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Points of intersection between Transformational,
Entrepreneurial and Sustainable Leadership
models Author Name: Shambhavi Pandey
Affiliation: PHD Scholar at Symbiosis International University, Co- Founder Healted Technologies
Pvt. Ltd.
Postal Address: M 13, Kubera Bahar Society, Baner Pashan Link Road, Pashan, Pune – 411021
Abstract: Leadership has attracted a lot of attention for research and theory building since decades.
Scholars, academicians and practitioners, all find this field of study very interesting and relevant for both
study and practice. Historical data suggests that though numerous theories of leadership have been
propounded, the one which has been ruling the minds of practitioners and academicians alike is the
Transformational Leadership Theory. The term ‘transformational leadership’ was first used by James
Downton in 1973, which was later popularized by James McGregor Burns in 1978 (Diaz-Saenz, 2011).
There is ample empirical research about Transactional Leadership, Laizzez faire Leadership and recent
theories of Sustainable Leadership and Entrepreneurial Leadership and their effect on business performance.
Each of these leadership styles differ from each other in very minute terms, so it becomes imperative for a
researcher, in today’s dynamic market scenario, to study combination of leadership styles for maximum
organizational effectiveness. While some researches indicate that Transformational Leadership style has a
positive impact on entrepreneurial business performance, others believe that a combination of
Transformational and Transactional Leadership styles should be used to gain maximum effectiveness.
In today’s dynamic business and economic scenario it is imperative for businesses to be sustainable and
entrepreneurial (to be constantly innovative). While on one hand the focus of sustainable leadership is to
keep optimum balance between people, planet and profits; yet at the same time the startup business
ecosystem and the general economic climate globally warrants a leader to be entrepreneurial i.e. constantly
innovative. This gives rise to a relatively new style of leadership called – Entrepreneurial leadership, which
is practiced both in startups as well as established businesses working in entrepreneurial capacities. This
paper aims to understand the points of intersection between the three leadership styles viz: Sustainable
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IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 243
Leadership, Transformational Leadership and Entrepreneurial Leadership and to be able to suggest a
combination leadership style which could be tested further for maximum effectiveness.
Keywords: Sustainable Leadership, Entrepreneurial Leadership, Transformational Leadership,
Organizational Effectiveness, Business Performance
Review of Literature: Literature in the domain of Leadership suffers a major drawback of being
fragmented. This paper is a humble attempt to consolidate available literature on Transformational
Leadership, Sustainable Leadership and Entrepreneurial Leadership and draw out major points of
intersection, thereby suggesting a combination model of leadership for further application, testing and
research.
Transformational Leadership: Effectiveness of leadership is also dependent upon the follower’s
belief in the Leader’s capabilities and acumen, which is dependent on contextual, cultural and
situational factors in which the leader operates. Transformational leaders sell their vision by buying
in the value system of the followers. It has more of an emotional and psychological appeal rather
than winning followers by promising the end result of material gains. These leaders infuse passion
by leading by example – they show sincerity in both thought and action. Idealized influence
(behavior) can be defined as transformational leaders who display behaviors that enable them to be
role models for their followers. Idealized influence (attributed) defines the sense of loyalty,
admiration, trust, and respect that followers attribute to these leaders (Puffer and McCarthy 2008).
Inspirational motivation refers to the fact that transformational leaders set high expectations on
employees and employ imagery and signs to emphasize struggle and communicate the significance
of organizational goals (Hoffman et al. 2011). Transformational leadership is closely related to
desired outcomes for individuals (e.g., Casimir, Waldman, Bartran, & Yang, 2006; Judge & Piccolo,
2004; Liu, Siu, & Shi, 2010) and teams (e.g., Bass, Avolio, Jung, & Berson, 2003; Peus,
Kerschreiter, Frey, & Traut-Mattausch, 2010; Schaubroeck, Lam, & Cha, 2007; Schaubroeck, Lam,
& Peng, 2011).
Keeping Burn’s research as fundamental, Bass and Avolio (1997) proposed three major styles of
leadership viz: Transformational leadership, Transactional leadership and Laissez faire leadership.
