholder Trust Empathy Fairness Truthful Courage Positive

Direct Family 4 3 3 1 2 2

Extended Family and Friends 2 2 1 1 0 0

Shareholders/Boardmembers 6 4 2 3 -1 4

Employees 4 8 3 3 3 8

Clients 7 7 3 4 4 8

Government Entities -5 -2 -1 1 -1 -1

Unversities and Training Inst. 1 2 -1 1 -1 3

Table 4.4: Coded scoring for quality of relationship and effect on leadership style

The quality of the relationship between business leaders and Clients is characterised

as strongly positive, with high levels of trust and empathy, as well as indications of

truthfulness, fairness and courage. Some respondents did mention that their trust

was only possible because of the installation of strict controls and administration on

sales, outstanding invoices etc. Also, Clients in general were trusted but their

employees not always.

Between business leaders and Shareholders/Board members, the relationship was

said to be mainly positive with high levels of trust and mostly a relationship of

empathy as well. Some respondents indicated the relationship to be truthful and

fair. There was an overall negative score on courage, which was said to be related to

a perceived lack of courage from foreign shareholders, as well as the complicated

factor of being friends with your (co-) shareholders. One family-owned-run business

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leader indicated that because of the personal basis of the relationship with

shareholders which lacked clear rules, the relationship was characterised as

negative, despite including trust and empathy to describe the quality of the

relationship.

The relationship with Employees was also characterised as very positive with high

levels of empathy. Trust, fairness, truthfulness and courage were also found to

describe the quality of the relationship, although not always. Some respondents

indicated that they lacked self-control or courage in their relationship towards

Employees, indicating that this had to do with the basis of the relationship being

more than just professional.

On the other hand, the relationship with government was generally characterised as

negative, and saw distrust, lack of empathy, unfairness and lack of courage dominate

the negative quality of the relationship. Only truthfulness received a marginally

positive score. It must be stressed in this context that the truthfulness is from the

business leader to the Government entities, and not the other way around.

Especially trading companies had a very negative opinion about their relationship

with government, while only the banking sector indicated a positive relationship. All

other respondents denied having any significant relationship with government (as a

regulator) or characterised the relationship as indifferent. In this regard,

interviewees were very clear in distinguishing their relationship with the government

as a client from the relationship with Government Entities as regulators and policing

entity.

4.1.3 Question 3: Leadership Style and Stakeholders

Leadership Style

The results of the leadership style survey were analysed by looking at relative total

score per framework from all respondents as a percentage of the total scores from

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all respondents. Within each Framework, scores per management practice were also

reviewed to look for any dominant scores.

Based on the 4 Frameworks of Leadership Behaviour of Bolman & Deal (2008), the

leadership style questionnaire resulted in a profile that showed a limited dominance

towards the Visionary framework with 27% of the points, with the Structural, Human

Resources and Political frameworks scoring 24%, 25% and 24% respectively.

Structural24%

HR24%Political

25%

Vision27%

Fig. 4-1. Leadership Style: Relative score per Framework as a percentage of total

score

Within the 4 management practices making up the score for the Visionary

framework, there was no real dominance of one practice over another. In the

Structural framework, management practices regarding “detailed reporting

structure” and “detailed policy and regulation” were relatively high, and the Human

Resources Framework saw a dominance of the view that business leadership sees

“staff as their most valuable asset”. The Political Framework saw a relatively low

score for the management practice of “seeking consensus in decision-making”. The

detailed survey results can be found in Appendix III.

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Overall it can be said that scores in the leadership style questionnaire were quite

high, with 95% of the individual scores higher than or equal to 3 (ou of a possible 5),

and 79% higher than or equal to 4. Because all scores between 1 and 5 were used

and because of the limited number of interviews, data were not corrected to

eliminate this tendency for higher scores. The researcher kept in mind this tendency

for high scoring in his analysis of the results.

Looking at the individual scores for each company, 6 out of the 8 companies scored

highest on the Visionary Framework, one on the Structural and one on the Human

Resources. In terms of the lowest scores, 4 companies scored lowest for the Political

Framework, 2 on the Structural (both services firms) and 1 on the Human Resources,

with one company showing an equally low score on the last two frameworks.

The scoring patterns between the different frameworks changed when data were

compared for different sub groups within the sample with specific company

characteristics. For instance, family-owned and run businesses showed a higher

score in both the Structural and Visionary framework, while scoring lower in the

Human Resources and the Political framework. In comparison, non family-owned

and run businesses scored lowest on the Structural framework and on the three

other frameworks scored higher than the family businesses.

For companies in their first 10 years of existence and managed by their founders, the

Structural Framework scored lower. Considering the leaders of these companies are

entrepreneurs, one might interpret their scoring pattern as a tendency towards the

“promoter” type as defined by Stevensen, Roberts & Grousbeck (1989). When

comparing foreign-owned and national-owned companies, the scores on all

frameworks are lower for the national-owned companies. Also, the variation found

in scores of the national-owned companies constituted the larger part of the

variation in the overall average scores. In other words, the foreign owned companies

varied less between the Frameworks, all scoring with a 5% range of 17.

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Within the services sector, the score for the Visionary framework is again much

higher (29%) and for the Structural framework much lower (20%). In comparison, the

non-services companies show a relatively low score for the Political framework (23%)

with the other frameworks scoring around 26%. Within the trading sector, the score

for the Political framework is 22% with the others around 26%, while the non-trading

sectors show a lower score on the Structural framework (23%) with the other scores

around 26%.

