Leadership Styles in Competing Organizational Cultures

By Leon J. Schimmoeller, Lynchburg College

Academic Citation: Leon J. Schimmoeller, “Leadership Styles in Competing

Organizational Cultures,” Kravis Leadership Institute, Leadership Review, Vol. 10,
Summer 2010, pp.125 – 141.

About the Author: Dr. Schimmoeller received a bachelor's degree in Mechanical

Engineering from the University of Dayton, an M.B.A. from Oakland University, and a
Doctorate of Business Administration with a concentration in Management from Nova
Southeastern University. Before teaching, Dr. Schimmoeller worked in industry for 20
years as a design engineer, Mechanical Engineering Manager, and Manufacturing
Engineering Manager. He has taught at several colleges and has been at Lynchburg
College since fall of 2005. E-mail: Schimmoeller@[Link]

Keywords: Organizational culture, leadership styles, competing values framework

Abstract

Organizational culture is often an important factor influencing the competitive strength of a firm.
Leadership is also a critical component in the success of an organization. It is important to
understand how these two powerful determinants of organizational performance affect each other.
Research determining that specific types of organizational culture favor particular styles of
leadership is important as it aids organizational leaders to identify which styles of leadership are
more likely to be successful in their culture. This study uses the Competing Values Framework to
define the organizational culture as clan, adhocracy, hierarchy, or market. Leadership style is
defined as transformational, transactional, or laissez faire. The results of this study indicate there
is a significant relationship between specific types of organizational cultures and leadership
styles.

Introduction

Organizational culture and leadership are two important constructs that have been
individually studied in the literature (Yukl, 1989). Each of these constructs is important
as they have been found to be essential to organizational success (Bass & Avolio, 1993).
Pfeffer (2002) determined that leadership is the single most important factor in a business
maintaining its competitive advantage. Furthermore, Lamond (2003) found culture is one
of the most influential forces in an organization and critical to organizational
effectiveness. While both leadership and organizational culture are important for
organizational success and there is a large body of literature concerning each, the
relationship between the two has had little empirical analysis (Block, 2003; Hennessey,
1998; Lok & Crawford, 1999). Specifically, there is little research describing which

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 125
leadership styles work best in different organizational cultures (Alvesson, 2002). This
leadership-culture relationship significantly influences the performance of organizations
and requires further investigation (Block, 2003)

Researchers have been discussing the definition of leadership for many years with
differing results but most agree that leaders have a perceived influence on organizational
members (Bohn & Grafton, 2002; Rost, 1991; Yukl, 1989). There are differences in how
to investigate leadership and the development of different measurements of leadership
styles (Yukl, 1989). One of the most researched and influential frameworks for leadership
is the theory of transformational and transactional leadership developed by Burns
(Eisenbach, Watson, & Pillai, 1999; Parry, 2002). While there are alternatives
frameworks for describing leadership, transformational leaders have received much
research attention and are included in this study because they are very effective at
achieving organizational goals and outperforming other styles of leadership (Yammarino,
Spangler, & Bass, 1990).

Organizational culture may be defined as a common set of values and beliefs that are
shared by members of an organization which influences how people perceive, think, and
act (Schein, 1990). Culture becomes a basic set of assumptions that guides an
organization’s social relationships and are moderated by an unspoken socialization
process, which is often taken for granted by vested members. This value system is used
as a reference by members as they make decisions in the performance of their duties.
Moreover, organizational performance has been directly linked to organizational culture
(Berrio, 2003).

Leadership styles and organizational culture are not independent of each other. Research
has shown there is constant interplay between leadership and organizational culture (Bass
& Avolio, 1993; Berrio, 2003; Parry, 2002). Bass and Avolio (1993) found that an
organization’s culture derives from its leaders and culture affects the development of its
leadership. Furthermore, effective leaders need to be attentive to beliefs, values and
assumptions in an organization, in short, the culture. By having higher levels of
emotional intelligence, these leaders can understand the emotions of followers and the
influence of organizational culture on the situation (Barling, Slater, & Kelloway, 2000).
Leaders may use this understanding of the culture and its effect on the organizational
members to aid them in selecting optimal leadership techniques. Hart and Quinn (1993)
found that managers are more effective when they are culturally complex. They have
more tools to deal with different situations. Lok and Crawford (1999) determined there
are different leadership behaviors correlated with specific cultural traits. Furthermore,
culture has also been measured as a strong influence to both organizational success and
achievements of the leader (Berrio, 2003). Therefore, it is important to know which styles
of leadership are found in specific types of organizational culture.

