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MUSTANG JOURNAL OF MANAGEMENT & MARKETING

VOLUME 1 (2012)

INTERIM EDITOR-IN-CHIEF Marty Ludlum

Assistant Professor of Legal Studies College of Business

University of Central Oklahoma

The Mustang Journal of Management & Marketing is an Official publication of

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Mustang Journal of Management & Marketing, Volume 1 (2012)

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Management & Marketing in a new Millennium Marty Ludlum, Interim Editor MJMM

These are interesting times. The financial system has collapsed in 2008 and emerged into a more regulated environment and serving a more cynical clientele. Professional sports have faced many difficulties, none more troubling than the problems of drug use in baseball and cycling. While the world is spinning (sometimes out of control), the academic community keeps working. We have an interesting mix of papers for our premier issue, which span several disciplines. The first paper is from Geoff Willis and Patricia Wert-Gray. They examined something near and dear to my heart, free samples. Their study found that acceptance rates by consumers are affected by both the method of presentation and the gender of the consumer. A more aggressive style of delivery will result in more samples given than a passive approach. Males, according to Willis and Wert-Gray, are more likely than females to accept a free sample. And if the sample is offered by a female, more males will take the free sample. This type of research is very valuable to marketing in the real world, whether offering samples at the food court in the mall or the grocery store. I wonder how beauty might affect these results. Of course, beauty is difficult to quantify, so a scientific approach is unlikely to work. However, if a very attractive male (Brad Pitt, for example) was offering free samples of potato chips would he give away more than an unattractive male (such as me)? Conventional wisdom would support this. However, perhaps an unattractive person is less imposing and threatening, and able to gain more potential customers to the free samples. Put that way, both propositions have an intuitive appeal. Shawkar Kamal examined leadership research in organizational behavior and strategy literature. Interestingly, Professor Kamal found that these two strands of research do not share a lot of common characteristics on leadership. He makes four propositions which attempt to clarify the divergent areas of research on leadership. The appendixes contain an excellent review of the literature in these two areas, a value for all researchers in this field. Next, Johannes Snyman examined the industry concentration in the subscription television industry from 1996-2012, following the Telecommunications Act of 1996. While most media reports claimed the telephone companies would enter (and dominate) the television market, leading to near monopolies in television that they previously had in the telephone market. However, it did not happen. The new


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market giants were digital broadcast satellite companies (Dish Network and DirecTV, for two). Professor Joseph Ojih studied the credit rating agencies and their actions during the recent financial crisis. The investing public relied on the word of the credit rating agencies, and it has been clear that some of their ratings were less than accurate, and some were less than objective. Professor Ojih proposes a solution that is both practical, reasonable in scope, and should be followed by those with political control. We also have several international authors. Professor Ramanujam reviewed the quality of health care services in India. Next, Vivian Nwoha Chidinma of Nigeria discussed the importance of managing a culturally diverse workforce. Finally, Professor Younis Saleh of Libya made a very interesting examination of the role of corporate social responsibility in the Libyan oil industry. This is the premier volume of the Mustang Journal of Management and Marketing, an official publication of Mustang Journals, Inc. The Journal is being published in hardcopy and electronically on the Mustang Journal’s web page at http://www.MustangJournals.com. All articles that appear in this volume of the Mustang Journal of Management and Marketing have been recommended for publication by the Reviewers/Advisory Editors, using a double, blind peer review process. Personal thanks are extended to the Reviewers/Advisory Editors for all their hard work and dedication to the Journal. Without their work, the publication of this Journal would be impossible. This is my first year as interim Editor-in-Chief, and I wish to express my sincere thanks and appreciation for all the support, encouragement, assistance and advice throughout this year. The publishing of the journal is an intense educational experience which I continue to enjoy. Congratulations to all our authors. I extend a hearty invitation to submit your manuscripts for future issues of Mustang Journals! Marty Ludlum Interim Editor in Chief Mustang Journal of Management and Marketing


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http://www.mustangjournals.com/


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Our Advisory Editors

Mustang Journals could not exist without the hard work and timely effort of our peer reviewers. Mustang Journals is seeking scholars willing to volunteer. Mustang

Journals recognizes the importance of the peer review process in shaping the reputation and credibility of the journal and the individual papers. Reviewers will be expected to review no more than three papers a year. If you would like to become a

peer reviewer, please contact us at [email protected]

Mustang Journals wishes to thank our Peer Reviewers.

Dr. Jennifer Barger-Johnson, Legal Studies, U. of Central Oklahoma

Dr. Linda Barton, Marketing, Brenau U. (GA)

Roger Chao, Ethics, Curtin University, Australia.

Dr. Michael D. Chatham, Accounting, Radford University

Steven I-Shuo Chen, Business & Management, National Chiao Tung U., Taiwan.

Dr. Wanda J. Corner, Management, Walden U. (GA)

Dr. Shivakumar Deene, Business Studies, Central U. of Karnataka, India

Dr. Aikyna Delores Finch, Management, Strayer U. (CA)

Dr. Darrell Ford, Legal Studies, University of Central Oklahoma

Dr. P. Ganesan, Marketing, Mburabuturo School of Finance & Banking, Rwanda

Dr. Andrew S. Griffith, Accounting, Iona College, New York.

Dr. David Hartmann, ISOM, University of Central Oklahoma

Dr. Randal Ice, Finance, University of Central Oklahoma

Z.E. Jeelani, Business Studies, Islamic U. of Science & Technology, India.

Dr. Stellina Jolly, Legal Studies, Punjab University, India.

Dr. Stuart MacDonald, Legal Studies, University of Central Oklahoma

Michael Machiorlatti, Economics, Oklahoma City Community College


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mailto:[email protected]

Dr. Bashar H. Malkawi, Intl. Trade Law, Hashemite U., Jordan

Dr. William Mawer, Dean, School of Education & Social Sciences, Southeast Oklahoma State University.

Dr. Ngboawaji Daniel Nte, Rivers State U. of Education, Nigeria.

Mohammad Nurunnabi, Accounting, Edge Hill University, UK.

Dr. William L. Quisenberry, Management, Ottawa U. (KS).

Vijayan Ramachandran, Management, Oklahoma City Community College

Dr. Suresh Reddy, Management, Vivekananda C. of Comp. Sciences, India

Dr. David Ritter, Business Law, Texas A & M - Central Texas

Amir Mohammad Sayem, Research Methods, Bangladesh Institute of Social Research

Karen Sneary, Business, Northwest Oklahoma State University.

Dr. Cathy Taylor, Management, Park University, Missouri

Dr. Lee Tyner, Management, University of Central Oklahoma

Dr. L. Vijayashree, Dept. of MBA, PES School of Engineering, Bangalore

Dr. Zulnaidi Yaacob, Management, University Sains Malaysia.

