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Ways CEOs Deliver Their Personal Values and Follower Commitment:
Comparison between Founders and Professional Managers
Abstract
The current study identified three typical approaches leaders employ to deliver
personal values to their followers and examined the corresponding psychological
reactions the followers generate in response to the value-delivering attempts. Results
showed that leaders using authoritarian way would result in followers’ compliance,
indicating the lowest level of value alignment. When leaders use policy-driven and
inspirational ways to transfer their personal values, they would achieve higher levels
of value congruence, identification and internalization, from their followers.
Additionally, the study investigated differences between CEOs who are founders of
the companies and those who are not in the value delivery process. Interesting
findings were discussed in terms of their implications for managerial practices.
Limitation and suggestions for future research were also presented in the paper.
Key words: value delivery, follower commitment, leadership behavior
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Ways CEOs Deliver Their Personal Values and Follower Commitment:
Comparison between Founders and Professional Managers
INTRODUCTION
Despite the growing recognition of the importance of leadership values as well
as leader-member value congruence in organizations (e.g., Bass & Steidlmeier, 1999;
Jung & Avolio, 2000), little is known about how leaders deliver their personal values
to followers and what kind(s) of psychological reaction the followers generate in
response to them (Meglino & Ravlin, 1998). Additionally, in emerging economies
such as China, small and private firms are blooming at an unprecedented pace (Lau &
Busenitz, 2001). Business led by organizational founders has been playing a critical
role in the rapidly growing economy (Chow & Tsang, 1994). Although Deeks (1973)
has claimed, over 30 years ago, the distinction between founder and “professional
manager (non-founder leader, who are non-family or non-owner and are often
recruited externally or improved internally)” to be a critical variable in organizational
research, little empirical research has examined whether or how the distinction would
affect value delivery from leaders to followers.
The current study, conducted in Chinese organizational context, aims at
examining the value transferring process and attempts to introduce a dynamic view of
leaders’ value-delivering behaviors and their corresponding outcomes in order to
better understand the mechanism of value-sharing among leaders and followers.
Based on literature review and Chinese organizational context, we identified three
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value-delivering approaches, namely, authoritarian, policy-oriented, and inspirational.
We then tested hypotheses on the effects of the approaches on the psychological
reactions from the followers in response to them. Finally, we investigated the
differences the top leader (CEO) being a founder makes in the process and discussed
the results and implications.
LITERATURE REVIEW AND HYPOTHESE
Theoretical background
Values are at the core of our personality (Rokeach, 1973). When it comes to
organizations, common shared-values by members are the most silent power in
organizational life (Posner & Schmidt, 1992). When individual values converge
around a particular set of assumptions and norms, organizational core values are
likely to form. Of the factors that shape organizational values, CEO values are the
most influential one (Collins & Porras, 1996; Drucker, 1988). Such values dictate the
ways organizations conduct business, treat employees, or deal with customers, and
suppliers (Barney, 1986). Through developing the strategy of the organization,
controlling the operational system and constituting the HR policy, the CEO shapes,
strengthens or modifies organizational value system by instilling his/her personal
values into the organization (Ciulla, 1999).
Many leadership theories, such as transformational leadership (Avolio,
Waldman & Yammarino, 1991; Bass, 1990, 1996), charismatic leadership (Conger &
Kanungo, 1994; Shamir, House & Arthur, 1993), visionary leadership (Nanus, 1992;
Westley & Mintzberg, 1989), and LMX theory (Graen, 1976; Graen & Cashman,
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1975), regard CEO values as important sources through which the leader exerts strong
impact on the organization. In the area, the emphasis on leadership values can be
observed in the shift of focus from transactional to transformational processes,
through which CEOs seek to rouse the consciousness of the followers by delivering in
them higher moral values (Yukl, 1999).
Value sharing, or value congruence, between leaders and followers has also
been a topic of research for many years. Results have shown that value congruence is
functional in a number of areas, including HR selection (Adkins, 1994), trust and felt
trust between leaders and followers (Lau, Fu & Liu, 2002), and the quality of
leader-member exchange (LMX) relationship (Ashkanasy & O’Connor, 1997). In fact,
the Person-Organization fit theory, which has been heavily studied, refers essentially
to the congruence of values between members and their organizations (Chatman, 1991;
O’Reilly, Chatman, & Caldwell, 1991).
