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Leadership & Development Journal

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1 1 2 3 4 5 6 7 8 9 : Inherited organisational performance? The perceptions of generation Y on 10 11 the influence of leadership styles. 12 13 14 15 Abstract 16 17 Leadership has a major impact on organizational performance (Agle et al., 2006; Felfe 18 19 20 and Schyns, 2004; Peterson et al., 2003). However, results are still conflicting regarding 21 22 these effects and research has yet to focus on the expectations and perceived impact 23 24 from the point of view of young professionals (the future senior employees and 25 26 managers). Following this, this study has focused particularly on the role of leadership 27 28 29 styles and their impact on performance focusing on a sample of 177 young professionals 30 31 in Germany. A quantitative research was implemented by using a self- 32 33 completion online questionnaire and the data was analysed using multivariate statistical 34 35 analysis to demonstrate the impact of each leadership on organizational 36 37 performance. The Multifactor Leadership Questionnaire (Avolio and Bass, 1995) was 38 39 40 used to measure leadership styles (passive/avoidant, transactional and transformational 41 42 leadership) and organizational performance was measured based on the Balanced 43 44 Scorecard performance dimensions (financial, learning and growth, customer 45 46 orientation and organizational effectiveness) (Kaplan and Norton, 2005). Main findings 47 48 49 supported the literature suggesting a statistically significant positive impact of both 50 51 transactional and transformational leadership on organizational performance. 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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2 1 2 3 4 5 6 7 8 9 Conversely, the relationship between the passive/avoidant and 10 11 organizational performance was statistically significant but negative. This suggests that 12 13 leaders in organisations driven by German culture should reconsider their approaches 14 15 and practices. 16 17 18 Keywords 19 20 Leadership styles, organisational performance, generation Y, organisational size, 21 22 multivariate analysis. 23 24 25 26 1. Introduction 27 28 29 Rapidly changing and more competitive environments have increased the significance 30 31 of developing competitive advantage through leadership to improve organisational 32 33 effectiveness (Jaramilo et al., 2005). Rather than financial efficiency, companies focus 34 35 on leadership and intangible resources to sustain their competitive advantages (Wang et 36 37 al., 2010). Leadership is one of the most explored concepts in business and industry 38 39 40 during the last decades and it is defined not only by leaders’ actual behaviours but also 41 42 by the perception of this behaviour (Tourish, 2014). It has become an essential element 43 44 for (Schein, 2010; Bryman, 2007; Brymer and Gray, 2006). As such, the 45 46 impact of leadership styles on organisational performance is well documented and 47 48 49 research has shown that different leadership styles would generate different outcomes 50 51 (Ogbanna and Harris, 2000). Therefore, leadership styles not only have generally an 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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3 1 2 3 4 5 6 7 8 9 influence on the employees’ performance but also on the organizational performance in 10 11 particular (Windsor, 2009; Wang et al., 2010). Lost sales or market share, staff turnover 12 13 and, in the worst case scenarios, bankruptcy, are the typical outcomes associated with 14 15 leaders and leadership styles, steering practitioners towards the use of effective or 16 17 ineffective leaders terminology. Unfortunately sometimes organizations do not 18 19 20 recognize the difference between being an effective or an ineffective leader until it is 21 22 too late. 23 24 After doing a review of the literature on leadership and performance topics it became 25 26 clear that most studies focused on overall performance in terms of financial 27 28 29 achievement (privileging financial measures) and using managers as respondents in 30 31 their samples (Peterson et al., 2003; Huang, 2015). Thus, there is a gap in the literature 32 33 referring to how leadership is perceived and how leadership styles influence 34 35 performance from the perspective of young professionals (Ladkin, 2013). Thus, various 36 37 studies showed conflicting results suggesting that further research is needed to clarify 38 39 40 the role of leadership styles on organisational performance from this perspective (Koech 41 42 and Namusonge, 2012). To address these gaps, the present study has focused on the 43 44 responses from young German professionals who represent future organizational 45 46 success. Consequently, it is of major importance to know how these groups assess the 47 48 49 leadership style of their leaders and how this has an influence on organizational 50 51 performance. 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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4 1 2 3 4 5 6 7 8 9 10 11 2. Literature Review 12 13 2.1 Leadership styles 14 15 Leadership has been defined taking into consideration various theoretical approaches 16 17 (Block 2003; Kouzes and Posner, 2007). For example, Yammarino and Dubinsky 18 19 20 (1994) defined leadership as the influence of people for performing tasks by using 21 22 mainly motivational methods. According to Boseman (2008) and Toor and Ofori 23 24 (2009), leadership is the ability to guide individuals to a specified outcome based on 25 26 stimulation and satisfaction of personal motives. Mitonga-Monga et al. (2012) stated 27 28 29 that leadership is a procedure for influencing others commitment by identifying their 30 31 full potential for reaching objectives. Although slightly different, all these definitions of 32 33 leadership share a common element acknowledging that organizations and their 34 35 workforce are influenced by leaders (Bohn and Grafton 2002). In addition to this, it is 36 37 also commonly accepted that the nature of the leadership style is the crucial factor for 38 39 40 the success or failure of any unit, organization or nation (Oladipo et al., 2013). 