Volume 15 Paper 2 Sundu Kaur

International Journal of Organisational Behaviour, Volume 15 (1), 15-35 ISSN 1440-5377 © HS Sandhu & K Kaur

AUGMENTING SUBORDINATES’ COMMITMENT: THE ROLE OF TRANSFORMATIONAL LEADERSHIP

HS Sandhu Kanwaldeep Kaur

ABSTRACT The paper examines the relationship between transformational leadership behaviour of Indian bank managers and organizational commitment of their subordinates. It articulates the role of socio-cultural and organisational context within the dynamics between transformational leadership and organisational commitment. A sample of 660 bank employees working in public and private sector banks located in northern India participated in the study. Transformational Leadership Behaviour Inventory (TLI) developed by Podsakoff, MacKenzie, Moorman & Fetter (1990), and Organisational Commitment Scale developed by Meyer, Allen and Smith (1993) were used for data collection. The data were checked for reliability using Cronbach alpha. Exploratory factor analysis was performed to validate the factor structure of the measuring instruments. Results of the hierarchical regression analysis reveal that transformational leadership behaviour of the superiors significantly augments the affective and normative organisational commitment of their subordinates. The paper hopes to increase our understanding of complexities within the dynamics between transformational leadership and organisational commitment by focusing on two contextual aspects. Keywords: Transformational leadership, Organisational commitment, Affective commitment, Continuance commitment, Normative commitment.

INTRODUCTION Extensive globalization since the 1980s has produced an economic environment that is more turbulent and volatile than ever before (Parry & Proctor-Thomson 2003). Static, permanent and traditional organizations working in a predictable world are giving way to flexible, adaptive and innovative organizations more suited in a new world of change and transformation. Globalization has also led to remarkable transformation in Indian economy since 1990. The 1991 government policy of tectonic economic liberalization, coupled with metamorphic liberalized policy in financial sector in sync with Narasimham Committee’s recommendations brought structural reforms in Indian economic and banking system (Srivastava & Nigam 2009). The changing scenario calls for revitalizing and transforming organisations to meet competitive challenges ahead. Quality of leadership represents a valuable source of organisational improvement and competitive advantage (Singh & Bhandarkar 2002; Parry & Sinha 2005).

HS Sandhu ([email protected]) is with the Dept. of Commerce & Business Management, Guru Nanak Dev University, Amritsar (Pb.), India; Kanwaldeep Kaur ([email protected]) is with the Dept. of Commerce & Business Management, Hans Raj Mahila Mahavidyalaya, Jalandhar (Pb.) India

mailto:[email protected]�

mailto:[email protected]�

Sandhu & Kaur Augmenting Subordinates Commitment: The Role of Transformational Leadership

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This has stimulated interest among researchers in studying transformational leadership in India (Singh & Bhandarkar 1990, 2002; Srivastava 2003; Devashis 2004). A number of studies have suggested that transformational leadership style affects many aspects of the success of a company (e.g., Bycio, Hackett & Allen 1995; Kirkpatrick & Locke 1996), but its effect on employee commitment is perhaps the most crucial. What motivates employee commitment can also vary from an emotional attachment, to gratitude, to sheer pragmatism (Bycio et al. 1995). Transformational leadership and organisational commitment have been well established to correlate positively with each other (Allen & Meyer 1996; Meyer, Stanley, Herscovitch & Topolnytsky 2002; Lowe, Kroeck & Sivasubramaniam 1996) in the Western context. Some studies in India, too, have affirmed this relationship (e. g. Rai & Sinha 2000) in the non-banking sector. Whether this relationship holds good in the context of Indian commercial banking sector is the main issue which this study hopes to resolve. The present study attempts to analyse the dynamics of this relationship with reference to two contexts: 1) Indian socio-cultural context, and 2) organisational context. The next section deals with the review of literature regarding organisational commitment, transformational leadership, relevance of transformational leadership in the Indian context in general and commercial banking in particular, and the possibility of linkage between transformational leadership and organisational commitment in the context of Indian banking sector.

LITERATURE REVIEW AND HYPOTHESES Organisational commitment There is little consensus concerning the definition of the concept of organisational commitment or its measurement. Most researchers conceive of commitment as involving some form of psychological bond between people and the organisation. Organisational commitment has been considered in terms of a single and a multi-dimensional perspective. The most prominent uni-dimensional approach to organisational commitment is the attitudinal approach of Porter, Steers, Mowday & Boulian (1974). Porter et al. (1974, p.604) define commitment as a ‘strong belief in and acceptance of the organisation’s goals and values, a willingness to exert considerable effort on behalf of the organisation and a definite desire to maintain organisational membership.’ The desire to maintain affiliation to the organisation is caused by different factors which Meyer & Allen (1991) describe as multi-dimensional organisational commitment. Meyer & Allen (1984) initially proposed that a distinction be made between affective and continuance commitment. They described ‘affective commitment’ as an emotional attachment to, identification with, and involvement in the organisation. Drawing on the early works of ‘side-bet’ theory of Becker (1960), they introduced the dimension of continuance commitment to the already existing dimension of (attitudinal) affective commitment. Continuance commitment refers to the ‘necessity’ of an individual to stay with the organisation due to the accumulation of investments like hierarchical position, peer relationships and seniority rights. Later on they added the third dimension ‘normative commitment’ based on the work of Weiner (1982) which was defined as the employee’s feelings of obligation to remain with the organisation. Weiner (1982, p.421) sees commitment as the ‘totality of internal normative pressure to act in a way that meets organisational goals and interests.’ These components are