However, little research has explicitly examined the specific ways leaders
transfer their values or how leaders make their followers align values with
themselves’. To investigate different approaches and their corresponding outcomes,
we primarily adopted two theoretical frames: the power theory (Bass, 1960; French &
Raven, 1959) and the identity theory (Ashforth & Mael, 1989; Stryker & Serpe, 1982;
Turner, 1975). The power theory helps us understand why a CEO can
influence/modify follower values and what approaches he/she is likely to employ to
do so; the identity theory helps us identify the corresponding outcomes. Specifically,
leadership behaviors and follower commitment are addressed as independent and
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dependent variables in this paper.
Three Value-delivering Approaches
Leadership power and influence behaviors jointly determine leadership
effectiveness (Yukl, 2002). Value delivery from leaders to followers, in essence, is a
process of exerting influence over the followers. Leadership occurs only when people
are influenced to do what is oriented by their leaders’ motivational values
(Kuczmarski & Kuczmarski, 1995).
According to the power theory, leader’s power is derived in part from the
opportunities inherent in a person’s position in the organization (“Legitimate power”),
and in part from expertise or symbolic attributes of the leader (“Referent power”)
(French & Raven, 1959). Consistent with the two types of power, we identified two
value-delivering approaches: policy-oriented and inspirational. A CEO using
policy-oriented way makes official requests in order to exert influence, although the
requests may derive only from the leader’s personal preference; whereas an
inspirational CEO transfers personal values mainly relying on individual referent
power to develop a stimulating appeal to the values. More than the two approaches,
we added a third one, the authoritarian approach, based on research and our
knowledge of leadership in Chinese organizational context.
One major characteristic distinguishing Chinese leaders from Western is that
they rely heavily on paternalistic leadership (Farh & Cheng, 2000; Westwood, 1997).
Paternalistic leadership behaviors such as strict discipline, paternal benevolence,
severe punishment of unmoral and disloyal behaviors, are associated with Chinese
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traditional norms. Among these norms, for example, wu lun (the five cardinal
relationships, Yang, 1993) emphasizes the absolute authority of the superior and the
obedience of the inferior. Based on the understanding, we therefore identified another
approach, authoritarian one, which is believed to suit the Chinese mentality and is
also consistent with the assertiveness and pressure tactics used by authoritative
leaders as presented in influence literature (e.g., Kipnis, Schmidt & Wilkinson, 1980;
McFarland, 2002).
The above three approaches can also be categorized into two different
orientations – institutional and individualistic (Moreland & Levine, 2001).
Policy-oriented approach is institutional because it is routine-based, system-driven
and relies on company regulations and group norms that are consistent with the
leader’s personal values. The inspirational and authoritarian approaches, on the other
hand, are more individualistic because both approaches rely more on informal and
individual ways. However, they are the two extremes of a pole in terms of dealing
with the disagreement on value orientation: authoritarian leaders are likely to inhibit
and depress the disagreement (Lamb & Publow, 1992), while inspirational leaders try
their best to encourage the agreement. More specifically and comparatively,
authoritarian leaders are enforcers, they simply do not allow differences;
policy-oriented leaders are trainers, they use formal procedures to handle differences;
inspirational leaders are mentors, who are persuasive and persistent and work out
differences together with their followers.
Followers’ reactions to leader’s value-delivering behaviors
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According to Schein (1968), leadership is a managerial socializing process
associated attitudes and values. A CEO’s primary responsibility is to make followers
identify with him/her and the organization, thus making them collectively achieve
organizational goals (Richards & Engle, 1986). Ideally, leaders would want to see
followers internalize the values they are trying to deliver so the followers could be
fully committed to the organizational goals.
We use follower commitment as the indicator for value congruence for both
theoretical and practical concerns. Theoretically, commitment has been defined as the
relative strength of an individual’s attachment to and involvement in a particular
organization, group, or person (Becker, 1992). Commitment to leader is characterized
by the follower’s belief in and acceptance of the leader’s goals and values, and a
desire to maintain stable relationship with him/her (Chen, Tusi, & Farh, 2002).
Additionally, comparing to Western cultures, individual commitment in oriental
cultures contains more moral components, which are always directed by individual
value orientations (Hofstede, 1980). The more the follower’s values align with those
of the leader, the more likely he/she would be committed to the leader.