The purpose of this study was to determine which leadership styles, the dependent
variable, are found in specific types of organizational cultures, the independent variable.
The method to investigate this relationship was to conduct an exploratory survey of many
organizations to determine correlations linking cultures with leadership styles. This

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 126
investigation of how leadership style is influenced by organizational culture seeks to
answer the following question:

• Does organizational culture determine which types of leadership are employeed

in an organization?

This study is important because successful leaders are vital to organizational

effectiveness (Howell & Avolio, 1993). It is an advantage for organizations that select
leaders with the style that has the optimum chance for success in their organization.
These leaders will be better able to work with and not be hindered by the culture of an
organization. To better investigate this relationship, a framework is needed for both
organizational culture and a model of leadership.

Organizational Culture

Organizational culture must be defined and described by a construct to enhance a

discussion of different styles of organizational culture. This research discusses
organizational culture as defined by the Competing Values Framework developed by
Quinn and his colleagues (Cameron & Quinn, 1999; Quinn, 1988; Quinn & Rohrbaugh,
1983) and first postulated in the seminal article by Quinn and Rohrbaugh (1983). The
Competing Values Framework is based on empirical analysis of the values individuals
within an organization hold about its performance and the manner in which it functions
and may be used to construct an organizational culture profile (Berrio, 2003).

Cameron and Quinn (1999) developed the Competing Values Framework which
describes differing organizational cultures based on two axes forming four quadrants. The
vertical axis represents the organization’s flexibility or central control in dealing with
issues. Organizations scoring high on control are at the bottom of the axis and tend to
have many documented procedures and processes which must be followed. Less
regimented organizations are located higher on the vertical axis of control. The horizontal
axis describes the focus of the organization and whether this focus is internal or external
to the organization (Cameron & Quinn, 1999). Firms focusing externally tend to be
concerned with the market, new customers, and competitors. Organizations that focus
internally are concerned with the morale of employees and how work is accomplished.
Existing customers also are important as the firm focuses on processes rather than new
business. The four discrete cultures defined and measured by the Competing Values
Framework are clan, adhocracy, hierarchy, and market and are illustrated in Figure 1.

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 127
 Figure 1: Competing Values Framework

The upper left quadrant of the framework represents Clan cultures. These cultures are
organizations that are flexible and have an inward focus. These firms are friendly toward
customers and employees and often feel like extended family to many dedicated members
(Hooijberg & Petrock, 1993). Clan cultures have high morale and members are satisfied
with the present state of the business. Adhocracy cultures also are flexible but, in contrast
to clan cultures, have an external focus. Teams are quickly created and disbanded to
respond to changing external conditions. Members are flexible, creative, and comfortable
when dealing with ambiguous situations (Cameron & Quinn, 1999). Associates are
excellent at recognizing and responding to changing market needs. Modifications to the
organizational structure are common and expected by its members.

Hierarchy cultures have the internal focus of the clan culture but also emphasize
centralized management control (Cameron & Quinn, 1999). This culture type often
includes bureaucratic institutions such as government offices that are rule-based and
emphasize following the policies and procedures of the organization. Hierarchies place
importance on doing work the correct way by following existing procedures with
emphasis on efficiency and smooth-running operations. These organizations respond
effectively and efficiently to familiar issues but are unable to cope with unique situations.

The final culture to be described by the Competing Values Framework is the Market
culture. This culture emphasizes centralized control while focusing on external issues. It
encourages members to be productive and competitive while measuring performance in
empirical terms such as sales growth (Cameron & Quinn, 1999). Employees are often
evaluated against each other using quantitative results. Understanding the type of
organizational culture that represents an organization’s current environment enables
leaders to be better able to work in the culture as they attempt to exert influence over its
members.

Leadership

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An important contribution to the study of leadership came from James MacGregor Burns
(1978) when he studied the leadership behaviors of politicians and was the first to define
their attempts to motivate followers as transactional or transformational. Bass (1985) later
modified Burns’ model and applied it to generic organizational settings (Howell &
Avolio, 1993). Bass’s model defined and described three types of leadership,
transactional, transformational, and laissez-faire. Transactional leaders motivate their
followers with rewards in an exchange based relationship. In this model, the leader-
member exchange is contingent upon rewards. These rewards are distributed by the
leader based on performance as described in a formal contract. The relationship expires
as defined in the terms of the contract or quickly diminishes if promised rewards are
delayed or not delivered. Rewards may be positive or negative and need not be monetary.
The influence of transactional leaders is dependent on their ability to provide rewards.