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Accroding to Bass, Transformational leadership was a style in which the leader tried to bring in the
consciousness of right and wrong among the followers and motivated them to perform ‘beyond
expectations’. Bass and Avolio (1997) described the following four characteristics of
transformational leaders as a part of the MLQ (Multi Factor Leadership Questionnaire):
a) Idealised Influence: When the leader is leading by example, being a role model for the
followers, trying to persuade them to nurture shared goals and a strong sense of purpose.
b) Inspirational Motivation: When the leader describes the desired end state in simplistic
terms, gets the followers buy in, motivates them to achieve more than expected and gives
work which is both meaningful and challenging for the followers.
c) Intellectual Stimulation: This refers to those traits of leaders which challenge and
encourage the intellectual capacities of their followers for constructive problem solving.
d) Individualized Consideration: This refers to those leaders who spend quality time
coaching and mentoring their followers for superior performance and personality
development.
They described Transactional Leaders as people characterized by the following three characteristics,
based on contingent reinforcement:
a) Contingent Reward: Here the leaders give rewards to the followers for good performance
and consequently punish or discipline them with strict action or threats for poor
performance.
b) Management by Exception: Here the leader intervenes only when the set standards of
performance are not met or to point out a mistake.
The third leadership style as described by Avolio and Bass was Laissez Faire or non-leadership where
leaders avoid clarifying expectations, addressing conflicts, and making decisions. Thus,
Transformational Leadership, in particular, brings about a positive change in organizations and
individuals alike for the larger good of the society. Bass, also suggested, based on the work of Burns,
that Transformational and Transactional Leadership can co-exist at any given point of time and this
particularly depends on the followers need and ability to develop a shared vision with the leader.
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Sustainable Leadership: In today’s economically volatile world of innovation and invention, it is
becoming increasingly important to weave the three pillars of sustainability viz: People, Profits and
Planet into the business fabric. This is slightly broader in scope as compared to the previous business
philosophies centered on major stakeholders within the firm, clients or shareholders. Now
sustainability demands taking care of a variety of stakeholders including taking care of the needs of
the lesser privileged population residing in and around the company’s operation, the government, the
environment, employees, shareholders, other businesses and enterprises directly or indirectly
dependent on the firm and the society at large. Keeping the above in mind a new style of leadership
– Sustainable Leadership has come into being which maximizes shareholder value, profits and firm
performance with a sustainable mindset in the long term. The three principles that ground
sustainable development are environmental integrity, economic prosperity, and social equity
(Bansal, 2005; Brundtland, 1987). Because each of these principles individually represents a
necessary, but insufficient condition, it means that if any one of them is not supported, then
economic development will not be sustainable. Keeping the above context in mind sustainable
leaders are defined as people having the mindset to build sustainable business solutions keeping in
mind the interests of a variety of stakeholders directly or indirectly related to the business or the
geography of business operation. There have been numerous studies which indicate that sustainable
leaders have a systems thinking, long term vision and the ability to motivate and mobilize resources
for profitability in the long term and not for short term gains. There is growing social pressure on
companies to consider “people, planet and profit” and to respond to the concerns of multiple
stakeholders, both inside and outside the business (Galpin et al., 2012). Organizations, therefore, are
in desperate need of sustainable leaders who can balance short-term and long-term priorities and
create value for a variety of stakeholders.
Avery and Bergsteiner (2010) identified 23 sustainable leadership practices/ principles which they
feel if any corporation, whether in the developing or developed market, adopted, could grow and
flourish under any economic circumstances in the long term. (Appendix A) Hargreaves and Fink
(2004) specified the Seven Principles of Sustainable Leadership and provided examples using an
education system. The seven principles of sustainable leadership are: Depth (matters), Length (lasts),
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Breadth (spreads), Justice (does no harm to and actively improves the surrounding environment),
Diversity (promotes cohesive diversity), Resourcefulness (develops and does not deplete material
and human resources), and Conservation (learns from the best of the past to create an even better
future) (Hargreaves and Fink, 2012). However, the sustainability pyramid given by Avery and
Bergsteiner is by far the most comprehensive model of sustainable leadership available in
contemporary literature. Their leadership philosophy is diametrically opposed to the short term
Anglo-US shareholder first philosophy. Avery first identified 19 leadership competencies which she
called the Rhineland or Queenbee style. She also tested them on a sample of 14 organizations which
were already working on these principles to some degree from other parts of the world like: USA,
UK, Australia, Europe, Scandinavia, South Africa and Thailand. She concluded that these principles
of sustainable leadership helped organizations thrive in diverse cultures, locations and market forces
in the long run. Then she along with Bergsteiner expanded the list to 23 essential competencies and
divided them into four blocks namely: Foundation Practices, Higher Level Practices, Key
Performance Drivers and Performance Outcomes. The fourth block or the top of the pyramid is what
contributes significantly to sustainability according to their research.