International Journal of Organisational Behaviour Volume 15 No. 1

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not mutually exclusive: an employee can simultaneously be committed to the organisation in an affective, normative, and continuance sense, at varying levels of intensity. Each component develops as the result of different experiences and has different implications for on-the-job behaviour. As different antecedents and consequences are associated with each form of commitment, so the managers should be aware of the manner in which their employees are committed to the organisation in order to foster the right kind of commitment in them (Coleman, Irving & Cooper 1999; Meyer et al. 2002). Transformational leadership Transformational leadership is viewed as the most prominent topic in the current research on leadership because of its qualitatively different approach to motivating followers (Bass 1998; Gardner & Avolio 1998; Howell & Avolio 1993). Burns (1978) first introduced the concepts of transformational and transactional leadership in his treatment of political leadership. Bass (1985) applied the concept of transformational and transactional leadership in organizational settings. Transactional leadership involves an exchange relationship between leaders and followers for mutual benefits. Transactional leadership encompasses contingent reward and management-by-exception (Bass 1985). In contrast, transformational leaders motivate followers to achieve performance beyond expectations by transforming followers’ attitudes, beliefs, and values as opposed to simply gaining compliance (Bass, 1985; Yukl, 1999). Tichy & Devanna (1986) suggest that the more successful transformational leaders are able to ‘dumb down’ their vision to grab followers’ interest, attention, and understanding. Transformational leaders articulate a vision of the future of the organization, provide a model that is consistent with that vision, foster the acceptance of group goals, hold high performance expectations, and provide individualized support and intellectual stimulation (Podsakoff, MacKenzie, & Bommer, 1990). Avolio, Yammarino & Bass (1991) described the characteristics of transformational leadership as four I’s—idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration, that are similar to behaviours specified in theories of charismatic leadership (Conger & Kanungo 1998). Howell & Avolio (1993) posit that transformational leadership develops followers' thinking about situations (intellectual stimulation), supports individuals (individualized consideration) and provides inspiration, faith and respect (charismatic leadership). They are comfortable with taking risk and challenging the status quo and demonstrate high internal locus of control (Howell & Avolio 1993). Jung, Chow & Wu (2003) found that leaders who displayed these four behaviours of transformational leadership were able to realign their followers’ values and norms, promote both personal and organisational changes, and exceed their initial performance expectations. Transformational leadership creates an emotional bond between leader and subordinates through fulfillment and modification of their needs and values which affect the quality of the subordinates’ relationship towards their organisation by influencing the behaviour and attitudes of the subordinates. Relationship between transformational leadership and organisational commitment Yukl (1994) posits that transformational leader brings major changes in the attitudes and assumptions of organisational members and builds commitment for the organisation’s mission, objectives and strategies. Work by Shamir and colleagues (Shamir, House & Arthur 1993; Shamir, Zakay, Breinin & Popper 1998) suggests that transformational leaders create a


