Table Of ContentTransactional & Transformational
Leadership Style, Motivation and the
Effect on Team Performance & Team
Creativity (Stripped/Edited Version)
Foreword: This is the stripped version of the original research paper. The researcher was
obliged to cut out the company’s name and background due to confidentiality agreements.
Moreover, the participants of this research were given full disclosure and anonomity to
protect their careers in case anything that was said could be considered as harmful for them or
the company. Therefore, this paper will have less insight into how the case findings were
derived and how these are supported by citations from the interviews. However, the findings
and theory presented in this paper are nonetheless considered to be of value to the field of
research on leadership.
Master Thesis
Author: Jansen, Richard
Student ID: 10323651
MSc Business Studies – International Management
University of Amsterdam
Supervisor: J.P. Lindeque
Second Reader: J.D. Belschak
Date: 18 March 2013
1
Abstract
This study examines how the characteristics of transformational leadership are considered to
influence team creativity in a dynamic environment & how those of transactional leadership
influence team performance within a routine environment. In addition, this research examines
what influences team members’ motivation and how this affects their performance or
creativity. The right mixture of leadership style and motivational constructs increases routine
team performance or dynamic team creativity.
A sample of two teams in different contexts (routine and dynamic) is selected and a multiple
case study design is used in which data is acquired through semi-structured interviews and
surveys. Subsequent analysis has led to mixed support of the working propositions; a mixed
leadership style dependent on the situation at hand is most likely to flourish for a creative
team, whereas a mixed leadership style dependent on outcome results is most likely to
flourish for a routine team. The findings indicate for both teams that commitment,
communication, extrinsic rewards and empowerment are highly influential for motivation.
Increasing motivation leads to higher performance in the routine team and to higher creativity
in the dynamic team.
The results offer managers an insight on what style of leadership fits best in different
situations and how employee motivation can be stimulated, thereby increasing performance or
creativity. Moreover, this study provides support for future research towards the studying of
mutually inclusive leadership styles instead of exclusive leadership styles.
Keywords: Transformational leadership; Transactional leadership; Creativity; Motivation;
Performance; Team; Work context; Empowerment; Rewards; Commitment; Communication;
Feedback
2
Acknowledgements
It wouldn’t have been possible to write and complete this thesis without the help and support
from the friends and family around me.
Above all, I would like to sincerely thank my supervisor Dr. J.P. Lindeque for his expertise,
support, feedback and understanding throughout this thesis process. His guidance has been
invaluable for the completion of this research and therefore my sincere gratitude.
Furthermore, I would like to thank my parents for their help and support throughout this
process, in particular my father for aiding me to get in contact with the company. Without
their help, this research could have fallen apart. Furthermore, I would like to thank the CEO
of the UK based company for giving me complete access to his company, and also my sincere
gratitude to all the interviewees that have contributed greatly to this study with their kindness
to participate and openness during the interviews. Their contributions have been of the utmost
importance for this research.
3
Table of Contents
1. Introduction ............................................................................................................................ 7
2. Literature Review ................................................................................................................. 12
2.1 Transformational & Transactional Leadership ............................................................... 12
2.2 Motivation, Commitment and Creativity & Performance .............................................. 19
2.3 Team Creativity & Performance ..................................................................................... 22
3. Methodology ........................................................................................................................ 27
3.1 Research Philosophy and Quality Criteria...................................................................... 27
3.2 The Case Study Research: .............................................................................................. 29
3.3 Research context ............................................................................................................. 31
3.3.1. Case criteria and selection: ......................................................................................... 31
3.3.2. Semi-structured interviews and adapted surveys ........................................................ 32
3.3.3. Background of the company: ...................................................................................... 36
3.4 Data collection & analysis methods ............................................................................... 37
3.4.1. Interviews ................................................................................................................... 37
3.4.2. Surveys ....................................................................................................................... 39
4. Results .................................................................................................................................. 44
4.1 Team Routine/Stable Survey & Interview results .......................................................... 44
4.1.1 Team routine/stable survey results .............................................................................. 44
4.1.2 Team routine/stable interview results .......................................................................... 47
4.1.2.1. Work context and present factors ............................................................................ 47
4.1.2.2. Leadership style and present factors ........................................................................ 48
4.1.2.3. Communication and present factors ........................................................................ 49
4.1.2.4. Expectations and present factors ............................................................................. 49
4.1.2.5. Commitment and influences .................................................................................... 50
4.1.2.6. Empowerment and present factors .......................................................................... 51
4
4.1.2.7. Rewards and present factors .................................................................................... 51
4.1.2.8. Motivation and influences ....................................................................................... 52
4.1.2.9. Team characteristics and present factors ................................................................. 53
4.1.2.10. Performance and influences ................................................................................... 53
4.1.3 Comparing interview and survey results ..................................................................... 56
4.2 Team Dynamic/Creative Survey & Interview results..................................................... 58
4.2.1. Team dynamic/creative survey results ....................................................................... 58
4.2.2. Dynamic/creative team interview results ................................................................... 59
4.2.2.1. Work context and present factors ............................................................................ 59
4.2.2.2. Leadership style and present factors ........................................................................ 60