1) Foundation Practices: They form the lowest strata of the pyramid or the bed rock and can be
introduced anytime whenever the management decides. They include: programs for developing
people continuously, maintaining amicable labour relations, ensuring long term retention of staff,
implementing internal succession planning, valuing people, practicing ethical behaviour,
environmental and social responsibility, stakeholder approach for a strong shared vision etc.
2) Higher Level Practices: It was noted in this research by Avery and Bergsteiner that if the
Foundation Practices are in place then they promote/ form the base for the next level of practices
i.e. the Higher Level Practices which include the six practices of: consensual decision making,
creating self-managing employees, harnessing the power of teams, developing a trusting
atmosphere, forming an organizational culture that enables sustainable leadership, and sharing
and retaining the firm’s knowledge. For example: Trust cannot be taught like a skill, it comes as
by product of continued ethical behaviour and valuing people along with a shared long term
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vision. Therefore, ‘Turst’ is shown in the Higher Level Practices as succession to the Foundation
Practices.
3) Key Performance Drivers: The Key Performance Drivers are a product of both the lower level
practices of the pyramid viz: the foundation practices and the higher level practices. Avery
stressed in her model that if there are strong practices in place to enthuse trust and autonomy in
decision making among employees then that will automatically result in quality and innovation.
(quality and innovation being a part of the key performance drivers – the third level of the
pyramid). Thus, the key performance drivers depend on a combination of various foundation
practices and higher level practices to be in place.
4) Performance Outcomes: The following five elements form the top of the pyramid which are a
result of the interactions of the elements of the bottom 2 layers of the pyramid:
Integrity of brand and reputation
Enhanced customer satisfaction
Solid operational finances (all firms have to survive financially including in the short
term).
Long-term shareholder value.
Long-term value for multiple stakeholders.
The pyramid is such that it offers flexibility and interaction in all directions – top down as well as
bottom up. Moreover, elements in the same strata also influence each other and those below and above
them. Some of the well-known organizations practicing sustainable leadership practices across the globe
are: Munich Re, BT (British Telecom), Colgate, Holcim. Most of these compaies who practice all 23
competencies are privately owned, as for public listed companies who have pressures to deliver short
term targets it is difficult to practice all the 23 sustainability competencies. However, research shows
that there are firms operating in sustainable contexts who do practice at least the initial 18 competencies
of sustainable leadership if not 23. Avery and Bergsteiner in their paper titled ‘Sustainable leadership
practices for enhancing business resilience and performance’ also cite a case wherein they exemplify
how Walmart uses the sustainable leadership competencies for maximizing financial outputs and gaining
competitive advantage. Inspite of paying more for products from ethical suppliers – an extraordinary
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reversal by an enterprise built around a low-cost strategy and taking socially responsible measures to
benefit the ordinary American in areas of health and environment, its bottom line wasn’t affected.
Entrepreneurial Leadership: Visser, de Coning, and Smit (2005) found that transformational
leadership and entrepreneurship had a significant positive relationship, but how entrepreneurship
functions as a subset of transformational leadership was unresolved. Renko et al. suggested further
research examining various organizational contexts and the position leaders occupy so as to better
understand how the entrepreneurial leadership style is used in organizations. Research is
inconclusive as to which combination of these leadership styles is effective for entrepreneurs, and
which positively affects business performance and business longevity.