Operationally, among multiple commitment-related measures, O’Reilly and
Chatman’s (1986) measure of three types of commitment can differentiate the
“amount” of individual’s psychological attachment to his/her leader (Organ, 1990). To
examine the outcomes of value-delivering behaviors, in the study, we adopted that
three types of commitment, compliance, identification and internalization (Kelman,
1958; O’Reilly & Chatman, 1986), to indicate levels of value congruence. The three
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should be different from each other with compliance standing for the lowest level of
value congruence, identification the middle, and internalization the highest. However,
some researchers report it’s hard to distinguish identification and internalization in
practice (e.g., Martin & Bennett, 1996; Sutton & Harrison, 1993), while the
compliance and the identification/internalization components of commitment are
uncorrelated (Sutton & Harrison, 1993). When being correlated with other
organizational dimensions, identification and internalization share similar patterns,
compliance generates a different set of relationships (e.g., Harris, Hirschfeld, Field, &
Mossholder, 1993). In this study, we are inclined to regard the three as distinct
aspects that can be differentiated in terms of the level of value congruence as well as
the underlying mechanism of value-sharing. Specifically,
Compliance is exchange based and is likely to occur when an individual adopts
attitudes and behaviors of a leader in order to gain specific rewards from and avoid
specific punishments by the leader (Kelman, 1958). When it comes to value
delivering from leader to follower, followers may comply with the leader if the leader
uses authoritarian approach (Yukl & Falbe, 1990). The followers may also comply
when he/she is obedient, lazy, or apathetic (Kipnis et al., 1980; Yukl & Tracey, 1992).
However, in Chinese organizations, the authoritarian approach may be effective
because of followers’ strong belief in obligation to authority, which is consistent with
of Chinese social norms (Farh & Cheng, 2000). Based on the arguments, we
hypothesize:
Hypothesis 1a: CEOs using authoritarian approach to deliver personal values will likely result in followers’ compliance, but not identification nor internalization.
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Identification is affiliation based and is likely to occur when followers accept
the leaders’ influence to establish or maintain a satisfying relationship with the leader
(Kelman, 1958). In this situation, followers respect their leaders’ values although they
may not fully adopt them because their respect often originates from the positions of
the leaders. Leaders who rely on legitimate power to exert influence are most likely to
use policy-oriented approach to deliver their values to the followers because they need
rules and regulations to establish the legitimacy of their influence. The organizational
legitimacy can actually reinforce the follower’s self-categorization as one member of
the group as well as a subordinate of his/her leader, which in turn drives them to
identify with the leader (Fielding & Hogg, 1997). Thus, we hypothesize:
Hypothesis 2a: CEOs using policy-oriented approach to deliver personal values will only result in followers’ identification, but not as likely in followers’ internalization.
Internalization is affection based and is likely to occur when people are willing
to adopt certain attitudes and behaviors because they are satisfied with the content
expressed in the specific attitudes and behaviors of the leaders (Becker, Billings,
Eveleth & Gilbert, 1996; Kelman, 1958). That is to say, only when the values (the
content) are in followers’ favor, the values can be really internalized by the followers.
Inspirational approach is an attempt to develop enthusiasm and high level of
commitment by arousing strong emotions and linking a request or proposal to a
person’s needs, values, hopes, and ideals. Therefore, leaders using the approach are
likely to make followers feel useful, improve their self-efficacy, thus perform
exceptional efforts (Bono & Judge, 2003; Deluga, 1995; Yukl, 1999). Thus, we
hypothesize:
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Hypothesis 3a: CEOs using inspirational approach to deliver personal values will not only result in followers’ identification but also likely to induce internalization.
The role the CEO identity plays in the value-delivering process
The above-hypothesized effects, however, may vary due to the identity of the
CEO – whether the CEO is a founder or professional manager, between whom there
are distinctive characteristics (Deeks, 1973). Compared to professional managers,
founders are more achievement-oriented. They are more willing to take risks and are
loyal to their own companies (Schein, 1983). Individually, founders are seen to be
personal, emotional and involved. In literature, founders are found to play a critical
role in creating and developing organizational culture, which is essentially based on
leader-member shared values (Reimann & Wiener, 1988). Professional managers, on
the other hand, are often regarded as power- and influence-oriented. They are
welcomed for bringing in much needed functional skills and are loyal to their
professions rather than organizations (Dyer, 1989). Unlike founders, professional
managers are seen to be impersonal, rational and less involved.