Finally, when comparing the KMPG ranked successful companies to the total scores,

the ranked scores become 1) Structural (27% and 24 resp.), 2) Visionary (26% and

27% resp.), 3) HR (25% and 25 resp.) and 4) Political (22% and 24 resp.). In other

words, amongst the companies that participated in the KPMG survey and that were

ranked high, the Structural Framework is the dominant one, compared to the

Visionary Framework for the overall scores.

Leadership style and the influence of the stakeholder relationship

With regard to the question of whether business leaders felt supported or frustrated

in their leadership style by the different stakeholder groups, only the Clients were

said to have a clearly positive influence by all interviewees. (For the overall scores,

see Appendix III)

The influence on leadership style by Shareholders / Board members was indicated as

slightly positive. Those companies where shareholders and directors were either

friends or family indicated that the relationship frustrated their leadership style. The

rest of the companies qualified the influence as enhancing or indifferent, with mainly

foreign-owned companies indicating an enhancing effect.

Business leadership indicated having a slightly negative relationship with Employees.

Those that characterised it as negative blamed skills levels and cultural factors as the

main reasons. Those that answered positively indicated the same challenges but

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explained that they saw it as part of their leadership responsibility and style to adapt

to these situations in an adequate way. This last group was mainly made up of

foreign-owned companies.

The influence of Government Entities on business leadership was characterised as

predominantly negative, with the respondents mentioning lack of skills and

commitment among government staff as well as lack of transparency and corruption

as the main reasons. These results were not dependent on the ownership structure

of the company, but did show a certain relationship with the economic sector. This

negative score was mainly the result of negative answers from sectors with a

relatively high dependency on government entities for their daily operations. Other

companies marginalized the significance of the relationship and indicated no

influence on their leadership style.

4.2 Research Analysis and Discussion

4.2.1 The quality of the interviews

In general, the researcher is of the opinion that the interviews were done in a frank

and authentic environment and without inhibitions on the side of the interviewee.

The researcher did not sense much hesitance in answering questions about any of

the issues raised, and where this was sensed the reassurance of confidentiality of

data always was sufficient to reassure the interviewee. An interesting detail about

the answers given is that negative characterisations of relationships were usually

qualified and explained by the interviewee, while positive answers were more often

given without any qualification or explanation.

The concepts of “business leadership” and “the relationship with stakeholders” were

not entirely clear for most of the interviewees at first, but became much clearer as

the interview progressed. This became apparent from the growing enthusiasm of the

respondent to discussing issues during the interview. This may be related to the

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limited or unclear introduction given by the researcher, but on the other hand the

researcher feels that this enhanced the authenticity of the data collected that could

otherwise have been compromised by a more lengthy explanation.

The researcher did sense that some business leaders answered certain questions for

their implemented leadership style, while others answered for their preferred or

aspirational leadership style. With one of the interviews it was sensed that a switch

occurred. The researcher attempted to correct this when noticed during the

interview, but a residual effect of this misconception is suspected.

One interview was not used, because the interviewee had just taken up his

managing position, and had not been with the company before that.

4.2.2 Overall quality of the data

The quality of the data was found to be sufficient to indicate certain trends in the

data set. The criteria as proposed by Lincoln and Guba (1994, from Bryman and Bell,

2003) have been met to a certain degree. The credibility of the research is

safeguarded by not assuming that the sample size is large enough for far-reaching

conclusions. Transferability is achieved by having also collected peripheral

information regarding the interviewee and her company. Confirmability and

authenticity are less relevant in grounded theory. All interviews were recorded to

ensure dependability.

The sample size clearly has had an impact on the type of conclusions.

Notwithstanding this important qualification, especially in the data on the

relationship to stakeholders some clear patterns can be seen. In a grounded theory

setting, this is all that is required. Trends have been found to be clear enough to

inform future research as well as merit a discussion referring to literature.

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The data set was homogenous on a few dimensions. All business leaders were born

and raised in Moçambique, but some are of foreign descent. All but one were men.

This will have created some bias in the results, undoubtedly.

The questionnaire-based survey shows little variation between the different

frameworks of Bolman & Deal (2008), and it is therefore not possible to draw any

clear conclusions on this dataset. The lack of variance could have been caused by

many factors such as giving desirable answers, the wording of the 16 statements that

made up the questionnaire, or the approach of the questionnaire which only

targeted the business leader herself. It is not really useful to speculate on the

reasons behind the limited variability at this stage.

A sensitivity analysis of the data confirmed that taking out one of the responses does

not change the ranking of stakeholder groups. This indicates a certain data stability

which enhances its value for trend analysis. Another sensitivity analysis shows that

the ranking of the stakeholders is quite sensitive to the methodology used with

regard to the processing of blank answers.

The use of statistical analysis on a sample of 8 from the population of all private

companies in Moçambique would not create any added information. The researcher

has therefore chosen to discuss the results at a qualitative level. As the only

quantitative parameter used, the standard deviation for the ranking of stakeholder

groups is used, which confirmed the statistical weakness of the data-set.

When analysing the recordings of the interviews, it became apparent to the

researcher that it may not have been clear to all interviewees that the direction of

the relationship that was being researched was from business leader to stakeholder,

and not the other way around. For instance, although a business leader may trust

her employees, this does not have to mean that the employees trust the business

leader. This potential factor for noise has been taken into account when discussing

the findings.

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4.2.3 Question 1: Stakeholder groups and their importance

The most important stakeholders to interviewed business leaders are the Clients, the

Employees and the Shareholders / Board members, in that order. This order does

not seem to be dependent on the ownership structure of the companies nor the

economic sector in which the company is active. It seems that Milton Friedman’s

statement (in Price, 2008) that the first responsibility of the CEO is towards the

shareholder does not find much support with business leaders in Moçambique. Most

business leaders explained that giving Clients and Employees more importance was

in the best interest of the shareholders.

