Balancing transactional and transformational leadership...Transactional leaders generally favour...

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See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/317201648 Balancing transactional and transformational leadership Article in International Journal of Organizational Analysis · July 2017 DOI: 10.1108/IJOA-02-2016-0978 CITATIONS 6 READS 313 3 authors, including: Sasa Baskarada University of South Australia 42 PUBLICATIONS 202 CITATIONS SEE PROFILE All content following this page was uploaded by Sasa Baskarada on 06 January 2018. The user has requested enhancement of the downloaded file.

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Page 1: Balancing transactional and transformational leadership...Transactional leaders generally favour closed cultures, mechanistic structures and formal systems and procedures ( Vera and

See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/317201648

Balancing transactional and transformational leadership

Article  in  International Journal of Organizational Analysis · July 2017

DOI: 10.1108/IJOA-02-2016-0978

CITATIONS

6READS

313

3 authors, including:

Sasa Baskarada

University of South Australia

42 PUBLICATIONS   202 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Sasa Baskarada on 06 January 2018.

The user has requested enhancement of the downloaded file.

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Balancing transactional andtransformational leadership

Saša BaškaradaDefence Science and Technology Group, Melbourne, Australia, and

Jamie Watson and Jason CromartyDefence Science and Technology Group, Canberra, Australia

AbstractPurpose – This paper aims to explore how situational variables jointly affect the choice of leadership style.Design/methodology/approach – This qualitative study is based on semi-structured interviewsconducted with 11 senior leaders in the Australian Defence, including with the Chief of Defence Force.Findings – The paper identifies four organizational factors (human capital, performance, time orientationand risk appetite) and two environmental factors (risk and stability) that are considered to have an effect onleader’s choice of transactional versus transformational styles. Furthermore, organizational human capitaland leader’s training and experience are identified as prerequisites of leadership ambidexterity.Originality/value – The findings explain how the choice of leadership style is contingent on internal andexternal factors, identifies several new contributing factors and explains how such factors may jointly affectthe choice of leadership style.

Keywords Transformational leadership, Ambidexterity, Transactional leadership, Exploration,Exploitation

Paper type Research paper

IntroductionIn contrast to transactional leadership, which focuses on leader–follower exchanges,contingent rewards and management by exception, transformational leadership emphasizesinspiration, intellectual stimulation and motivation of followers (Von Krogh et al., 2012; Bass,1999). Although one of the most popular contemporary leadership styles, transformationalleadership has been presented as both a universal as well as a contingency theory (Andersen,2015). In other words, some scholars maintain that transformational leadership is alwayssuperior to transactional leadership (Bass, 1985; Burns, 1978; Birasnav, 2014), while othersargue that different leadership styles may be required under different circumstances (Yukl,2012). This is obviously problematic as a theory cannot be universal and contingent. The factthat transformational leadership has received approximately five times more scholarlyattention than transactional leadership (Dinh et al., 2014) lends support to the view that manyscholars view transformational leadership as a universal theory. Nevertheless, there havebeen calls for more research on “how the situational variables that define common situationsfor leaders jointly determine which behaviors are most relevant” (Yukl, 2012, p. 77). Thispaper contributes to answering such calls by addressing the following broad researchquestion:

RQ1. How do internal and external situational variables jointly affect the choice oftransactional versus transformational leadership style?

© Commonwealth of Australia.

The current issue and full text archive of this journal is available on Emerald Insight at:www.emeraldinsight.com/1934-8835.htm

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Received 16 February 2016Revised 17 March 201629 November 201618 December 2016Accepted 24 December 2016

International Journal ofOrganizational AnalysisVol. 25 No. 3, 2017pp. 506-515Emerald Publishing Limited1934-8835DOI 10.1108/IJOA-02-2016-0978

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Transactional, transformational and ambidextrous leadership stylesA wide range of internal and external contingency factors may affect the choice of leadershipstyle (Brandt et al., 2016). This includes the external environment, organizationalperformance and organizational maturity (Osborn et al., 2002; Jansen et al., 2009; Waldmanet al., 2001; Vera and Crossan, 2004; Jansen et al., 2006; March and Simon, 1953). Specifically,transformational leadership has been linked to a dynamic external environment,unsatisfactory organizational performance and times of revolutionary change, whiletransactional leadership has been associated with stable and predictable environments,acceptable organizational performance and established organizations. In other words,transactional leadership is useful for institutionalizing, reinforcing and refining existingknowledge, whereas transformational leadership is useful for challenging the existing stateof affairs (Jansen et al., 2009).