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higher level of personal commitment on the part of the leader and followers towards a common vision, mission and organisational goals which, in turn, influence followers’ organisational commitment. Transformational leaders influence followers’ organisational commitment by using intellectual stimulation, encouraging followers to think critically through using novel approaches, involving followers in decision-making processes (Jermier & Berkes 1979; Rhodes & Steers 1981), inspiring loyalty while recognizing and appreciating the different needs of each follower to develop his or her personal potential (Avolio 1999; Bass & Avolio 1994, 1997; Walumbwa & Lawler 2003; Yammarino, Sprangler & Bass 1993). They encourage the followers to take on greater challenges and responsibility, and who, in turn, reciprocate with extra efforts leading to higher levels of commitment to their organisations (Wayne, Liden & Sparrowe 2000). Research studies have confirmed that commitment is influenced by transformational leadership in a variety of organisational settings and cultures (Avolio, Zhu, Koh & Bhatia 2004; Bono & Judge 2003; Bycio et al. 1995; Goodwin, Wofford & Whittington 2001; Howell & Avolio 1993; Koh, Steers & Terborg 1995; Lok & Crawford 2004; Walumbwa & Lawler 2003). Three meta-analytic reviews (e.g. Dumdum, Lowe & Avolio (2002); Fuller, Peterson, Hester & Stringer (1996); Lowe et al. 1996) have also shown transformational leadership positively related to work-related outcomes such as satisfaction, commitment and performance. In an Indian context, Rai & Sinha (2000) found that the supervisors’ transformational style had significant relationship with organisational commitment. However, a study by Chandna and Krishnan (2009) showed varying results in their comparative analysis of IT and non-IT sector in India. While transformational leadership was found to have a significantly positive relationship with continuance, as well as normative commitment but significantly negative relationship with affective commitment in non-IT sector, no significant relationship has been revealed between transformational leadership and any of the dimensions of organisational commitment in the IT sector. Ramachandran and Krishnan (2009) in a cross cultural study reported that transformational leadership was positively related to normative commitment in India and China but not in the US, while it was positively related to affective commitment in the U.S. and India but not in China. Role of context in leadership research In recent years emphasis has been laid on giving due importance to contextual variables in leadership research (Lowe & Gardner 2000; Pawar & Eastman 1997; Yukl 1999, 2006). According to Rousseau & Fried (2001), contextualizing research means ‘linking observations to a set of relevant facts, events, or points of view’ (p. 1) which may include, among others, organisational characteristics, work functions, external environmental factors, and demographic variables, and it determines ‘the variability that we can potentially observe’ (p 3). It has been argued that the context in which leadership is observed can constrain the types of behaviours that may be considered prototypically effective (John 2001; Lord, Brown, Harvey & Hall 2001). Based on arguments regarding the effect of context on the relationship between variables, we identified two oft cited contextual factors that could theoretically affect the relationship


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between transformational leadership behaviour and the organisational commitment: Indian socio-cultural context, and organisational context (i.e. commercial banking in India). Indian socio-cultural context The concept of transformational leadership originated and developed in the individualistic societies of the West. As far as Indian society is concerned, a number of studies have revealed that Indian society is characterized by collectivism and hierarchism (Hofstede 1980; Kumar 1997; Sahay & Walsham 1997; Sinha 1995; Walumbwa & Lawler 2003; Walumbwa, Wang, Lawler & Shi 2004). Indians have also been found to be high on power distance (Hofstede 1980; Mendonca & Kanungo 1996) that seemingly does not support empowering and a participative style of management. However, Heller (1985) argued that shifts in the society as a whole, in technology and in organisational structures are associated with ‘loss’ or ‘erosion’ of authority. On the micro level of superior-subordinate relations, the loss is evident in a decline in willingness to be bossed as well as a loss of desire to be the boss (Heller 1985). In a study of leadership styles of managers of Indian organisations, Singh (1982) found that the dependency prone culture of India has given way to empowerment and autonomy, questioning has replaced unquestioned compliance, the power distance between the supervisor and subordinate has narrowed. Integration of the domestic economies with global economies has also caused diffusion of ideas and practices among nations (Bass 1997). This has happened in the case of India too. Moreover, the proportion of population in the working age group of 15-64 years is currently around 62.9 per cent and is expected to rise to about 70 per cent by 2026 (Srivastva & Nigam 2009). This demographic dividend is expected to extend over the next few decades of this millennium. This is leading to change in demographics of work force. Younger generation is better educated and has different values, beliefs, and expectations compared to their older and senior counterparts. They are more receptive to leadership styles which provide them more autonomy to think, act and grow. Organisations are also changing their management styles to accommodate the increased educational level and accompanying higher expectations of their employees. Sinha & Kanungo (1997) have upheld the co-existence of ‘global’ and ‘local’ in Indian’s organisational behaviour on the basis of what they call ‘context sensitivity’ and ‘balancing’. Context sensitivity is basically a thinking principle or a mind-set that is cognitive in nature and it determines the adaptive nature of an idea or behaviour (Sinha & Kanungo 1997, p. 96). Balancing is a behavioural disposition to avoid extremes and to integrate or accommodate diverse considerations. Organisational context Various researchers (Bryman 1992; Conger & Kanungo 1998; Pettigrew 1987) have emphasized the need for giving due attention to the relationship between transformational leadership and organisational context. While transformational leadership is potentially applicable to most organisational situations, it is not equally applicable to all situations. Organisational contexts can be linked to transformational leadership through three forms of relationship (Pawar 2003). First, different types of organisational contexts can create different degrees of need for transformational leadership (Bass 1998). Second, organisational contexts can influence the degree to which transformational leadership’s operations will be supported or opposed (Pawar & Eastman 1997). Third, organisational contexts can influence the nature of transformational leadership behaviour that emerge and operate in an organisation.