If you are interested in serving as an Advisory Editor,

please contact us at [email protected]


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mailto:[email protected]


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Table of Contents Mustang Journal of Management & Marketing

Volume 1 (2012)

Title . . . . . 1 Editor’s Notes: Management & Marketing in a New Millennium . . . . . 3 Advisory Editors . . . . . 6 Table of Contents . . . . . 9 Sample Acceptance Rates and Gender Bias: An Empirical Investigation Geoff Willis & Stacia Wert-Gray . . . . . 11 Leadership Research in OB and Strategy: An Attempt to Bridge the Divide Shawkat Kamal . . . . . 24 Economic Concentration in the Subscription Television Industry Johannes H. Snyman . . . . . 43 An Appraisal of the Roles of Credit Rating Agencies in the 2007-2008 Financial Crises Joseph Ojih . . . . . 58 Managing Culturally Diverse Workforce to Enhance MNCs Performance and Competitiveness Nwoha Chidinma Vivian . . . . . 76 Quality of Health Care Services in India – A Comparative Study of Public and Private Health Organizations P.G. Ramanujam . . . . . 88 Costs As A Link Between Corporate Social Performance And Financial Performance : An Analytical Study Of The Views Of The Beneficiaries Of The Services Produced By Some Types Of Costs In The Libyan Oil Companies. Younis A. Battal Saleh . . . . . 119 Announcements for Mustang Journals & Conferences . . . . . 148


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SAMPLE ACCEPTANCE RATES AND GENDER BIAS:

AN EMPIRICAL INVESTIGATION

Geoff Willis

University of Central Oklahoma [email protected]

Stacia Wert-Gray University of Central Oklahoma

ABSTRACT

This study examines the tendency of people to accept an offer of a free sample. Three hundred persons were offered a sample with manipulated factors of sample delivery method and sample administrator gender. The data suggest that consumer acceptance rates are affected by both the manner in which the sample is distributed and the gender of the person offering the sample. Consumers that are approached by the sample administrator are more likely to accept the offer than if they must approach the administrator. Males are more likely to accept a sample than females, and are more likely to do so when a female administers the sample.


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https://mail.uco.edu/owa/redir.aspx?C=dc59f1bd3a9d44029e95c33bc49c7055&URL=mailto%3agwillis%40uco.edu

INTRODUCTION

Current marketing literature agrees that product sampling is a powerful marketing tool (Shrimp & Sprott, 2006; Feric, 1996; PMAA Council, 1996). Sales promotions can be just the ticket for boosting sales (Fishman, 1997). Retailers are spending less on advertising and more on promotion (Chain Store Age, 1998). Consumer sales promotions commonly utilized include coupons, samples, contests, specialty items, and rebates. Several researchers offer explanations for the surge in promotions (Dawes, 2004; Dickson & Sawyer, 1990; Low & Jakki, 2000; Quelch, 1983). One important consideration is the changing view that advertising and promotion activities are not mutually exclusive. “This has changed as increased use by market leaders such as Proctor and Gamble and McDonald’s have given promotion a newfound ‘respectability,’ and as rising prices and increasing ‘ad clutter’ have raised doubts about advertising’s cost-effectiveness” (Peattie, 1998, p. 43). A shift in supply chain power towards retailers (Toop, 1992), matching competitors’ promotions (Lal, 1990), and emphasis on immediate results also contribute to increased promotional activity. A growing number of manufacturers are sampling both new and established products (Target Marketing, 1997). Samples can be distributed within the product package, in store, through the mail, or more recently online. Online samples have also been successfully utilized to drive website traffic (Beeler, 2000) but online samples are less under the control of the seller (Chong & Zhang, 2009) than tangible samples. In many industries, samples constitute a significant portion of the overall marketing budget. The pharmaceutical industry spent in excess of $18 billion on marketing drugs in 2005, the majority of which was spent on samples allocated to physicians (Montoya, Netzer, & Jedidi, 2010); the food industry also reports significant expenditures (Luxton, 2001). Samples are effective because they allow the consumer to judge product quality prior to purchase. Unlike advertising or personal selling which tells consumers that a product is great, samples allow the consumers to try it firsthand and decide for themselves. The foci of much of the free sample literature (Jain, Mahajan, & Muller, 1995; Gedenk & Neslin, 1999; Bawa & Shoemaker, 2004) has been a) how sampling provides consumers the opportunity to experience the product, and b) how sampling can be used to generate sales and foster customer loyalty. A good product can be sold effectively by placing it directly into the hands of your prospect (Rieck, 2000). Samples are also effective (Osman & Fah 2011) in generating trial from consumers who may already be brand loyal to a competitor. Research has shown that 43% of shoppers indicate that they would switch brands if they liked a free sample. (Chain Store Age, 1998) Consumers have definite preferences in how they would like samples to be made available to them. Direct mail is the preferred source of product


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samples (Chain Store Age, 1998). A Donnelley Marketing Inc. survey finds that over 70% of consumers prefer to receive a free sample in the mail, but manufacturers report that in-store samples are the most frequently used (Direct Marketing, 1995). One study examined preferences for sample delivery by gender. Target Marketing & Research in Huntinaton, NY surveyed over 2,000 respondents regarding product samples. Women said that they would be more receptive to samples delivered by mail than by hand. Men in were more open to hand-delivered samples (Hummert, 1997). This study examines the tendency of people to accept an offer of a free sample. It is an exploratory study to determine if the genders differ in their tendency to accept a sample. The study also explored if subjects were more or less likely to accept a free sample when the gender of the person offering the sample was varied. Previous work by Prendergast, Tsang, and Lo (2008) explored antecedents to sample-seeking behavior including the demographic variables of gender, age, and income. They discovered that gender, age and income were significant predictors in their demographic-only model.

RESEARCH METHODOLOGY The study was conducted during the first week of the fall semester at a major regional university. University students, visitors, and employees were offered a frozen treat as they walked past an information booth located alongside a sidewalk on campus. It was an extremely hot day with outside temperatures over 100 degrees. Three variations of the offer were presented:

1. In variation one of the experiment, one male administrator and one female administrator asked respondents if they wanted a free frozen treat as they walked past the information booth. If the subject elected to receive the free sample, they had to alter their course and walk off the sidewalk to the booth to pick the sample up off a table. Both the male and female administrators were present at the booth throughout this phase of the investigation. The hypothesis tested during this phase of the investigation was:

H0: There is no difference in sample acceptance between males and females when they must deviate from their established course.

H1: Males are more likely to accept a sample than females when sample acceptance requires the recipient to deviate from their established course.

2. In variation two of the experiment, one male administrator stood on the sidewalk with a box of frozen treats in hand and asked respondents if they wanted a free sample. The sample administrator was positioned in such a way that the subject’s established path carried them directly to the sample. In variation one, the placement of the booth required a


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subject to change course perpendicular to the established direction of travel. This trial tested the hypothesis:

H0: There is no difference in sample acceptance rates between men and women when the sample is offered by a male.

H2: The sample being offered by a male is more likely to be accepted by a female than a male.

3. In variation three of the experiment a female administrator stood on the sidewalk with a box of frozen treats in hand asked respondents if they wanted a free sample. This treatment tested the hypothesis:

H0: There is no difference between female and male acceptance rates when the sample is offered by a female administrator.

H3: The sample offered by a female administrator is more likely to be accepted by male subject than a female subject.

Additionally variations one, two and three allowed us to test these three hypotheses:

H0: There is no difference in sample acceptance rates between the sample being offered at the administrators’ convenience and the sample being offered at the subjects’ convenience.

H4: The sample being offered at the subjects’ convenience will be accepted at a greater rate than a sample offered at the administrators’ convenience.

H0: There is no difference in sample acceptance rates between males and females regardless of the convenience of obtaining the free sample.

H5: Males are more likely to accept a free sample than females regardless of the convenience of obtaining the free sample.

H0: There is no difference in sample acceptance rates between males and females regardless of the gender of the sample administrator.

H6: Males are more likely to accept a free sample from a female than females are to accept a free sample from a male.

DATA ANALYSIS AND DISCUSSION

A chi-square test of independence was performed to determine if there was a significant difference in free sample acceptance for each of the treatments. In addition, we measured the variables’ association using Cramér’s V using that option in the chi-square routine. Cramér’s V is a useful measure of the association between two variables as it is unaffected by sample size (Conover 1992). The SPSS 17.0 statistical software package was used to test each hypothesis; the results are summarized in Table 1, the 2x2 tables are located in Appendix 1.