The ranking did not change when taking out the younger business leaders. This

would suggest that younger and older business leaders agree on stakeholder

definition, despite having a different personal history with regard to colonialism and

the war.

The stakeholder ranking using only business leaders of Moçambican descent brought

the Employees, Clients and Shareholders / Board members even closer in their

ranking, but did not change the order. This may confirm what is discussed by De

Liefde (2002) as African Leadership, which distinguishes itself from western

leadership by its guiding principle of Ubuntu, “I am because of others” (p. 73,

quoting Tutu, 1994), which brings about a less hierarchical approach to the

organisation.

For the majority of the business leaders, their circle of relationships includes Direct

Family, Extended Family and Friends, Government Entities and Universities and

Training Institutions, but do not mention any relationship to Associates, Suppliers or

Competition. Porter’s model of the 5 competitive forces (Porter, 1979) defines 5

forces that make up the competitive environment: Bargaining power of suppliers,

threat of new entries, threat of substitute products, bargaining power of customers

and competition within sector. Many of these competitive forces do not seem to be

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included in the answers of the business leaders. This could indicate several things: a

competitive reality in Moçambique that is different from the rest of the world; a

leadership style that by choice has a relatively narrow focus on their circle of

relationships; an understanding of the concept “stakeholder” that focusses less on

the direct commercial relationships; a combination of these three.

Beyond their direct business and social environment, General Society was also not

mentioned by most business leaders. A religious connection was mentioned by only

one. The business leader feels responsible for all groups that she directly interacts

with in work and family life. When prompted, some indicated that they steered away

from politics as well as professional organisations, because they felt that these

institutions were hijacked for or dominated by political purposes or agendas. This

comment together with the suggestion made in the previous paragraph shows

reluctance among business leaders to extend their circle of relationships beyond

where they have a certain influence over events.

Using Table 2.1 on page 20, this view on their circle of responsibility points towards a

level of moral development characterised as “…meet(-ing) interpersonal role

obligations…” (Graham, 1995, in Pierce & Newstrom, 2006, p. 56) which links to the

leadership style called “coaching” (Graham, 1995, in Pierce & Newstrom, 2006, p.

56). The “coach” is said to be looking to connect individual goals to the group goal,

according to Goleman, Boyatzis & McKee’s (2004) and Pierce & Newstrom (2006).

Goleman et al also mention long-term capacity building to be important for the

coach, and see delegating as a typical management practice. Coaches sense

frustration with a lack of development and motivation with employees. As the rest of

the discussion will show, these results confirm what transpires from the rest of the

data.

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4.2.4 Question 2: The characteristics of the relationship

The Basis of the Relationship

The relationship of business leaders with two of its three most important

stakeholder groups Shareholders / Board members and Employees is said to be

based on “Personal Values ” by the majority of the interviewees. This shows a

similarity to the importance given to the executive’s personal values under Chinese

CEO’s by Tsui et al (2004), but also links to the characterisation of African Leadership

made by De Liefde (2002).

The basis of “Personal Values” seems to link to the moral referent of “personal

relationship with supervisor”, which is typical to a “Coaching” style of leadership,

according to Graham (1995, in Pierce & Newstrom, 2006, p. 56). This adds credibility

to the similar finding given at the end of chapter 4.2.3. (p. 49)

Those business leaders that characterised their relationship differently (“Rules and

Contracts” or “Professional / Commercial”) were business leaders of foreign-owned

companies. However, the group indicating a “Personal Values” relationship also

included two foreign-owned companies. Interestingly enough, the business leaders

of these two foreign-owned companies characterised their owner as a role model for

themselves. Especially business leaders of Moçambican descent characterised these

relationship as being based on “Personal Values”. Family-owned and Owner-run

businesses all classified their relationship with employees as “Personal Values”

based, which confirms the “…preference for informal direct relationships…” as

mentioned by Jack (2006).

Business leaders classify the basis of their relationship with Clients in a variety of

ways, with the majority indicating “Professional-Commercial”, some indicating

“Historic” and one each indicating “Personal Values” and “Rules and Contracts”. The

variation does not seem to be related to the business sector, and many interviewees

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mentioned more than one category. No typical trend can be identified for business

leaders in Moçambique with regard to their relationship to Clients, but it steers away

from a “Personal Values” basis and leans towards a “Professional-Commercial” one.

With Government Entities, the relationship is defined as based mostly on “Rules and

Contracts”. Some interviewees explained that they had a more professional

relationship with some government employees, but that the relationship with the

Government Entities as such was strictly based on what was required by laws and

regulations of the country and the sector. Most companies interviewed said that

they are willing to work together with Government, but have not been able to set it

up to their satisfaction. One business leader tried to extend the relationship to a

Professional one by setting up training possibilities and internships, but felt

frustrated with the lack of positive response. Pierce & Newtrom’s three concepts

that define leadership (2006) (influence, power and securing compliance) are very

differently configured between business leader and government, than with other

stakeholders.

The relationship with Universities and Training Institutes is generally characterised as

a “Professional-Commercial” relationship. Most business leaders were actively

engaged with this sector, usually through hosting trainees and interns in the

company, and sometimes engaging in the development of curricula. Several

interviewees expressed their frustration about the lack of relevance of training

manuals and curricula to the reality of the sector, as well as with the lack of interest

with this sector to do something about this. One of the companies has directors-

shareholders that also teach at one of the universities, which has become an integral

part of their recruitment procedures.