When delivering values to their followers, founders are more likely to achieve
high levels of commitment than professional managers. There are two reasons that
can be used to explain for the difference. First, the inner drives to deliver personal
values are different. Being owners or partial owners of the firm, founders always try
their best to maximize the interests of their companies. Thus they are more likely to
want followers to share their personal values, commit to and be inspired by those
values, and eventually work hard to fulfill those values. On the other hand,
professional managers are often only agents, whose personal interests are not always
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consistent with that of the organizations’. Therefore, they are less likely to be as
devoted to the company as the founders (Schein, 1983).
Secondly, comparing to founder CEOs, professional managers lack trust from
followers. According to agency theory (e.g., Fama, 1980; Eisenhardt, 1989), the
property right owned by a principal is an important basis for people to trust the owner.
Being agents, professional managers lack such a basis for being trusted. They are not
only monitored by their principals, but also by their followers. Regardless how hard
they work, until they establish their credibility, professional managers are generally
viewed as less committed to the organization, more concerned with short-term goals
and with their own embedded interests (Kouzes & Posner, 1993). As a result, they
usually have a more difficult time convincing their followers of their true motives,
and worse still, their intentions are often misinterpreted.
The reasons may appear stronger in China. Until the economic reform that
started in 1978, almost all companies were state-owned in the planning system. The
economic reform made it possible for individuals to establish their own businesses
(Lau & Busenitz, 2001). In 1990s, many people, which had been working for
state-owned firms, quitted their jobs to chase their dreams in life and worked for some
explicit purposes, therefore, they have strong incentives to deliver their values to their
followers and arouse their enthusiasm (Chang & MacMillan, 1991). On the other hand,
because an equitable compensation system is yet to be established in China, the pay of
professional managers is relative low and does not often reflect their contributions to
the company. Therefore, professional managers in China may lack strong motivation
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to put forth their maximum efforts. And even if they try to instill their values into the
followers, followers are more critical about the ways they use and are likely to
discredit them.
Based on the main effects suggested by H1a, H2a, and H3a and the arguments
on the influence of CEO identity, we further generate the following set of hypotheses:
Hypothesis 1b: Comparing to professional managers, founders using authoritarian approach to deliver personal values are more likely to achieve follower compliance. That is, the relationship between authoritarian value-delivering behaviors and followers’ compliance in founder group is likely to be stronger than that in professional manager group. Hypothesis 2b: Comparing to professional managers, founders using policy-driven approach to deliver personal values are more likely to achieve follower identification. That is, the relationship between policy-driven value-delivering behaviors and followers’ identification in founder group is likely to be stronger than that in professional manager group. Hypothesis 3b: Comparing to professional managers, founders using inspirational approach to deliver personal values are more likely to achieve follower identification as well as internalization. That is, the relationship between inspirational value-delivering behaviors and followers’ identification/internalization in founder group is likely to be stronger than that in professional manager group.
METHOD
Data collection
Participants were 451 employees from 28 companies located in 12 cities
including Beijing, Shanghai, Guangzhou, and Chengdu, which are dispersed in China.
All responses were collected from the employees via two waves of on-line
questionnaire survey1 over a six-week period, which was designed to minimize the
effect of the common method bias. The first questionnaire included items on
1 Researchers who have compared on-line and traditional mail respondents have concluded that there no significant responses biases between these two methods (refer to: Mehta & Sivada, 1995; Tse, 1998).
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leadership behaviors, and company and individual information. The second
questionnaire included questions on the CEO’s identity (whether he/she is a founder
or not), the leader’s traits (credibility) and self-reported commitment. Company code
(assigned by the researchers) and individual birthday were used to match the
respondents from the two surveys.
At the very beginning of the project, an invitation letter was sent to each of 89
CEOs who had attended executive training programs at a business school in North
China. Thirty one of them explicitly declined our invitation. We then sent emails to
the rest of the CEOs, asking for their support for the study. Those CEOs were required
to ask their employees to help complete the first questionnaire within two weeks. In
the text of the email, the organization code was assigned and the hyperlink directing
to the on-line questionnaire was provided.
Three weeks later, we closed the access to the questionnaire and got 761
responses from 31 companies and then the second email was sent to the CEOs of the
31 companies, asking them to continue encouraging their employees to complete the
second questionnaire within three weeks. We closed the second survey at the
designated time and got 480 responses from 28 of the 31 companies. Matching the
two waves of survey data, 451 responses were available for our hypotheses testing,
with 4 to 40 from each of the 28 companies.
The majority of the CEOs are male (25; 89% of the total of 28), and most have
over three years of business administration experiences. The average age of the firms
is about seven years and twelve of them have more than 100 employees. Detailed
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information on the sample demographics is provided in Table 1.