41 42 The historical development of leadership has an extended past and can be classified 43 44 into five main evolutionary stages that then lead to five main areas of current research 45 46 interests. Early studies were focused on investigating individual traits associated with 47 48 49 leadership. This was referred to as ‘trait’ theories which identified certain personal traits 50 51 to differentiate between leaders and non-leaders and suggested that leaders were born 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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5 1 2 3 4 5 6 7 8 9 with some traits rather than trained (Mahoney et al., 1960). Due to issues with 10 11 validating these traits and the search for types of traits that distinguish leaders from 12 13 followers, the focus shifted then to the ‘behaviour’ and ‘style’ of leaders (Likert, 1961). 14 15 Lewin and Lippitt (1938) for example referred to autocratic, democratic and laissez- 16 17 faire leaders, describing the types of behaviours common to each style which 18 19 20 determined the leader-follower relationship as well as group success, risk-taking, 21 22 problem-solving , morale and relations. These three leadership styles have 23 24 usually been distinguished as: 1) autocratic – where the leader exhibits tight 25 26 over the group and its activities; 2) democratic – where participation and the majority 27 28 29 rules and 3) laissez-faire, where limited leadership activities are present. 30 31 The Ohio State University and University of Michigan identified two dimensions 32 33 related to the consideration behaviour and initiating structure behaviour (Lowe and 34 35 Gardner, 2000). They concluded that both dimensions were separate elements, but that a 36 37 leader with dedication in both could achieve higher outcomes (Murphy, 2005). From 38 39 40 this point of view, according to Sybil (2000), the success of leaders is dependent on the 41 42 group tasks as well as how the leader’s personality fits the group. 43 44 Nevertheless, contradictory findings in behavioural approaches shifted the trend in 45 46 research towards the style of leading. A critical factor in these theories was the non- 47 48 49 observance of situational aspects which characterize the effectiveness of leaders 50 51 (Mullins, 1999). Therefore, researchers began to emphasize on ‘situational’ and 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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6 1 2 3 4 5 6 7 8 9 ‘contingency’ theories of leadership credited to Fiedler (1967). According to this 10 11 approach, the ability for leading depends on the present situational factors. The leaders’ 12 13 position power, the task structure as well as the leader-follower relations are crucial 14 15 factors for the effectiveness of leadership (Fiedler, 1967; 1996). Consequently, 16 17 leadership is mainly influenced by a given situation and its effectiveness is dependent 18 19 20 on the understanding of situational factors as well as the choice of a suitable style to 21 22 manage different situations (Hersey, Blanchard and Johnson, 2007). 23 24 In order to overcome the former drawbacks of the traits, behavioural and contingency 25 26 situational theories, a new paradigm of leadership has come to the forefront of research 27 28 29 called transactional/transformational theory (Tourish, 2013). This theory was originally 30 31 suggested by Burns (1978) and later developed by Avolio and Bass (2004). Similar to 32 33 Lewin and Lippitt (1938), this leadership model distinguishes between three styles of 34 35 leadership (the passive/avoidant, transactional and transformational leadership) and has 36 37 attracted wide attention among many scholars such as Avolio et al. (2004), Barbuto 38 39 40 (2005), Brymer and Gray (2006). The Multifactor Leadership Questionnaire (MLQ) 41 42 developed by Avolio and Bass (1995) contains the leadership components to measure 43 44 these three styles which are widely used in many studies due to their validity, reliability 45 46 and significance of research findings (Ejere and Abasilim, 2013; Koech and 47 48 49 Namusonge, 2012). In line with this, the present study adopted this scale as an 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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7 1 2 3 4 5 6 7 8 9 appropriate tool to measure leadership styles and their impact on organisational 10 11 performance as further detailed next. 12 13 14 15 2.2 Organizational performance 16 17 The surge of research in organisational performance has led to various and partly 18 19 20 conflicting definitions and theories (Selden and Sowa 2004). For example, Venkartrama 21 22 and Ramanujam (1986) suggested that the evaluation of organizational performance 23 24 could be categorized into financial, operational and organizational effectiveness. Kaplan 25 26 and Norton (2005) argued that organizational performance is determined by the 27 28 29 organization’s ability to use its resources to predict its future. 30 31 Similarly to the array of definitions, there are also several approaches for evaluating 32 33 organizational performance but only little consensus on a valid set of criteria (Lusthaus 34 35 et al., 2002). More than defining what performance is, the measurement of the 36 37 considered performance dimensions will be crucial for an organisations’ success. The 38 39 40 most commonly used indices for evaluating organizational performance tend to be 41 42 tangible such as profits, sales volume or equity turnover. Intangible indicators such as 43 44 product development and customer satisfaction are less frequently used (Rhodes et al., 45 46 2008). 47 48 49 For example, according to Wang (1997), two different layers are of particular 50 51 importance when considering performance: (1) efficiency, which reflects the input-to- 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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8 1 2 3 4 5 6 7 8 9 output rate and (2) effectiveness, which represents the degree of objective achievement. 