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Table 1 Chi-square Values and Effect Sizes for Hypotheses H1-H6

Ha

Treatment χ2 N V

H1

Gender x Acceptance: Consumer approaches 3.46* 98 .19

H2

Gender x Acceptance: Male distributes samples 0.32 88 .06

H3

Gender x Acceptance: Female distributes samples 4.16* 119 .19*

H4

Approach x Acceptance: Administrator approaches

7.45** 305 .16**

H5

Gender x Acceptance: Male vs. female customers 4.98* 305 .13*

H6

Opposite x Acceptance: Customer from opposite gender 1.72 207 .09

* p

independence confirmed that males were more likely to do so, χ2 (1, 305) = 4.98, p=0.02 and Cramér’s V = 0.13 (p=.03). Hypothesis 6, testing the “opposite sex” effect on acceptance of a free sample shows that this effect is not statistically significant χ2 (1, 207) = 1.72, p=0.12 and Cramér’s V = 0.09 (p = .22).

RESEARCH IMPLICATIONS, LIMITATIONS AND FUTURE RESEARCH The observations discussed within this paper suggest that consumer acceptance rates can be affected by the manner in which the sample is distributed. If consumers are approached by the sample administrator, they are more likely to accept the offer than if they must deviate from their current course or alter their existing agenda. Companies that routinely distribute samples can design the sample distribution system to make acquisition of a free sample as effortless as possible in order to successfully distribute a maximum number of samples. One design consideration is to minimize the physical distance between the sample administrator and customers. The less distance between the two parties prior to the transaction, the greater the percentage of customers that will actually take the sample. Another design consideration is to ensure that the sample administrator is in the traffic pattern, i.e., the customer’s pre-sample vector of travel does not need to be altered in order to take possession of the sample. This also serves to minimize the customer’s perception of the effort needed to obtain the sample. The gender of the person administering the sample may also impact acceptance rates. A product manager could realize greater success of free sample distribution to potential male customers if a female sample administrator is distributing the samples. While men are in general more likely to accept a free sample than women, the effect that a female administrator has on sample acceptance by males is significant, whereas the reverse administration/acceptance pairing is not. The nature of the free sample in this experiment is one factor that may have a profound effect on the results. The free sample was an ice-cold confection that was distributed on a hot day. Research has shown that while women have higher core body temperatures, their hands and feet are, on average, more than two degrees colder than men’s (Kim, Richardson, Roberts, Gren, & Lyon, 1998) which results in their tendency to feel colder than men. Women may have been less inclined to accept a frozen treat due to the potential physical discomfort. Another trial with a hot confection on a cold day or a hot confection on a warm day might reverse the percentages of each gender accepting the sample. The edible nature of the free sample may also have some bearing on each gender’s acceptance rate. The ambient temperature dictated that the free sample had to be consumed immediately. Researchers (Young, Mizzau, Mai, Sirisegaram, & Wilson, 1998) have demonstrated that group composition


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plays a role in how much women eat. In their study, when women ate with other women, their food choices were unchanged, however when women ate in the presence of men, their intake dropped in proportion to the percentage of men in the group. Since the food samples were distributed in a high-traffic, common area on campus, this effect may have played a role in the percentage of women accepting the sample. An additional series of trials should be conducted with a variety of non-food items, such as office supplies, that both genders have equal use for on a college campus. Another way to control for this effect would be to distribute sample food items in a single-gender setting. This study should be viewed strictly as exploratory. Further research is needed to control for these potential effects and to confirm our findings.


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REFERENCES

Bawa, K. & Shoemaker, R.W. (2004). The effects of free sample promotions

on incremental brand sales. Marketing Science, 23, 345-63.

Beeler, A. (2000). Package-goods markers tune in free-sample sites. Advertising Age, 71(25), 58-59.

Conover, W.J. (1992). Practical Nonparametric Statistics (2nd ed.). New York, NY: John Wiley.

Coupon usage remains up, Donnelley survey reports (1995). Direct Marketing, 58(5) 8.

Dawes, J. (2004). Assessing the impact of a very successful price promotion on brand, category and competitor sales. Journal of Product and Brand Management, 13, 303–314.

Dickson, P. R., & Sawyer, A. G. (1990). The price knowledge and search of

supermarket shoppers. Journal of Marketing, 54(3), 42–53.

Feric, M. (1996). The promise and perils of product sampling. Marketing Magazine, 101(14), 14.

Fishman, A. (1997). Sales promotions easy way to plug business. Denver Business Journal, 49(3) 28a.

Gedenk, K. and Neslin, S. (1999). The role of retail promotion in determining future brand loyalty: its effect on purchase event feedback. Journal of Retailing, 75, 433-59.

Jain, D., Mahajan, V. and Muller, E. (1995). Determination of optimal

product sampling for the diffusion of a new product. Journal of Product and Innovation Management, 12, 124-135.

Kim, H., Richardson, C., Roberts, J., Gren, L. and Lyon, J. (1998). Cold

hands, warm heart. The Lancet, 351 1492. Lal, R. (1990). Manufacturer trade deals and retail price promotions. Journal

of Marketing Research, 25(6), 428–444.


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Low, G. S., & Jakki, J. M. (2000). Advertising vs. sales promotion: A brand management perspective. Journal of Product and Brand Management, 9, 389–414.

Luxton, S. (2001). Sales Promotion in the Australian Food Industry: A Review of Industry Practice and Its Implications. Journal Of Food Products Marketing, 7(4), 37.

Montoya, R., Netzer, O., & Jedidi, K. (2010). Dynamic allocation of pharmaceutical detailing and sampling for long-term profitability. Marketing Science, 29, 909-924.

Mummert, H. (1997). P.S. Target Marketing, 20, 79.

New survey details promotional practices, (1998). Chain Store Age, 74(11), 67.

Osman, S., & Fah, B. (2011). Simulation of sales promotions towards buying behavior among university students. International Journal Of Marketing Studies, 3(3), 78-88.

Peattie, K., & Peattie, S. (1995). Sales promotion—a missed opportunity for

services marketers? International Journal of Service Industry Management, 6(1), 22–

39.

Peattie, S. (1998). Promotional competitions as a marketing tool in food retailing, British Food Journal, 100(6) 286-294.

PMAA Council reports on effectiveness of product sampling. (1996).

Potentials in Marketing, 29(1), 29.

Prendergast, G., Tsang, A. & Lo, C. (2008). Antecedents of the intention to seek samples. European Journal of Marketing, 42, 1162-1169.

Quelch, J. A. (1983). It’s time to make trade promotion more productive. Harvard

Business Review, 61(3), 130–136.

Rieck, D. (2000). The ‘cedar plank salmon’ secret of selling, Direct Marketing, 63 22-25.

Short takes, (1997). Target Marketing, 20(1), 20-21.


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Shimp, T. A., & Sprott, D. E. (2006). Increasing store brand purchase intentions through product sampling. Advances In Consumer Research - European Conference Proceedings, 7, 409.

Toop, A. (1992). European. London, UK: Kogan Page.

Wang, C., & Zhang, X. (2009). Sampling of information goods. Decision Support Systems, 48(1), 14-22.

Young, M., Mizzau, M., Mai, N., Sirisegaram, A., & Wilson, M. (2009). Food for thought: what you eat depends on your sex and eating companions. Appetite, 53(2) 268-271.