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The first proposition of this thesis is therefore:

Proposition 1: Business leaders in Moçambique pursue a relationship based

on “Personal Values” with internal stakeholders, while pursuing a

relationship on a “Professional / Commercial” basis with external

stakeholders.

It seems that business leaders and government employees do not want to

compromise their own position by extending the relationship to a level where it can

be perceived as creating a potential for a conflict of interest or compromising

situation. This may be a reason behind the lack of a positive response on some of the

training initiatives and other attempts to create a cooperative environment. This

positioning together with perceived dominance of political agendas in broader

society (see chapter 4.2.3) may constitute signals of an overly politicized

environment between government, society and private sector. On the other hand,

looking at Pierce & Newstrom’s concepts of leadership, it may also be that the

business leader is not able to adapt to the different power balance is finds when

interacting with government.

The Quality of the Relationship

Business leaders state that they have a positive relationship with their Clients, based

on trust and empathy. This relationship also extends to the government as a Client.

Tight controls and administration ensured that trust was not damaged unnecessarily,

either directly between business leaders or indirectly through interactions between

their employees, making it a process-based trust (Manolova, Gyoshev & Manev,

2008). Empathy created a basis for both entities to understand the realities of doing

business in Moçambique, with regard to issues such as bad roads, delays in many

areas, bureaucracy and lack of skills.

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Business leaders and Shareholders / Board members also have a generally positive

and trusting relationship, although courage was sometimes said to be lacking. This

was in some cases blamed on a lack of understanding of local circumstances, and in

other cases blamed on the relationship between the management and shareholders

being too personal or family /friendship ties getting in the way. It seems that

process-based trust creates a better working relationship than interpersonal

cognitive trust (Manolova, Gyoshev & Manev, 2008).

Employees have the trust and empathy of their directors, in a relationship that is said

to be not always truthful and courageous. Manolova, Gyoshev & Manev (2008) refer

to this trust as characteristic trust. Low skills levels and certain cultural barriers to

management practices aimed at employee empowerment is said to blame for

frustration in the relationship. The researcher feels that characteristic trust and

“Personal Values” as a basis for the relationship may create frustration with the

business leader with regard to their relationship with employees, when business

leaders face with a limited receptiveness to or impact of initiatives to improve

operations. Although not in the same terms, this was also heard during the

interviews.

This leads to the following proposition:

Proposition 2: A tendency by business leaders towards characteristic trust

and a relationship based on personal values with internal stakeholders

negatively affects their working relationship with employees in the business

environment in Moçambique that is characterised by skills shortages and

cultural barriers to modern management practices.

It seems that Government Entities are not in very positive books in general with the

private sector. Institutional as well as process-based trust are lacking (Manolova,

Gyoshev & Manev: 2008). Business leaders struggle with the lack of capacity and

willingness to work together to improve service levels, and are frustrated with the

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general lack of transparency of processes and corrupt practices of government

employees. These sentiments were especially prevelant with business leaders of

companies that were directly dependent of government institutions in their daily

operations, such as those involved in imports. The economic sector seems an

important variable in the quality of the relationship, because it defines the level of

interaction with and dependence on service of Government Entities.

The change from a centrally planned economy to a market oriented one has given

space to the rise of what was characterised by one interviewee as “savage

capitalism”. Such a statement indicates some distrust by business leaders towards

the outside world, which is similar to the situation described in transition economies

by Manolova, Gyoshev & Manev (2008). It confirms Hunt’s model for multi-level

leadership that gives the external environment such a prominent place. There also

seems to be a link to some of the dilemmas found in China by Tsui, Wang, Xin, Zhang

& Fu (2004) between the changing external environment, the “executive’s own

cognitive…values” (p 17) and the applied leadership style. Furthermore, it may even

be the reason behind the apparent disjunction between Porter’s model (1979) and

the situation the business leaders describe. Porter’s model is based on a competitive,

free-market economy, while most of the business leaders (partly) grew up in a

centrally planned economic environment.

The points raised leave an impression with the researcher that general distrust of

society makes business leaders reluctant to extend their circle of relationships

beyond those stakeholder groups where they have a certain influence (See ch 4.2.3,

p 49). This leads this thesis to propose that:

Proposition 3: Distrust of General Society by business leaders forces the

business leader to limit her circle of relationship to her direct business

environment, even if this goes against her own moral development.

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An interesting detail about perceptions of corruption with nationally-owned

companies is distinction most respondents make between small payments to badly

paid public servants, and large payments to greedy higher ranked officials. Recently,

the head of the anti-corruption brigade of Moçambique GCCC, Mrs. Ana Maria

Gemo, made the same distinction (AIM, 2009). With regard to the first, empathy

with the individual government official makes them not mind too much. With regard

to the second, most respondents of both nationally-owned and foreign-owned

companies stated direct payment for contracts to involved officials is not acceptable,

although payment of commissions to intermediaries is acceptable to some of the

respondents. Making a distinction between small and large exposes business leaders

to the risk of what Ashford & Anand (2003) refer to as “incrementalism”, where

ethical values are slowly eroded.

Business leaders of foreign-owned companies showed an especially clear stance on

corruption as stipulated by their owners, which seems to help the business leader in

following that line. This confirms Lou & Han’s study done in China, Brazil, Russia,

Poland and South Africa (Lou & Han 2009) that saw foreign-owned companies take a

clearer stance against corruption than nationally owned.

With regard to the relationship between Government Entities and business leaders

in Moçambique, the following proposition is made:

Proposition 4: An overly politicized environment and lack of transparency

blocks institutional trust between Government Entities and Business leaders.