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Addressing these issues is important because it will facilitate predicting and explaining the effectiveness of transformational leadership in the Indian banking sector. The banking sector in India has been subjected to structural reforms since 1991 by easing the internal as well as external constraints in the working of the banks. The diversification of ownership of banking institutions has enabled private shareholding in public sector banks. The increasing presence of private sector domestic and foreign banks has led to an unprecedented increase in competition in the banking sector, offering tremendous opportunities of business expansion and diversification nationally as well as globally along with threats from the emergence of new players in the industry. Acute competition with the advent of new generation private sector banks and foreign banks bringing in latest technology has resulted in putting greater focus on product innovation backed by IT advancement and thrust on customization of products. High average age of staff in public sector banks has been toned down by offering voluntary retirement scheme. The banks are on hiring spree recruiting younger persons with good educational background and IT skills to manage their expansion plans. Effective leadership is viewed as a key factor in attracting, motivating, and maintaining employees in organisations undergoing change and transformation. Therefore, the conditions in such type of organisations provide an ideal test of the relationship between transformational leadership and followers’ commitment (Bass & Avolio 1997; Cropanzano, Rupp & Byrme 2003).

The internal and external environment characterizing organisations undergoing transformation alters prototypical expectations of leadership (Brown & Lord 2001; Keller 1999; Lord, Brown, Harvey & Hall 2001; Lowe et al. 1996). Pawar & Eastman (1997) argue that organisations are more receptive to transformational leadership during adaptation rather than during efficiency orientation. Shamir & Howell (1999) asserted that charismatic leaders are more likely to emerge under conditions of turbulence and crisis than under conditions of stability and continuity. It is also more effective in dynamic organisational environments that require and enable the introduction of new strategies, markets, products, and technologies. Such organisations have been called dominant boundary-spanning units by Pawar & Eastman (1997) and they are considered to be more receptive to transformational leadership than the organisations with dominant technical cores (Pawar & Eastman 1997). Transformational leadership is more likely to emerge and be effective when the tasks of organisational members are challenging, complex and require individual and group initiative, responsibility, creativity and intense effort. The foregoing discussion leads us to predict that banking sector in contemporary India provides an organisational context conducive for the emergence of effective transformational leadership.

Leadership studies in India

Researchers such as Meade (1967), Meade and Whittake (1967), and Murphy (1953) asserted that because Indian culture, by and large is authoritarian, it is the authoritarian leadership which would promote organisational productivity in the Indian set-up. Sinha & Sinha (1974) expressed doubts about the appropriateness of the authoritarian (F) style in Indian culture. They identified a few socio-cultural values such as, preference for aram (rest or relaxation without being tired), dependence proneness (Chattopadhyay 1975; Sinha 1970), readily accepting the authority of the superior (Kakar 1971), lack of commitment, cultivating personalized relationship with the superior (De 1974; Sinha & Sinha 1974), and lack of team-orientation- some of which, of course, seem to share the rubric of authoritarianism. Due to these characteristics typical of Indian subordinates, Sinha (1980, p. 55) proposed the


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Nurturant-task (NT) style as an alternative model suited to the Indian culture. The NT leader according to Sinha (1980) ‘cares for his subordinates, shows affection, takes personal interest in their well-being and, above all, is committed to their growth subject to the subordinate’s task accomplishment. Some empirical evidence (e.g. Ansari 1981, 1986, 1987; Ansari and Shukla 1987; Jain 2000) establishes that NT leaders earn more favorable ratings on the evaluation of the leader and attributions of leadership than the participative leaders. The transition towards transformational leadership in the Indian context has been reflected in later period studies (Devashis 2004; Krishnan, 1990; Rai & Sinha 2000; Singh & Bhandarkar 1990, 2002; Srivastava 2003).

Most of the studies relating to leadership in banking sector in India have focused on Task-oriented/ Relationship-oriented styles (e.g. Brar, 2009; Punj 1978; Prakasam 1980; Misra & Srivastava 1992). Vishalli & Kumar (2004) in a study of leadership styles of the regional managers of a public sector bank in India reported that there was no significant association demonstrable between transactional leadership style and most of the behavioural competencies of subordinates while most of the competencies had a significant relationship with transformational leadership style. Brar (2009) in an exploratory study of leadership styles of managers in Indian banking industry found that the ‘consideration’ dimension of LBDQ had a positive, relatively high and significant effect on organisational commitment whereas ‘initiating structure’ had an insignificant and inverse effect on organisational commitment. Based on the review of extant literature, our analysis upholds that socio-cultural and organisational contexts in Indian banking industry are conducive for emergence of transformational leadership style which is likely to have a significantly positive influence on organisational commitment. The following hypotheses are formulated in this regard: Hypothesis 1: The degree of transformational leadership behaviour in Indian bank managers

is moderate. Hypothesis 2: The transformational leadership behaviour of the Indian bank managers

significantly predicts affective, continuance, and normative organisational commitment of their subordinates.

Hypothesis 3: The transformational leadership behaviour has the strongest influence on affective commitment.