Transactional leaders generally favour closed cultures, mechanistic structures andformal systems and procedures (Vera and Crossan, 2004; Shrivastava, 1983).Transformational leaders, on the other hand, generally favour open cultures, organicstructures, adaptable systems and flexible procedures. Accordingly, they seek to encouragecreativity, change, experimentation and risk-taking (Berson et al., 2006; Mittal and Dhar,2015). Although transformational and transactional leadership styles have been associatedwith exploratory (discontinuous) and exploitative (incremental) innovation, respectively, anumber of studies have argued that the association between transformational leadership anddiscontinuous innovation may be more complex (Keller, 1992; Jaussi and Dionne, 2003; Junget al., 2003; Elenkov et al., 2005; Rosing et al., 2011).

Organizations need to be able to simultaneously focus on the efficient management ofimmediate business demands well as on future opportunities and challenges (Baškaradaet al., 2016b, 2016a). Accordingly, organizational ambidexterity (O’Reilly and Tushman,2004), the ability to maintain an appropriate balance between incremental innovation(exploitation) and discontinuous innovation (exploration), is critical to organizationalenduring success (March, 1991; Tushman and Reilly, 1996; Yukl, 2009; Jansen et al., 2008).This is the case as too much innovation may produce a surplus of experimental technologies,whereas excessive refinement may lead to a competency trap, where existing technologiesand business models may become irrelevant over time (Levitt and March, 1988). Achievingand maintaining appropriate balance can be challenging as exploration and exploitationcompete for limited organizational resources (March and Simon, 1953). They also stand in arelative tension since immediate benefits may not lead to strategic advantages, and viceversa (March, 1991).

Ambidextrous leadership involves either concurrent focus on exploration as well asexploitation, or the ability to seamlessly switch between the two approaches (Rosing et al.,2011; Li et al., 2015; Torres et al., 2015). Thus, while ambidextrous leaders encourage theirfollowers to stretch objectives, they also enforce expectations and create an environmentwhere employees support and trust each other (Gibson and Birkinshaw, 2004; Zacher andRosing, 2015; Baškarada et al., 2016c).

MethodSimilar studies conducted in the past have largely been based on quantitative data collectedfrom subordinates (Yukl, 2009). Considering the complexity of the research problem, and toobtain richer insights pertaining to internal and external factors affecting the choice ofleadership styles, this study opted to collect qualitative data directly from 11 senior leadersin Australian Defence. Accordingly, semi-structured interviews were conducted with theChief of Defence Force, Chief Joint Operations, Deputy Chief Joint Operations, Chief Defence

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Scientist, Commander Border Protection Command, Commodore Warfare, Deputy Chief ofArmy, Director General Defence Learning Branch, Head Joint Capability Coordination,Director General Support and Commander 1st Division.

As this study adopts a qualitative rather than quantitative approach, there was norequirement to select a statistically representative sample (Baškarada, 2014). Instead,participants were selected based on their position (i.e. senior leaders from different parts ofthe organization), availability and willingness to participate in the study. Although a set ofpredefined questions based on Bass’s (1985, 1999) Multifactor Leadership Questionnaire wasused, the semi-structured approach allowed the researchers to modify questions as requiredand seek more information when a novel theme emerged. Subsequent to the interviews, allinterview notes were reviewed by the study participants for accuracy.

The constant comparative method of qualitative data analysis was used to identify keyfactors, themes and patterns (Glaser, 1965; Spradley, 1979). Qualitative data analysis, ingeneral, and the constant comparative method, in particular, aim to add structure tounstructured text. For instance, thematic analysis, where categories are grouped intooverarching themes, is one of the most frequently employed approaches to qualitative dataanalysis (Aronson, 1995). Such structure, which is introduced in stages, forms the basis ofany resulting frameworks, theories and explanations (LeCompte, 2000). The constantcomparative method was first outlined by Glaser (1965) in a seminal paper that highlightedthe importance of simultaneous coding and analysis. The method initially involves theidentification of as many categories of analysis as possible. According to Glaser, this datacategorization directly leads to the identification of theoretical properties relating tocategories. Such theoretical properties may include causes, conditions, consequences,dimensions, types and processes. Once identified, categories and their properties may thenbe integrated into a preliminary theory. While Glaser and Holton (2004) explain what needsto be compared, exactly how this is to be done remains relatively ambiguous. Whencomparing coded items, other scholars have suggested looking for equivalence, similarityand difference (LeCompte, 2000). To ensure a level of face-validity, the outcomes of theanalysis were reviewed by all several subject matter experts as well as the studyparticipants.