________________________
Insert Table 1 about here. ________________________
Measures
Value-delivering behaviors. We used leadership behaviors to capture the
approaches leaders employ to deliver their personal values. Scales measuring
value-delivering behaviors were developed by the authors in reference to works by
Strange and Mumford (2002), Yukl and Falbe (1990), and House et al.’s (1999). For
example, six items indicating inspirational approach were developed based on one of
the subscales included in the Global Leadership and Organizational Behavior
Effectiveness (GLOBE) project survey instrument. A sample item reads: “The CEO is
highly involved and enthusiastic when talking about his values/beliefs.”
Originally, each dimension of the value-delivering way contained six items. To
refine the instrument, we used the data collected from the 310 respondents2 who
responded the first but not the second survey to conduct exploratory factor analyses
(EFA). Principal component analysis with varimax rotation was used to obtain the
factor structure among the 18 items. Eventually, four items were maintained for each
dimension and the refined EFA results are shown in Table 2.
________________________
Insert Table 2 about here. ________________________
Follower commitment. Follower commitment was measured by nine items
2 The data from those respondents was not used to test hypotheses.
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adopted from O’Reilly and Chatman (1986) and Becker (1992) with a few
modifications to fit the purposes of this study. Three items are used to measure each
dimension of commitment: compliance, identification, or internalization. The original
English protocol and the back translation were compared and modifications were
made to resolve discrepancies and ensure accuracy of meaning (Brislin, 1970).
All the scales were measured on a six-point Likert-scale. Their means, standard
deviation, inter-correlations and reliabilities are provided in Table 3. The Conbrach’s
α shown in the table are all over 0.7, demonstrating acceptable internal consistency of
the items in each scale.
________________________
Insert Table 3 about here. ________________________
DATA ANALYSES AND RESULTS
LISREL was used to test our hypotheses. The technique is ideal for the purpose
for two reasons: first, our conceptual framework involves multiple inter-correlated
independent variables (IVs) and dependent variables (DVs); secondly, the program
allows for simultaneously estimating path coefficients of multiple groups (samples)
and comparing the path coefficients across the groups (Jǒreskog & Sǒrbom, 1993).
Unlike conventional methods such as multiple regression, in which we need to control
some predictor variables to generate unique variance due to the IVs, in LISREL, we
do not need to introduce control variables since the technique is to reproduce the real
(observed) relationships among the target IVs and DVs according to the parsimonious
structural model.
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One primary purpose of our study is to compare founders and professional
managers, the multi-group structural equation modeling makes it possible for us to
examine the overall construct validity and to further test our hypotheses between the
two groups of leaders. Specifically, we first examined configural invariance and
factorial invariance to guarantee measurement equivalence across groups (Mullen,
1995; Myers, Calantone, Page & Taylor, 2000). Then, based on an acceptable
factorial invariance model, we investigated the structural (path) parameters to
compare the two groups of leaders.
Construct validity and measurement equivalence
Configural invariance was examined by running the 6-factor (3 IVs and 3 DVs)
CFA model (Model 0) separately for the founder and professional manager group to
see whether they shared the same conceptual framework ( )2()1(formform Λ=Λ ). We
evaluated the fit indices of the two separate models and the results suggested
reasonable configural invariance of latent constructs (χ2174=272.55, RMSEA=0.06,
TLI=0.94, CFI=0.95 for Model 0Founder, and χ2174=278.89, RMSEA=0.05, TLI=0.95,
CFI=0.96 for Model 0Pro-manager). The fit indices and estimated factor loadings of the
models also demonstrated acceptable convergent and discriminant validity for the
constructs in our study. Given the acceptable configural invariance, we developed a
baseline model (Model 1) for investigating factorial invariance, in which the two
groups were stacked and no constraints were imposed across groups.
By constraining all the 21 factor loadings to be equal across two groups,
factorial invariance was examined by comparing Model 2 against Model 1. The
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chi-square difference was investigated and there was no significant difference (∆χ215 =
23.08, p > .05) between the two models, suggesting reasonable measurement
equivalence across the two groups (see Table 4 for detail).