In contrast to transactional leaders, transformational leaders create a vision that inspires

and motivates the target audience (Burns, 1978). Followers place the vision and needs of
the organization before their personal desires. Transformational leaders attempt to elevate
the conduct and aspirations of the team members, transforming both the followers and the
leader to a higher level of performance and consciousness. Transformationally lead teams
move to an elevated level on Maslow’s Hierarchy of Needs as concerns are shifted from
safety and security to higher order needs such as achievement and self-actualization
(Bass, 1985). These leaders are change agents as they project their vision for the
organization onto the members of the organization (Howell & Avolio, 1993).
Transformational leaders may have long-term and far-reaching positive effects on the
organization and its performance when compared to transactional leaders whose
influence is limited by the terms of the contract with their followers (Yukl, 1989).

A third type of leadership proposed by Bass (1985) is laissez-faire leadership. This is a

style of leadership that is inactive and is often referred to as a lack of leadership (Avolio
& Bass, 1995). These leaders may assign tasks but provide no additional leadership such
as support or management oversight. Decisions are left to others in the organization and
these laissez-faire leaders often quickly lose power in the organization due to their lack of
action. Of these three leadership styles, laissez-faire leadership has been found to be the
least effective (Avolio & Bass, 1995).

Organizational Culture and Leadership

Organizational culture and leadership have an empirical link to each other and each plays
a part in determining organizational effectiveness (Block, 2003). Furthermore,
organizational culture may have an influence on the effectiveness of leaders. There is
evidence of a difference in the effectiveness of charismatic leaders in the private and
public sectors. Howell and Avolio (1993) report a significant relationship between
charismatic leadership and organizational performance in the private sector. Conversely,
Javidan and Waldman (2003) found that charismatic leaders in public sector companies,
in this study a utility company, were viewed the same as charismatic leaders in private

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 129
companies by their employees but there was no significant improvement in
organizational effectiveness. Javidan and Waldman theorize it is the difference in the
organizational culture which makes charismatic leaders less effective in public utility
companies. It is this relationship and its implications on organizational performance that
is of interest to this study.

Methodology

This research studied the relationship between leadership styles and organizational
culture by correlating different leadership styles as the dependent variable to various
organizational cultures. More specifically, the styles of leadership defined by Avolio and
Bass (1995) as transformational, transactional, and laissez-faire were correlated to the
specific types of organizational culture defined by Cameron and Quinn (1999) in the
Competing Values Framework. Additionally, Cameron and Quinn make assumptions
about which style of leadership is the most effective in different specific organizational
cultures but they do not reference research supporting these propositions. These
assumptions have not been investigated in the existing body of literature until this study
though other researchers have proposed there is a need to better understand the
relationship between organizational culture and leadership (Landrum, Howell, & Paris,
2000; Lok & Crawford, 1999).

Current strategies used in the study of organizational culture and leadership style entail
collecting data from organization members (Brooks, 1996; Giek & Lees, 1993;
Hennessey, 1998). These members are typically from the same organization, with the
organization serving as the unit of analysis. Data are gathered using written survey
instruments (Block, 2003; Lok & Crawford, 1999) or interviews (Brooks, 1996).
Leadership surveys usually include self-reported leadership styles or reports by
subordinates (Bass & Avolio, 1993).

This study surveyed members of various organizations with different cultures and
identified those cultures. The survey respondents also identified the dominant leadership
style of their superior and the effectiveness of that leader. While there are concerns about
the reliability of an exploratory survey where subjects are anonymously surveyed without
follow-on investigations (Schein, 1992), analyzing members from multiple organizations
allowed many different organization cultures to be examined for the dominant leadership
style.

Instrumentation

The Organizational Culture Assessment Instrument (OCAI) designed by Cameron and

Quinn (1999) measured the organizational culture as defined by the Competing Values
Framework. This survey instrument requires the sample to respond to six key dimensions.
These dimensions include dominant characteristics, organizational leadership,
management, organizational glue, strategic emphases, and criteria for success. Each of

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the six items has four possible results and the responder does not pick one result but
divides 100 points among the four results in an ipsative scale. Cameron and Quinn (1999)
describe how the validity of the OCAI is supported.