DATABASE AND RESEARCH METHODOLOGY Sample description Data collection from a total of 660 bank employees was undertaken from April to September, 2009. The subjects included managerial and clerical staff working in different branches and administrative offices of public and private sector banks located in the state of Punjab. The average age of the respondents was 40 years. Only 22 percent of the total sample consisted of women. Of the respondents, 79 percent were married; 43 percent of the respondents were postgraduates and 57 percent were graduates. Data collection procedure and response rate Originally the questionnaire was planned to be sent through post and telephonic contacts in order to save time, but the response was poor and even with repeated requests not much success was achieved. Finally, we personally contacted the respondents on site and got the questionnaire filled in after public dealing hours. Respondents were explained the purpose of the study and the nature of the battery of tests. Their doubts regarding understanding the


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statements were cleared. Therefore, the problem of non-response or occurrence of missing values in the data could not arise. Research instruments Transformational Leadership Behaviour Inventory (TLI) Leadership Behaviour Inventory (TLI) developed by Podsakoff et al. (1990) has been used for collecting ratings on leadership behaviour. It consists of 23 question items, which are designed to measure the employees’ perceptions of transformational leadership behaviour of their managers on six dimensions – a) articulating a vision (five items, coded AV1 to AV5), b) providing an appropriate model (three items coded, RM1 to RM3), c) acceptance of group goals (four items, coded AG1 to AG4), d) high performance expectations (three items, coded HP1 to HP3), e) intellectual stimulation (four items, coded IST1 to IST4), and f) individualized support (four items, coded IS1 to IS4). Respondents were asked to answer the TLI by judging how intensely their manager displayed the behaviours described in the questionnaire, using a seven-point scale (1=minimum extent, and 7= maximum extent). Organisational Commitment Scale Organisational Commitment Scale developed by Meyer et al. (1993) has been used to measure affective, continuance, and normative organisational commitment. The scale has 18 items, with six items for each of the three factors- affective (items coded as AC 1 to AC 6), continuance (items coded as CC 1 to CC 6), and normative (items coded as NC 1 to NC 6) organisational commitment. Responses to each item were made on a 7-point scale with anchors labeled (1=strongly disagree, and 7=strongly agree). The psychometric properties of the instrument have been validated in number of studies (Meyer & Allen 1997). The scores for the six items in each scale provided a total, and a mean score for each one of the scales indicated the level of affective, continuance, and normative organisational commitment. Control variables

Prior studies have demonstrated that demographic variables are potential predictors of organisational commitment (Mathieu & Zajac 1990; Meyer et al. 2002). Based on prior studies, we controlled for age, gender, marital status, educational level, and positional tenure in the hierarchical multiple regression analysis. To avoid multicollinearity, organisational tenure which was another demographic variable affecting commitment was dropped from the analysis by us because it correlated highly with age.

RESULTS AND ANALYSIS Internal consistency and validity The internal consistency reliability coefficient of the instrument (TLI) was assessed using Cronbach alpha. Cronbach alpha for factor individualized support was found to be 0.54. As it was below 0.60 criterion which, according to Nunnally & Bersnstein (1994) is an acceptable level of reliability for social sciences, the factor ‘individualized support’ was dropped from the scale. The internal consistency reliability coefficient of the instrument for other five factors ranged between 0.85 and 0.91. The alpha coefficients for the Organisational Commitment Construct in this study showed values 0.89 for affective commitment, 0.70 for continuance commitment, and 0.81 for normative commitment scale. However, alpha in case of continuance commitment scale could improve to 0.83 by deleting one item from it. So to get a more refined scale, this item i.e. ‘if I


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had not put so much of myself into this bank, I might consider working elsewhere’ was deleted. The reliability coefficients for all the dimensions of Organisational Commitment Scale exceeded 0.60 criterion of acceptable level of reliability Factor analysis was performed to establish the discriminant validity of the Transformational Leadership, and Organisational Commitment constructs. Table 1 presents the results of factor analysis. Table 1: Transformational Leadership and Organisational Commitment Constructs: Principal Component Factor Analysis with Varimax Rotation

Variables Factor1 Factor 2 Factor 3 Factor 4 AV1 .714 .300 .179 .005 AV2 .728 .300 .136 .045 AV3 .759 .282 .140 .064 AV4 .780 .201 .190 .105 AV5 .814 .187 .155 .110 RM1 .781 .269 .084 .090 RM2 .762 .264 .100 .088 RM3 .759 .240 .171 .077 AG1 .776 .276 .098 .030 AG2 .772 .264 .094 .008 AG3 .785 .257 .186 .034 AG4 .777 .142 .151 .001 HP1 .641 .136 .175 -.026 HP2 .644 .188 .153 .016 HP3 .625 .122 .212 .020 IST1 .719 .110 .183 .064 IST2 .732 .112 .138 .067 IST3 .735 .097 .192 .062 IST4 .753 .129 .161 .017 AC1 . 404 .627 .333 .094 AC2 . 431 .605 .219 .053 AC3 .322 .775 .148 .008 AC4 .346 .738 .191 -.018 AC5 .355 .599 .240 .073 AC6 .321 .698 .239 -.054 CC1 .077 .118 .014 .803 CC2 .113 -.013 .060 .854 CC3 .074 -.072 .077 .790 CC4 .004 .035 .030 .701 CC5 .053 .045 .106 .617 NC1 .109 .272 .627 .004 NC2 .137 .199 .565 -.103 NC3 .177 .062 .802 .087 NC4 .214 .091 .687 .122 NC5 .194 .102 .761 .059 NC6 .190 .214 .593 .110 Eigen Value 15.19 3.01 2.47 1.47 Variance Explained 42.19% 8.39% 6.87% 4.11%