10 11 Lusthaus et al. (2002) extended this approach and identified four elements for analysing 12 13 organizational performance: (1) effectiveness, (2) efficiency, (3) ongoing organisational 14 15 relevance and (4) financial viability. In turn, for Koech and Namusonge (2012) 16 17 organizational performance was represented by the degree of business objectives 18 19 20 achievement in the previous financial year of the organization. Ling and Hong (2010) 21 22 measured organizational performance only with financial indicators such as Return on 23 24 Equity (ROE) and Earning per Share (EPS). Ejere and Abasilim (2013) assessed 25 26 organizational performance based on effort, satisfaction and effectiveness indicators. 27 28 29 Alsughayir (2014) assessed performance in comparison to competitors in terms of 30 31 organizational effectiveness, financial and business performance. 32 33 As the financial dimension is ultimately the outcome of all other elements, most 34 35 academics relied on financial performance as the only measure of organisational 36 37 performance (Neely, 2007; Neely, Gregory and Platts, 2005; Akyuz and Erkan, 2010). 38 39 40 Many authors have criticized this trend of organizations’ performance usually being 41 42 measured based on traditional financial performance indicators such as sales revenue, 43 44 return on investment and earning power (e.g., Long and Thean, 2011). When evaluating 45 46 performance, non-financial measurements also have an outstanding importance in 47 48 49 particular for the long-term operations of organizations, including product quality and 50 51 workforce performance. Thus, both financial as well as non-financial/intangible 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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9 1 2 3 4 5 6 7 8 9 measurements need to be simultaneously considered when evaluating performance 10 11 (Kaplan and Norton, 2005). Furthermore, according to Wang et al. (2010) , performance 12 13 measurements should cover a wider spectrum of performance measurements such as 14 15 customer satisfaction and quality as non-financial indicators because no single 16 17 performance indicator completely represents all aspects. 18 19 20 Acknowledging this need to go beyond financial indicators, Kaplan and Norton 21 22 (1996; 2005) suggested the use of the Balanced Scorecard approach (BSC) so that 23 24 executives were able to track both financial and operational metrics to measure 25 26 organizational performance. These authors proposed a framework that enables managers 27 28 29 to consider four performance parameters to cope with activities such as continuous 30 31 innovation and improvement which the current competitive environment demands. The 32 33 BSC tracks all the important indicators of an organizations’ strategy that enables 34 35 managers to get a fast and comprehensive view of the business from four important 36 37 perspectives. The BSC not only includes financial measures with the results of actions 38 39 40 already taken, but also operational measures on customer orientation, organizational 41 42 effectiveness and learning and growth that are the drivers of future financial 43 44 performance (Kaplan and Norton, 2005). BSC measures are designed to pull people 45 46 towards the overall vision by assuming that employees will take the necessary actions to 47 48 49 achieve the objectives. Consequently, for the purpose of this paper, organizational 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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10 1 2 3 4 5 6 7 8 9 performance was measured based on the four Balanced Scorecard (BSC) performance 10 11 dimensions aforementioned. 12 13 14 15 2.3 Leadership styles and organizational performance 16 17 The nature of the relationship between leadership styles and organizational performance 18 19 20 has attained a great deal of research attention over time. Keegan and Den Hartog (2004) 21 22 argued that leadership has been an important component to influence innovation and 23 24 performance in the workplace. According to Wang et al. (2010), the performance of an 25 26 organization is a reflexion of the managers’ leadership style. Accordingly, numerous 27 28 29 studies, such as Peterson et al. (2003), Felfe and Schyns (2004) or Agle et al. (2006), 30 31 confirmed that leadership behaviour is a determining factor that influences 32 33 organizational performance, showing statistically significant relationships between both 34 35 variables. 36 37 In addition to this, different leadership styles have also been found to be positively or 38 39 40 negatively correlated with organizational performance as detailed next (e.g., Howell and 41 42 Avolio, 1993; Ogbonna and Harris, 2000; Nazarian and Atkinson, 2014). Howell and 43 44 Avolio (1993) identified that transformational leaders were seen as more innovative 45 46 which was positively correlated with improved organizational performance, whereas 47 48 49 transactional leadership was negatively correlated with business-unit performance. 50 51 Ogbonna and Harris (2000) empirically examined the relationship between leadership 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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11 1 2 3 4 5 6 7 8 9 style and performance mediated by . Their study concluded that 10 11 leadership style was not directly linked to performance but that it was indirectly 12 13 associated through the mediating effect of organisational culture. In addition, Den 14 15 Hartog and Koopman (2001) found out that transactional and transformational 16 17 leadership styles were correlated with employee satisfaction and performance, employee 18 19 20 turnover, customer satisfaction and organizational effectiveness. 