nile journal of business and economics

Hasan METIN & Ali COŞKUN/ NileJBE; April 2016

3

Nile Journal of Business and

Economics

http://journals.ntnu.ng/ojs/njbe/

NileJBE (2016) 2: 3-16

©Copyright by NTNU

http://dx.doi.org/10.20321/nilejbe.v2i2.48

The Effect of Leadership and Organizational Culture on Effectiveness of

NGOs: An Empirical Study

Hasan METIN1 & Ali COŞKUN

2

1 PhD Candidate, Graduate School of Social Sciences, Fatih University, Turkey

Email: [email protected]

2Professor, Department of Management, Fatih University, Turkey

& International Burch University, Bosnia and Herzegovina

Email: [email protected]

This study aims to investigate the effect of leadership and organizational culture on organizational

effectiveness of nongovernmental organizations (NGOs). In the study, after a comprehensive literature

review, an empirical study by means of a survey questionnaire has been conducted to find out the

effect of leadership and organizational culture on effectiveness. In the study, organizational culture is

conceptualized as motivational climate within the organization, the atmosphere that relies on trust and

confidence and willingness of members to take responsibility and the leadership is analyzed in terms

of being democratic, respecting others, being participative in decision making and taking risks when

necessary. The effectiveness of NGOs refers to the achievement of the previously set objectives, using

benchmarking as an indicator, and diversifying the sources of revenue. The results obtained from the

survey show that organizational culture and leadership both have positive effects on effectiveness of

NGOs.

Key words: Effectiveness, Leadership, NGO, Organizational Culture, Volunteerism.

INTRODUCTION

Non-governmental organizations (NGOs) are crucial for the society with respect to their

humanitarian, political, social objectives they have and the economic activities that take place

within them. They play a very important role by producing goods and services and providing

employment for a very significant amount of people. They are also crucial ―with their

organizational type relying on professional staff, involving volunteers, being formally registered,

having tax-free status, and claiming applied expertise in social policy in terms of delivering social

services or advocating solutions‖ (Srinivas, 2010, p.119).

Leadership and organizational culture are two important concepts for the organizations, which

managers take into consideration when performing in the most effective way. Since NGOs have

common characteristics unique to the sector, which the researcher will cover in the following

sections, the style of leadership plays a very crucial role for the attainment of previously set goals.

Volunteerism is a very significant characteristic of the NGOs that authoritarian leadership style or

military-like culture is less likely to end up with an effective organizational climate.


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The study first will provide a literature review on NGOs, leadership, organizational culture and

effectiveness. Then the effect of leadership and organizational culture on effectiveness of NGOs is

to be analyzed using the data collected from a survey questionnaire conducted to the solidarity

NGOs in Turkey.

NON-GOVERNMENTAL ORGANIZATIONS (NGOS)

Srinivas, (2010) provided a very detailed explanation on NGOs stemming from a very

comprehensive literature review while quoting from Desmarais (2007, p. 23) and Mintzberg and

Srinivas (2009). Srivinas (2010, p.119) stated ―NGO is typically defined as an organizational type

―relying on professional staff, involving volunteers, being formally registered, having tax-free

status, and claiming applied expertise in social policy in terms of delivering social services or

advocating solutions.

Lewis (2003), Fisher (1994), Najam (1996) and Uphoff (1993) are the other very crucial authors

that expand these distinctions, arguing that a unique voluntary communitarian ethos defines such

efforts, through ―commitment of their workers, volunteers, and members and not primarily

through financial remuneration based on profit making‖ (Lewis, 2003, p. 328).

Given the fact that there are different ways of defining and naming NGOs, it is easy to state that

they have become very crucial with respect to international development especially in developing

countries (Liston, 2008).

NGOs have some specific characteristics that make them different from governmental

organizations (public sector) and private sector such as not seeking profit, having different sources

of revenue from profit seeking organizations, having different kinds of objectives, having multiple

stakeholders, and working with volunteers. Table 1 provides the summary of the characteristics of

the NGOs with their explanations.