________________________
Insert Table 4 about here. ________________________
Hypotheses testing
Having obtained acceptable CFA results, we constructed a structural model,
Model 3 (see Figure 1), to estimate the paths from IVs and DVs for both groups. In
this model, we didn’t constrain any path coefficient to be the same across the two
groups. Path coefficients and their significance levels are provided in Figure 1, with
“F” indicating the coefficients estimated from founder group and “M” indicating the
coefficients estimated from professional manager group (see Figure 1 for detail).
________________________
Insert Figure 1 about here. _________________________
After obtaining the independent path coefficient from each group, we then
constrained all pairs of path coefficient to be equal across groups and obtained the
“overall” effects3 of the IVs on the DVs, which are indicated by the letter “O” in
Figure 1. The coefficients designated by letter “O” can be interpreted as the main
effects hypothesized in H1a, H2a, and H3a.
Results
H1a suggests CEOs using authoritarian approach will result in followers’
3 To test the main effects, another way is to run a structural model in which two subgroups are mixed. We also did in that way and got reasonably consistent results as reported in this paper.
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compliance without identification and internalization. The LISREL results indicate
that H1a is partially supported: the authoritarian approach relates to compliance (β
= .18, p < .05) without identification (β = -.15, n.s.), and additionally, the approach
negatively relates to internalization (β = -0.19, p < .05). H2a suggests CEOs using
policy-driven approach can achieve followers’ identification but not internalization
and it is partially supported. Results show that CEOs using policy-oriented approach
can not only achieve significant improvement in identification (β = .25, p < .05), but
also in internalization (β = .19, p < .05). H3a is supported because the inspirational
approach significantly relates to both internalization (β = .25, p < .05) and
identification (β = .23, p < .05).
Constraining a specific path to be equal across the two groups, we examined
the difference between the founder group and the professional manager group on the
particular path between the IV and the DV. For example, Model 4 was acquired by
constraining the path from inspirational approach to internalization to be the same
across the two groups. Results from model comparison indicate a worse fit from
Model 2 (the factorial invariance model) to Model 4 (∆χ27 = 17.49, p < .05), thus
demonstrating a significant difference between founder group and professional
manager group on the relationship between leader’s inspirational approach and
follower internalization. Incorporating the path coefficients independently estimated
from Model 3 (βFounder = .39, p < .05; and βPro-manager = .14, n.s.), we know founders
using inspirational approach are more likely to achieve followers’ internalization than
professional managers.
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Model 5 ~ Model 12 shown in Table 4were obtained through the same
technique as used in Model 4, i.e., by constraining a particular path coefficient to be
equal across the two groups. Results show that, of those paths from IVs to DVs, two
are significantly different between the founder group and the professional group. One
of them is the path from inspirational approach to follower identification (∆χ27 =
15.31, p < .05); the other is from policy-oriented approach to follower compliance
(∆χ27 = 17.37, p < .05). That means when exercising inspirational approach, leaders
who are founders are more likely to achieve follower identification than their
counterparts who are not founders. The same is true with the effect of policy-oriented
approach on follower compliance.
Statistically, the above results provide support for H3b, but not for H1b and
H2b. However, the patterns revealed are generally consistent with what are
hypothesized. One interesting is that when leaders use the authoritarian approach,
those who are founders are able to achieve compliance (β = .27, p < .05), but not
identification (β = -.13, n.s.) or internalization (β = -.15, n.s.); however, those who are
professional managers, using the same approach, cannot achieve compliance (β = .12,
n.s.), and what’s more their behaviors will significantly decrease follower
identification (β = -.22, p < .05) and internalization (β = -.26, p < .05). The results
show that the pattern for the relationship between value-delivering behaviors and
follower commitment are different for founders and professional managers. Even
when the same type of leadership behaviors is used, it is harder for professional
managers to make followers’ values align with the values of their own, thus harder for
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them to achieve high level(s) of commitment.
DISCUSSION AND CONCLUSION
Discussion and implications
This study identified three distinct approaches which are believed to be typical
ways Chinese CEOs use to deliver their personal values to followers. Accordingly, we
operationalized three types of follower commitment, compliance, identification and
internalization, as the outcomes of the value delivery process to represent the different
extent to which followers share the values of the leaders. The inquiry not only offers
theoretical links between value-delivering leadership behaviors and follower
commitment, but also provides practitioners with some unique managerial
implications.
Specifically, our results show that different value-delivering approach will
result in different levels of follower commitment. Authoritarian approach can only
result in followers’ compliance, whereas inspirational approach relates to high levels
of follower commitment, identification and internalization. Policy-oriented approach
may also relate to identification and internalization but the relationships seem not as
strong as those with the inspirational way. In order to obtain value congruence from
their followers, generally speaking, CEOs should use inspirational way as much as
they can.
