LEADERSHIP BEHAVIORS AND THEIR IMPACT ON

ORGANIZATIONAL PERFORMANCE
IN GOVERNMENTAL ENTITIES

Jonathan Muterera a
a
School of Business and Economics, Nipissing University, North Bay, Ontario, Canada.
a
Corresponding author: jmuterera@muterera.com

©Ontario International Development Agency ISSN: 1923-6654 (print)

ISSN 1923-6662 (online). Available at http://www.ssrn.com/link/OIDA-Intl-Journal-Sustainable-Dev.html

Abstract: One factor that researchers regularly cite as INTRODUCTION

one of the most important contributors to
organizational performance is leadership. However,
despite the widespread speculation that leadership is
important for organizational success, there has been
relatively little research regarding the impact of
leadership behaviors on organizational performance
in governmental entities. More specifically, there is
little research examining the impact of
transformational leadership behaviors on
organizational performance within governmental
entities. Consequently, the purpose of this paper is to
empirically examine whether transformational
leadership styles of leaders in governmental settings
impact public sector organizational performance.
Further, the study examines whether transformational
leadership styles of leaders in governmental settings
augment the impact of transactional leadership on
public sector organizational performance. Data was
collected from chief executives in 372 county
governments in the United States. Overall, the results
show that transformational leadership behaviors have
a significant impact or organizational performance. In
addition, the results show that leaders who use
transformational leadership as their primary or
dominant leadership style have an impact on
organizational performance over and beyond the
impact of those leaders who mostly use transactional
style.
Keywords: Government Performance, Leadership
behaviors, Transactional Leadership,
Transformational Leadership
ne of the major challenges faced by local
O government administrators and their
organizations is that, citizens are increasingly
becoming dependent upon many local
government services, including but not
limited to, fire, police, water, sewage, schools, and
housing. In providing these services to citizens,
government organizations at all levels are expected to
perform effectively. Over the years, however,
governmental entities have been the target of
criticism for not living up to this very important
expectation, especially in developing countries. As
such, we have seen much being written about the
factors that affect government performance.
One factor that researchers regularly cite as an
important contributor to organizational performance
within the public sector is leadership. According to
Wolf (1993) “throughout history scholars of politics
and public administration have attributed the
renowned instances of agency effectiveness largely to
the leadership skills, styles, and characters of their
chiefs” (p. 163). Indeed, research in leadership is
overflowing with articles and books suggesting that
“effective leadership” is the key to organizational
performance or effectiveness. However, despite the
widespread speculation that leadership is important
for organizational success, a review of literature on
examining the linkage between leadership and
governmental organizational performance shows
several limitations. First, despite the widespread
speculation that leadership is important for
20 Muterera / OIDA International Journal of Sustainable Development 03: 08 (2012)