Therefore the latter minimize their direct contact and relationship as much as

their economic sector allows them, to avoid ethical dilemmas and

compromising situations.

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4.2.5 Question 3: Leadership Style and Stakeholders

Within the mentioned limited variation, the scores confirm some of the data found

from the other components of the research. The relatively high score for the

Visionary framework could be related to the need for Visionary leadership in

economy in transition. The rule of a new paradigm in the markets calls for a business

leader that translates this to her shareholders, employees and stakeholders

(Goleman, Boyatzis & KcKee, 2004). The score for Human Resources confirms the

strong and positive relationship that business leaders say they have with their

employees, indicating a higher “People Orientation” (Black & Mouton, 1985).

Company structure and economic sector seems to have an influence on the

leadership style. The data seem to suggest a typical leadership style for national

companies in Moçambique, based on the Visionary and Human Resources

frameworks. This combination of creating a strong vision and giving the team the

support it needs to function well seems to indicate the “Coach” as the leadership

style preferred by national companies (Goleman, Boyatzis & McKee’s, 2004; Pierce &

Newstrom, 2006). It also has similarities with Ma & Tan’s model (2006) for drivers for

entrepreneurship, regarding the focus on “improving people’s lives”.

This leads us to the fifth proposition of this research:

Proposition 5: Business leaders of national-owned companies in

Moçambique predominantly have a coaching style of leading their company.

This does however not mean that this leadership style has served companies best

with regard to commercial success in Moçambique. When looking only at the

companies within the sample of respondents that are listed in the KPMG survey for

the 100 most successful companies of Moçambique ( 2007), the leadership style is

dominated by the Structural Framework, which is one of the lowest for the overall

sample. The scoring pattern of the respondents that are highly ranked by the KPMG

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survey points more towards a leadership style called “Team Leader” for those

companies (Blake & Mouton, 1985; Pierce & Newstrom, 2006).

But there are some important details that need to be taken into account of the non-

ranked companies. One of them is a company linked to an altruistic organisation,

which means that their primary objective is more than just commercial. Another one

is owner-run, which may also affect the commercial business objective of the

company. Also, two of the non-ranked companies are from the services sector.

Therefore, although the apparent difference in leadership style between ranked and

non-ranked companies shows an interesting difference, it is not yet possible to draw

any conclusions about the kind of leadership style that serves companies best in

Moçambique.

As for the influence of stakeholder groups on leadership style, some of the

relationships based on “Personal Values” seem to frustrate business leaders, mainly

with Employees and with Shareholder / Board members. For Shareholders / Board

members, this is especially true for national companies. The impact of Shareholders

/ Board members on leadership can be improved by professionalizing the

relationship (national companies) or by creating more understanding of the local

business environment (foreign companies).

The frustration of the business leader with her relationship to employees were said

to due to lack of skills and a cultural mismatch between management practice and

employee. These are to be expected in a country a high illiteracy rates and in the

middle of a transition from centrally-planned to a free market economy. Robbins

(2002) model of all the factors involved in effective empowerment shows how

difficult it is to get it right.

The situation in Moçambique around empowerment seems the opposite from that

described in Russia by Carl Fey (2008). He describes a frustrated employee who is

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highly skilled but not empowered because of hierarchic leadership styles. Curiously

enough, he proposes a coaching style of leadership to empower employees.

The tendency towards personal relationships with staff and shareholders seems to

based on a genuine interest from the business leader. Also, the different

components of this research independently point towards a Coaching leadership

style. Changing the relationship to a more professional one may affect the

authenticity of the leadership style, which in turn may affect follower trust and the

leader’s wellbeing (Gardner, Fisher & Hunt, 2009). And adopting a non-authentic

leadership style now will block business leadership to transcend to a

transformational leadership style, which needs to be authentic if it is to be ethical

(Bass & Steidlmeyer, 1999).

Only Clients seem to clearly support business leaders in their leadership style.

Interestingly enough, this is also the only relationship characterised as professional.

Government clearly frustrates most business leaders. Where the government is

client, this creates an interesting ambiguous relationship stuck between “Personal

Values” or “Professional / Commercial” and “Rules and Contracts”.

Again it seems that business leadership could be improved by business leaders

seeking a more professional relationship with its different stakeholders. Such a

change is within the reach the business leader for most stakeholder groups, although

with Government Entities, the need for it being an effort from both sides may make

achieving changes more challenging.

This brings the sixth proposition:

Proposition 6: Business Leaders see their leadership style frustrated because

their authenticity stands in the way of a more professional relationship with

key stakeholders.

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4.3 Limitations of the study

The researcher acknowledges that the special case for Moçambique may not be

relevant the rest of the world. Its colonial history and subsequent independence

struggle are unique to a few countries in the World (together mainly with Angola,

Guiné Bissau, and to a lesser extent with São Tomé e Príncipe and Cabo Verde).

Although an armed independence struggle, internal conflicts, past nationalization of

production assets under a Marxist-Leninist (or similar) regime and current re-

privatisation are all quite common occurrences and policies of countries all over the

world during the period of decolonisation, its configuration, timing and the specific

interpretation for each mentioned factor for Moçambique is unique. Therefore, any

extrapolation of results from this study to other countries should be done cognisant

of these unique characteristics of the country studied.

Leadership questionnaires, interviews and surveys are influenced by respondents

giving answers that are socially desirable, more positive and more socially

acceptable. For this reason, even though the researcher’s primary interest was in

studying leadership and ethics in Moçambique, only the drivers of ethics in

leadership were studied without directly referring to ethics as a subject, thereby

reducing the potential for a tendency of respondents trying to score well on ethical

issues of leadership. Even so, the high scores on all leadership style questions may

indicate a certain lack of self criticism with the respondents.