However, the above suggestions may not be so “correct” if we take a closer
look at the difference between founder CEOs and professional managers. For founder
CEOs, the more inspirational behaviors they conduct to instill their personal values,
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the higher levels of commitment (identification and internalization) they can get from
the followers. But for professional managers, when they employ the same
individualistic approach to deliver their personal values, their followers may not buy
in. In other words, unless they have established a high level of credibility,
inspirational approach may not be the most effective way for professional managers to
deliver their values because of the inherited distrust followers generally have in them
as we previously addressed. Furthermore, professional managers should definitely
avoid using authoritarian approach, which is found to significantly decrease
followers’ identification as well as internalization. In contrast, founder leaders using
the authoritarian approach can at least achieve compliance, which may not necessarily
be dis-functional in Chinese organizations (Westwood, 1997).
In fact in our second survey instrument, we included four items measuring
CEO credibility (adopted from Rubin, Palmgreen, & Sypher (1994) scale; Cronbach α
= .88 in our study), which is designed to “check” one of our basic assumptions:
comparing to founder CEOs, professional managers are usually perceived to be less
credible. ANOVA test was performed and results showed that there was significant
difference between founder leaders and non-founder leaders in terms of perceived
credibility by followers (MFounder = 4.80, SD = .92; MPro-manager = 4.58, SD = .85; F(1,444)
= 6.12, p < .05). The results supported our arguments, however, instead of perceived
CEO credibility, we used CEO identity as a moderator in our framework for two
reasons. First, we believe that compared to perceived CEO credibility by followers,
CEO identity may bear a lot more interesting/potential moderating effect on related
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variables such as CEO’s motivation, CEO job involvement, and CEO compensation,
which should be different between founder CEOs and professional managers. Since
we have got some interesting findings, we hope our study will invoke more research
on the specific effects of those potential factors.
Secondly, the comparison between founders and professional managers can
provide unique and explicit implications for business leaders. For professional
managers, they need to be fully aware of the perceptions people carry and need to
work very hard to build up their credibility to win the trust from followers. And
because of the inherited distrust people have in them, professional managers should
rely more on the system or structure (institution-oriented) and avoid being too
personal (individual-oriented) when delivering values. Unless they have a very high
level of credibility, using inspirational way may make them look as if they are acting
or preaching. On the other hand, for those who are founder leaders, they should
capitalize the trust followers have in them and clarify their own values and seek value
congruence by taking more inspirational approach.
Limitation and suggestions for future research
In this study, we examined the value delivery process using follower reported
data. The sample size (451 in total, 192 followers under founder leaders and 259
followers under professional managers) seems reasonably sufficient for our
hypotheses testing. However, at the organizational level, our sample includes only 15
founder leaders and 13 professional managers. Also because we used a convenience
sample in which the CEOs are former students of executive programs, the results
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generated from the sample may be limited. To investigate the difference between
founder leaders and professional managers, future studies should extend sample sizes,
specifically, the number of CEOs.
As we can see from the sample, the size of the firms led by founders is
generally smaller than those led by professional managers. Although no study has
been conducted to directly examine the effects of firm size on value-delivering
process, it can be believed that a leader in a small company will be much easier to
“socialize” follower to make their values align with that of his/her own. Considering
the statistical power of using LISREL to analyze data, we didn’t include firm size in
our study, thus the threats from “small-size effects” still exist. Special attention should
be paid to the issue in future research in the area.
Conclusion
In the emerging economy of China, more and more businesses are led by
people “jumping into the sea” (Asiaweek, 1993; xiahai, one of the most popular
phrases in China in the 90’s, which describes people who quit job to start their own
businesses after the China “opened its doors to the West” and started its economic
reform). Although most of these companies are relatively small in size and product
capacity, together, they are playing an increasingly important role in the rapid growth
of Chinese economy (Chow & Tsang, 1994). The situation calls for great research
efforts to study managerial practices in those small and private firms in China. We
believe our attempt in this study will be the beginning of a stream of potential
research.