4.2.3. Comparing interview and survey results .................................................................... 68
4.3 Cross-case analysis ......................................................................................................... 70
4.3.1. Comparison of the survey results of the teams ........................................................... 70
4.3.2. Comparison of the interview results between the teams ............................................ 72
5. Discussion ............................................................................................................................ 79
5.1 Propositions linked to team routine/stable...................................................................... 79
5.2 Propositions linked to team dynamic/creativee .............................................................. 82
6. Concluding Remarks ............................................................................................................ 86
6.1 Limitations ...................................................................................................................... 88
6.2 Scientific relevance and managerial implications .......................................................... 89
6.3 Suggestions for future research ...................................................................................... 89
7. References ............................................................................................................................ 90
5
Index of Tables and Figures
Table 1. Linking the propositions to the questions .................................................................. 34
Table 2. Comparison between team and leader (Team Routine/Stable) .................................. 46
Table 3. Interview results team routine overview ................................................................... 55
Table 4. Comparison results on leadership team routine/stable ............................................... 57
Table 5. Comparison between team and leader (Team Dynamic/Creative) ............................ 59
Table 6. Interview results team creative overview ................................................................... 67
Table 7. Comparison results on leadership team dynamic/creative ......................................... 69
Table 8. Comparison survey scores between teams & leaders ................................................ 71
Table 9. Comparison interview results ..................................................................................... 78
Table 10. Results of the propositions linked to routine/stable team ........................................ 82
Table 11. Results of the propositions linked to dynamic/creative team ................................... 85
6
1. Introduction
For a company to achieve consistent above normal market performance, it must create a
sustainable competitive advantage that is unique from its competitors (Barney, 1991; Porter,
1985). Barney (1991) suggests ‘that firms obtain sustained competitive advantages by
implementing strategies that exploit their internal strengths, through responding to
environmental opportunities while neutralizing external treats and avoiding internal
weaknesses’ (Barney, 1991. p. 99). In today’s economic community, worldwide competition
and rapid technological change have put pressure on companies trying to increase their
effectiveness (Mumford, Scott, Gaddis & Strange, 2002). Furthermore, stimulating creative
behavior as well as increasing work performance can be seen as two important aspects that are
increasingly important for organizational survival. Creativity and better performance is an
aspect found at the employee level of the organization. Finding out how management can
influence the employees to perform better and be more creative can hold the key to gaining
this competitive advantage and how to benefit more from it. At the center of organizational
performance are the employees; however this seems to be a level that is often overlooked and
underrated by management. Thereby, not realizing that one of the core competences an
organization can improve is its employee performance. Leadership is considered by many
researchers as one of the most, if not the most, influential factor that influences employees’
creative behaviors and performance (Amabile, 1998; Jung, 2001; Mumford & Gustafson,
1988) and the success of organizational teams (Zaccaro, Heinen & Shuffler, 2009). Therefore,
researchers have spent so much time and attention in studies the last decade on how
leadership can influence and improve employee performance. There are two types of
leadership styles that have been the topic of most research of the last decades on leadership:
transformational leadership and transactional leadership. Previous research has shown the
importance of different aspects and behaviors of leadership for team performance (DeRue,
Barnes & Morgeson, 2010; Manz & Sims, 1987).
Due to the rising complexity of issues (external pressures, time restraints) that organizations
need to take into consideration and deal with, creative work is frequently carried out in teams
consisting out of members with unique specialized work roles (Hoever, v. Knippenberg & v.
Ginkel, 2012). Most employees work in teams organized and directed by a leader. The leader
has a great responsibility as this is the person that is responsible for the employees, their
evaluation and coordination. Previous research suggests that there are two basic behavioral
approaches to team leadership: a coaching, person-focused approach and a directive, more
7
task-focused approach (Burke et al., 2006). DeRue et al. (2010) propose that team member
performance can be stimulated by the right type of leadership by invoking different kinds of
stimulation, and in particular motivation. Osterloh, Frey and Frost (2001) discuss in their
study that the management of employee motivation should be seen as a source of distinctive
firm competences. The right type of leadership that invokes motivation within teams could be
the key to increasing employee creativity and performance.
The two types of leadership that have received most attention in studies are transformational
and transactional leadership (e.g. Nederveen Pieterse, v. Knippenberg, Schippers & Stam,
2009; Zhang, Tsui & Wang, 2011, 2010; Basu & Green, 1997; Kahai, Sosik & Avolio, 2003;
Jaussi & Dionne, 2003). Transformational leadership is commonly described in previous
research as a style of leadership that transforms employees to rise above their self-interest by
changing their morale, beliefs, ideals, interests, and values, motivating them to perform better
than initially expected (Bass, 1985; Yukl, 1999). Transactional leadership is commonly
described as a more directive form of leadership that delegates compliance of his employees
through both rewards and punishments (Bass, 1985; Yukl, 1999). Some studies of
transformational leadership have proposed that transformational leadership has a positive
influence on employee performance outcomes (creativity and innovation) in contrast to
transactional leadership (e.g. Nederveen Pieterse et al., 2009, Shin & Zhou, 2003; Zhang et
al, 2011). The results of the study of Zhang and Bartol (2003) showed that transformational
leadership is positively related with group creativity. They proposed that the growth of firms
in a highly competitive and dynamic context depends critically on the firms' capacity to be
creative and innovative. However, transactional leaders were considered to impede speaking
up and deviant behaviors resulting in a “culture of silence” that may be essential for creativity
to flourish (Zhang et al, 2011). On the other hand, there have also been some studies that have
shown contradictory findings in these relationships, making the overall findings inconsistent
(Basu & Green, 1997, Kahai et al., 2003, Jaussi & Dionne, 2003). Surprisingly, the results of
the study of Kahai et al (2003) observed that creativity was higher under transactional
leadership than under transformational leadership.