organizational success, little scientific evidence,
particularly within the public sector context, verifies
these speculations. For example, Boyne (2003) found
that only four studies (i.e. Brewer & Selden, 2000;
Meier & O’Toole, 2002; Wolf, 1993; Zigarelli, 1996)
have empirically addressed the linkage between
leadership behaviors and organizational performance.
Second, much has been written about
transformational leadership theory; however, despite
a growing attention in literature on the theory, there is
very little current empirical knowledge on the
relationship between transactional-transformational
leadership behaviors and governmental
organizational performance.
Therefore, the primary aim of the study is to
empirically test and determine if transactional and
transformational leadership behaviors help explain
local government executive leadership behaviors as
they relate to the perceived effectiveness of
governmental entities.
MATERIALS AND METHODS
The transformational leadership theory paradigm
Burns (1978) originally drew attention to the concept
of transformational leadership. He defined a
transformational leader as an individual that inspires
other individuals to perform beyond expectations.
Building on Burns’ work, Bass (1985) refined and
operationalized concept of transformational
leadership. Bass made a distinction between
transactional and transformational leadership.
Leaders who use transactional leadership behaviors
as their dominant leadership style often emphasize
the economic interchanges between them and their
followers. For example these leaders often exchange
tangible rewards such as money for performance.
However, a transformational leader does more with
his/her followers than rely on conditional and
economic exchanges. Transformational leaders
inspire followers to commit themselves to
organizational goals, thus performing beyond
expectations (Bass & Avolio, 1990; Northouse,
2004).
As stated earlier, very limited studies have looked at
the linkage between other constructs of leadership
theories and organizational performance in
governmental entities (i.e. Brewer & Seldon, 2000;
Meirer & O’Toole; Wolf, 1993). Moreover, as best as
the researcher can tell, no studies have empirically
tested the specific linkage between Bass’s
transformational leadership theory and governmental
organizational performance. Fortunately, a
foundation for this study exists in literature.
Numerous studies within the private sector have
found that transformational and transactional
leadership positively impact organizational
performance. For example, in a meta-analytic study
by Lowe, Kroeck, and Sivasubramaniam (1996),
transformational and transactional leadership
behaviors were positively correlated with
performance in a variety of organizational settings.
Further, other studies have found that
transformational leadership behaviors impact various
facets of performance more than the impact of
transactional leadership behaviors (Judge & Piccolo,
2004). Therefore, the first hypothesis in this study is
that both transformational and transactional
leadership behaviors are positively correlated with
organizational performance. Further, it is
hypothesized that transformational leadership
behaviors positively impact governmental
organizational performance, over and above
transactional leadership behaviors.
Sampling
The participants for the study consisted of 372 chief
executives in local governments (specifically county
governments) in the United States. The participants
were individuals with a full range of powers,
including the authority to direct the affairs of the
organization, the authority to hire, fire, promote, or
demote department heads and/or county employees,
etc. The job titles of these individuals varied
significantly. However, the most common job titles
used include County Commissioner (CC), Chief
County Executive (CCE), County Executive Officer
(CEO), Chief County Administrator (CCA), and
County Administrative Officer (CAO). Participants
were asked to respond to questions regarding their
leadership behaviors and the perceived performance
of their organizations. Some background and
demographic data was also collected.
Instrumentation
With the exception of background and demographic
data and certain items in the organizational
performance section, the survey questionnaire
included instruments that have been established by
other scholars and are widely used in literature.
The Multifactor Leadership Questionnaire Short
Form (MLQ 5X Short Form) (Avolio & Bass, 2004;
Bass & Avolio, 2000), which consists of 45 items
was used to collect information on leadership
styles/behaviors. The 45-item questionnaire is the
standard instrument used to collect information on
four sets of factors: transformational, transactional,
and laissez-faire leadership, and leadership outcome
factors (Avolio & Bass, 2004). This study adapted 32
questions that measured transformational leadership
and transactional leadership behaviors. The
reliability and validity of this instrument is detailed in
literature. Bass and Avolio (2000) conducted the
initial validation study of the MLQ Form 5X. In their
 Muterera / OIDA International Journal of Sustainable Development 03: 08 (2012)
studies consisting of fourteen samples with a total N
= 3,860, Bass and Avolio (2000) reported reliabilities
ranging from .74 to .94.
Traditionally, objective data on organizational
performance are preferable. However, such data is
not readily available, especially for governmental
entities. As such, subjective data are acceptable as an
alternative (Chun & Rainey, 2005; Delaney &
Huselid, 1996; Dess & Robinson, 1984; Kim, 2005;
McCracken, Mcllwain, & Fottler, 2001; Schmid,
2002). The 16 item questionnaire on organizational
performance developed by Quinn (1988, pp. 139-
140) was used to measure organizational
performance. The sixteen item scale developed by
Quinn has been widely used in literature and its
validity and reliability as a measure of organizational
performance has been well established. Six additional
questions to measure organizational performance
were designed by the researcher. When the reliability
coefficient (Cronbach, 1984) was computed for
Quinns’ 16-item questionnaire, the results revealed a
reliability coefficient of .92. When the reliability
coefficient for the 6 item questionnaire developed by
the researcher was computed, the results showed a
reliability coefficient of .84. However, when the two
scales were combined, the reliability coefficient
increased to .95. Furthermore, the 16-item index of
organizational performance (developed by Quinn)
highly correlated (r = .997) with the 6-item index of
organizational performance (developed by the
researcher); thereby suggesting that the two scales are
most likely measuring the same thing. Therefore, the
two questionnaires were combined to create a 22 item
overall index of organizational performance.
Data Analysis
Transactional and transformational leadership
behaviors were the independent variables while
governmental organizational performance was the
dependant variable. To test the hypotheses discussed
above, regression analysis, specifically hierarchical
regression analysis (Geyer & Steyrer, 1998) was
used. First transactional leadership was entered into
the regression model to assess the amount of variance
it explains in the outcome measure, i.e. organizational
performance. Next, transformational leadership was
entered in the model to assess how much variance it
added to explaining the outcome measures, in
addition to the variance already explained by
transactional leadership. The change in R2 would
represent the variance explained by transformational
leadership. All data was analyzed with using STATA
and an alpha level of 0.05 was used to test for
significance.
RESULTS AND DISCUSSION
21
Descriptive Statistics
Two types of leadership styles were measured, i.e.
transformational and transactional. These represented
the independent variables in the study. The observed
score range for the transformational leadership
measure was 2 to 5 with a mean score for leaders
rating themselves at 3.53 and standard deviation of
.58. The transactional leadership observed score
range was 1 to 5. The mean score for leaders rating
themselves was 2.99 with a standard deviation of .67.
Organizational performance was the dependent
variable in this study. The range of possible scores
for the organizational performance measure was 1 to
5; with 1 representing a poorly performing entity and
5 representing a highly performing organization. The
observed score range was 2 to 5. The mean was 3.52
with a standard deviation of .60. Table 1 shows the
descriptive statistics for the variables used in the
study.
Statistical Analyses
Prior to performing the hierarchical regression
analysis discussed above, correlation analyses were
conducted to determine the independent correlative
relationship between transformational and
transactional leadership behaviors and governmental
organizational performance. Overall, transformational
leadership was significantly (p<.001) and positively
(r =.37) correlated with governmental organizational
performance. . Transactional leadership was also
significantly (p<.001) and positively (r =.25)
correlated with organizational performance. Table 2
shows the Pearson product-moment correlations for
each of the leadership styles and organizational
performance.
Overall, it can be concluded that the correlational
association between transformational leadership and
organizational performance is significant. Likewise,
the correlational relationship between transactional
leadership and organizational performance is also
significant.
Following the analysis described above, regression
analyses, specifically hierarchical regression was
conducted to determine the predictive validity of
transactional and transformational leadership styles.
First, the relationship between transactional
leadership and organizational performance was
tested. As shown in table 3 regressing transactional
leadership onto organizational performance produced
an R2 of .06 (p<.01) and a significant beta weight of
(β = .228, p<.01). Second, transformational
leadership was included in the regression equation.
Regressing transformational leadership, along with
transactional leadership onto organizational
performance produced an R2 of .14 (p<.01) and a
significant beta weight of (β = .383, p<.01).
22 Muterera / OIDA International Journal of Sustainable Development 03: 08 (2012)