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Figure 1: Model and path coefficients
Note: F—Founder group M—Professional manager group O—Overall * p < .05
Inspirational approach
Policy-oriented approach
Authoritarian approach
Identification Compliance Internalization
F: 0.04 M: 0.18 O: 0.12
F: 0.44* M: 0.11 O: 0.23*
F: 0.27* M: 0.12 O: 0.18*
F: -0.13 M: -0.22* O: -0.15
F: 0.29* M: 0.25* O: 0.25*
F: 0.21 M: -0.18 O: -0.05
F: 0.18 M: 0.23* O: 0.19*
F: -0.15 M: -0.26* O: -0.19*
F: 0.39* M: 0.14 O: 0.25*
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Table 1: Demographics of the sample
Followers N=451
Leaders N=28
Firms N=28
Mean 35.0 (7.9)a Maximum 65 Age Minimum 20 Mean 5.3 (3.9) Maximum 27.0 Tenure/years Minimum .2 Male 65.4% 89.2% Sex Female 34.6% 10.8%
Firm Age 12.5 (11.3) less than 20 1 21 ~ 50 8 51 ~ 100 7 101 ~ 500 10
Firm size
501 and above 2 Founder 15 CEO identity Professional manager 13 Manufacturing 15 Trade & service 9 Industry Others 4
a The values in parentheses are SD.
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Table 2: EFA results (N=310) Scales & Items Fact
1 Fact
2 Fact
3 Authoritarian approach 1. Forces his values and opinions on those around him .86 .04 .04 2. Leave little room for autonomy since he wants things carried out
in accordance to his values/beliefs .82 .03 .04
3. Does not tolerate those whose values/beliefs are not consistent with his
.81 .02 .07
4. Disregard the needs of others in order to achieve the goals based on his own values/beliefs
.73 .03 -.02
Policy-oriented approach 1. Makes influence by making polite, formal, and clear requests .04 .84 .11 2. Behaves according to norms and procedures that are established
according to his values/beliefs .05 .84 .13
3. Backs up the orders with justification based on his values/beliefs .07 .67 .32 4. Will punish people only if they do not adhere to the key principles .03 .60 .11 Inspirational approach 1. Encourages us to devote ourselves to the vision and perform
exciting efforts .01 .16 .93
2. Is confident about his own values/beliefs, and develops them into a vision specifying a better future
.15 .28 .55
3. Is highly involved and enthusiastic when talking about his values/beliefs
-.03 .07 .54
4. Is willing to make personal sacrifices in the interest of his beliefs/values
.03 .35 .37
Percentage of total variance explained
22.3
20.3
14.6
Extraction Method: Maximum Likelihood. Rotation Method: Varimax with Kaiser Normalization.
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Table 3: Means, Standard deviation, correlations and reliabilities of IVs and DVs
(N=451) mean SD 1 2 3 4 5 6
Inspirational behaviors 4.17 .84 (.77)a
Policy-oriented behaviors 4.39 .77 .49** (.85)
Authoritarian behaviors 2.80 .90 .09* .06 (.76)
Internalization 3.32 1.00 .28** .26** -.05 (.82)
Identification 4.49 .99 .29** .35** -.01 .26** (.91)
Compliance 4.50 .96 .13** .06 .19** .06 .10* (.82) a The values in parentheses are Cronbach’s α. * p < .05 ** p < .01
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Table 4: Results of testing construct validity and hypotheses
Model χ2 Df RMSEA TLI CFI GFI ∆χ2 ∆df
Separate CFA model Model 0Founder
a Model 0Pro-manager
b
272.55 278.89
174 174
0.06 0.05
0.94 0.95
0.95 0.96
0.88 0.91
Model 1 (Unconstrained model)
550.33 348 0.05 0.94 0.95 0.91
Model 2 (Factorial invariance)
571.17 363 0.05 0.95 0.95 0.90 20.84 15
Model 3 (Path analysis)
583.57 369 0.05 0.94 0.95 0.90 12.40 6
Model 4(inspir internc) Model 5(inspire ident) Model 6(inspire comp) Model 7(policy intern) Model 8(policy ident) Model 9(policy comp) Model 10(auth intern) Model 11 (auth ident) Model 12 (auth comp)
588.66 586.46 584.19 583.64 583.67 588.54 583.77 583.92 584.00
370 370 370 370 370 370 370 370 370
0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
0.94 0.94 0.94 0.94 0.94 0.94 0.94 0.94 0.94
0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95
0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90
17.49* 15.31* 13.02 12.47 12.50 17.37* 12.60 12.75 12.83
7 7 7 7 7 7 7 7 7
a Founder group: N=192 b Professional manager group: N=259 c The path being constrained to be equal across groups * p < .05