The Multifactor Leadership Questionnaire (MLQ 5X) measured leadership as

transactional, transformational, and laissez-faire and was designed by Avolio and Bass
(1995). These measurements are used to determine leadership styles. Leadership
outcomes of subordinates’ willingness to exert effort, subordinate satisfaction with their
leader, and the subordinate’s perception of their leader’s effectiveness, though these
outcomes were not part of this analysis (Avolio & Bass, 1995).

The MLQ 5X is a self-reporting questionnaire consisting of 45 questions addressing how

often the participant’s supervisor displays a spectrum of leadership behaviors (Gardner &
Stough, 2002). Five sub-scales consisting of four items each assesses characteristics of
transformational leadership including idealized influence attributes, idealized influence
behaviors, inspirational motivation, intellectual stimulation, and individual consideration.
Three sub-scales of four items each measure the transactional leadership components of
contingent rewards, active management by exception, and passive management by
exception (Avolio & Bass, 1995; Howell & Avolio, 1993). The MLQ 5X also measures
laissez-faire leadership with four items. Subordinates rate how frequently their leaders
engage in specific behaviors measured by the MLQ 5X by using a 5-point Likert scale
(Howell & Avolio, 1993). Avolio and Bass (1995) state that reliability of this instrument
exceeds accepted levels.

Factor analysis

Factor analysis aggregated the components of transformational leadership. The MLQ

determines leadership style by measuring different discrete determinants of behavior
(Avolio & Bass, 1995). Bono and Colbert (2005) formed an overall composite score for
transformational leadership by summing the components. Following this precedence, this
study employed component factor analysis with varimax rotation to measure the
intercorrelations between these five different factors of transformational leadership. The
reliability coefficient had an alpha score of .95 and intercorrelations between the
components ranged from .743 to .866, indicating that the components of transformational
leadership were not independent of each other in this study. Reliability analysis yielded
alpha scores of .78 for idealized influence attributes, .80 for idealized influence
behaviors, .87 for inspirational motivation, .80 for intellectual stimulation, .74 for
individual consideration, .84 for contingent rewards, .60 for management by exception
active, .74 management by exception passive, and .43 alpha for laissez-faire. Cronbach’s
alpha analysis for the measures of culture yielded alpha scores of .80 for clan, .76 for
adhocracy, .75 for hierarchy, and .70 alpha for market.

Additionally, factor analysis of the five components of transformational leadership

yielded a high score of .9000 for the Kaiser-Meyer-Olkin Measure of Sampling
Adequacy and a significant Bartlett's Test of Sphericity. As illustrated in Table 1, the
total variance explained by the first factor of Idealized Influence (Attributed) is 83.2%

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 131
and only one component is extracted. Carless (1998) also reported the MLQ as not
measuring separate transformational leader behaviors but rather a single higher-order
construct of transformational leadership. Based on precedence of other researchers
(Barling, Weber, & Kelloway, 1996; Bono & Colbert, 2005), this study combined the
components of transformational leadership into a composite score for analysis as the
transformational score for each leader.

Table 1
Factor Analysis: Transformational Leadership
Component Initial % of Variance Cumulative Extraction % of Cumulative %
Eigen % Sums of Variance
Values Sqrd
Loadings
1 4.16 83.2 83.2 4.16 83.2 83.2
2 .311 6.2 89.4
3 .225 4.5 93.9
4 .172 3.4 97.3
5 .132 2.6 100.0

Other research has combined the components of transformational and transactional

leadership. Den Hartog, Van Muijen, and Koopman (1997) found the MLQ did not
distinguish between transformational and transactional leadership; their study could only
distinguish between active and passive styles of leadership. This present study
investigated combining the components of transactional and transformational leadership
using factor analysis to combine transformational leadership components with the
transactional leadership components of contingent reward and management-by-exception
(active) but it was not as successful as that of only transformational leadership
components. When the components of transformational and transactional leadership were
combined by factor analysis, the overall variance explained was reduced to 71% and
Bartlett's Test of Sphericity was not significant. Therefore, transactional and
transformational components were not aggregated into one composite score for analysis
by this study. Additionally, factor analysis of the transactional components of contingent
reward and management-by-exception (active) was not significant. Contingent reward is
often described as the dominant behavior of transactional managers (Avolio & Bass,
1995); therefore, this study uses contingent reward as the measure of transactional
leadership. Laissez-faire leadership is defined by the component of laissez-faire measured
by the MLQ.