The intention was to interview companies that were ranked high in the Cem Maiores

Empresas survey (KPMG, 2007). However, for reasons related to the time available

for this research, this has not been possible, and other companies were also

interviewed. Therefore, the link to successful business leadership cannot be made as

strongly as intended.

Language issues may have played a role in two ways in the quality of the data

collected. Although the author is relatively fluent in colloquial Portuguese, he is not a

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native speaker and does not have much experience in discussing management and

leadership issues in Portuguese. This may have created noise and some data loss.

Also, interviews have been done in both Portuguese and English, depending on the

preference of the interviewee. For compatibility of collected data and potential bias,

all data should have been collected using one language. Unfortunately this has not

been possible. These two factors may have created noise through a limited

understanding of the subject of the interviews and the questions by the interviewee,

as well as a limited understanding by the researcher of the subtleties in the answers.

The researcher sees as the main limitation of this research the number of interviews

that were done. With only 8 interviews, any statistical analysis of the results looses

relevance. Requirements for trustworthiness and authenticity therefore demand

that all trends and patterns found need to be seen as mere indications for further

research without drawing any conclusions about the population. This is however not

uncommon when applying grounded theory.

5 RESEARCH CONCLUSIONS

Grounded theory is a methodology that aims to identify theory emerging from the

data. The data set used for this thesis is limited, but adequate to identify trends

within the field of business leadership and its relation to stakeholders in

Moçambique. Many of the dynamics found in literature on business leadership in

China, Russia and Eastern Europe were identified in Moçambique, but some specific

patterns also suggest a typical African cultural influence.

Business leaders in Moçambique define their circle of relationships by professional

and family boundaries, including mostly those stakeholder groups with whom they

have a professional, contractual or family connection. Within their working

environment these are shareholder and board members, employees and clients.

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Stakeholders outside their direct operating environment are hardly mentioned. This

seems not to be because of a lower level of cognitive moral development (Kohlberg,

1969), but more because an overly politicized society makes them protect

themselves. The lack of outreach towards the general society seems to be

compensated by a very strong commitment towards the well-being of employees

and their families, proving a sense of responsibility beyond transactional (Graham,

1995).

It may be that the business leader defines her circle of operations by the ability to

stay true to her own morals and values. Looking at Ferrel, Fraedrichs & Ferrell’s

statement that ethics in leadership are determined by a morality “…as defined by

stakeholders…” (2004, p.5) and Brown & Treviño’s model of ethical decision-making

(2006), the business leader searches for a relationship with those stakeholders that

share a certain morality, thereby reducing the situational and moderating influences

on her leadership, and minimizing the dys-connection between the leader’s and the

(…stakeholders…) morality (Bass & Steidlmeyer, 1999). Family and friends may play

an important supportive role for the business leader (they were ranked with the

more important groups of stakeholders!), even though they are not part of the

business environment.

Business leaders tend towards a relationship with their internal stakeholders that is

based on personal values, characterised by characteristic trust and empathy. Outside

the company they pursue a professional or commercial relationship with mainly

clients and government entities. Because of a perceived politicized society and non-

transparent government, a lack of institutional trust with government stands in the

way of a professional relationship with both the government entities and to a lesser

extent with their individual employees. This distrust (although not an institutional

one) seems to extend to general society.

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From the lack of any importance given to suppliers and competitors by the

respondents, it seems that the 5 forces indicated by Porter (1979) as determining

the competitive environment are not seen by business leaders as equally important.

This drives leaders to limit the relationship purely to what is legally required.

Business leaders feel negatively about this, and are of the opinion that it inhibits

them in their role. Because the level of legally necessary interaction differs between

economic sectors, certain sectors are more affected than others by this.

Coaching seems the preferred leadership style in Moçambique, especially with

nationally owned companies. Lack of skills and cultural barriers with employees

creates a certain frustration typical of the “coach” leadership style (Goleman,

Boyatzis & McKee, 2004). A more professional relationship with key stakeholders

may enable business leaders to improve their effectiveness as a business leader and

enable them to expand their circle of relationships to a level that fits their moral

referent.

This on the other hand may force the business leader to compromise on her

authenticity, which could have consequences on some of the drivers of business

leadership ethics such as trust. It also may block the way towards a category of

leadership that “..taps into the ethical dimension..” (Brown & Treviño, 2006), which

would not serve those that aspire to be lead by their morals when fulfilling their

duties as business leaders.

6 FUTURE RESEARCH DIRECTIONS

Moçambique was ranked by Transparency International at the 130th place of 181.

Also recent studies by the World Bank Reports show transparency issues as being

one of the main factors that negatively affect the investment climate. This highlights

the importance of ethics in business development. Lack of transparency and

corruption are however merely symptoms of a certain ethical setting of the business

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environment. The research done for this thesis tries to make a step towards

understanding what drives ethics in business leadership in Moçambique.

Business leaders enjoyed talking about the issues raised and appreciated reflecting

on them in a confidential setting. This should encourage researchers to continue on

this path.

The leadership style survey gave some interesting trends pointing to a preferred

leadership style and the relationship with stakeholder, which brought to light some

very relevant factors and resulted in 6 propositions. A more solid statistical basis will

be valuable for confirming or discarding these propositions, thereby improving the

understanding of the ethical dynamics of business leadership of Moçambique, and

potentially other countries. In extending the sample, heterogeneity around the

dimensions such as gender and nationality or descent should also be taken into

account.