Table 1: Descriptive Statistics for Variables

Variable Mean Std. Dev Min Max

Transactional Leadership 3.53 .58 2 5

Transformational Leadership 2.99 .67 1 5

Organizational Performance 3.52 .60 2 5

N = 372

Table 2: Correlations for Leadership Styles and Organizational Performance

Organizational Performance

Transformational 0.37*
Leadership

Transactional Leadership 0.25*

* p<.001; N = 372

Table 3: Regressions Analyses

Organizational Performance

Β R2 ∆R2

Transactional Leadership .228* 0.06

Transformational Leadership .383 * 0.14 0.08

* p<.01; N = 372

R2 represents variance explained by the model

∆R2 represents change in R2 explained by adding transformational leadership to model

β (beta coefficient) is the regression coefficient for the variable.

 Muterera / OIDA International Journal of Sustainable Development 03: 08 (2012)
In summary the results of the analyses above suggest
that both transactional and transformational
leadership behaviors are positively related to
governmental organizational performance. Moreover,
the augmentation hypothesis was supported by the
data in the study. If transactional leadership alone is
regressed on organizational performance, only 6% of
the variance in organizational performance was
explained by that leadership construct. However,
when both transactional and transformational
leadership behaviors are regressed against
organizational performance, a considerable portion of
variance, that is, 14% can be accounted for by both
leadership behaviors. This suggests that
transformational leadership explains an additional 8%
variance in organizational performance.
Although there is relatively little research on the
transactional-transformational leadership concept and
its relationship with governmental organizational
performance, the results in the study are consistent
with research that has been conducted in other
sectors, particularly studies conducted in the business
sector (Lowe, et al., 1996).
CONCLUSIONS
The significance of this study is apparent in both its
contributions to the literature as well as practice.
First, a review of literature suggests that very few
studies (e.g. Boyne, 2003; Brewer & Selden, 2000;
Kim 2003) have tested the linkage between
leadership behaviors and governmental
organizational performance. As best as the
researcher can tell, no studies have been done within
the public sector context to examine the relationship
between transactional-transformational leadership
behaviors and governmental organizational
performance. Therefore, this research seeks to extend
prior theoretical and empirical work by covering this
gap.
Next, the study has several practical implications.
First, transactional and transformational leadership
behaviors were found to contribute to governmental
organizational performance. Second, the results
showed that transformational leadership behaviors
positively contributed to organizational performance
over and above the contribution made by
transactional leadership. These results suggest that
local governmental entities that are serious about
improving their performance can benefit from
incorporating the transformational leadership theory
paradigm as an integral component in leadership
training of managers at all levels.
Despite the theoretical and practical contributions of
this study, it has a number of limitations. These
limitations give rise to some suggestions for future
research. First, the study was cross sectional in
23
nature. Further, the study was largely correlational
thus, causality cannot be determined. A longitudinal
study could gather information about
transformational and transactional leadership styles
and organizational performance on an appropriate
time span and strengthen the comments on causality.
Second, the study did not examine the specific
dimensions of transactional and transformational
leadership behaviors. Future research should focus on
examining these specific dimensions of leadership
and the interactions they have with governmental
organizational performance. Finally, the study
examined only the direct relationship between
transactional leadership, transformational leadership,
and governmental organizational performance. As we
know, leaders seldom work in a vacuum. A growing
consensus in literature is that managers work “with
and through other people to accomplish the
objectives and goals of an organization” (Hahn and
Kleiner, 2002, p. 1). Very little empirical evidence is
offered in literature to show how the behaviors of
leaders influence the attitudes and behaviors of
followers, to achieve organizational performance
beyond expectations. Perhaps this is an area where
significant contributions could be made.
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