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Appendix 1: 2x2 Data tables

Consumers must approach the table to receive the sample Actual Observations Percentage Male Female Total Male Female Total Accept 30 23 53 63.8% 45.1% 54.1% Reject 17 28 45 36.2% 54.9% 45.9% Total 47 51 98 100.0% 100.0% 100.0% A male administrator directly hands consumers a sample Actual Observations Percentages Male Female Total Male Female Total Accept 23 39 62 74.2% 68.4% 70.5% Reject 8 18 26 25.8% 31.6% 29.5% Total 31 57 88 100.0% 100.0% 100.0% A female administrator directly hands consumers a sample Actual Observations Percentages Male Female Total Male Female Total Accept 32 51 83 82.1% 63.8% 69.7% Reject 7 29 36 17.9% 36.3% 30.3% Total 39 80 119 100.0% 100.0% 100.0% Consumer approaches the table Vs. administrator approaches the consumer Actual Observations Percentages Approach Handed Total Approach Handed Total Accept 53 145 198 54.1% 70.0% 64.9% Reject 45 62 107 45.9% 30.0% 35.1% Total 98 207 305 100.0% 100.0% 100.0% Male Vs. female acceptance, both methods of sample distribution Actual Observations Percentages Male Female Total Male Female Total Accept 85 113 198 72.6% 60.1% 64.9% Reject 32 75 107 27.4% 39.9% 35.1% Total 117 188 305 100.0% 100.0% 100.0%


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Opposite gender Vs. same gender sample acceptance, both methods of sample distribution Actual Observations Percentages Opposite Same Total Opposite Same Total Accept 71 74 145 74.0% 66.7% 70.0% Reject 25 37 62 26.0% 33.3% 30.0% Total 96 111 207 100.0% 100.0% 100.0%


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LEADERSHIP RESEARCH IN OB AND STRATEGY: AN ATTEMPT TO BRIDGE THE DIVIDE

Shawkat Kamal BRAC Business School

BRAC University, 66 Mohakhali C/A Dhaka – 1212, Bangladesh

e-mail: [email protected]

ABSTRACT

Based on previous studies in OB and Strategy literature, in this study I tried to come out with a few propositions that would enhance our understanding of exactly how the leaders affect the performance of their organizations. While doing so, I looked at the major journals in these two fields and presented four propositions that reflected both the combined findings as well as individual findings in these two literatures. Although I expected more conformity between these two literatures regarding this issue, the analysis did not reveal enough support for this expectation.

Key Words: CEO, Leadership, Firm Performance, Tenure, Vision

I. INTRODUCTION The concept of leadership is a very important area of organizational research and the leadership research dates back to the pre World War II era (e.g. Barnard, 1938). Numerous studies have been conducted on leadership since then and various aspects of leadership were looked at in details. One such aspect is the role of leadership on firm performance. Although both the Strategy and OB Literature have emphasized on the role of leadership on firm performance, the focus in these two literatures is quite varied. While the strategy literature is more concerned with strategic leadership theory that deals with people at the top of the organization, the OB literature has focused more on leadership theory that deals with leaders at any level in the organization (Vera & Crossan, 2004). The strategic leadership theory stems from the seminal work of Hambrick and Mason (1984) where they argued that the top management team is a very important


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element in organizations and findings from the study in that area are likely to be quite beneficial for different stakeholders of the firms. The objective was to generate interest among the scholars to engage in research in this area and their effort may be deemed successful considering the numerous researches that followed in the field of strategic leadership theory sine the publication of their paper. In contrast to leadership theory in general that is solely concerned with the relational aspect of executive work, strategic leadership theory also emphasizes on the strategic activity of the executives (Hambrick & Pettigrew, 2001). However, both groups of literature had an overwhelming focus on the transactional and transformational leadership, two very popular way of distinguishing the leadership styles. The transactional style of leadership is characterized by contingent reward and management by exception, and the transformational style of leadership is characterized by charisma, individualized consideration, and intellectual stimulation (Bass, 1985).

Although there are studies (e.g. Lieberson & O’Connor, 1972) that do not necessarily agree that leadership has much of a role in organizational performance, conventionally it has been suggested that leaders play a crucial role in organization performance (e.g. Thomas, 1988; Pedraja-rejas, Rodriguez-Ponce, & Rodriguez-Ponce, 2008). In his study of retailing firms based in the UK, Thomas (1988) concluded that leader differences do account for performance variations within firms to a substantial degree. Pedraja-rejas et al. (2008) found that transformational leaders positively affect organizational performance for all levels of organizations whereas transactional leadership has no impact on large organizations and a negative impact on small and medium organizations. Their study was situated in Chile and covered 21 large, and 98 small and medium enterprises. However, exactly how the outcomes are influenced due to the action of the leaders have received very little attention, especially in the strategy literature. Considering the fact that leaders are treated as the guiding force of the organization, it is very important to understand how they achieve what organizations expects them to achieve. In this study, I have tried to look into the relevant literature in the OB and Strategy field to find an answer to this very question – “How do leaders affect performance outcomes in an organizational setting?” In the first two sections of this article, I will present my findings on what the existing strategy and OB literature has done so far to address this issue. In the final section, I will provide a few propositions with the objective of creating some understanding of how the leaders actually play a significant role in determining organizational outcomes.


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II. THE STRATEGY LITERATURE The studies of leadership in the strategy literature have focused mainly on top management teams and CEOs and a lot of studies were conducted to test the effect of this group of leaders on firm performance. The outcomes of these studies were not always in line with each other. There was support for leadership styles’ effectiveness in some (e.g. Mackey 2008), whereas there was not enough support in others (e.g. Waldman et al., 2001). One problem that plagued these studies was the use of not so reliable sources of data such as newspaper articles and biographies or autobiographies of leaders deemed as charismatic. Also very few studies took an effort to go deep and find out how exactly the leaders were making a difference. I discuss the findings of some studies that tried to delve into this specific issue below.

Westley and Mintzberg (1989), in a study that looked at the activities of some visionary leaders in detail, proposed that a leader can create a difference to the organization by using the proper style of visionary leadership in the given context. They defined five different styles (creator, proselytizer, idealist, bricoleur, and diviner), and citing examples from real world organizational settings argued that the leaders became successful only when they understood the context well and applied the appropriate style. Elenkov, Judge, and Wright (2005) also looked at the role of vision in their study of role of strategic leadership on firm innovation. They defined strategic leadership as – “the process of forming a vision for the future, communicating it to subordinates, stimulating and motivating followers, and engaging in strategy-supportive exchanges with peers and subordinates”. They conducted their study on 223 companies located in six countries using survey method. The authors found that strategic leadership behavior had a positive effect on both product-market and administrative innovations.

A number of studies have looked at the tenure of a CEO and the performance of a firm and this focus on tenure seemed a popular choice among authors looking into this issue. Hambrick and Fukutomi (1991) suggested a framework where they divided the tenure of CEOs in the office in five different parts – response to mandate, experimentation, selection of an enduring theme, convergence, and dysfunction1. They suggested that the relationship between CEO tenure and firm performance will take an inverse U-shape with the peak period in performance coming during the middle part of the

1 as per their definition, the CEOs move from one part to another as time progresses in the order in which they are shown here


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tenure. They characterized the different periods with different attributes and suggested that through promoting these attributes at the different stages of their tenure, the CEOs will influence the outcome of the organization. Miller (1991) also came out with similar findings. He argued that the longer the CEOs stay in their job, the more they ignore their environment, and ultimately this results in negative performance outcome for the organization. Even if these CEOs accept change, they only accept it when the changes are in line with the existing tradition in the organization. In contradiction to the previous two studies, Simsek (2007) came out with totally different arguments. In his study on 495 firms, he showed that the longer the CEOs stay in office, the higher the risk taking propensity of the top management team, and the better the performance of the firm. He argued that because long tenured CEOs possesses a track record and a deeper understanding of the environment, along with an increased likelihood of getting involved into risky initiatives; the top management team would feel more comfortable while engaging in risk taking activities at the presence of such leadership. According to him, this higher risk-taking propensity leads the firm to engage in more entrepreneurial activities. Citing Zahra (1996), he further argued that by engaging in entrepreneurial initiatives, a firm may create first-mover advantages, may be able to target premium market segments and would enhance the possibility of skimming the market ahead of competitors. Thus the firm would ultimately find itself in a more profitable position by following this path.