21 22 Elenkov (2002) examined the relationship between leadership styles and 23 24 organizational performance in Russian companies and revealed that the transformational 25 26 as well as transactional leadership style was positively related to organizational 27 28 29 performance while transformational was over and beyond the impact of transactional 30 31 leadership. On the other hand, Rejas et al. (2006) found that transformational leadership 32 33 positive influenced organizational performance, while the impact of transactional and 34 35 passive/avoidant leadership was negative in Chilean context. Muterera (2012) also 36 37 found out that transactional as well as transformational leadership styles were positively 38 39 40 related to organizational performance in American context while the contribution of 41 42 transformational was more than of transactional behaviour. Accordingly, Koech and 43 44 Namusonge (2012) found that transformational leadership was highly positively 45 46 associated, whereas transactional behaviour was relatively low associated with 47 48 49 organizational performance in state-owned in Kenya. A similar research 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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12 1 2 3 4 5 6 7 8 9 conducted by Ejere and Abasilim (2013) confirmed these research findings in a 10 11 Nigerian work context and identified the same results. 12 13 In addition to these findings, the review of the literature found limited empirical 14 15 studies on the perception of young professional addressing the role of leadership styles 16 17 on organizational performance. Most of the current academic studies used surveys with 18 19 20 managers (Peterson et al., 2003; Koech and Namusonge, 2012; Huang, 2015) which 21 22 highlights the need to study the evaluation of how leaders act to influence their 23 24 followers and which impact their leadership style has on the organizational performance 25 26 from the perception of different sample groups. Understanding young professionals’ 27 28 29 perceptions is fundamental for today’s organizations as these will be the workforce for 30 31 their future organizational success. This study focuses particularly on young 32 33 professionals in Germany because German organizations are characterized by a strong 34 35 hierarchical nature while each worker has its own role clearly defined by detailed job 36 37 descriptions (Hays plc, 2014). As a result, young professionals are expected to have a 38 39 40 clear role and expectations of their leaders and performance. 41 42 The British company Hays plc (2014), which offers international recruitment and HR 43 44 services, conducted a survey about the Generation Y in Germany and their attitudes and 45 46 expectations regarding the world of work. The Generation Y is defined as young people 47 48 49 born between 1983 and 1995. Out of 1,000 respondents more than 60% were either 50 51 students or in first full time job. 48% of the respondents described their boss as a 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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13 1 2 3 4 5 6 7 8 9 leader, 43% as a coach/mentor, 39% as a confidant, 24% as an advisor, 23% as a peer, 10 11 10% as a friend and 6% see their boss as an allocator of work. This indicates that 12 13 autonomy is encouraged amongst highly skilled employees in Germany. Furthermore, 14 15 there is a desire for managers with coaching and mentoring skills as well as for 16 17 discussing personal matters (Hays plc, 2014). Their research also found that the most 18 19 20 important qualities of the workplace leader included fairness (57%), ability to motivate 21 22 others (52%), knowledge (47%), supportive (39% and transparency (25%), which all 23 24 constitute elements of transformational leadership. However, German organizations 25 26 operate in a highly structured environment, where individuals clearly know what is 27 28 29 required to be rewarded and succeed which is a clear indication of transactional 30 31 leadership. 32 33 Also the notion of values-based leadership is in line with this emphasis for building a 34 35 strong, cohesive culture to create agility and continuity. The Generation Y in Germany 36 37 also wants motivational leaders who are knowledgeable and expert (Hays plc, 2014). 38 39 40 As a result, based on the literature overview, transformational leadership is therefore 41 42 expected to have a greater impact on organizational performance when compared to 43 44 other leadership styles, given that transformational leaders encourage employees to take 45 46 risk, motivating them to be innovative and achieve both individual and organisational 47 48 49 objectives (Waldman et al., 2001). Hence, the following research framework and 50 51 hypotheses are suggested (see figure 1): 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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14 1 2 3 4 5 6 7 8 9 10 11 Leadership Styles Organisational 12 size 13 14 Transformational 15 16 Transactional 17 Performance 18 19 Passive/laissez-faire 20 21 22 Figure 1. Suggested research framework. 23 24 25 26 H1: The transformational leadership style has a positive influence on the overall 27 28 29 organizational performance. 30 31 H2: The transactional leadership style has a positive influence on the overall 32 33 organizational performance. 34 35 H3: The passive/avoidant leadership style has a negative impact on the overall 36 37 organizational performance. 38 39 40 41 42 Alongside leadership styles, it is argued that organisational size should also be 43 44 considered. Organizational size is commonly accepted has a variable that influences 45 46 effectiveness (Hambrick, 1989; Hambrick and Mason, 1984; Mintzberg, 1973) and 47 48 49 performance (e.g., Fombrun and Shanley, 1990; Kumar and Siddharthan, 1994; Chen 50 51 and MacMillan, 1992). Organisational size is seen as a variable that captures the scope 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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15 1 2 3 4 5 6 7 8 9 of operations differentiation and increased bureaucratic complexity (Pawar and 10 11 Eastman, 1997). Thus, positive relationships have been found between organisational 12 13 size and performance in the majority of studies conducted (e.g., Johnson and Greening, 14 15 1999; Muller and Kolk, 2010; Stanwick and Stanwick, 1998). Scholars have argued that 16 17 leaders have less impact on performance in larger organisations due to the complexity in 18 19 20 establishing organisational structure and culture (e.g., Hunt, 1991; Nahavandi and 21 22 Malekzadeh, 1993; Atwater and Bass, 1994; Koene et al., 2002). Additionally, 23 24 organisational size as also frequently been used as a moderator on the leadership- 25 26 performance relationship (e.g., Gibb and Harr, 2007; Bohorquez and Esteves, 2008). 