Results and discussionFactors affecting the choice of leadership styleThe qualitative analysis identified four organizational factors (human capital, performance,time orientation and risk appetite) and two environmental factors (risk and stability) that areconsidered to have an effect on leader’s choice of transactional versus transformationalbehaviors (Figure 1).

It was found that transactional leadership is positively associated with short-term timeorientation. For instance, operational military decisions/actions that are time-sensitive (i.e.have to be made relatively quickly) are more likely to be based on lessons learned in the past(i.e. tried and tested approaches). An interviewee identified that he has a preference fortransformational leadership, but his ability to use that approach depends upon the timeavailable and the sensitivity of the issue at hand. The sheer magnitude of sensitivitiesassociated with operational issues limits the degree of exploration and consultation that hecan at times undertake. On the other hand, if there is little or no previous experience (e.g. dueto a changing environment), and time is not of the essence, then transformational leadershipis considered more appropriate.

Although previous research argued that transactional leadership is associated with astable environment and transformational leadership with unstable and/or uncertain

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environments (Jansen et al., 2009; Osborn et al., 2002; Jansen et al., 2006), this study suggeststhat any environmental effects on leadership style are further mediated by external risks andorganizational (internal) risk appetite. For instance, military operations take place in highlydynamic environments, yet, due to a relatively low-risk appetite (as human lives are at stake)they may be dominated by transactional leadership approaches. In other words,transactional leadership is essential for risk mitigation and safety. An interviewee identifiedthat in situations that are normally associated with high-risk and/or high-impact events,wherein tactical and operational actions have the potential for significant strategic outcomes,he must occasionally provide very specific and direct guidance on the use of assets to avoidany potential complications that a transformational approach might introduce. Accordingly,transactional leadership is also positively associated with a low-risk appetite, which is inturn positively associated with a relatively satisfactory organizational performance.Conversely, unsatisfactory organizational performance may lead to an increase in the riskappetite.

Transactional leadership is also positively correlated with another organizational factor:a relative scarcity in human capital. An interviewee observed that, due to the current staffinglevels, there is a lack of people and experience across various functions, some of whichpreviously had deep experience and specialist staff. Consequently, senior leaders cansometimes get too heavily involved in the work and decisions of junior leaders. In contrast,another interviewee noted that repeat postings of persons into his organization has led togreater depth of understanding (i.e. increased human capital), which, in turn, has facilitatedtransformational approaches to leadership.

An interviewee identified the “burning platform” (immediate and radical change due todire circumstances) as a key driver for transformation. The interviewee suggested therealization that the size, shape and direction of an organization will result in it “going over thecliff” in five or 10 years (long-term time orientation) is a strong motivation fortransformational leadership. In such circumstances one simply cannot continue to do things

Environmental Factors

Organiza�onal Factors

Leadership Style

Transac�onal

Transforma�onal

Time Orienta�on

Risk Appe�te

Human Capital

Stability Risk

Performance

Figure 1.Factors affecting thechoice of leadership

style

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the way they have been done in the past as, due to radical changes in the environment,potentially unsatisfactory organizational performance may eventuate. The emergence ofexternal pressures and motivations for change increases organizational risk appetite andhelps to build a culture where people expect and want to be transformational. Conversely,transformation is more difficult to accomplish in good times when resources abound. Assuch, transformation is not generally associated with the “up cycle”, but instead “it is onlywhen dark clouds come that you really start to think transformationally”.

Another interviewee exemplified the effect of changing environmental conditions on therequirement for transformational leadership by noting that he had the opportunity toundertake the same role at two different stages of his career. Although he thought that doingthe job the second-time around meant that he would know what to do and how to do it andwhat would be successful and what would not work, given the changed context, this was notthe case.