Achieving a larger participation of those companies with a high ranking in the KPMG

survey help establish a stronger link between the results of this research to

successful business leadership. Using a 360 approach will enable the researcher to

make a better distinction between implemented leadership style and desired style

that may have affected the data in this research.

Such research could be done on an ongoing basis, as a research program based with

one of the local universities or with private sector organisations. Such an ongoing

approach would create the possibility for a longitudinal dimension to the research,

thereby enabling the monitoring of effects of certain interventions in skills

development or government transparency initiatives. It should be taken into account

that with the perceived over-politicized environment, the choice of research

institution will influence the willingness to be open about this sensitive subject.

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Weiler_Appendices.doc

MBA Research Proposal Appendices Page I

APPENDICES

Appendix I – Questionaire Leadership ........................................................................ II

Appendix II – Structured Interview Questions with coding spreadsheet ................... IV

Appendix III: Results of Leadership Style Survey ........................................................IX

Appendix IV: Results of Structured Interview .......................................................... XIII

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MBA Research Proposal Appendices Page II

Appendix I – Questionaire Leadership

No. Interview: Form 1: Name Respondent: Date of Birth:

Date and time: Level of Education Nationality

Rate on a scale of 1-5 whether a certain statement is applicable to you as a leader in your company

Scores are 1 –Not applicable at all, 2 – Hardly applicable; 3 – Partly applicable; 4 – Usually applicable; 5 – Strongly applicable;

Structural Framework

1. I set up a clear and well-defined organizational reporting structure

1 – 2 – 3 – 4 - 5

2. I give clear and detailed instructions instead of a general explanation of what the objective is

1 – 2 – 3 – 4 - 5

3. I have put in place policies and rules for most company processes and routines

1 – 2 – 3 – 4 - 5

4. I hold regular planning sessions, to which everyone is then held accountable

1 – 2 – 3 – 4 - 5

Human Resources Framework

1. I strive for my employees to be friends with each other 1 – 2 – 3 – 4 - 5

2. I invest a lot in skills development of staff 1 – 2 – 3 – 4 - 5

3. Our staff is our most valuable and important asset 1 – 2 – 3 – 4 - 5

4. I have put in place many support measures for staff to enable them to perform well

1 – 2 – 3 – 4 - 5

Political Framework

1. I take decisions in the company by consensus 1 – 2 – 3 – 4 - 5

2. I engage extensively with all stakeholders to understand their point of view

1 – 2 – 3 – 4 - 5

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MBA Research Proposal Appendices

3. I assure that resources are allocated in a democratic and transparent fashion

1 – 2 – 3 – 4 - 5

4. I do not interfere in the decisions of others 1 – 2 – 3 – 4 - 5

Symbolic Framework

1. I project a very strong vision which guides everyone’s actions and decisions

1 – 2 – 3 – 4 - 5

2. I lead the company from the front, set the example and show the way

1 – 2 – 3 – 4 - 5

3. I use success stories from our company’s history to inspire and motivate employees

1 – 2 – 3 – 4 - 5

4. I actively foster a very strong company culture which sets the tone for how things should be done

1 – 2 – 3 – 4 - 5

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Appendix II – Structured Interview Questions with coding spreadsheet

Business Leaders and their relationship with stakeholders

1. Can you name the stakeholder groups to which you feel a certain

responsibility or accountability as a business leader? This responsibility can

be explicitly determined in rules and regulations, or can be based on your

own personal values.

2. Do you consider yourself a separate stakeholder, or are you part of one of

these groups? Do you see a responsibility to any stakeholders beyond your

direct business environment?

3. Could you rank them in order of responsibility or accountability?

4. Can you describe this responsibility for each stakeholder group? Can you

describe whese it comes from, are these based on written rules, past

experiences, cultural ties or personal values?

5. I’d like you to select a few of the stakeholder groups that you mention, two

stakeholder groups with a legal connection, two stakeholder groups with a

personal connection, and two with whom you or your company has had a

long relationship. Can you characterise the quality of relationship you have

towards these stakeholder groups, in terms of trust, integrity, reliability?

(Prompt trust if not mentioned, tick for trust, self-control, empathy, fairness,

trusthfulness, courage, authenticity) Would you summarise the quality of

relationship as positive or negative? Does your relationship with these

stakeholder groups enhance your leadership style or does it conflict with your

style?

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MBA Research Proposal Appendices Page V

No. Interview:

Form 1:

Date of Birth:

Name Respondent:

Date and time:

Level of Education

Nationality

Stakeholder Sphere Question 1: Stakeholders Rank Describe Responsibility and its basis

You and family

Yourself

Partners and children

Parents, brothers sisters etc.

Inlaws

Direct Company

stakeholders

Shareholders

Board members

Employees

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MBA Research Proposal Appendices Page VI

Operating

Environment

Associated firms

Competition

Clients

Suppliers

Banks etc.

Regulatory

Environment

Regulatory Authorities

Judiciary and Police

Sector based regulators

Other government entities

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MBA Research Proposal Appendices Page VII

Professional

Environment

Universities

Professional Organisations

Chamber of Commerce etc.

Public Environment

Political parties

Action groups etc.

Communities

Unions

Relgious communities (Specify)

Others?