There were other studies that looked at this issue from more varied perspectives. In their study of 48 Fortune 500 firms, Waldman et al. (2001) looked at the role environmental uncertainty plays in leaders being effective and influential on organizational outcomes. Although they failed to find any direct relationship between leadership styles, be it transformational or transactional, and organization outcomes; they found that when this relationship was moderated by environmental uncertainty, transformational leadership had a positive effect on firm outcomes. Waldman, Javidan, and Varella (2004) conducted another study in the sane vein where they looked at 69 Canadian and US firms. Interestingly, this subsequent study found support for a direct relationship between CEO charisma and firm performance. If we look at the two studies together, they do suggest that transformational CEOs may have some impact on organizational performance. However, in their study of 128 public firms in the US, Agle et al. (2006) failed to find any relationship between CEO charisma and organizational performance even when they considered environmental uncertainty. Instead they found that the perceived charisma of the CEO often depends on prior organizational performance. This


27

reiterated the concern that perceived CEO charisma may be an outcome of good firm performance rather than Charisma of the CEO resulting in good firm performance. Thus whether CEO charisma really has an effect on firm performance is still a debatable issue.

Bringing in the dimension of trust, Davis et al. (2000) tested whether trust in the leadership does have an effect on firm performance. They conducted a couple of studies on the restaurant industry and found that trust in the leadership did increase the performance of the organization. The study also indicated that the ability, benevolence, and integrity of the leaders (which in this case were general managers of the restaurants) were the key factors behind this building of trust. Waldman and Yammarino (1999) looked at the proximity factor between the CEO and his/her followers. They argued that a charismatic CEO engages in both close and distant relationships and the combination of both ultimately results in expected organizational performance. In their theoretical piece, they proposed a model where they argued that distant CEO attributes such as visions, sagas, and story telling causes the followers to attribute the CEO with charismatic style of leadership. On the other hand, a charismatic CEO, through a close interaction with the top management team, creates a role modeling of the CEO at the lower management levels. When these two factors combine, it results in heightened intra and inter group cohesion that leads to a coordinated performance of units. The ultimate outcome of this process is enhanced organizational performance, and the authors argue that it would be more evident when the external environment is perceived to be a volatile one.

As can be seen from the above review, the focus of the leadership research in strategy mainly revolved around four broad issues – vision, CEO tenure, leadership style and trust. There was clear consensus amongst the scholars regarding the role of vision with both the studies covered in the review emphasizing that the right vision, communicated in the right manner, will prove beneficial for the organizations. Although the earlier studies on CEO tenure found that long CEO tenures are detrimental for the firm, this view was challenged by Simsek (2007) where he proposed that CEOs with longer tenure fosters an environment of entrepreneurship. Since both the previous works were conducted in the early 90s, studies that look at this specific issue today might reveal more interesting outcomes as the world has changed a lot since then. Although leadership styles received a lot of attention from the scholars, the findings were varied and puzzling in this area. Hence this area, which has been studied quite extensively, still remains ripe with possibilities for further research. Finally, trust was also given some attention by the strategy scholars. I found it refreshing as the aspect of trust is not discussed


28

often in strategy literature. However, the outcome of the study suggested that trust in leadership has a very important role to play when looking at the performance of organizations. The overall finding from the above mentioned studies is summarized in Appendix 1.

III. THE OB LITERATURE

As mentioned before, the studies in OB literature took a broader view of leadership and also looked beyond the level of CEOs and top management teams. For example, in their study of 50 supermarket stores in Netherlands, Koene, Vogelaar, and Soeters (2002), looked at the leadership role of the store managers. They found that the store mangers’ leadership behavior influenced the stores’ financial performance and climate. The performance improvements came due to the reduction of controllable costs and an increased level of quality in work. The managers could obtain this outcome through providing support, inspiration and encouragement. In another study, Howell and Avolio (1993) found that when leaders practiced intellectual stimulation and individualized consideration; and when they had innovation supportive mindset; the organization performed better. Intellectual stimulation and individualized consideration are two of the four attributes generally associated to a charismatic leader. As defined by Ling et al. (2008), “intellectual stimulation emphasizes the leader’s ability to stimulate followers to challenge assumptions and the status quo and to encourage them to view problems from new perspectives and develop novel approaches”; whereas, “individualized consideration, focuses on the leader’s ability to improve follower development by providing support, encouragement, and coaching”. Howell et al. (2005), in their study of performance of 101 business unit managers of a large Canadian financial services institution, looked at the physical distance between leaders and followers to find out whether that determines the expected performance of the followers. They found support that less physical distance resulted in better performance when the leaders were following transformational leadership. The other aspect of the finding was very interesting where they found that for leaders following a contingent reward approach, the units performed better when they were more physically distant from the leader. Zhu, Chew, and Spangler (2005) tried to bring the role of transformational leadership into the formal administrative system, which was mostly thought to be beyond the scope of such leadership style. Their findings suggest that in addition to being inspirational and charismatic, the transformational leaders also improve the organizational outcomes through the practice of human-capital enhancing HRM practices. These practices include HR practices


29

that motivate and empower their employees. There were studies that looked specifically at the top management level as well. Tosi et al. (2004) in their study on CEO charisma brought in a very important issue. They tried to look at the effect of CEO charisma on firm performance using different methods compared to the generally not so reliable yet popular method of using media reports and expert observations. They used a survey method and got feedback from the top management teams of the organizations in which the CEOs concerned were working for. The survey was conducted using questionnaires. The findings based on this study that analyzed the performance and compensation of 59 CEOs were really interesting. The authors found that although there was no relationship between CEO charisma and firm performance, there was a positive relationship between CEO charisma and their compensation. This raises a serious question as if this findings are true then the CEOs might be benefiting over a myth rather than reality. Ling et al. (2008) in one of the most recent attempts to find the exact relationship between transformational leadership and firm performance conducted a study that solely focused on small and medium enterprises (SMEs). Although they acknowledged that previous studies found mixed results regarding the impact on CEO charisma on firm performance, they argued that since CEOs in small and medium enterprises are more empowered compared to their large counterparts, they will have more opportunity to influence the performance of the organization. Hence they posited that CEO charisma in such organizations will be positively related to firm performance. The study was conducted on 121 SMEs in the New England area of the United States. The finding supported their argument. In addition, they also found that CEOs who are founding CEOs of the company and CEOs with longer tenure are likely to have more impact on this relationship.

Boal and Hooijberg (2000) focused on the absorptive capacity, adaptive capacity, and managerial wisdom of the leaders in the strategic positions. They defined absorptive capacity of the leaders as the ability to recognize new information, assimilate it, and apply it towards new ends. Adaptive capacity was defined as the ability to change. They proposed that the presence of these characteristics in leaders will make them more effective. They argued that one way to have a better grip on absorptive capacity was for the leaders to have a broad understanding of environmental and contextual relationships. Thus one way for these leaders to be effective would be to be aware of what’s happening in the environment and the context under which they are working. They further proposed that by articulating and disseminating proper visions, and improving on their level of social intelligence, these leaders can improve the organizational outcomes.