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Principal component analysis was selected in order to avoid assumptions regarding an underlying causal model (Nunnally 1978). A scree test (Cattell 1966) of the varimax rotated factor structure indicated a 4-factor solution which accounted for 61.5% of the total variance. A minimum factor loading of 0.30 (Nunnally 1978) was used as a yardstick for considering an item to load on a particular factor. As may be observed from Table 1, there was minimal problem with double loading of items which clearly attest to the discriminant validity of the variables. However, all items of TLI had very high loadings on a single transformational scale, indicating the inability of the instrument to distinguish between different factors of transformational leadership. Table 2 presents the means, standard deviations and the pattern of correlations between variables in the study. Table 2: Descriptive Statistics and Correlation Matrix. Variables Mean S.D. 1 2 3 4 5 6 7 8 1. Age

40.30

11.75

-

2. Gender

1.22

.41

-35**

-

3. MS

1.79

.41

.63**

-37**

-

4. Edu.

1.61

.78

-25**

.14**

-.18**

-

5. Pos. Ten.

7.25

8.23

.52**

-.10**

.33**

-.12**

-

6. AC

4.91

1.15

.24**

-.08*

.09*

-.16**

.05

-

7. CC

4.74

1.02

.25**

-.10**

.17**

-.08*

.05

.10**

-

8. NC

4.94

1.09

.44**

-.07

.22**

-.23**

.17**

.54**

.16**

-

9. TL

4.91

1.16

.25**

-.06

.07*

-.18**

.08*

.69**

.17**

.47**

** p<0.01, * p <0.05 MS - Marital Status, Pos. Ten. – Positional Tenure, AC – Affective Commitment CC–Continuance Commitment, NC– Normative Commitment, TL – Transformational Leadership As is clear from table 2, affective commitment has strong positive correlation with normative commitment (r = 0.54, p<.01) and weak positive relationship with continuance commitment (r = 0.10, p<.01). Meyer et al. (2002) in their meta-analysis reported substantial corrected correlation (r = 0.63) between affective and normative commitment. Though the correlation between affective and normative commitment scales is high, yet both are separate and distinguishable constructs as has been indicated by factor analysis (table 2). It allows for the possibility that factors that contribute to strong affective commitment also contribute, albeit less strongly, to normative commitment (Meyer et al. 2002). However, correlation coefficient between normative and continuance commitment is found to be positive and small but significant (r = 0.15, p < 0.01). This is a rare occurrence as normative and continuance


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organisational commitment are typically negatively related or not related (Meyer & Allen 1997). Descriptive statistics (table 2) reveal the degree of transformational leadership behaviour displayed by managers as perceived by their subordinates. The mean score of managers’ transformational leadership as measured by TLI is 4.91. Since the lowest possible mean score on the TLI is 1 (no transformational leadership) and a maximum is 7, a high score of 5.5 and greater reflects a relatively high behavioural intention on the part of the leader to engage in transformational leadership behaviour. A reported mean of 4.91 provide evidence of the existence of transformational leadership among Indian bank managers, though it is below the ideal bench mark for engaging in transformational leadership behaviour. Hypothesis 1 is therefore, fully supported. From table 2, it can also be seen that transformational leadership of the superior has significant positive correlation (r = 0.69, p<.01) with the affective commitment of the subordinates. It also has significant positive relationship (r = 0.47, p<.01) with normative commitment though it is weaker than the relationship between transformational leadership and affective commitment. Continuance commitment also had weak positive correlation (r = 0.17, p<.01) with transformational leadership behaviour. To further test hypothesis 2 and 3, a hierarchical regression analysis was performed. The demographics were used as controls, so they were entered first, followed by transformational leadership behaviour of the superior. The order of entry of variables rested on the logic that demographics precede the leadership behaviour. The results of the hierarchical regression analysis are reported in Tables 3, 4, and 5. TABLE 3: Results of Hierarchical Multiple Regression Analysis: Affective Commitment _____________________________________________________________________ Variables Standardised Beta ( β) R2 Adj. R2 ∆R2 F-Change _____________________________________________________________________ Demographics: Age .11** Gender -.01 Marital status -.01 Education -.02 Positional Tenure -.05 .09 .08 .09 12.50*** Transformational Leadership .67*** .49 .49 .40 519.27*** _____________________________________________________________________ Notes: 1. Education was so coded that high score reflects high educational level.

