Effect of Leadership on Organizational Commitment

Author(s): Shiji Lyndon and Preeti S. Rawat

Source: Indian Journal of Industrial Relations , July 2015, Vol. 51, No. 1 (July 2015), pp.
97-108
Published by: Shri Ram Centre for Industrial Relations and Human Resources

Stable URL: https://www.jstor.org/stable/43974541

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Effect of Leadership on Organizational
Commitment

Shiji Lyndon & Preeti S. Rawat

This paper focuses on the relation- Introduction

ship between leadership and or-
ganizational commitment in the In today's competitive environment
Indian context. It traces the re- organizations are trying to outperform their
search on leadership and commit-competitors by producing better products
ment and arrives at a conceptualand services. To achieve this objective,
framework establishing the link-an organization requires highly committed
ages between the relevant vari- employees. Organizational commitment
refers to an employee's psychological
ables. Data was collected through
bond with the organization (Mowday,
questionnaires to measure leader-
ship styles and organizationalSteers & Porter, 1982). The concept of
commitment. A total of 239 re-organizational commitment has received
sponses was gathered from em-considerable attention because of its im-
ployees working in banking, pact on individual performance, organiza-
higher education, Informationtional effectiveness and its relationship
Technology and manufacturing with desirable work outcomes (Simosi &
Xenikou, 2010). Thus, the factors which
sectors. The research fìnds a posi-
tive linkage between leadership
influence organizational commitment have
style and organizational commit-
become an important area of research in
the field of human resource development
ment. One important finding of the
study has been that, in the Indian (Joo & Shim, 2010).
context, contingent reward is per-
ceived more transformational than An increasing number of studies fo-
transactional factor. Implications cus on identifying the antecedents of or-
of this study on managerial prac- ganizational commitment (Chen &
tice are also discussed. Francesco, 2000; Lok & Crawford,
2001; Mathieu &Zajac, 1990; William &
Shiji Lyndon (Email: shiji@somaiya.edu) Hazer,
is 1986). The influence of leaders
Assistant Professor & Preeti S. Rawat (Email:
on creating and maintaining organiza-
preetirawat@somaiya.edu) is Professor, K. J.
tional culture is an accepted fact (Panda
Somaiya Institute of Management Studies and
Research, Vidyavihar (E), Mumbai 400077. & Gupta, 2001). The literature on lead-

The Indian Journal of Industrial Relations, Vol. 51, No. 1, July 2015 97

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 S hi ji Lyndon & Preeti S. Rawat

ership suggests that the ability to under- The locus of leadership refers to the
stand and work within a culture is a pre- source from which leadership emerges.
requisite to leadership effectiveness While the mechanism of leadership im-
(Henessey, 1998). In this paper we study plies the means by which leadership is
the influence of leadership styles on or- enacted. Hernandez et. al. (2011) cat-
ganizational commitment. Transforma- egorized leadership theory into five loci:
tional and transactional leadership styles i.e. leader, follower, leader-follower dyad,
are studied to understand its influence on collective, and context. Hernandez et. al.
affective, continuance and normative (2011) also identified four mechanisms
commitment. of leadership i.e. traits, behaviors, cog-
nition and affect.
Leadership
Transformational & Transactional
Leadership is one of the most widely Leadership Theories
and frequently studied topics in the area
of organizational behavior (Yammarino, Transformational and transactional
2013). There are numerous definitions theories of leadership are based on the
and approaches to leadership. Leadership concepts given by McGregor Burns
can be viewed from multiple perspectives. (1978) in his bestselling book "Leader-
It can be represented as an act (Bennis ship". The concept of transformational
& Goldsmith, 1994), behavior (Hemphill leadership emerged 'from the interest in
& Coons, 1957; Gerber, Nel & Van Dyk, the concept of charismatic leadership.
1996; Rowden, 2000) or process Transformational leadership consists of
four components: charisma or idealized
(Jacques & Clement, 1991; Stogdill, 1974;
Yukl, 1999; Northhouse, 2007). influence, inspirational motivation, intel-
lectual stimulation and individualized con-
Similar to the wide range of leader-sideration (Bass, 1985). Charisma or ide-
ship definitions used by different re- alized influence is the degree to which
the leaders can influence followers to
searchers and practitioners, there are also
differences in conceptualizing and mea- identify with the leader by arousing
suring leadership. Some of them have strong emotions. Inspirational motivation
focused solely on the leader to explain is the degree to which the leader com-
leadership, while there are others who municates an appealing vision and in-
have used follower centered approach. spires followers to pursue that. Intellec-
Graen and Uhl Bien (1995) classified tual stimulation is the degree to which
leadership theories into three categories:the leader articulates new ideas, encour-
the leader, the follower and the leader ages followers to question conventional
follower relationship. Hernandez, Eberly, practices and fosters creativity among
Avolio and Johnson (2011) integrated the the followers. Individualized consider-
numerous theories of leadership on the ation is the degree to which the leader
basis of two fundamental principles i.e. provides support, encouragement and
the locus and mechanism of leadership. coaching to followers.