Another important landmark in the history of Entrepreneurial Leadership literature is Entrepreneurial
Orientation (EO) – a term coined defined and explained extensively by Miller (1985) and later by
Lumpkin and Dess. EO is in a nut shell a firm’s entrepreneurial behaviour exemplified by a few key
competencies like: Risk Taking, Proactiveness, Innovativeness, Competitive Aggressiveness and
Autonomy. The entrepreneurial leadership style has yet to be studied in depth using the same
variables, such as entrepreneurial orientation, gender, emotional intelligence, innovation, and
performance (Renko et al., 2015). Entrepreneurial Leadership according to Renko et al, involves
directing the efforts of a group towards achieving those organizational goals which require
recognizing and exploiting entrepreneurial opportunities. For example: new product development to
gain competitive advantage over the prevalent line of products, or recognizing a new market
segment or sales channel for the existing products, or developing a new feature of a product to suit
the requirements of a particular customer segment.
Renko et al have developed a new measurement scale called the ENTRELEAD scale to test the
environmental, organizational, and follower-specific contingencies that may influence the success of
entrepreneurial leadership. They, in their research, have defined Entrepreneurial Leadership as
‘influencing and directing the performance of group members toward the achievement of
organizational goals that involve recognizing and exploiting entrepreneurial opportunities’. The
purpose of them developing this scale was to measure a leader’s entrepreneurial behaviour and
characteristics. Considering the dynamicity of today’s economic scenario, employees at each level
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have to seize entrepreneurial opportunities, be innovative and agile to remain relevant for the
business.
Thus, they need to display and practice entrepreneurial competencies and behaviours at each stage of
their career. Renko et al address the research gap concerning the conceptual framework of
Entrepreneurial Leadership and focus on the actions, processes and attributes that are typical of this
leadership style. They then proceed to measure these attributes through developing the
ENTRELEAD scale of measuring entrepreneurial leadership characteristics. Scholarly work in the
decade of 2000 has researchers writing about leaders who practice entrepreneurial behaviours in
mature organizations. (Gupta et al (2004), Macmillan and Mcgrath (2000), Thornberry (2006)).
There are still others like Jensen and Luthans 2006; Peterson, Walumbwa, Byron and Myrowitz
2009; Soriano and Martinez 2007; Swiercz and Lydon 2002 whose work revolves around
entrepreneurs or new founders of businesses who have to assume leadership roles so as to make their
businesses grow. Then there is a third category of existing research which deals with similarities and
differences between leaders and entrepreneurs. Thus, there is still a conceptual research gap on
dealing with entrepreneurial leadership as an independent leadership style which to an extent has
been addressed by Renko et al.
Additional research is needed to understand how context impacts leadership style, as well as the relationship
between transformational leadership, transactional leadership, or laissez-faire leadership and the
entrepreneurial leadership style. Discovering the relationship between these leadership styles will result in a
significant contribution to the leadership literature through developing a new understanding of how the
combination of leadership styles can facilitate organizational performance.
Research Methodology: An analysis of the three style of Leadership viz: Transformational, Sustainable
and Entrepreneurial was carried out and the key competencies and traits characteristic of each model were
identified. Next these behaviours or traits were then clubbed into broader competencies for ease of
comparison. Weber and Watson’s Literature Review Matrix was used to analyze the presence / absence of
these key competencies in the three leadership styles (as described by the above three models of leadership
viz: The ENTRELEAD Scale by Renko et al, The Multifactor Leadership Questionnaire by Avolio and Bass
and the Sustainability Pyramid by Avery and Bergsteiner).
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Analysis and Findings: According to Renko et al, there are huge overlaps between Transformational and
Entrepreneurial Leadership apart from one major distinction i.e. ‘Opportunity Recognition and Exploitation’
which is a critical competency of Entrepreneurial Leadership while it is not a part of Transformational
Leadership. The points of convergence, as stated above, are many like: Apart from being role models,
entrepreneurial leaders also encourage their followers to think and act entrepreneurially in order to achieve
shared goals, in doing so they continually challenge and stimulate their follower’s intellect. Thus, this leads
us to the first three paradigms of Transformational Leadership behaviour as measured by the MLQ
(Multifactor Leadership Questionnaire) which are Idealised Influence, Inspirational Motivation and
Intellectual Stimulation. They empower and encourage their followers to make their identities in the
organization and recognize themselves as an important part of the organizational vision and mission, thus,
this particular trait also coincides with the fourth dimension of the Transformational Leadership behaviour
as measured by the MLQ viz: Individual Consideration.