30

Yukl (forthcoming, 2008) suggested that the influence of leadership can be explained through Flexible Leadership Theory (FLT). He argued that the three key determinants of organization’s performance are efficiency, adaptation, and human capital. He proposed that cooperative effort of multiple leaders and an approach of adaptation and flexibility in a dynamic environmental setting by the leaders influence these key determinants and ultimately has an effect on firm performance.

Peterson et al. (2003) in their study brought in another interesting dimension. They argued that the way senior managers interact has an effect on organizational performance. Instead of linking leadership directly to firm performance, they used it as a moderating variable between the interaction pattern of senior managers and the organizational performance. They argued that certain characteristics of the CEO such as openness and agreeableness will influence the senior management and will lead them to having a more cohesive, flexible and risk taking approach. They further found that these attributes in the top management team were positively related to the performance of the organization. In a similar argument, Kaiser, Hogan, and Craig (2008) suggested that leaders make an organization effective by creating an environment conducive for the people in the organization, who in turn ensures organizational effectiveness. This is done through making the individual followers more committed to their tasks by creating a feeling of trust and existence of perceived leader support. To do that the leaders need to follow both a transactional and a transformational style of leadership. According to them, the other activities of the leaders in this regard is geared towards improving team performance in which the leaders engage in removing obstacles in the team towards goal achievement and implementing a proper action plan. Berson, Oreg, and Dvir (2008) brought in the organizational culture in their analysis for leadership effectiveness in organization. This study emphasized that although leaders dispositional attributes such as security, benevolence and self-direction affects organizational outcome, this effect is an indirect one. They argued that the attributes of the CEOs is reflected in the organizational culture, and it is the organizational culture that ultimately has an effect on organizational outcomes. The study conducted on 26 Israeli companies found support for all their arguments.

Recently scholars have also started to look at the role of leadership in fostering organizational commitment. Shamir, House, and Arthur (1993) proposed a theoretical model where they argued that organizational outcomes are affected by leader behavior. They argued that when a leader displays certain behaviors (e.g. ideological explanations, emphasizing collective entities, expressing confidence in


31

followers); s/he creates a motivational mechanism that results in heightened self-esteem and heightened self-worth in the followers. This also results in increased self and collective efficacy; as well as more social identification and value internalization. The outcome of such a mindset in the followers is the existence of personal commitment to leader and the mission of the organization, organizational citizenship behavior, and a feeling of task meaningfulness in the mind of the followers. In general, these outcomes are likely to have a positive impact on the organizational performance. Steyrer, Schiffinger, and Lang (Forthcoming) conducted a study on 78 companies from Germany and Austria in an attempt to find the relationship between leadership style and organizational commitment. The study further explored whether a high level of organizational commitment from the employees would lead to enhanced organizational performance. The study found that if leaders practice charismatic, team-oriented, participative, or human oriented style of leadership; the resultant outcome will be increased level of organizational commitment in the followers. The findings also indicated that this increased level of organizational commitment would lead to better performance for the organization.

Another dimension brought in by the scholars in leadership literature was trust. Burke et al. (2007) argued that often leaders were successful because they could garner a feeling of trust in their followers which ultimately motivated the followers to engage in the activities desired by the leader. They further went on to argue that a breakdown of trust between the leaders and the followers may prove fatal for the organizations. They presented a model in which they argued that when the leader shows ability, benevolence, and integrity; a general level of trust on the leadership is established. The strength of the level of trust depends on predisposition of the followers, perceived psychological safety and organizational climate. This trust in leadership results in extra-role behavior and a willingness to follow among the followers which ultimately enhances the performance of the organization.

I found that the OB literature was more active compared to the strategy literature in finding how the leaders affect the performance of organizations. However, the way to look at it varied considerably in most circumstances. This reiterated the need that future researches should aim at bringing these two literatures closer while addressing the issue of the mechanism through which leaders affect the performance of their organizations. The areas that were broadly looked at in OB literature from the aspect of role of leaders in organizational performance involved two areas similar to that of strategy literature. These were leadership style and trust. However, although finding from


32

the trust aspect was more or less similar to that of the strategy literature, the impact of leadership style was very different compared to what was found in the strategy literature. There was widespread support in the OB literature that transformational style of leadership had a significant effect on organizational performance. One of the factors that might have led to this contrasting finding from the strategy literature is the different measurements used by the scholars in these two fields. Another reason might be the fact that the OB literature, in addition to looking at the role of CEOs, also looked at leaders at various levels of the organization. The other three areas covered in OB literature were unique to this stream. They were organizational environment, organizational commitment and absorptive capacity. Both the organizational attribute and the leadership attribute were positively related to firm performance. Thus the overall finding was also quite different from the strategy literature. While the strategy literature found contrasting evidence within the same area of research, almost all the areas of OB literature resulted in similar finding. One reason for this overwhelming support may be due to the fact that some of the studies in OB literature were not empirical in nature and thus one may raise the question whether all the propositions would hold eventually if tested using real world data. A summary of the findings from these studies are presented in Appendix 2.

IV. CONVERGENCE AND PROPOSITIONS Based on the findings of existing studies, I have put forward a few propositions. Although the focus of the study was to find common threads between these two literatures, unfortunately not much similarity were found in the previous studies. Thus the propositions reflect similarities as well as uniqueness in these two particular fields of literature regarding leadership research. As we found in the strategy literature, using the right vision for the right context (Westley & Mintzberg, 1989) and communicating the vision properly to followers (Elenkov et al., 2005) can enhance the possibility of organizational performance. Thus both the alignment of the vision with the environment under which the organization is operating and the existence of a shared vision is needed for improved organization performance. By alignment of the vision I mean a vision that is suitable for the existing environmental context. For example, an ambitious vision in the current period where the whole world is suffering from a global economic crisis may not be in alignment for most of the industries. However, there are commodities that are in high demand during these periods (e.g. gold). For firms involving in


33

such businesses, having an ambitious vision may be perfectly in alignment with the external reality. It is very important that a leader understands what exactly needs to be done in a certain context. The shared vision component is also very important as this involves the followers more into the strategic processes of the organization, and in general increases their level of commitment and trust in the leadership. Hence, one might expect that a combination of these two would enhance the performance of an organization in general. Thus I propose – Proposition 1: The leaders in strategic positions can enhance the performance of organization through the implementation of a shared vision that is in alignment with the organization’s business environment.

Both the Strategy and OB literature emphasized on the need for the leader to stimulate, motivate, and empower employees in order to achieve good performance for the organization (Elenkov et al., 2005; Bas et al., 2002; Zhu et al., 2005). It was also found that individual considerateness can help achieve good performance for the firm as well (Koene et al., 2002).A leader who motivates, and who is considerate about individual needs is likely to stimulate more interest in his/her followers and this generally ends up in good performance for the firm. These attributes are generally very common in a charismatic leader. Although the strategy literature is still divided on the influence a charismatic leader has on organization performance, the overwhelming support found in the OB literature for the usefulness of this leadership style suggests that certain attributes of a charismatic leader would definitely work in favor of the organization as far as generating the expected performance is concerned. So I propose - Proposition 2: The leaders who display individual considerateness and are at the same time capable of motivating employees and empowering their followers are more likely to bring better performance for the organization.