98 The Indian Journal of Industrial Relations, Vol. 51, No. 1, July 2015

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 Effect of Leadership on Organizational Commitment

Transactional leadership refers to the in an organization. It is the mental con-

exchange relationship between the leader tract which connects the individual to the
and the follower to fulfill their interests organization (Wallace, 1995). It helps in
(Bass, 1999). Transactional leaders try to developing voluntary cooperation within
fulfill follower's needs in exchange of their the organization. It shows the strength
completing the job requirements. Trans- of an individual's identification with the
actional leadership consists of three com- involvement in an organization and also
ponents: contingent reward, management the willingness to remain in the organi-
by exception-active and management by zation (Mowday, Steers, & Porter, 1979).
exception-passive. Contingent reward re- Organizational commitment has three
fers to the degree to which leaders can characteristics: (a) belief in and accep-
establish transaction with followers by tance of organizational goals, (b) willing-
rewarding the efforts of followers by com- ness to put effort and (c) desire to con-
municating with them as to what they must tinue to be the member of the organiza-
do to get rewards and punishing undesir- tion (Porter, Steers, Mowday & Boulian,
able actions. Management by exception 1974).
is the degree to which the leader takes
action by intervening so that the decided Mathieu and Zajac (1990) conducted
standards are achieved. The difference a meta-analysis to examine the anteced-
between active and passive management- ents, correlates and consequences of or-
by-exception is made on the basis of the ganizational commitment. They identified
timing of the leader's intervention (Bass twenty six common antecedents of or-
&Avolio, 1993). Active leaders interveneganizational commitment. They classified
by anticipating mistakes and problems andthose twenty six antecedents into five
taking preventive action before the prob- categories: (a) personal and demographic
lem becomes grave while passive leadervariables (b) variables related to job char-
intervenes only after the follower fails to acteristics (c) variables related to group
meet the pre-determined standards. leader (d) organizational characteristics
related variables and (e) role related vari-
ables. Another major study on the ante-
Active leaders intervene by antici-
cedents, correlates and consequences of
pating mistakes and problems and
organizational commitment was the meta-
taking preventive action before
analysis conducted by Meyer, Stanley,
the problem becomes grave while
Herscovitch and Topolnytsky (2002).
passive leader intervenes only af-
They investigated the correlation be-
ter the follower fails to meet the
tween the variables identified in the
pre-determined standards.
three-component model of organizational
commitment unlike Mathieu and Zajac
Organizational Commitment (1990) who had based their observations
on attitudinal-behavioral perspective of
Organizational Commitment is the organizational commitment. They divided
the antecedents into four categories: (a)
degree of identification and participation