Avery and Bergsteiner gave a sustainability pyramid model for organizations to guage their management
practices and leader’s capabilities vis a vis the sustainability perspective. They laid down a framework of 23
key elements/competencies which if followed would yield to sustainable business. (refer Appendix A). The
pyramid is divided into three sections of competencies yielding to the top crown of sustainable practices and
tangible financial returns. The bottom layer of the pyramid consists of 14 competencies called the
‘Foundation Layer’ which have been clubbed in this research paper for ease of comparison as under:
Sr. No Sustainability Pyramid
Layer
Sustainability Pyramid
Competency
Referred in this paper
as
1 Foundation Layer Developing people
continuously
Individual Consideration
2 Amicable labour relations Idealised Influence
3 Long term retention of staff Intellectual
Stimulation/Inspirational
Motivation
4 Internal succession planning Individual Consideration
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5 Valuing people Individual Consideration
6 Ethical behaviour Value/Moral Centric
7 Long term perspective Long term vision
8 CEO and top team leadership Idealised Influence
9 Considered organizational
change
Long term vision
10 Independence from financial
markets
Passion for work
11 Environmental responsibility Environmental and social
responsibility
12 Social responsibility Environmental and social
responsibility
13 Stakeholder approach
14 Strong shared vision Idealised influence
15. Higher Level Practices Devolved and consensual
decision making
Intellectual Stimulation
16 Self-management Idealized influence
17 Team Orientation Idealized influence
18 Enabling Culture Individual Consideration
19 Knowledge retention and
sharing
Intellectual Stimulation
20 Trust Value/moral centric
21 Key Performance
Drivers
Strategic, Systemic Innovation Innovativeness,
Competitive
Aggressiveness
22 Staff Engagement Individual Consideration
23 Quality Passion for work
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On comparing a similar model of key competencies framed for Entrepreneurial Leaders (ENTRELEAD
SCALE) by Renko et al, 2015 (Refer Appendix B) and Transformational Leadership models given by
Burns, Bass and James Kouze and Barry Posner (1987) and the relatively recent MLQ (Multifactor
Leadership Questionnaire) (Refer Appendix C); the following inferences can be drawn about
Entrepreneurial Leadership (EL), Transformational Leadership (TL) and Sustainable Leadership (SL):
Sr. No Key Competency/Driver/Trait/Characteristic EL SL TL
1. Risk Taking P A P
2. Innovativeness P P P
3. Proactiveness P A P
4. Competitive Aggressiveness P A A
5. Opportunity Recognition and Exploitation P P A
6. Creative Problem Solving P P P
7. Long Term Vision P P P
8. Social and Environmental Responsibility A P A
9. Passion for work P P P
10. Value/Moral Centric P P P
11. Charisma P P P
12. Individual Consideration P P P
13. Idealized Influence P P P
14. Inspirational Motivation P P P
15. Intellectual Stimulation P P P
(Read P = Present, A = Absent, in the above table)
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Hence it follows that TL is a superset for EL and SL and can be diagrammatically represented as follows:
The yellow shaded area represents the point of intersection of all three viz: TL, EL and SL consisting of
Innovativeness, Creative Problem Solving, and Passion for work, Long Term Vision, Value/Moral Centric,
Charisma, Individual Consideration, Idealized Influence, Intellectual Stimulation and Inspirational
Motivation.
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Appendix A
a
-
Developing
people
continuously
Amicable
labour
relations
Ethical
behaviour
Long term
perspective
Considered
organizational
change
Independence
from financial
markets
Environmental
Responsibility
Social
Responsibility
Long term
retention of
staff
Internal
succession
planning
Valuing
people
CEO and top
team
leadership
Stakeholder
Approach
Strong
shared
vision
Evolved and
Consensual
decision
making
Self
Management
Team
Orientation
Enabling
Culture
Trust Knowledge
retention
and sharing
Quality Staff
engagement
Strategic,
systemic
innovation
Brand and Reputation Customer Satisfaction Financial Performance
Long term shareholder value Long term stakeholder value
Sustainability
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IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 257
Appendix B:
THE ENTRELEAD SCALE
© 2018 IJRAR October 2018, Volume 5, Issue 4 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)
IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 258
Appendix C : Multifactor Leadership Questionnaire
© 2018 IJRAR October 2018, Volume 5, Issue 4 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)
IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 259
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