Data Collection

The sample for this survey was comprised of employees working full-time in various
industries. Those requested to respond to the survey are employees of companies that

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 132
expressed an interest in learning more about their organizational culture and dominant
style of leadership. The unit of measure was each responder to complete the survey. Out
of 460 surveys requested, 171 responded yielding a 37% response rate. Of these
responses, 6 were eliminated due to incomplete responses, resulting in 165 usable
surveys. Several of the responses required data conditioning such as when asked what
year they were born, they replied with a two digit rather than four digit responses.

Descriptive statistics to better understand the sample are displayed in Table 2. The
sample was 86% from the medical industry, 3% education, 2% finance, 2%
retail/wholesale, and 7 % other industries. The responders reported that 41% of them
have supervisor or managerial positions. In summary, this sample is highly female, very
experienced, mostly from the medical industry, and with a substantial history with their
current employer. Regression analysis included controlling for variables of age, seniority,
gender, and industry with no significant results.

Table 2
Survey Sample
Sex Male 28% Female 78%
Age Mean 45.5 years
Age Standard Deviation 11.9 Years
Age Range 19 years 70 years
Tenure with Employer
Mean Tenure 15 years
Tenure < 5 years 35%
Tenure < 1 years 4%

Research Hypothesis

H1. Organizational culture influences which types of leadership are employed in an

organization.

Cameron and Quinn describe the leadership traits likely to be found in each of the
quadrants of the Competing Values Framework (1999). They describe clan culture as
warm and friendly and consistent with transformational leadership that is inspirational
and idealized. Adhocracy cultures are vision-driven with the focus on external results, not
following internal processes, so it is inferred that transformational leadership traits such
as inspirational motivation would be found in such a culture. These two cultures are not
based on internal rules so they are not expected to contain transactional leadership
behaviors such as contingent reward.

Conversely, hierarchy and market cultures are based on internal controls. Cameron and
Quinn (1999) describe successful hierarchy leaders as those that enforce the rules of the

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 133
work-place. Therefore, it was anticipated to find leaders in these cultures that are
transactional but not transformational.

Results

This study tested the relationship between the four types of culture defined by the
Competing Values Framework (Cameron & Quinn, 1999) as the independent variable
and the three different leadership styles defined by Bass (1985) as the dependent variable.
Specifically, this study examines transactional, transformational, and laissez-faire
leadership as described in the previous sections. These dependent variables are correlated
with the four types of culture previously discussed. Regression analysis examined each
relationship for the strength of the relationship and for statistical significance at .05 level
of significance.

Table 3
Correlation of Organizational Cultures and Leadership Styles
Transformational Transactional Laissez-Faire
Clan
Correlation Coefficient 0.267 0.241 -0.153
p-value 0.001* 0.002* 0.049*
t-value 3.531 3.169 -1.981
Adhocracy
Correlation Coefficient 0.190 0.172 -0.110
p-value 0.015* 0.027* 0.160
t-value 2.467 2.233 -1.412
Hierarchy
Correlation Coefficient -0.183 -0.148 0.090
p-value 0.018* 0.058 0.252
t-value -2.382 -1.909 1.149
Market

Correlation Coefficient -0.036 -0.047 -0.036

p-value

t-value 0.648 0.546 0.651

-0.458 -0.605 -0.454

Note: * Correlation is significant at 0.05 level (two-tailed)

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 134
Results of the analysis are illustrated in Table 3. There was a significant relationship
between several of the specific organizational cultures and leadership styles including
between transformational leadership style and clan culture. Cameron and Quinn (1999)
predicted that the behaviors of a transformational leader such as inspirational motivation
would be found in clan cultures and this analysis is strong evidence to support that
proposal. Furthermore, there was a significant relationship between transactional
leadership and clan culture. This finding is not consistent with current literature. Cameron
and Quinn predicted that transactional behavior would be found in rule-based cultures,
not flexible clan cultures. While this finding was inconsistent with Cameron and Quinn, it
does support the research of Den Hartog, Van Muijen, and Koopmen (1997) that
transactional and transformational behaviors are similar and often are indistinguishable.
Laissez-faire leadership style and clan culture had a negative correlation, indicating the
friendly and accessible culture of a clan an unlikely place to find a disengaged manager.