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 Shi ji Lyndon & Preeti S. Rawat

demographic variables such as age, gen- the employees' perceived obligation to

der, education, organization tenure, posi- remain with their organization (Lee et al.,
tion tenure and marital status, (b) vari- 2001; Wasti, 2003). An employee with
ables related to individual differences normative commitment will stay with an
organization because they feel that they
such as locus of control and self-efficacy,
(c) variables related to work experiences"ought to" (Clugston et al., 2000).
such as organizational support, transfor-
mational leadership, role ambiguity, role Transformational Leadership
conflict, interactional justice, distributive
justice and procedural justice, (d) vari-Commitment is as a result of effec-
ables related to alternatives/investments tive leadership style (Walumbwa, Lawler,
such as alternatives available, invest- Avolio, Wang & Shi, 2005; Walumbwa &
ments made, transferability of educationLawler, 2003). Transformational leaders
and transferability of skills. motivate employees through emotionally
connecting with them and creating a com-
Three Component Model pelling vision. They promote values which
are related to the goal accomplishment,
Meyer and Allen (1991) developed aby emphasizing the link between the
three component model of organizationalemployee's efforts and goal achievement
commitment. They defined these three and by creating a greater degree of per-
themes as components of organizationalsonal commitment to the ultimate common
commitment namely affective commit- vision of the organization (Shamir, Zakay&
ment, continuance commitment, and nor-Popper, 1998). Transformational leaders
mative commitment. are sensitive to the needs of the employ-
ees and thus try to satisfy them by creat-
Affective commitment leads to con- ing environment where employees desire
tinuing to work for an organization be- to continue with the organization (Jack-
cause of the employee's emotional at- son, Meyer & Wang, 2013). They influ-
tachment, involvement and identificationence organizational commitment by en-
with the organization (Wasti, 2003). Em- couraging employees to think critically by
ployees with affective commitment re- involving followers in decision-making pro-
mains in the organization because theycesses, inspiring loyalty, while recogniz-
"want to". Continuance commitment re- ing using innovative ways, and appreciat-
fers to tfc|e commitment that is based on
ing the different needs of each follower
the costs that are linked with leavingto a develop his or her personal potential
(Avolio,
specific organization (Wasti, 2003). In the 1999). Walumbwa and Lawler
case of continuance commitment, the (2003) found that transformational lead-
employee primarily stays with their cur- ers can motivate and increase follower's
rent organization because they perceivemotivation and organization commitment
that leaving the organization would cost by getting them to solve problems cre-
too much (Clugston, Howell & Dorfman, atively and also understanding their needs.
2000). Normative commitment refers to They may also create a sense of obliga-

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 Effect of Leadership on Organizational Commitment

tion in employees which leads to norma- Hypothesis 2: Transformational leader-

tive commitment (Bass &Riggio, 2005). ship is positively related to affective
commitment.
Research on the relationship between
Hypothesis 3: Transformational leader-
transformational leadership and the differ-
ship is positively related to normative
ent components of commitment have re-
commitment.
sulted in different findings. The meta-ana-
lytic studies suggest that employees work- The links between transforma-
ing with transformational leaders demon- tional/charismatic leadership and con-
strate fewer withdrawal behaviors and are tinuance commitment is relatively
more committed to their organizations complex because it is a multidimen-
(Walumbwa et al., 2004; Walumbwa & sional concept (Powell & Meyer,
Lawler, 2003). Heinitz and Rowold (2007) 2004) which includes the perceived
and Rafferty and Griffin (2004) reported cost of leaving because of lack of al-
positive relation of transformational lead- ternatives and also tendency to stay
ership with affective commitment. Meyer, back because of investments made in
Stanley, Herscovitch & Topolnytsky the organization (Jackson et al., 2013).
(2002) identified four studies that exam- At a conceptual level, it is expected
ine the relationship between transforma- that there might be a positive correla-
tional leadership and affective commit- tion between transformational/charis-
ment and continuance commitment and matic leadership and continuance com-
three studies investigating the relation with mitment because the positive condi-
normative commitment. They found posi- tions created by transformational lead-
tive relation with affective commitment and ers would be perceived as a loss if
normative commitment and a negative employees decided to leave the orga-
relation with continuance commitment. nization (Connel, Ferres &Travagilone,
The meta analytic study of Jackson et al. 2003). Felfe, Yan & Six (2008) found
(2013) also found transformational lead- weak positive correlation between
ership is positively related to affective and transformational leadership and con-
normative commitment. tinuance commitment. However,
Rafferty & Griffin (2004) and Meyer,
Stanley, Herscovitch & Topolnytsky
(2002) found that several dimensions
Esformational
r vely related to leadership affective and is
normative commitment. of transformational leadership corre-
lated negatively with continuance com-
mitment. Therefore, because of the
Based on the literature, following
lack of conclusive literature on rela-
hypotheses are proposed: tion between transformational leader-
ship and continuance commitment, no
Hypothesis 1: Leadership is positively
specific hypothesis was formulated and
related to organizational commit-analysis was considered exploratory.
ment.