2. Gender was coded men =1 and women=2 3. Marital status, where 1 = single; 2 = married. ** p < 0.01; *** p < 0.001.

Table 3 presents the results of the hierarchical regression analysis for affective commitment. Overall, the antecedent sets explained 49 per cent of the variance in affective organisational commitment. Demographic variables contributed only 9 per cent variance in the affective commitment. The transformational leadership made the additional contribution (∆R2 = 0.40)


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to affective commitment. Within the demographics, the significant determinant of affective organisational commitment was age (β = 0.11, p < 0.01). Table 4: Results of Hierarchical Multiple Regression Analysis: Normative Commitment _____________________________________________________________________ Variables Standardised Beta ( β) R2 Adj. R2 ∆R2 F-change _____________________________________________________________________ Demographics: Age .41*** Gender .09** Marital status -.02 Education -.08** Positional Tenure -.06 .23 .23 .23 39.65*** Transformational Leadership .37*** .35 .35 .12 120.98*** _____________________________________________________________________ Notes: 1. Education was so coded that high score reflects high educational level.


Table 4 shows the results of hierarchical multiple regression analysis for normative commitment. Overall, the antecedent sets explained 35% of the variance in normative organisational commitment. Demographics explained 25% of the variance in normative organisational commitment. The transformational leadership made 12% incremental contribution (∆R2 = 0.12) to normative commitment. Within the demographics, the significant predictor of normative organisational commitment were age (β = 0.41, p < 0.001), gender (β = 0.09, p < 0.01), and education (β = -0.09, p < 0.01). Table 5: Results of Hierarchical Multiple Regression Analysis: Continuance Commitment _____________________________________________________________________ Variables Standardised Beta ( β) R2 Adj. R2 ∆R2 F-change _____________________________________________________________________ Demographics: Age .26** Gender -.01 Marital status .04 Education -.01 Positional Tenure -.10* .08 .07 .08 11.05*** Transformational Leadership .11** .09 .08 .01 9.12*** _____________________________________________________________________ Notes: 1. Education was so coded that high score reflects high educational level.


Table 5 displays the results of hierarchical multiple regression analysis for continuance commitment. Demography as well as transformational leadership explained only 9% of the variance in continuance organisational commitment. Transformational leadership could make only 1% incremental contribution to continuance commitment. Within the demographics, the


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significant predictor of continuance organisational commitment was age (β = 0.26, p < 0.001) and positional tenure (β =-0.10, p< 0.001). Correlation matrix (table 2) and the results of hierarchical regression analysis (table 3, 4, and 5) lend support for hypotheses 2 and 3. DISCUSSION

This study set out to explore the transformational leadership behaviour of managers of commercial banks in India, and the impact, if any; it had on the organisational commitment of their subordinates. Transformational Leadership was measured by Transformational Leadership Behaviour Inventory (TLI) developed by Podsakoff et al., (1990). Organisational commitment was viewed as a multi-dimensional concept, and has been measured by Meyer et al. (1993) Organisational Commitment Scale. Findings of the study support our contention that Indian commercial banks would provide the socio-cultural and organisational context conducive for the emergence of transformational leadership. Two explanations can be offered for this. One, the British rule which tended to reinforce the traditional caste based hierarchical structure has been counteracted by the political equality experienced since independence which has resulted in a desire to affect a decrease in power distance (Chhokar 2000), and decrease in the collectivistic values of Indians (Chhokar 2000; Sinha, Vohra, Singhal, Sinha & Ushashree 2002; Triandis & Bhawuk 1997). Second, the economic reforms (Liberalization, Privatization, Globalisation) initiated since 1991 have changed the very complexion of Indian economy and its banking sector. The Indian banker cannot function the same way as he was operating in pre 1990 era when Indian banking industry was operating in a relative stable environment under the protective umbrella of the government. Indian banking in the modern times is far more open to change than in the past. Further, it must be recognized that the profile of the led has also undergone significant changes with rise in entry level educational qualifications and skills. Consequently, expectations of followers have also undergone sea change. Younger generation has different values, beliefs, and expectations compared to their older and senior counterparts. They are more receptive to leadership styles which provide them more autonomy to think, act and grow. The organisations are changing their management styles to accommodate the increased education level and accompanying higher expectations. Pearson & Chatterjee (1999, 2001) in their study reported that in a relatively short time, the fundamental attributes of a competitive market economy have subjugated societal qualities as ‘respect for seniority’, ‘valuing tradition over change’ reinforced over hundreds of years and thought to be unchangeable. Moreover, as suggested by (Bass 1997), integration of the domestic economies with the global economies also cause diffusion of ideas and practices among nations. This is true for India, too. Today, India is one of the most exciting emerging markets in the world. India is the largest recipient of remittances in the world. It has skilled managerial and technical manpower that match the best available in the world. Under the circumstances it is quite reasonable to expect that leadership demand may have undergone a shift leading to an impact on the leadership style. This finding is also in consonance with the finding of Devashis (2004) who reported that 70 percent executives in Indian business organisations preferred transformational leadership style. However, the mean score of transformational leadership displayed by Indian bank managers came out to be moderate only. This finding points to the fact that although the leadership style of Indian banker has indeed changed after reforms, the