The findings in the strategy literature regarding CEO tenure were mixed. Although the OB scholars did not show much of a concern for this issue, it was very popular in the strategy literature. Whereas Hambrick and Fukutomi (1991), and Miller (1991) found that longer CEO tenure is detrimental for the organizational performance, Simsek (2007) found that this situation can be overcome if the CEO encourages more risk taking activities which results in entrepreneurship for the firm. Hence, entrepreneurial activity by the


34

CEO can make the CEO useful for the firm even over a longer period of time. Although the finding here is contradictory, I find the argument of the earlier two articles to be more compelling. It is highly likely that if a CEO stays in a firm for too long a time, it may result in some sort of inertia and often s/he may take decisions that is best for his/her own personal benefit rather than the benefit of the organization. However, Simsek’s argument of entrepreneurship is also quite strong and cannot be easily ignored. It might be interesting to see what the outcomes would be when these two views are integrated together. So I propose – Proposition 3: CEO tenure will be negatively related with organization performance. But this relationship will be moderated by the entrepreneurial nature of the CEO. The more entrepreneurial the CEO, the lower will be the rate of decrease in firm performance.

Previous studies suggested that an environment that creates a perceived support from the part of the leader enhances the organizational performance (Kaiser et al., 2008). Berson et al. (2008) argued that a leader’s personality traits can help build a culture where the followers feel more comfortable and have a perception that the environment is supportive. Thus, a leader whose dispositional attributes are more conducive to creating a culture of trust amongst the followers regarding the leader’s support behind them is generally likely to help improve the performance of the organization. Support of the positive impact of trust has been found in both the strategy (Davis et al., 2000) and OB literature (Burke et al., 2007). The role of trust has been largely missing in the work in strategy literature. Often it is deemed as an area to be pondered over by the OB scholars only. However, as can be seen from the studies conducted, trust can play a very important role in enhancing a leader’s capacity to influence the performance of the firm. Hence, I believe, more research in this area is needed to improve the understanding of the trust aspect and look at its influence in strategic leadership in an organization. Proposition 4: CEOs whose dispositional attributes foster perceived environmental support and a culture of trust amongst followers will see an enhanced performance from their organizations.

V. CONCLUSION

This study was aimed at analyzing the existing work in Strategy and OB literature that looked at the way leaders affect firm performance. The findings suggested that the number of such studies conducted


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were quite small, especially in the strategy literature. Although one major objective was to find where these two literatures treaded the path together, not much evidence of such happenings were found. Thus the propositions presented were based mainly on one stream of literature or the other. However, these propositions do present an opportunity to test how leadership affects organizational performance in new ways and may add something new to the existing literature. Considering the work in the existing literature is still not at its optimum regarding this issue, these small increments may prove useful for taking the research in this area forward. The scope of this study was limited mostly to the top tier journals in Strategy and OB field. This might prove to be a limitation in making a general comment on whether scholars are looking at this issue seriously or not. However, while conducting such a research, a frame of reference is required and I believe the journals selected for this study serves that purpose well considering their significance in the OB and Strategy literature, and the overall acceptability of works published in these journals. Future studies may extend this study further by incorporating works from more journals. To my knowledge, such a study was never conducted before. Thus one contribution, albeit small, of this study was the fact that it marks the beginning of a research in a new direction. I hope future researchers will look into this issue even deeper and make additional contributions to create further understanding of this issue.

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28. Waldman, D. A., M. Javidan, and P. Varella. 2004. ‘Charismatic Leadership at the strategic level: A new application of upper echelons theory’, The Leadership Quarterly, 15: 355-380.

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Appendix 1: Summary of studies reviewed in the Strategy Literature

Study Source Sample2 Key Variables Key Findings/Propositions Westley and Mintzberg, 1989

Strategic Management Journal

N/A - Strategic Vision -The visionary leader is a transformer and s/he is successful because s/he plays his/her role according to the need of the hour.

Elenkov, 2005


1,095 top managers from 223 firms in the

US and Europe

- Strategic Leadership Behaviors - TMT tenure heterogeneity - Social culture - Product-market innovation - Administrative innovation

- Strategic leadership behaviors have a strong positive relationship with executive influence on product–market and administrative innovations. - TMT tenure heterogeneity moderated the relationship of strategic leadership behaviors with executive innovation influence for both types of innovation, while social culture moderated that relationship in the case of administrative innovation.

Hambrick and Fukutomi, 1991

Academy of Management Review

N/A - CEO tenure - Business environment - Firm performance

- CEO tenure and firm performance will have a inverse U shaped relationship - The performance downturn of a long tenured CEO will be more severe in a dynamic environment and less severe in a stable environment

Miller, 1991

Management Science The CEO and the senior most TMT member of

95 Canadian firms

- CEO tenure - Environment-Strategy match - Organization performance

- CEO tenure was related inversely to the prescribed match between organization and environment - The prescribed match between organization and environment was positively related with the financial performance of the firm.

Waldman et al, 2001

Academy of Management Journal

48 Fortune 500 Firms - Transactional leadership - Charismatic leadership - Environmental uncertainty - Organization performance

- Organization performance had no direct relationship with transactional or charismatic leadership. - Under environmental certainty, charismatic leadership had a positive effect on organization performance

Waldman, Javidan, and Varella, 2004

The Leadership Quarterly

69 firms from the USA and Canada

- Charismatic leadership - Firm performance

- CEO Charisma predicts firm performance

Agle et al. 2006

Academy of Management Journal

CEOs and TMT members from 128

firms

- Perceived CEO Charisma - Organization performance - Environmental uncertainty

- CEO charisma had no impact on organizational performance, even under environmental uncertainty

Davis et al., 2000


371 employees from a chain of 9 restaurants

- Perceived trustworthiness of general managers - Organizational Sales and net profits - Employee turnover

- Level of trust in general mangers was positively related to organizational performance and negatively related to employee turnover

Waldman and Yammarino, 1999

Academy of Management Review

N/A - Organizational culture - CEO charisma - TMT cohesion

- A charismatic CEO engages in both a close and distant relationships and the combination of both ultimately results in expected organizational performance

2 The studies that were not empirical in nature do not have any sample. Thus the sample related information for them is not applicable (N/A).


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Appendix 2: Summary of studies reviewed in the OB Literature

Study Source Sample Key Variables Key Findings/Propositions Koene et al., 2002


2,156 employees from 50 stores of a supermarket

chain in Netherlands

- Charismatic leadership behavior of store managers - Financial performance of the store

- There is a clear relationship between the financial performance of the local stores and local leadership style at these stores.

Howell and Avolio, 1993

Journal of Applied

Psychology

78 managers representing the top four levels of

management in a large Canadian financial

institution

- Management-by-exception leadership - Contingent reward leadership - Charismatic leadership - Consolidated unit performance

- Transformational leadership style is positively related to firm performance - Both management-by-exception and contingent reward leadership is negatively related to firm performance

Howell et al., 2005


101 senior managers and their 308 direct reports in a

large Canadian financial services institution.

- Transformational leadership - Contingent leadership - Physical distance between leaders and followers - Business unit performance

- Transformational leadership positively predicted unit performance, while contingent reward leadership was not related to performance. - Physical distance between leaders and followers negatively moderated the relationship between transformational leadership and unit performance.

Zhu et al., 2005


170 companies listed in Singapore stock exchange

- Human-capital-enhancing HRM practice - CEO transformational leadership - Organizational outcomes

- human–capital-enhancing HRM fully mediates the relationship between CEO transformational leadership and organizational outcomes

Toshi et al., 2004


59 large U.S. firms in 26 industries

- CEO Charisma - Firm performance - CEO compensation

- CEO charisma was not related to firm performance but was positively related to their compensation.