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 Shiji Lyndon & Preeti S. Rawat

Transactional Leadership no specific hypothesis was formulated

and analysis was considered explor-
There are two aspects of transac- atory.
tional leadership i.e. contingent reward
leadership and management by exception Transformational vs. Transactional
leadership. Contingent reward relation- Leadership
ship is rewarding employees when they
achieve the desired objective. Manage- Transformational and transactional
ment by exception is involving with the leaders differ in terms what the leaders
employees only to correct the mistakes. and followers have to offer one another
Management by exception can be active (Conger & Kanungo, 1998). Transforma-
or passive. Judge and Piccolo (2004) tional leaders offer purpose to the fol-
found that contingent reward leadership lower which is beyond the short term
had strong positive correlation with job goals and also aims to fulfill their higher
satisfaction and performance which has order intrinsic needs while transactional
been linked to commitment (Meyer et al., leaders focus on proper exchange of re-
2002). The meta analysis by Jackson et sources. Transformational leadership
al., (2013) also found a strong positive helps the followers to identify with the
relation between contingent reward lead- needs of the leaders, whereas, transac-
ership and affective commitment. They tional leader provides the followers with
found that management by exception (ac- something which they want in exchange
tive) also had positive but weak correla-from the leader for their contribution
tion with affective commitment. While, (Kuhnert & Lewis, 1987). Therefore,
management by exception (passive) hadconceptually transformational leadership
negative correlation with affective com- leads to more commitment than transac-
mitment. tional leadership style.

Therefore, based on the literature,

Conceptually transformational lead-
following hypotheses are proposed:
I ership leads to more commitment
than transactional leadership style.
Hypothesis 4: Leadership style following
contingent reward relates positively
to affective commitment. Research also shows similar findings.
Limsila and Ogunlana (2007) found that
Hypothesis 5: Leadership style following transformational leadership style is likely
the dimension of management by to generate commitment from subordi-
exception (active) relates positivelynates while transactional is not.Therefore,
to affective commitment.
based on the literature, following hypoth-
Literature does not give any strongesis is proposed:
theoretical rationale for the relations of
transactional leadership with normative Hypothesis 6: Transformational leader-
and continuance commitment, therefore, ship style leads to higher organiza-

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 Effect of Leadership on Organizational Commitment

tional commitment than transactionalcommitment namely affective commit-

leadership style. ment scale (ACS), the continuance com-
mitment scale (CCS) and the normative
Research Design
commitment scale (NCS). Each of the
scales consists of eight statements that
Data was collected through question-
comprise the 24 statements and all state-
naires to measure leadership styles and
ments were linked to a five point Likert
organizational commitment. A total of 239
type interval scale. Cronbach 's Alpha was
responses was gathered from employees
0.87 for affective, 0.75 for continuance
working in banking, higher'education, in-
and 0.79 for normative commitment (Allen
formation technology and manufactur-
& Meyer, 1990).
ing sectors. There were 137 males and
101 females. The sample consists of 133
Leadership was measured using 32
employees with graduation, while 106
items from Avolio and Bass' (2004) Mul-
employees had post-graduation or profes-
tifactor Leadership Questionnaire (MLQ-
sional degree. 129 employees had less
Form 5X). It consists of eight factors i.e.
than 5 years of experience while 54 of
idealized influence, inspirational motiva-
them had more than 6 but less than 10
tion, intellectual stimulation, individualized
years of experience and 56 had more than
consideration, contingent reward, manage-
1 1 years of experience in their present
ment by exception(active) and manage-
organization. The sample comprised 83
ment by exception(passive). Cronbach's
employees from banking sector, 50 from
Alpha was 0.73 for eight idealized influ-
higher education, 65 from information
ence items, 0.83 for four inspirational mo-
technology and 41 from manufacturing
tivation items, 0.75 for five intellectual
industry.
stimulation items, and 0.77 for three indi-
vidualized consideration items, 0.69 for
Organizational commitment was mea-
four contingent reward items, 0.75 for four
sured using organizational commitment
active management by exception items,
scale (Allen & Meyer, 1990). It consists
and 0.70 for four passive management by
of three scales reflecting the three com-
exception items (Avolio & Bass, 2004).
ponent conceptualization of organizational
Research Model