Similarly, changing environmental conditions (Government and operational pressures)have caused Australian Defence to be a more joint and diversified organization today than itwas in the past. For instance, the Government has requested Defence to be more transparent,accountable and efficient, leading to closer working relationships with other departments.Likewise, operations have caused Navy, Army, Air Force and other departments to worktogether. The resulting conditions have engendered transformational approaches. Anotherinterviewee also acknowledged that the joint, coalition and multiagency environment withinwhich Defence is now working requires transformational leadership.

In reflecting upon when transformational leadership might not work well, an intervieweesuggested that having a clear outcome in mind is necessary. In times when the outcome isless clear, or resources or relationships do not exist, transformational approaches are lesssuccessful.

Ambidextrous leadershipAs noted previously, ambidextrous leadership involves either concurrent focus onexploration as well as exploitation or the ability to seamlessly switch between the twoapproaches. Most of the interviewees agreed with the thesis that effective leadership requiresa balance between transactional and transformational approaches. One interviewee notedthat as the leader of his organization, he likes to operate more in the transformational space.Nevertheless, limits to transformation are imposed by resource constraints, as, whileattempting to develop alternative approaches, one still needs to keep “the transactionalmachine” in operation. In other words, any transformational approach is firmly bounded bycertain transactional expectations. Another interviewee cited the recent development androll out of his organization’s five year strategy as an example of transformational leadership.However, even when developing this strategy, and thinking about the future in the broadestsense, he was required to continue operating the business and was therefore required to betransactional on many other matters. As a general rule, he suggested he would split his focusapproximately 60-65-per cent transactional and 35-40-per cent transformational. Anotherinterviewee noted that he spends 80 per cent of his time in the transactional mode, and whilehe would very much like to move toward 40-per cent transformational, he would still need tomaintain 80-per cent transactional to meet the ongoing decision demands of his role and keepGovernment informed. Another interviewee noted that he usually spends 60 per cent of histime doing the business of the day and the remaining 40 per cent of the time exploring howto make things better. Nevertheless, he was quick to suggest that it is “never one or the other”and that effective leadership requires both approaches.

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A number of interviewees explained how they delegate transactional responsibilities torelevant deputies. For instance, an interviewee observed that, by design, he has focused hisefforts on transactional aspects, leveraging the strong emphasis of his superior ontransformational processes. As such, he ensures that while his superior remainstransformational, the transactional issues continue to be progressed. These two seniorleaders form a comprehensive team that exhibits leadership ambidexterity across twodifferent levels (Li, 2013). Another interviewee provided a similar example by noting that tocreate an environment for his deputy to be more transformational, he established aChief-of-Staff position within his organization to deal with much of the process and mundanecorporate governance responsibilities. Another interviewee agreed that, in awell-functioning headquarters, it will be the Deputy Commander or the Chief-of-Staff whowill oversee the transactional process, allowing the Commander to be more transformational.

Prerequisites. Ambidextrous leadership, by definition, requires competence in bothtransactional and transformational approaches. As such, appropriate training andexperience (personal factors) are prerequisites for ambidexterity and do not affect thebalance between transactional and transformational styles. Similarly, sufficient humancapital (organizational factor) is also a prerequisite for ambidexterity (Lee and Huang, 2012).In addition to being prerequisites, training, experience and human capital are also relativelystable compared with other factors, which affect the balance between transactional andtransformational leadership styles (Figure 2).

Many of the interviewees noted that their military training has prepared them well fortransactional leadership. However, a leader requires a broad experience-base to betransformational. Exploring the development of his approach to transformational

Risk

Urgency

Ambidexterity

Time Orienta�on2

Risk Appe�te2

Stability3

Risk3

Performance2

Prerequisites

Training1

Experience1

Human Capital2

Notes: 1Personal factor; 2organizational factor;3environmental factor

Figure 2.Factors affecting

leadershipambidexterity

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leadership, one of the interviewees noted that he received little training on the topic duringhis formal education, but that his learning on the subject has instead been experiential.Another interviewee agreed that the way leaders view things is shaped by their backgroundand life experience, and explained that his transformational approach to leadership has beenshaped by a mainstream career with command experience, operational deployments, staffroles, formal education and a number of opportunities to “step outside the organization”.