Employee creativity, an aspect of innovative behavior, has received slightly more attention as
an outcome variable of transformational and transactional leadership according to Nederveen
Pieterse et al. (2009). These studies are not only divided by contrast in results, but also in their
way of researching (field or experimental studies). The results of previous experimental
studies have shown that employees of transformational leadership are positively related with
8
creative performance (Jung, 2001; Jung & Avolio, 1999). Moreover, these results were also
found in previous field studies (Shin & Zhou, 2003, Gumusluoglu & Ilsev, 2009). However,
the laboratory studies done by Jaussi & Dionne (2003) found no positive relationship. More
surprisingly was that the laboratory study of Kahai et al. (2003) even found a more positive
relationship with transactional leadership. A difference in doing field or laboratory studies
does not give a clear view on the results of the influences of the different leadership styles.
The contradictory findings give the opportunity to look into different variables and a different
approach. Previous studies suggested using a multi-level perspective for future research in
studying leadership that proposes multiple contexts (e.g. Zhang & Bartol, 2003; Kahai et al.,
2003). A very important aspect in the possible research could be the context and setting in
which the employees and leader are active. Transformational leadership is argued to have a
positive influence on employee performance outcomes in a decentralized, creative and non-
routine working environment, whereas transactional environment is argued to have a more
positive effect on routine, simple and centralized work tasks. Not much emphasis has been put
on researching the difference between transformational and transactional leadership in regards
of the context it takes place in, as was performed by De Hoogh, den Hartog & Koopman
(2005). Unfortunately, like the majority of previous research, their findings are based on
results derived from surveys and questionnaires, which are perceived to be more prone to the
loss of meaning and explanation along with often disregarding the context and surroundings it
takes place in (Myers, 2009). Moreover, Yukl (1994) suggested that in contrast to most
research on leadership, future research should focus on studying the perceptions that
employees have on their leader instead of focusing on the perception leaders have on their
own behavior.
This study chooses to focus on a multi-level perspective researching two leadership styles
accross multiple different contexts that were proposed as future research suggestions by prior
research as mentioned in the previous paragraph. In addition, this study addresses the gap of
the forementioned limitations by doing in-depth multiple case analysis performing and
analyzing both surveys and in-depth interviews (triangulative research) with two different
teams and their leaders working in contrasting contexts within the same company, thereby not
only focusing on the perception of the leader, but also on the perception of the team. More
specifically, the objective of this research is to find out how transactional leadership style
influences (routine) performance in a team set in a stable working context and how
transformational leadership style influences creativity in a team set in a dynamic working
9
context. Furthermore, this study will examine how performance or creativity is influenced by
employee motivation and how motivation is influenced by leadership style and other factors
that are considered to be influential for motivation (e.g. commitment, communication,
rewards & empowerment). These factors and their relation to motivation are all described in
the upcoming literature review.
A small multinational enterprise based in London was chosen as the company to do the case
study research for the following reasons: a) the company gave the researcher full assistance
and access to the company, b) the teams of the company were in line with the requirements
made in this research, c) the company is a multinational enterprise which increases the
generalizability of the findings to other multinational companies.
The findings of this research display a mixed leadership style dependent on and adaptive to
the situation at hand to be most likely to flourish for a creative team, whereas a mixed
leadership style dependent on outcome results is most likely to flourish for a routine team.
This study adds new insights about the leadership style and the influence it has on employee
creativity and performance across different contexts, and in addition, how the motivation of
an employee is perceived to be influenced and by what constructs. The findings of this
research would help managers (especially leaders) to become more aware on what style of
leadership is most appreciated and influential according to the context the team works in.
Furthermore, it helps managers to become more aware and better understand the motivational
constructs of employees and what they considered as most influential for motivational state
which leads to higher creativity and performance.
The remainder of this study is structured as following. In the upcoming literature review the
concepts of transactional leadership and transformational leadership are reviewed, which are
used to describe why they are believed to flourish in their related work context. Moreover,
performance, creativity and motivation are reviewed and explained how they are believed to
influence each other according to previous research. Subsequently, 9 propositions are
formulated which hold the potential influential factors of performance and creativity.
Subsequently, in the methodology section, an extensive description of the multiple case
research design will be presented with a background of the participating company and on how
the results were gathered and analysed. A multiple case study approach was adopted in which
qualitative data is collected through semi-structured interviews with two different teams and
the team leaders at the same company. Quantitative data is collected through surveys given to
10