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 Shiji Lyndon & Preeti 5. Rawat

Results & Analysis analyses with varimax rotation. Table 1

shows the rotated factor structure of or-

The results were analyzed using the
statistical package for social sciences
(SPSS). All the results are given in tables
1-4. Tables 1-2 show factor analysis of
organizational commitment and leader-
ship scales using principal component
ganizational commitment scale. The di-
mension of affective commitment was
divided into two factors while normative
and continuance commitment showed
distinct factor loadings. It explained 52
percent of cumulative variance.

Table 1 Rotated Factor Analysis of the Organizational Commitment Scale

Dimensions

Item Emotional Affective Normative Continuance

Commitment Commitment Commitment Commitment

Eigenvalue 5.7 2.8 2.1 1.9

% of Variance explained 23.75 11.67 8.89 7.98
Cumulative % of variance explained 23.75 35.42 44.32 52.31
Extraction Method: Principal Component Analysis
Rotation Method: Varimax With Kaiser Normalization
Rotation converged in 6 iterations

Table 2 Rotated Factor Analysis of the Leadership Scale

Dimensions

Item Transformational Management Management

Leadership by Exception by Exception
Active Passive

Eigenvalue 9.954 31.108 31.108

% of Variance explained 1 .995 6.233 37.34 1
Cumulative % of variance explained

Extraction Method: Pri

Rotation Method: Varimax With Kaiser Normalization
Rotation converged in 6 iterations

Table 3 Reliability of the Scales Used

Scale No. of Items Cron Bach Alpha

1 Leadership Scale 32 0.898
2

Table 2 shows the rotated factor &Avolio, 2004). In the present study
structure of leadership style scale.three
The factors emerge: transformation
scale did not cleanly load into seven leadership
fac- including contingent reward,
tors as given in the original scale management
(Bass by exception (active) and

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 Effect of Leadership on Organizational Commitment

Table 4 Correlation between the Variables

TF 1
MBE(A) 0.399** 1
MBE(P) -0.018 0.069 1
EC .466** .156* 0.001 1
AC 0.099 0.123 0.099 0.318** 1
NC .202** 0.038 -0.052 .388** .336** 1

CC

***p<0.001,**p<0.01,*p<0.
TF : Transformational Lead
MBE(A) : Management by
MBE(P) : Management by E
EC : Emotional Commitment
AC : Affective Commitment
NC : Normative Commitment
CC : Continuance Commitment

management by exception (passive). It

commitment (R2=0. 13, p<0.001). Among
explained 42 percent of cumulative vari-the various styles of leadership, transfor-
ance. mational leadership best explains orga-
nizational commitment (R2=0.13,
p<0.001)
Table 3 shows the reliability compared to management by
of orga-
nizational commitment and exception (active) (R2=0.02, p<0.01).
leadership
scale. All the Alpha values are
While, high
management by exception (pas-
(.0.80) in all the scales (Nunnally,
sive) does1978).
not have a significant influ-
Table 4 shows correlation between ence onall the
organizational commitment.
variables. It shows that transformational
leadership is positively correlated withDiscussion
management by exception (active), emo-
tional, affective, normative and continu- The primary purpose of this study
ance commitment. While, managementwas to examine the influence of trans-
by exception (passive) does not haveformational/transactional leadership
correlation with any component of com- styles on the three components of orga-
mitment. nizational commitment. The expected
positive linkage between leadership style
and organizational commitment was sup-
The results show that leadership
ported. These findings are in line with
style significantly influences orga-
nizational commitment.
those of other researchers (Jackson et.
al., 2013; Judge & Piccolo, 2004).