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MBA Research Proposal Appendices Page VIII

Responsibility

driver

Stakeholder

Group

Quality of Relationship +/-? Enhance/Conflicts

Leadership Style

Rules

Trust -empathy-fairness-truthfull-courage-authentic


Values



Relationship

history

Trust-empathy-fairness-truthfull-courage-authentic


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Appendix III: Results of Leadership Style Survey

Overall

Structural24%

0%0%0%

HR25%

0%0%0%

Political23%

0%0%0%

Vision28%

0%0%0%

Graph IV-1. Percentage scores for Leadership Style for all Frameworks

Structural Framework

reporting28%

instructions23%

policies andrules27%

planningsession

22%

Graph IV-2. Percentage scores for the 4 management practices of the Structural framework

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HR Framework

friends24%

skillsdevelopment

25%

staff assets28%

support staff23%

Graph IV-3. Percentage scores for the 4 management practices of the Human Resources framework

Political Framework

consensusdecision

22%

stakeholderengagament

26% democratic resourceallocation

27%

avoid unilateraldecisions

25%

Graph IV-4. Percentage scores for the 4 management practices of the Political framework

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Visionary Framework

strong vision26%

lead from thefront26%

success stories24%

strong culture24%

Graph IV-5. Percentage scores for the 4 management practices of the Visionary framework

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MBA Research Proposal Appendices Page XII

Characterise leadership style by 4 frameworks Company names Framework Score Question Ave ST. Dev. Co. 1 Co. 2 Co. 3 Co. 4 Co. 5 Co. 6 Co. 7 Co. 8

Structural 111

reporting 36 4,71 0,49 4 4 5 5 5 5 5 3 instructions 29,5 3,64 0,94 3 5 3 5 3 3,5 3 4 policies and rules 34 4,29 1,50 5 5 5 4 1 5 5 4 planning session 27,5 3,21 1,35 4 4 3 2 1 3,5 5 5

HR 117,5

friends 31,5 4,07 1,54 1 5 4,5 5 5 5 3 3 skills development 33 4,14 0,69 5 4 4 4 3 4 5 4 staff assets 38,5 4,79 0,39 4 5 5 5 5 4,5 5 5 support staff 30,5 3,79 0,81 4 3 4 3 3 4,5 5 4

Political 108

consensus decision 27,5 3,36 0,85 2 3 4 3 3 4,5 4 4 stakeholder engagament 32,5 3,93 0,19 4 4 4 4 4 3,5 4 5 democratic resource allocation 34 4,29 0,95 3 5 5 5 5 4 3 4 avoid unilateral decisions 31 3,86 1,07 3 4 4 2 5 4 5 4

Vision 124,5

strong vision 37 4,71 0,49 5 5 5 4 5 4 5 4 lead form the front 37 4,57 0,79 5 5 5 5 4 3 5 5 success stories 34,5 4,21 0,81 4 3 5 4 5 3,5 5 5 strong culture 34 4,29 0,76 4 4 5 5 4 3 5 4

Table IV.1 Leadership Style survey results

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MBA Research Proposal Appendices Page XIII

Appendix IV: Results of Structured Interview

Which stakeholders were mentioned Order Name stakeholder Frequency 1 Direct Family 100% 3 Shareholders / Boardmembers 100% 4 Employees 100% 7 Clients 100% 2 Exended Family and Friends 88% 9 Government Entities 88% 10 Universities /Training inst. 75% 5 Associated firms 50% 6 Competition 50% 11 General Society 50% 8 Suppliers 13%

Table IV.2. Frequency Stakeholder groups

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MBA Research Proposal Appendices Page XIV

What is the ranking of the stakeholders Name stakeholder Frequency Ave rank ST D C. 1 C. 2 C. 3 C. 4 C. 5 C. 6 C. 7 C. 8 Clients 100% 1,63 1,41 2 1 5 1 1 1 1 1 Employees 100% 2,25 1,39 1 2 3 1 2 3 5 1 Shareholders / Boardmembers 100% 3,25 1,04 3 3 3 4 4 4 4 1 Direct Family 100% 3,88 2,53 3 7 1 3 4 1 8 4 Suppliers 13% 4,00 n.a. 4 General Society 50% 4,75 2,50 6 6 1 6 Government Entities 88% 5,14 1,95 6 1 7 5 5 6 6 Exended Family and Friends 88% 5,43 2,44 3 7 2 6 8 8 4 Competition 50% 5,50 3,00 7 7 7 1 Universities /Training inst. 75% 6,17 1,72 7 6 8 3 7 6 Associated firms 50% 6,25 1,71 4 6 7 8

Table IV.3. Average ranking Staleholders with individual answers.

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MBA Research Proposal Appendices Page XV

What is the basis of and quality of relationship

Name stakeholder Pers.

Values Rules & Contract

Proff / Commerc Historic

Nr answers Trust Empathy Fairness Truthful Courage Positive? Enhances?

Direct Family 6 1 0 0 4 4 3 3 1 2 2 2 Exended Family and Friends 5 0 0 1 2 2 2 1 1 0 0 0 Shareholders / Boardmembers 5 2 1 0 6 6 4 2 3 -1 4 1 Employees 5 2 1 0 8 4 8 3 3 3 8 -1 Associated firms 1 0 0 0 1 1 1 1 0 1 1 1 Competition 0 0 3 0 2 -1 -1 0 1 1 0 -1 Clients 1 1 3 2 8 7 7 3 4 4 8 6 Suppliers 0 0 0 0 0 0 0 0 0 0 0 0 Government Entities 1 5 1 0 6 -5 -2 -1 1 -1 -1 -3 Universities /Training inst. 0 0 4 1 3 1 2 -1 1 -1 3 0 General Society 1 2 1 0 1 -1 0 0 0 0 -1 -1

Table IV.4. Results on basis and quality of relationship with agregated scores for categories.

Documents

Business Leadership and Stakeholders Relationship in a …gsblibrary.uct.ac.za/researchreports/2009/Weiler.pdf · · 2010-07-02found to be a determining factor for the setting of