Analysis of adhocracy culture indicated there was a significant relationship with

transformational leadership style. Cameron and Quinn (1999) predicted the behaviors of a
transformational leader such as inspirational motivation would be found in adhocracy
cultures and this is verification of their proposal. Leaders are often the inspiration for
members breaking the internal organizational processes to achieve team goals. It is
logical and expected that transformational leaders were found in adhocracy cultures.

Additionally, there was a significant relationship between transactional leadership style

and adhocracy culture. Cameron and Quinn (1999) suggested the rule-breaking behaviors
in an adhocracy culture would not support the contingent reward behaviors of a
transactional leader. Contingent rewards use contracts to motivate members with rewards.
It is the follower’s trust in the fulfillment of this contract that determines a transactional
leader’s ability to influence others. Adhocracy cultures are mission-driven organization
with temporary arrangements that are fluid. It is unforeseen to see the contracts that
define contingent reward behaviors in a culture which stresses flexibility such as the
adhocracy culture. A possible explanation is the speed at which contingent reward
contracts are arranged might make them useful in the dynamic adhocracy environment
and is further support for the research of Den Hartog, Van Muijen, and Koopmen (1997)
that transformational and transaction behavior often appear together. Finally, there was
not a significant relationship between laissez-faire leadership style and adhocracy culture.

Hierarchy cultures focus on bureaucracy to maximize organizational efficiency by

following established procedures. There was a significant negative relationship between
hierarchy cultures and transformational leadership style. This negative relationship is
expected as transformational leaders use vision to inspire and motivate workers toward
organizational goals. Hierarchy cultures enforce process rules within the organization to
achieve consistency and efficiency. It is understandable that these differing methods are
negatively related; the more an organization focuses on internal processes, the less
latitude there is for a visionary leader.

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 135
Cameron and Quinn (1999) predicted that the behaviors of a transactional leader would
be found in a rules-based hierarchy culture. Transactional leaders use active management
by exception behaviors to identify and correct actions that are not in compliance with
norms for the organization. It was a not predicted to find the relationship negative but
non-significant between transactional leader behaviors in process-driven hierarchy
cultures, although with p=.058 the negative relationship was nearly significant. It is the
leaders that define and enforce the rules of hierarchy culture; therefore the study assumed
the contract-based behaviors of a transactional leader would be found in this hierarchy
culture. A possible explanation is the process rules in this culture replace the need for the
leader to generate contracts for behavior. Furthermore, there was not a significant
relationship between laissez-faire leadership style and hierarchy culture.

As previously stated, the market culture is an externally focused, numbers driven

environment where members are often measured against each others’ performance.
Market cultures are results-oriented and transaction based and do not include the
inspirational and visionary behaviors associated with transformational leadership. It is
consistent with this framework that there was not a significant relationship between the
two. However, research anticipated the behaviors of a transformational leader would be
found in market cultures. Market cultures are results-oriented where leaders excel at
negotiating terms and achieving results (Cameron & Quinn, 1999). These negotiating
activities and focus on results are consistent with the transactional leadership behavior of
contingent reward which offers rewards based on performance (Bass, 1985). It was
unexpected when analysis found this relationship negative and far from significant. This
result may be similar to the hierarchy results in which the rules and process controls of
the organization negate any strong leadership style. Finally, there is not a significant
relationship between laissez-faire leadership style and market culture.

Discussion

Leadership and organizational culture are two important factors in determining

organizational performance (Berrio, 1995) therefore it is important for maximum
organization performance to understand how these constructs influence each other. The
single most important finding of this research was that there is a significant positive
correlation between both transformational and transactional leaders in both clan and
adhocracy cultures. It is important for organizational leaders to understand they are found
in both clan and adhocracy cultures and not hierarchy or market cultures. It appears less
organizational control allows the active styles of leadership to flourish. This framework
can serve as an effective model for organizational leaders who support matching
leadership style with organizational culture. The linkage between transformational and
transactional leaders suggests that both styles of dynamic leaders are necessary in the
flexible environments of clan and adhocracy cultures. Cultures with fewer rules and more
discretion require leaders that are more active than other organizational cultures which
emphasize centralized organizational control. It appears the organization needs to reduce
the internal controls and follow the old adage of “let leaders lead”.