Ling et al., 2008

Journal of Applied

Psychology

A total of 121 firms resulting in response from all CEOs and a total of 330

TMT members.

- CEO transformational leadership - Firm size - Organization performance

- CEO transformational leadership is positively related to organization performance, and this relation is stronger when the firm size is small.

Boal and Hooijberg, 2000


N/A - Absorptive capacity - Capacity to change - Managerial wisdom

- Leaders with high level of absorptive capacity, adaptive capacity, and managerial wisdom will be more effective than other leaders.

Yukl, 2008


N/A - Cooperative effort - Adaptability - Environmental setting

- Cooperative effort of multiple leaders and an approach of adaptation and flexibility in a dynamic environmental setting by the leaders have an effect on firm performance.

Peterson et al., 2003

Journal of Applied

Psychology

Data from different archival sources

- CEO personality - TMT cohesion - TMT centralization

- CEO openness and agreeableness will influence the senior management and will lead them to having a more cohesive, flexible and risk taking approach. These attributes in the top management team are positively related to the performance of the organization


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Kaiser et al., 2008

American Psychologist

N/A - Feeling of trust regarding leadership - Perceived leader support - Organizational effectiveness

- Leaders make an organization effective by creating an environment conducive for the people in the organization, who in turn ensures organizational effectiveness. This is done through making the individual followers more committed to their tasks by creating a feeling of trust and existence of perceived leader support.

Berson et al., 2008

Journal of Organizational

Behavior

26 Israeli companies representing multiple

industries

- CEO values - Organizational Culture - Organizational outcome

- The attributes of the CEOs is reflected in the organizational culture - The CEOs impact the organizational outcomes through the creation of organizational cultures

Shamir et al., 1993

Organization Science

N/A - Leader behavior - Follower self-esteem and self-worth - Organizational commitment - Organizational performance

- Through the display of certain behaviors (e.g. ideological explanations, emphasizing collective entities, and expressing confidence in followers) a leader helps create a personal commitment to the leader and the mission of the organization. - This increased level of commitment has a positive impact on the organizational performance.

Steyrer et al, 2008

Scandinavian Journal of

Management

78 companies from Germany and Austria

- Leadership style - Organizational commitment - Firm performance

- The practice of charismatic, team-oriented, participative or human oriented style of leadership will result in increased level of organizational commitment. - An increased level of organizational commitment in the followers leads to better organizational performance.

Burke et al., 2007


N/A - Feeling of trust among followers - Ability, integrity, and benevolence of leaders - Predisposition and perceived psychological safety of the follower - Organizational climate - Organization performance

- If leaders are successful in garnering a feeling of trust in their followers, this will result in better organization performance.


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ECONOMIC CONCENTRATION IN THE SUBSCRIPTION TELEVISION INDUSTRY

Johannes H. Snyman

Metropolitan State University of Denver

Abstract

This study reviews the economic concentration level of ownership in the subscriber television industry, consisting of cable, digital broadcast satellite (DBS) and internet protocol television (IPTV) companies from 1996 to March 2012. The intent of the Telecommunications Act of 1996 was to increase competition in the cable television, broadcasting and telephone industries. However, competition in the subscriber television industry did not come from telephone companies successfully entering the industry after the implementation of the Act in 1999; it came from the entry of DBS companies which did not receive much attention during the crafting of the Telecommunications Act. The entry of DirecTV in 1994 and Dish Network in 1996 significantly reduced the level of the three market concentration measures, CR4, CR8 and HHI, indicating a slowdown of the development of a monopoly in the subscription television market. The Satellite Home Viewers Act of 1999 and the Satellite Television Extension and Localism Act of 2010 further enhanced the much needed competition. More recently, the entry of telephone companies (i.e., Verizon’s FiOS in 2005 and AT&T’s U-Verse in 2006) via IPTV technology further reduced the levels of the three concentration measures.


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Introduction Economic concentration in the subscriber television industry has

passed through several phases since its inception in the late 1940s. These phases can be described in terms of technological innovation and regulatory changes. The first phase or the cable television phase experienced phenomenal growth from its inception in the 1940s because it did not face much competition until the Telecommunications or Telecom Act of 1996. When Congress passed the Act it argued that telephone companies, or telcos, could provide the needed competition for cable companies. The Act allowed telcos and cable companies to enter each other’s markets. The Telecom Act, which was passed in 1996 and implemented in 1999 and still guiding the industry today is the second phase. Telcos, however, experienced major financial problems and did not enter the subscriber television industry in a significant and lasting manner (Goolsbee & Petrin, 2004). It was not until 2005 with the invention of Internet Protocol Television (IPTV) that telcos entered the subscription television industry in a significant way. The third phase started in 1998 when the first digital satellite television company was formed. Competitors in the industry today therefore consist of cable, telephone and satellite television companies. Economic or ownership concentration has always been of great concern to scholars. Many have studied concentration in the cable television industry since it dominated the television subscriber industry for many years and is still the major player today (Atkin, 1994; Chan-Olmsted, 1996; Chan-Olmsted & Litman, 1988; Gomery, 2000; Howard & Ogles, 1994; Parsons, 2003; Snyman, 2010; Sterling, 1979; Waterman, 1991; Waterman & Weis, 1997). However, since the invention of satellite television and IPTV no study has focused on concentration in the industry by combining all three technologies in the same study. This study is closing this gap in the literature by combining all three technologies in the same analysis and providing new conclusions about competition in the industry through the use of market concentration measures.

Historical Background and Research Question

Cable Television The first television subscription service started in Lans-ford,

Pennsylvania, in 1950, under the name Community Antenna Television (CATV), which was later changed to Cable Television. John Watson invented cable television in June 1948 in Mahoney City, Pennsylvania, to overcome the poor reception of over-the-air signals in areas that were out of reach of the broadcasts of television stations. However, subscription service did not start for another two years. The new service grew very quickly to 70 systems by 1952 that served 14,000 subscribers nationwide. Large


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corporations, namely Cox, TelePrompTer and Westinghouse, seized the opportunity provided by the new industry and by 1962, these corporations owned 800 cable systems which served 850,000 subscribers. By the end of the 1970s cable television was a booming industry. The number of subscribers had grown to almost 16 million nationwide (NCTA: History of Cable Television).

As a new industry, cable television was allowed to operate without notable interference by the Federal Communications Commission (FCC) and Congress for several years. However, by 1964 the FCC expressed concern over cross-ownership of cable and broadcast companies (“Should TV’s Own CATV’s?” 1964). The FCC soon pronounced significant regulatory controls. In 1968, the FCC took action and prohibited cross-ownership of cable properties and placed limits on multiple system ownership (FCC, 1968) and in 1970, the FCC banned cross-ownership between television broadcasters and cable television companies (FCC, 1970). The FCC also slowed down cable’s growth into large markets in 1966 by preventing cable’s entry into these markets but reversed its decisions and rules in 1972 (Besen & Crandall, 1981). Ownership restrictions, however, remained a topic of great concern.

The next major legislation affecting subscription cable television came when Congress passed the Cable Communications Act of 1984 with the purpose to promote competition by deregulating the cable television industry (Crandall & Furchtgott-Roth, 1996). A new technology, Direct Broadcast Satellite (DBS), provided some of the impetus for the Act. However, the new technology failed to produce the required competition and cable television subscription services and rates grew rapidly (Parsons, 2003). Congress had created an unregulated monopoly which they reversed with new rate controls in the Cable Act of 1992 (Atkin, 1994).

Another attempt to promote competition took place when Congress passed the Telecommunication Act of 1996. The intent was to deregulate the telephone, cable and broadcasting industries. The Act was designed to encourage l

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