27 28 29 For example, Jung et al. (2003) found that organizational size moderates the impact of 30 31 transformational leadership on firm’s innovation. Moreover, different leadership styles 32 33 have also been considered, for example Pawar and Eastman (1997), Egri and Herman 34 35 (2000), and Yang et al. (2010) have argued that organizational size has a determinant 36 37 role on employees’ receptiveness to transformational leadership behaviour. As a result it 38 39 40 is suggested that: 41 42 43 44 H4: Organisational size moderates the relationship between leadership styles and 45 46 organizational performance. 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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16 1 2 3 4 5 6 7 8 9 3. Methodology 10 11 3.1 Participants and procedure 12 13 The present study was conducted using a deductive research approach and linked to a 14 15 quantitative research design. For this particular study, a single primary data collection 16 17 technique was applied by using a questionnaire to obtain the data. This research strategy 18 19 20 and this method are the most appropriate to investigate (1) the hypotheses suggested and 21 22 (2) the relationships between variables, given that the interpretation of standardised 23 24 questions is the same among all respondents (Robson, 2011). 25 26 Primary data collection was conducted using a self-completion questionnaire distributed 27 28 29 online to reach a wider population and a larger sample size (De Vaus, 2002). A 30 31 convenience sample of 489 participants was drawn from current dual students and 32 33 alumni with the support of the Dean of the and Engineering 34 35 from the Cooperative State University in Ravensburg. Although this sampling method 36 37 might lead to bias, this was appropriate to have access to the population under analysis, 38 39 40 as suggested by Bono and McNamara (2011). A total number of 178 questionnaires 41 42 were received within the period of six weeks. After excluding one invalid response 43 44 (where the respondent used 3 to answer all questions), 177 responses were valid which 45 46 represents a response rate of 36 percent (177/489). In their review of response rates in 47 48 49 organisational research, Baruch and Holtom (2008) found that for data collected at the 50 51 individual level (e.g. employees, managers, general population), the average response 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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17 1 2 3 4 5 6 7 8 9 rate was 52.7 percent, with standard deviation of 20.4. In turn, for the organizational 10 11 level (i.e. when the respondents are top executives representing the organization) the 12 13 average response rate was 35.7 percent with a standard deviation of 18.8. Thus, they 14 15 also found that mail distributed surveys revealed a lower response rate than other forms 16 17 of data collected. Hence, due to nature of the sample/population under analysis we 18 19 20 believe this is an acceptable sample size as we were focusing specifically on German 21 22 dual students. 23 24 3.2 Instrument 25 26 The questionnaire was developed based on well-established scales previously explained 27 28 29 in the literature overview. The first part of the questionnaire included socio- 30 31 demographic questions. The second part of the questionnaire included a series of 32 33 statements about leadership styles. The Multifactor Leadership Questionnaire (MLQ5x) 34 35 developed by Avolio and Bass (1995, 2004) was adopted. The questionnaire included 36 37 36 items measuring transactional, transformational and laissez-faire leadership styles. 38 39 40 The last part of the questionnaire included organisational performance items which were 41 42 adopted from Kaplan and Norton’s (1996, 2005) Balanced scorecard (BSC). In total the 43 44 11 items suggested by these authors were kept and adopted to measure the four 45 46 constructs considered comprising (1) overall financial performance, (2) customer 47 48 49 orientation, (3) organizational effectiveness to measure internal business processes, and 50 51 (4) leaning and growth. These 11-items were also based on rating questions used to 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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18 1 2 3 4 5 6 7 8 9 collect opinion data about the achievement of specified organizational objectives and 10 11 about the extent to which the perceived leadership style impacted on the items of the 12 13 performance dimensions. As suggested by Podsakoff et al. (2003), common method 14 15 bias was addressed through careful construction of the items themselves (e.g., eliminate 16 17 item ambiguity, demand characteristics, social desirability), ensuring validity of the 18 19 20 instrument, protecting respondent anonymity and reducing evaluation apprehension. 21 22 23 24 4. Results 25 26 Results regarding descriptive statistics (see Table 1) reveal that in the considered sample 27 28 29 the majority of respondents were male with 71.7% (n = 127) of valid responses whereas 30 31 only 28.3% (n = 50) were female respondents. The results illustrate that the majority of 32 33 the respondents were between 22 and 29 years with 85.9% (n = 152). Only 9.4% of the 34 35 respondents were under 22 years (n = 17) while the minority of the respondents were 30 36 37 years and above (4.7%, n = 8). The large proportion of the respondents had earned a 38 39 40 bachelor degree with 44.9% (n = 79) whilst 21.3% (n = 38) of the sample were currently 41 42 master students and 18.0% (n = 32) had a master degree. Only the minority of the 43 44 respondents were currently completing their bachelor degree (15.8%, n = 28). As such, 45 46 they can all be classified as young professionals or the German generation Y as 47 48 49 previously explained. Additionally, 63.8% (n = 113) of the respondents had worked for 50 51 a large company with 250 and more employees, followed by 24.4% (n = 43) with an 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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19 1 2 3 4 5 6 7 8 9 employment at a medium sized company between 50 and 249 employees and only 7.9% 10 11 (n = 14) of the respondents had worked for a small company with 10 to 49 employees 12 13 while the minority of the respondents with 3.9% (n = 7) were employed at a micro 14 15 enterprise with a size of 1 to 9 employees. 16 17 18 Table 1: Descriptive Statistics 19 20 21 Variable N % 22 23 Gender 24 25 26 Male 91 71.7 27 28 Female 36 28.3 29 30 Age 31 32 Under 22 12 9.4 33 34 35 22-29 109 85.9 36 30 and above 37 6 4.7 38 39 Education Level 40 41 15.7 42 Current bachelor 20 Student 43 44.9 57 44 Bachelor degree 45 21.3 46 Current master 27 47 Student 18.1 48 23 49 Master degree 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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20 1 2 3 4 5 6 7 8