Table 5 shows the regression analy-One important finding of the study is

sis. The results show that leadership style
that in the Indian context, contingent re-
significantly influences organizational
ward is perceived more transformational

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 Sliiji Lyndon & Preeti S. Rawat

Table 5 Regression Analysis

Criterion Variable Predictor Variables

Beta t values R2

Leadership
Organizational Commitment 0.366 6.46 0.13***
Transformational leadershi
Organizational Commitment 0.369 6.117 0.13***
MBE(Active)
Organizational Commitment 0.155 2.412 0.02***
MBE(Passive)
Organizational Commitment 0.064 0.983 0***
Leadership
Emotional Commitment 0.435 7.415 0.186***
Transformational le
Emotional Commitment 0.461 8.003 0.209***
MBE(Active)
Emotional Commitment 0.156 2.418 0.02***
MBE(Passive)
Emotional Commitment 0.001 0.015 -0.04
Leadership
Affective Commitment 0.13 2.015 0.013***
Transformational lea
Affective Commitment 0.099 1.526 0.006***
MBE(Active)
Affective Commitment 0.123 1.905 0.011***
MBE(Passive)
Affective Commitment 0.099 1.529 0.006***
Leadership
Normative Commitment 0.172 2.675 0.025***
Transformational lea
Normative Commitment 0.202 3.181 0.037***
MBE(Active)
Normative Commitment 0.038 0.582 -0.003
MBE(Passive)
Normative Commitment -0.052 -0.795 -0.02
Leadership
Continuance Commitment 0.45 7.718 0.199***
Transformational lead
Continuance Commitment 0.464 8.037 0.212***
MBE(Active)
Continuance Commitment 0.255 4.051 0.061***
MBE(Passive)
Continuance Commitment -0.061 -0.937 0

***p<0.001,**p<0.01,*p<0.05

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 Effect of Leadership on Organizational Commitment

than transactional factor. Contingent re-
ward is the degree to which leaders can
establish transaction with followers by
rewarding their efforts by communicating
with them as to what they must do to get
rewards and punishing undesirable actions.
to hone behavior and skills that lead to
transformational leadership style. The
findings also have an impact on the re-
cruitment, selection and the promotion
policies of the managers in organizations.
Limitations

Contingent reward is perceived

more transformational than trans- i The sample size of the present study
actional factor. is small. Therefore, the conclusions can
be seen as indicators to the larger trend.
The study should be carried out on a
The hypothesis related to the rela-
larger sample to get more reliable con-
tionship of transformational leadership
clusions. Further, the survey comprised
and affective and normative commitment
employees from banking, education, IT
was supported. This relationship which and manufacturing sectors. Inclusion of
has been established in the Western con-
employees from other sectors would
text has found support in the Indian con-
make the study more comprehensive.
text too. There was so specific hypoth-
esis formulated with regards to transfor-
Future Directions
mational leadership and continuance com-
mitment. But, the results show a positive Future research can include pater-
correlation between the two. As noted nalistic leadership style and its influence
earlier, the positive environment created
on organizational commitment. Compari-
by the transformational leader must son be of transformational, transactional and
perceived as a loss arid thus leads topaternalistic
a leadership style can help find
higher continuance commitment. out which style of leadership leads to
higher commitment in the Indian context.
The hypothesis related to the rela-
Further, future research can also study
tionship of management by exception (ac-
the moderating influence of organizational
tive) and affective, normative and con-
culture on this relationship.
tinuance commitment had positive but
weak correlation. This finding is similar
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 Shi ji Lyndon & Preeti S. Raw at

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108 The Indian Journal of Industrial Relations , Vol. 51, No. 7, July 2015

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