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 136
Clan and adhocracy cultures’ positive relationships with transformational and
transactional leadership supports earlier studies such as Den Hartog, Van Muijen, and
Koopmen (1997) that indicated it may be difficult to distinguish between
transformational leadership and the contingent reward behavior of transactional
leadership. Both leadership styles are types of active management that may be successful
in specific situations. This pairing of transactional and transformational leadership was
supported by this study in three of the four types of organizational cultures studied.
Hierarchy culture was the exception as it was negatively related to both transformational
and transactional leadership but the relationship to transactional leadership was not
significant, although at p=.058 it approaches significance.

There are several important implications from this empirical research for organizations.
First, from a theoretical standpoint, the framework and model suggest finding
transformational and transactional leadership styles in clan and adhocracy cultures
evolved out of a need for active styles of management in cultures that have less structure
and more flexibility. It is the leader’s job to provide any required control, not the business
systems and processes. This is valuable research for organizational leaders and change
agents who will be hiring new company leaders and who are involved in change.
Organizations with clan or adhocracy cultures should promote or recruit active leaders
demonstrating the qualities of transformational and transactional leaders. The supposition
is that transformational and transactional leaders will be supported by the current
environment and be effective when working with employees in the existing culture.

Transformational leaders were negatively correlated with hierarchy environments in this

study. Therefore, this study suggests that transformational leaders would not be
successful in the hierarchy culture. The causation is not clear; do transformational leaders
change their style in hierarchy cultures or do they become frustrated with the emphasis on
following rules and leave the organization? Avolio and Bass (1995) demonstrated that in
the long run, transformational leaders are more effective than transactional and laissez-
faire leaders. Followers are more motivated to perform by an inspiring vision from a
charismatic leader than by the promise of short-term rewards contingent on performance.
It is important that organizations with hierarchy cultures recognize that their culture does
not support the most effective style of leadership. These organizations’ executives must
understand the hierarchy culture’s process control and emphasis on efficiency and
repeatable performance does not attract the best candidates for long-term effective
leadership. Stakeholders must decide between a culture that promotes optimum
organizational efficiencies or the optimum style of leadership.

In light of the conclusions from this study, as well as the potential and promise for
promoting informed decision making as part of organizational change and leadership
selection processes, several promising areas for exploration are worth highlighting. The
study results supports surveys such as Den Hartog, Van Muijen, and Koopmen (1997)
that defined transformational and transactional leaders as active leaders using the
behaviors of both styles of management. This study adds to the body of knowledge by
indicating both these leadership styles are positively correlated to clan and adhocracy
cultures. It would be of interest to investigate these dual-style leaders and examine the

Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 10, Summer 2010 137
circumstances in which they use the different styles of leadership. Rather than additional
leadership surveys to distinguish between transformational and transactional leaders, it
may be more useful to understand when to use the behaviors of each style of leadership to
be an effective leader. Leaders in clan and adhocracy cultures could use this information
to learn when to employ transactional and transformational leadership behaviors to
increase effectiveness.

Limitations of the research

There are several important limitations related to the framework and the design process
common when analyzing organizational cultures. The study used each respondent as a
unit of study to compare the organizational culture to the reported style of the responder’s
leaders. Schein (1992) urged studying organization culture using more than surveys. He
suggested the researcher should visit the organization when possible and confirm the
survey results with follow-up investigations. Confirming reported organizational cultures
by all the organizations in this study was not possible due to the need to collect surveys
from many different cultures. However, two of the organizations were visited and
employees were in agreement that the survey accurately identified their organizational
culture.

The MLQ survey may be used by five employees to rate the same leader to increase the
reliability of the ratings. It might be possible to repeat this study using multiple responses
for each leader but leaders and survey respondents would need to be identified and
surveyed. This new survey might have increased reliability of the leader evaluation but
would consume more resources and possibly be less random as the leaders and the
employees would have to be identified.

The pool of candidates for this survey was selected for access and willingness to
participate while protecting anonymity. The sample was purposeful and may not reflect
the businesses in the region. A method to improve the sample would be to extend the
survey to other regional businesses. This would increase both the sample size and the
number of organizational cultures polled.

This study assumes organizational culture as the independent variable and leadership as
the dependent variable. Grojean, Resick, Dickson, and Smith (2004), and Block (2003)
reported that leaders may have an influence on organizational culture. Furthermore, Ahn,
Adamson, and Dornbusch (2004) found that managers often control the changes in an
organization’s culture. Further research is needed to determine the causality of this
relationship and how this relationship develops.

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