9 Position 10 11 12 13 Subordinate 73 57.5 14 Junior Manager 42 33.1 15 16 Middle Manager 10 7.8 17

18 Senior Manager 2 1.6 19

20 Respondents’ company size 21 22 Micro enterprise (1-9) 5 3.9 23 24 Small (10-49) 10 7.9 25 Medium (50-249) 31 24.4 26 27 Large (250 and over) 81 63.8 28 29 Years of service 30 31 Less than 1 year 32 25.2 32 More than 1 year, but 57 33 44.9 less than 3 years 34 35 More than 3 years, 27 21.2 36 but less than 5 years 37 11 8.7 38 5 years and above 39 40 41 42 43 44 Data indicates that 57.5% (n = 102) worked as subordinates, followed by junior 45 46 manager positions (33.1%, n = 58) and middle managers (7.8%, n = 14), while very few 47 48 49 have worked as senior managers with (1.6%, n = 3). The results also show that 44.9% (n 50 51 = 79) of respondents had worked for their current company for more than one year, but 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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21 1 2 3 4 5 6 7 8 9 less than three years, followed by people that worked for less than one year and more 10 11 than three years (25.2%, n = 45), while 21.2% (n = 38) had worked for less than five 12 13 years. Only 8.7% (n = 15) had worked five years and above for their current company. 14 15 In order to better understand the differences between German context and other 16 17 countries, Table 2 compares the results of this study in terms of all three leadership 18 19 20 styles with average means for European studies based on Avolio and Bass (2004) study 21 22 and their findings. By comparing this study with the results from Avolio and Bass 23 24 (2004) study in Europe, it is clear that the average mean for the 3 leadership styles in the 25 26 present study were significantly higher than the European mean scores. 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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1 2 22 3

4 5 6 7 8 9 10 11 Table 2. Comparison of the study mean scores to the Europe normative scores (Source: Mind Garden; Avolio and Bass, 2004). 12 13 Transformational Transactional Laissez-faire 14 15 Idealised Idealised Inspirational Intellectual Individual Contingent Management Laissez- 16 Attributes Behaviours Stimulation Consideration Reward by by Faire 17 (IA) (IB) (IM) (IS) (IC) (CR) Expectation Expectation (LF) 18 Active Passive 19 (MBEA) (MBEP) 20 Mean (Europe) 2.77 2.73 2.68 2.74 2.75 2.90 2.31 1.16 0.85 21 22 23 24 Mean 3.4528 3.2874 3.2874 3.3130 3.3780 3.4232 3.3198 2.4665 2.2933 25 (This study) 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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23 1 2 3 4 5 6 7 8 9 In order to test the hypotheses proposed in this study, correlation and regression 10 11 analysis were used (through SPSS 20). These are typical analyses with this type of data 12 13 in this field of research (e.g. Ogbonna and Harris, 2000; Nazarian and Atkinson, 2014; 14 15 Chang et al., 2012). Table 3 shows descriptive statistics, the correlation and internal 16 17 consistency of the constructs investigated. The results indicate that all items used in this 18 19 20 study are reliable and above the recommended range Cronbach’s Alpha > .60 (Hair et 21 22 al., 2010). Furthermore, Table 3 shows that there is a statistically significant positive 23 24 correlation between the transformational leadership style and organizational 25 26 performance (r = .553, p < .01) and transactional leadership and organisational 27 28 29 performance (r = .367, p < .01). By contrast, there was a statistically significant negative 30 31 correlation between the passive/avoidant leadership style and organizational 32 33 performance (r = -.526, p < .01). 34 35 36 37

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1 2 24 3 4 5 6 7 8 9 10 11 Table 3. Mean, standard deviation, reliability and correlation analysis. 12 13 Construct Dimensions number M SD Reliability PAL TRAL TRFL OP 14 of items 15 Passive (PAL) Management-by- 8 2.3799 0.55656 0.804 1 16 Exception Passive 17 18 (MBEP) 19 Laissez-faire (LF) 20 21 Transactional ( TRAL ) Contingent Reward (CR) 8 3.2815 0.58997 0.609 -.269** 1 22 Management-by- 23 Exception Active 24 (MBEA) 25 26 Transformational Idealized Influence 20 3.3913 0.77206 0.888 -.447** .671** 1 27 28 (TRFL) Attributed (IIA) 29 Idealized Influence 30 Behaviour (IIB) 31 Inspirational Motivation 32 (IM) 33 Intellectual Stimulation 34 (IS) 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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1 2 25 3

4 5 6 7 8 9 10 11 Construct Dimensions number M SD Reliability PAL TRAL TRFL OP 12 of items 13 Individual Consideration 14 (IC) 15 16 Organisational financial (FT), 11 3.4531 0.57003 0.844 -.434** .367** .553** 1 17 18 performance (OP) customer orientation 19 (CO), 20 organisational 21 effectiveness (OE) 22 learning and growth (LG) 23 **. Correlation is significant at the 0.01 level (2-tailed). 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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26 1 2 3 4 5 6 7 8 9 In order to test the suggested research framework and hypotheses (see figure 1), 10 11 multiple regression analyses were conducted using SPSS 20. The results of these 12 13 analyses are summarized in Table 4 and indicate that there is a statically significant 14 15 negative relationship between passive/avoidant leadership style and organizational 16 17 performance (ß = -.434, p < .001). Also the results indicate that there is a statically 18 19 20 significant positive relationship between transactional leadership and organisational 21 22 performance (ß = .367, p < .001) as well as transformational and organisational 23 24 performance (ß = .553, p < .001). 25 26 27 28 29 Table 4. Regression Results for relationship between leadership style and 30 organisational performance. 