Transformational Leadership VS. Transactional Leadership: The Influence of Gender and Culture on Leadership Styles of SMEs in China and Sweden The Department of Business Studies Master in International Business FEC 685, Master Dissertation December 2006 Tutors: Christer Ekelund Authors: Pan Xiaoxia Lisa Källström Pan Xiaoxia Viveca Fjelkner Wu Jing Acknowledgements Kristianstad University, 2006 There are many people to whom we owe the acknowledgements. First of all, we would like to express our most sincere and warmest appreciation to our supervisors, Christer Ekelund and Lisa Källström, who have been generous enough to give us valuable comments on the whole thesis. Many thanks also give to Annika Fjelkner for her patient improvement in our English writing. Then we are indebted to Dr. Hoon Halbauer at Lund University, Dr. Ingemar Ottosson and Dr. Leif Holmberg at Kristianstad University for their kind help. Particular thanks also to Zhang Lin, Pierre Carbonnier, Duoc Lu and Yang Xinzheng for their sincere help in our questionnaire and data analysis. Last but not least, we owe our profound gratitude to all our friends and all the Chinese and Swedish managers who have offered us lots of support and encouragement. Pan Xiaoxia Pan Xiaoxia Wu Jing Abstract Transformational and transactional leadership, which focus on the relationship between leaders and employees, are the most recent development of leadership theories. Yet studies on the impact of gender and culture on transformational and transactional leadership styles are limited. This Master Dissertation therefore aims to shed new light on that issue. First, it attempts to compare leadership styles adopted by managers of SMEs in China and Sweden. Second, it tries to evaluate which element - gender or culture - exerts a more important influence upon leadership styles. Based on empirical researches, ten hypotheses are formulated and a new model is developed in the dissertation. In addition, the deductive approach is chosen as methodology and quantitative data is gathered with the help of an empirical study of an online questionnaire. Eventually, the present research indicates that both Chinese managers and Swedish managers of SMEs are prone to be more transformational than transactional. It also shows that there is no gender influence upon leadership styles. In contrast, culture exerts a little more impact on leadership styles of SMEs in China and Sweden. Key words: transformational leadership style, transactional leadership style, gender, culture, China, Sweden Table of Contents 1. Introduction 1.1. Background ...........................................................................................................1 1.2. Problem..................................................................................................................2 1.3. Purpose...................................................................................................................2 1.4. Limitations.............................................................................................................3 1.5. Research Questions...............................................................................................3 1.6. Outline....................................................................................................................3 2. Methodology .............................................................................................................5 2.1. Choice of Methodology.........................................................................................5 2.2. Data Collection......................................................................................................5 2.2.1. Secondary Data....................................................................................................5 2.2.2. Primary Data .......................................................................................................6 2.2.3. Qualitative Method and Quantitative Method .....................................................6 2.3. Research Approach...............................................................................................6 2.4. Research Philosophy.............................................................................................7 3.Theoretical Framework............................................................................................8 3.1. An Overview of Theories of Leadership .............................................................8 3.1.1. Introduction: Concepts of Leadership .................................................................8 3.1.2. Characteristics of Leadership Theories...............................................................9 3.1.2.1. Four Types of Leadership Theories...................................................................9 3.1.2.2. Summary.........................................................................................................11 3.1.3. Traditional Theories of Leadership....................................................................11 3.1.4. New Leadership in the 21st Century..................................................................12 3.1.4.1. Introduction.....................................................................................................12 3.1.4.2. Transformational Leadership ..........................................................................12 3.1.4.3. Connective Leadership....................................................................................13 3.1.4.4. Summary.........................................................................................................13 3.1.5. Summary of Leadership Theories ......................................................................13 3.2. Transformational VS. Transactional Leadership.............................................14 3.2.1. Introduction........................................................................................................14 3.2.2. Components of Transformational Leadership ...................................................15 3.2.3. Components of Transactional Leadership .........................................................15 3.2.4. Summary ............................................................................................................16 3.3. Gender and Leadership......................................................................................17 3.3.1. Overview of Theories of Gender and Leadership ..............................................17 3.3.1.1.Stereotypes of Male and Female Leaders ........................................................17 3.3.1.2. Role Incongruity .............................................................................................18 3.3.1.3. Gender Differences in Actual Leadership Styles ............................................18 3.3.2. Gender Persepective on Transformational and Transactional Leadership.......22 3.3.2.1. Introduction.....................................................................................................22 3.3.2.2. Gender Difference Camp ................................................................................22 3.3.2.3. Non-Differences Camp ...................................................................................24 3.2.2.4. Summary.........................................................................................................24 3.4. Culture and Leadership .....................................................................................25 3.4.1. An Overview of Theories of Culture and Leadership Styles………………………25 3.4.1.1. Theories of Culture .........................................................................................25 3.4.1.2. Theories of Previous Researches on Culture and Leadeship Styles ...............25 3.4.1.3. Hofstede’s Four Cultural Dimensions of National Culture.............................27 3.4.2. Hofstede’s Four Cultural Dimensions VS. Leadership Styles............................29 3.4.2.1. Power Distance VS. Leadership Styles...........................................................29 3.4.2.2. Collectivism/Individualism VS. Leadership Styles ........................................29 3.4.2.3. Femininity/Masculinity VS. Leadership Styles ..............................................30 3.4.2.4. Uncertainty Avoidance VS. Leadership Styles ...............................................31 3.4.2.5. Summary.........................................................................................................32 3.4.3. Hofstede’s Four Cultural Dimensions Index of China and Sweden...................34 4. Discussion of the PWP Model ...............................................................................36 4.1. Introduction.........................................................................................................36 4.2. Explanation for the PWP Model........................................................................36 4.3. Hypotheses...........................................................................................................45 4.3.1. Hypotheses of Influence of Gender on Leadership Styles..................................45 4.3.2.Hypotheses of Influence of Four Cultural Dimensions on Leadership Styles ....46 4.4.Conclusion…………….………………………………...................................…..49 5. Empirical Method ..................................................................................................50 5.1. Research Strategy................................................................................................50