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reforms are still at a nascent stage and the traditional Indian mind-set still exercises considerable hold. The pattern of significant predictors of affective and normative organisational commitment reveals that the transformational leadership significantly predicts the subordinates' organisational commitment. Analysis and interpretation of the data collected from the sample clearly indicates that affective commitment levels of employees in an organisation are strongly enhanced by the presence of a transformational leader. Normative commitment of the employee is moderately enhanced by transformational leadership behaviour. It is useful to draw attention to the fact that the relationship between transformational leadership and affective commitment found out by the study is quite high, considerably higher than similar relationship reported by Bycio et al. (1995). This finding can be attributed to some dominant factors characterizing Indian commercial banking sector: 1) the process of adoption is still not complete, 2) the banking organisations are witnessing unprecedented increase in competition throwing up continuous threats from emerging players, and 3) demographics of work force are undergoing tremendous change which align well with transformational leadership styles of Indian bank managers. These kinds of situations provide strength to the relationship between transformational leadership and followers’ commitment to the organisation. These observations are in tune with views of (Pawar & Eastman 1997; Shamir & Howell 1999). The continuance commitment of employees is not much impacted by transformational leadership. Since continuance commitment is based on the cost calculations of leaving the organisation, transformational leadership has little role to play in this regard.

The study has revealed the strongest influence of transformational leadership of Indian bank managers on their followers’ affective commitment. The impact of affective commitment on positive work outcomes has already been well established in prior studies. So it will be rewarding for banking organisations to invest in transformational leadership training of managers. The infinite potential is there in every being, and a being varies from another only in the degree of manifestation of that potential. Leadership capabilities are inherent and can be trained (Parry & Sinha, 2005). Discriminant validity of transformational leadership behaviour inventory Another observation which we wish to highlight is the lack of discriminant validity of TLI found in our study. Exploratory factor analysis replicated the distinct factor structure of OCS but it failed to discriminate the key dimensions of transformational leadership from one another as proposed in Transformational Leadership Behaviour Inventory (TLI) by Podsakoff et al. (1990). High levels of multicollinearity among the transformational leadership dimensions We found strong correlations (Varying from 0.69 to 0.89) among the subcomponents of transformational leadership. High correlations among transformational factors is expected because theoretically, the transformational factors have been grouped under the same class of leader behaviour and are expected to be mutually reinforcing, but the instrument failed to distinguish the various subcomponents of TLI.


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Transformational leadership represented by one higher order factor Principal component analysis found very high loadings of the items on a single factor which indicated that transformational leadership is represented by one higher order transformational leadership factor with all the sub-dimensions loading onto it. Though it is possible to distinguish conceptually among separate transformational leadership behaviour, different factors proposed by TLI may not measure different or unique underlying constructs. This problem has been faced by Devashis (2004) also in their exploratory factor analysis of TLI in a sample of non-banking organisations of India. Contextual variables might have moderated inter-factor relations thus potentially impacting the construct validity of the leadership instrument. It appears that either the distinctions between factors are not captured by the TLI or Indian subordinates fail to recognise the differences in the scales, though this needs to be further verified with confirmatory factor analysis. This study has once again demonstrated that context plays an important role in how the factor structure of a survey instrument behaves as factor structures are sensitive to contextual characteristis (Kerlinger 1986). The relatively high levels of multicollinearity among the transformational leadership scales and the difficulty in discriminating the key dimensions of transformational leadership from one another has been discussed by many researchers in the past in case of MLQ also (Bycio et al. 1995; Carless 1998; Kelloway, Barling, and Helleur 2000; Parry & Sinha, 2005; Tepper & Percy 1994; Tracey & Hinkin 1998, 1999; Yammarino & Dubinsky 1994). Carless (2001) articulated this quandary in case of yet another instrument for measuring transformational leadership viz. Leadership Practices Inventory (LPI: Kouzes & Posner 1988). The similar difficulty has been experienced by us for factors of TLI in the present study. LIMITATIONS AND CONCLUSION Findings of the study might have been unduly affected by common source variance as the ratings on leadership behaviour of the superiors and the organisational commitment of the subordinates were obtained from the same source. To minimize this problem, future studies may collect data from multiple data sources. Peers’ ratings or superiors’ ratings can be used to replicate the study. Despite this limitation, however, the research hopes to increase our understanding of complexities within the dynamics between transformational leadership and organisational commitment by focusing on two contextual aspects (i.e. socio-cultural and organisational context). REFERENCES Allen, NJ & Meyer, JP 1996, ‘Affective, continuance, and normative commitment to the

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Volume 15 Paper 2 Sundu Kaur

Documents

organisational commitment constructs

augmenting subordinates commitment

factor individualized support

transformational leadership behaviour

normative organisational commitment

transformational leadership style

indian banking sector

public sector banks