31 32 Variable R2 F β Sig. Decision 33 Statistics 34 TRFL .306 77.047 .553 .000 H1 Supported 35 36 TRAL .134 27.184 .367 .000 H2 Supported 37 38 PAL .189 40.703 -.434 .000 H3 Supported 39 40 Dependent Variable: Organisational Performance *p< 0.05, **p< 0.00 41 42 43 44 45 To test the relationship between Leadership styles and organisational performance 46 47 moderated by organisational size, hierarchical regression was used (Tabachnick and 48 49 Fidell, 2007). The results in Table 5 demonstrate that the relationship between passive, 50 51 transactional and transformational with organisational performance is significantly 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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27 1 2 3 4 5 6 7 8 9 moderated by organisational size. Passive leadership shows positive influence whereas 10 11 for both transactional and transformational show a negative influence. 12 13 14 15 Table 5 Moderation effect of organisational size on the relationship between 16 organisational culture and organisational effectiveness. 17 18 19 Variable Model 1 Model 2 Model 3 20 Contact 2.285** 2.172** .083 21 PAL -.434** -.441** -1.150** 22 Org. size -.085* -.104 23 PAL x Org. size .732** 24 R-Sq .189 .196 .232 25 2 26 R Change .007 .036 27 F-Statistics 21.186** 17.443** 28 29 Contact 2.36** 2.214** .376** 30 31 TRAL .367 .366** 1.124** 32 Org. size -.041 -.032 33 TRAL x Org. size -.769* 34 R-Sq .134 .136 .153 35 R2 Change .002* .017 36 F-Statistics 13.709** 10.396** 37 Contact 2.37** 2.23** .008 38 TRFL .553** .556** 1.115** 39 Org. size .022* .035 40 41 TRFL x Org. size -.571* 42 R-Sq .306 .306 .321 43 R2 Change .000 .015 44 F-Statistics 38.391* 27.278* 45 Dependent variable: Org, Performance *p< 0.05; **P< 0.001 46 47 48 49 In addition to testing the suggested hypotheses we have also looked into the effects of 50 51 52 leadership style on the different dimensions of the BSC. Table 6 shows that the 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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28 1 2 3 4 5 6 7 8 9 transformational (r = .502, p < .01) and transactional (r = .386, p < .01) leadership styles 10 11 have the strongest statistically significant positive influence on organizational 12 13 effectiveness followed by the financial performance and customer orientation. Both 14 15 transformational (r = .404, p < .01) and transactional (r = .224, p < .05) leadership styles 16 17 have comparably weaker statistically significant positive influence on learning and 18 19 20 growth. In contrast, passive/avoidant leadership has a significant negative influence (r = 21 22 -.494, p < .01) on financial performance followed by organizational effectiveness (r = - 23 24 .462, p < .01), customer orientation (r = -.349, p < .01), and learning and growth (r = - 25 26 .322, p < .01). 27 28 29 30 31 Table 6. The effect of leadership styles (PAL, TRAL and TRFL) in each of the 32 BSC performance dimensions (FT, CO, OE and LG). 33 34 FT CO OE LG 35 PAL -.494** -.349** -.462** -.332** 36 .304** .292** .386** .224* 37 TRAL 38 TRFL .440** .437** .502** .404** 39 **. Correlation is significant at the 0.01 level (2-tailed). 40 *. Correlation is significant at the 0.05 level (2-tailed). 41 42 43 5. Discussion & Implications 44 45 The empirical findings of this study show that all the mean scores of the leadership 46 47 48 dimensions were significantly higher in this study than the European mean scores. A 49 50 possible reason for this is that the young professionals considered in this study were 51 52 highly skilled employees with academic degrees. This supports Windsor (2009) 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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29 1 2 3 4 5 6 7 8 9 argument in which he stated that employees from successful organizations with a higher 10 11 level of education tend to rate their leaders higher when they perceive the organization 12 13 as high-potential with strong evidence of participative decision-making, clear and 14 15 mission and positive intercultural climate. 16 17 In regards to H1, clear support is provided by our findings to Howell and Avolio 18 19 20 (1993) and Rejas et al. (2006) who argued that transformational leadership style has a 21 22 positive impact on organisational performance. 23 24 Similarly, supporting H2, this study is aligned with other studies (such as Muterera, 25 26 2012) that showed a positive relationship between transactional and organisational 27 28 29 performance. A possible reason for this is that, according to Hays plc (2014), autonomy 30 31 is of particular importance amongst highly-skilled employees in Germany rather than 32 33 leaders as allocator of work. 34 35 Although in the literature passive/laissez-faire leadership style has not been fully 36 37 supported as an actual leadership style (for example Ejere and Abasilim, 2013 who 38 39 40 argued that it has no relationship whatsoever with performance), this study is line with 41 42 Rejas et al. (2006) who have showed that laissez-faire style has a negative impact on 43 44 organisational performance (supporting H3). 45 46 An important contribution of these findings refers to the need of actually considering 47 48 49 laissez-faire leaders and their potential negative and disrupting impact in an 50 51 organisation which clearly suggests that further research should be developed in order to 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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30 1 2 3 4 5 6 7 8 9 clarify the mixed nature of results associated to this leadership style. Also, leaders 10 11 should continue to focus on engaging with followers, inspire the followers’ enthusiasm 12 13 and encourage them to rise to the high moral and ethical standards while avoiding the 14 15 practices of passive/avoidant leadership. 