In addition to a varied career, early exposure to transformational leadership is also acritical prerequisite; if one does not get exposed to big leadership and strategic issues untillate in the career, one is more likely to view things as one dimensional. As such,transformational leadership should be part of a leader’s career development from earlystages. An interviewee noted that transformational approaches did not play a strong part inhis early career. It was only upon exposure to the commercial world, that his eyes wereopened to another way of doing business. Industry provided a “sink or swim” environmentwith great opportunities to be transformational. Another interviewee noted that although hehas always had a preference for transformational approaches, as a junior leader, he might nothave had the skills and experience to apply the transformational approaches that he is nowable to utilize as a senior leader. If a leader does not have that experience-base, then access topeople who do have it is very important. Another interviewee noted that “at 25 everythingwas black and white, but with maturity I have now accepted that ambiguity is certain”. As hematured and progressed through the organization, he became more transformational in hisapproach. He also suggested a potential linkage between emotional intelligence andleadership approaches. Another interviewee agreed by noting that his ability to see an issuefrom another person’s perspective has enabled him to have empathy for howtransformational leadership decisions might be received by those that work for him.

However, one of the interviewees suggested the choice of leadership style may bedependent on a leader’s personality; if a leader is predisposed to one type of leadership, he orshe may have to consciously work on the other. Another interviewee agreed that choosingbetween transformational and transactional approaches was not an active mindset, but “oneof those things” that after 30 years of experience in the job is “almost automatic”. It was alsosuggested that leaders are likely to interpret situations in relation to similar situationsexperienced in the past, and, as a result, may instinctively apply a transactional approachbefore considering anything transformational.

The moderating role of risk and urgency. Several of the interviewees explained that theybalance transactional and transformational leadership approaches by consciously thinkingthrough risk and urgency. For instance, as Defence undergoes reform processes, some of thedecisions are so large that potential mistakes will have long-lasting implications, andtherefore, being mindful of this is an encouragement to not rush in and do things under thetransactional paradigm. However, this can be a difficult issue to manage in the face ofGovernment and leadership pressures to provide information and demonstrate progress.

This argument is consistent with our earlier discussion, for the rationale for balancingbetween transactional and transformational leadership styles is dependent upon twoaggregate factors: risk (a function of environmental risk and organizational risk appetite)and urgency (a function of organizational performance, time orientation and environmentalstability). While transactional leadership is generally employed when the risk associatedwith making a poor decision is relatively high and transformational leadership when the riskis relatively low, these conditions are further mediated by the urgency factor. As such,unsatisfactory organizational performance, unstable environment or long-term timeorientation may require transformational leadership even when the risk associated withmaking poor decisions is relatively high. Assuming acceptable organizational performance,

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an interviewee noted that an overestimation of environmental risk is often correlated with atendency for transactional over transformational leadership.

ConclusionThis study explored how a number of organizational and environmental factors may jointlyaffect a leader’s choice of transactional and transformational behaviors. It was highlightedthat transformational approaches are firmly bounded by transactional expectations, andthat effective leadership requires a balance between the two leadership styles. The leader’straining and experience as well as sufficient organizational human capital were identified asprerequisites of leadership ambidexterity.

The paper makes several theoretical and practical contributions. Theoreticalcontributions include:

• providing support for the thesis that the choice of leadership style is contingent oninternal and external factors;

• identifying several new contributing factors; and• explaining how such factor may jointly affect the choice of leadership style.

From a practical perspective, the findings may be used by senior leadership developmentprofessionals to promote and facilitate leadership ambidexterity by ensuring that relevantprerequisites are addressed and that risk and urgency are adequately considered. Finally,simply raising senior leadership awareness of relevant factors may stimulate self-reflectionand facilitate identification and correction of any imbalances in leadership style.

Future work may investigate the extent to which this paper’s findings are transferable toother organizations as well as to lower echelons of leadership in Australian Defence. Forinstance, less senior leaders without significant ownership and control of resources andpolicy may not be able to facilitate organizational transformation to the same extent as moresenior leaders can. Future work may also explore a potential paradox that is implicit in thediscussion section, namely, that unsatisfactory organizational performance (and theresulting resource-constrained environment) is at the same time a driver for, as well as abarrier to, transformation.

Finally, while unsatisfactory organizational performance increases organizational riskappetite and helps to build a culture where people expect and want to be transformational,the resulting resource-constrained environment limits any transformative potential. This isbecause while attempting to develop alternative approaches, one still needs to keep “thetransactional machine” in operation.

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Corresponding authorSaša Baškarada can be contacted at: [email protected]

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