16 17 Coaching and mentoring skills as well as the discussion of personal matters are 18 19 20 extremely important for the Generation Y in Germany while they also want 21 22 motivational leaders who are knowledgeable and fair (Hays plc, 2014). Leaders with 23 24 transformational style are visionary and enthusiastic while having the ability for 25 26 encouraging and motivating subordinates to develop the follower´s capability leading to 27 28 29 success (Howell and Avolio, 1993). A transformational leader helps and motivates 30 31 followers to perform beyond expectations while putting their own self-interest in the 32 33 background to concentrate on organizational goals (Bass and Riggio, 2006). On the 34 35 other hand, laissez-faire leaders do not provide any empowerment or clear guidance on 36 37 how to achieve desired outcomes, therefore generating negative results in a German 38 39 40 driven context. 41 42 In addition to this, the findings of this study are also supported by Elenkov (2002), 43 44 Koech and Namusonge (2012) and Waldman et al. (2001) showing that the 45 46 transformational leadership style has a greater impact than transactional leadership style 47 48 49 on organisational performance. This means that leaders that adopt transformational 50 51 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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31 1 2 3 4 5 6 7 8 9 leadership styles have the potential of achieving both individual and organisational 10 11 objectives to a greater extent than leaders that choose the transactional approach. 12 13 Finally, in regards to H4, results showed a clear moderating effect of organisational 14 15 size on the relationship between leadership styles and organisational performance 16 17 supporting previous research conducted by Jung et al. (2003), Pawar and Eastmean 18 19 20 (1997), Egri and Herman (2000) and Yang et al. (2010). 21 22 The potential consequence of this study could be that organisations with German 23 24 culture should adopt both transactional and leadership styles as opposed to laissez-faire, 25 26 since being passive in this culture is not an acceptable trait. Leaders should use 27 28 29 transactional leadership for the satisfaction of followers’ lower-order needs and the 30 31 practices of transformational leadership for motivating followers and developing them 32 33 to their whole potential to accomplish higher-order objectives. Empirical evidence of 34 35 this view is given by many leadership researchers such as Bono and Judge (2004), 36 37 Hayashi and Ewert (2006) and Brymer and Gray (2006). 38 39 40 With respect to the management and leadership literature, this study has made an 41 42 important contribution as it provided insight on the degree of impact of each leadership 43 44 style on the four BSC performance dimensions. The implication is that organizations 45 46 may detect leadership areas with significant effects on specific performance measures 47 48 49 and identify potential for training and development to improve leadership practices and 50 51 the overall organizational performance. Consequently, human resource experts are able 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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32 1 2 3 4 5 6 7 8 9 to align their training and development activities and to derive the leadership style or 10 11 the attributes with the most positive or negative impact on specified organizational 12 13 measures. 14 15 Given that transformational as well as transactional leadership are significant 16 17 predictors of improved organizational performance, perhaps the most important 18 19 20 implication of this research is that leaders need to apply the patterns of transformational 21 22 and transactional leadership depending on the situation they encounter, supporting the 23 24 theoretical background considered in this paper. 25 26 Consequently, leaders may consider practising both leadership styles in combination 27 28 29 depending on the situation in order to satisfy the low-level needs of followers with 30 31 transactional leadership as well as motivating the followers with transformational 32 33 leadership by appealing to their higher needs for developing their fullest potential. 34 35 Empirical evidence to this implication is given by many leadership researchers such as 36 37 Bono and Judge (2004) and Hayashi and Ewert (2006). 38 39 40 41 42 6. Concluding Remarks 43 44 Previous researchers provided limited empirical studies that examined the role of 45 46 leadership styles on organizational performance from the perspective of young 47 48 49 professionals. Moreover, the impact of the leadership styles on the four BSC 50 51 performance dimensions has also not been investigated. 52 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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33 1 2 3 4 5 6 7 8 9 This study addressed these gaps by focusing on young professionals’ perceptions of 10 11 leadership and performance. This population was chosen given the fact that these are the 12 13 future senior employees and managers in organisations in Germany so it is crucial to 14 15 understand their expectations. 16 17 The findings of this study provide leaders in the industry sector with clear guidance 18 19 20 on which leadership styles to use with young professionals to achieve optimal 21 22 performance and competitive advantage for companies in today’s globally competitive 23 24 market. However, these findings are limited to the German context which might suggest 25 26 the impact of cultural elements in this research. 27 28 29 Following the discussed findings, future research should focus on the implications of 30 31 adopting the laissez-faire leadership style and its consequences for organisational 32 33 success and competitiveness. Future research could also consider the cultural 34 35 differences between young professionals in other countries other than Germany and the 36 37 impact of these differences on organisational performance. Other variables such as 38 39 40 education, job position and years of professional experience could also be explored in 41 42 the future as intervening variables. 43 44 45 46 REFERENCES 47 48 49 Agle, B.R., Nagarajan, N.J., Sonnenfeld, J.A. and Srinivasan, D. (2006). Does CEO 50 matter? An empirical analysis of the relationships among organizational 51 performance, environmental uncertainty, and top management ' perceptions of 52 CEO charisma. Academy of Management Journal , 49(1):161-174. 53 54 55 56 57 58 59 60 Leadership & Organization Development Journal

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