Table 1 Characteristics of NGOs

Characteristic Explanation

Institutionalized Having of formal organizational structure

Self-governing Being autonomous in setting goals

Non-profit Being not profit seeking while being economically sustainable

Voluntary Volunteers take roles in NGOs both in operational and

administrational levels

Have independent

governance

Being separated from the state and public Institutions

Sources: JHU CCSS (2010), Ozden (2008), UNDP (2010), Salamon and Anheier (1997), Bulla

Starr-Glass (2006).

NGOs are organized, institutionalized that they have boards, as well as professionals working for

them. NGOs have written rules and procedures, and they are responsible for their operations to

appropriate authorities. They are in contact with other NGOs (Proulx, Hager & Klein, 2014), with

governments, (Ramanath & Ebrahim, 2010) with private sector (Borwankar & Velamuri, 2007)

and they create networks (Poole, 2008).

The second important characteristic of the NGOs as mentioned is being governed independently

that they can have different kind of objectives from profit seeing organizations, which they set

themselves. While the clients of the profit seeking organizations expect satisfactory service or


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goods with high quality, the donors or contributors of the NGOs do not expect any interest in

return (Henderson, Chase & Woodson, 2002; Beamon & Balcik, 2008; Kendall & Knapp, 2000).

Thirdly, since NGOs do not seek profit, sources of revenue for NGOs might be considered as a

factor that differentiates them from profit seeking or for profit organizations. Profit seeking

organizations obtain their revenues through the sales of their products or services, however the

main sources of the revenue for NGOs are donations, and fundraising, monetary or non-monetary

contributions of governmental institutions, individuals, and private companies.

Fourthly, volunteering (Özmutaf, 2007) is another very crucial concept for NGOs. The

fundamental human source of the NGOs is volunteers. The atmosphere within the NGOs relies on

trust (Burgos, 2012). Since it seems very cost effective to have volunteers to implement the

projects planned for NGOs, it creates challenges for performance measurement due to lack of

formal working relation. NGOs do not sign contracts with the volunteers within their organization

and this makes it very difficult for them to give them assignments and evaluate their performance,

which is very crucial for this study, because the study focuses on effectiveness which can be

considered as a dimension of performance (Ertas, 2012; Rajan & Zingales, 1998; Akingbola,

2012; Samuel, Wolf, & Schilling, 2013, Harris, 2000; Aligica, 2014).

Fifthly, although NGOs have or might have close relationships with governmental institutions and

public bodies, they are separated from them.

VARIABLES OF THE STUDY

Leadership

Leadership can be defined as ―the process by which an individual influences the behavior of

another person or group (Tosi & Hamner, 1982). Another way of defining leadership is ―the

ability to influence the group the achievement of a vision or set of goals‖ (Robbins, Judge &

Campell, 2010).

The theories of leadership can be titled under trait theories (theories that propose specific personal

characteristics differentiate leaders from non-leaders), behavioral theories (Graen & Uhl-Bien,

1990) (theories that assume specific behaviors differentiate leaders from non-leaders), and

contingency theories (theories that assume the situations determine the best style of leadership)

(Robbins, et al., 2010). Transformational leadership, charismatic leadership are other

contributions to the literature of leadership.

Trait Theories

Trait theories as stated above conceptualize leadership with respect to the traits and focus on

determining those who have leadership traits and differentiate them from the others (Owens,

1979). Hundreds of studies have been performed in order to figure out, in what ways the leaders

are different from the others (Scoot & Mitchell, 1976). Samples from Koçel (2011)’s list of the

traits that differentiate leaders from the others is as follows: age, length, gender, race, beauty &

good-looking, intelligence, knowledge, initiative, honesty, sincerity, veracity and determination.

According to trait theories, the only variable of the leadership function is the leader him/herself.

But the studies show that successful leaders have different kind of traits (Koçel, 2011).

Behavioral Theories


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As stated above, behavior theories of leadership focus on the behaviors, stating that what makes

the leader successful and effective is the way that the leader behaves rather than the traits that the

leader has. In other words, behavior theories emphasize the second variable of the leadership

function (behaviors) more than the other variables (traits and contingencies). Five studies will be

referred under behavioral theories.

Starting from over one thousand dimensions, the researchers of the Ohio State University reduced

their study to two dimensions after factor analyses and concluded that initiating structure and

consideration to be the ―categories that substantially accounted for most of the leadership behavior

described by employees‖ (Robbins, et sl., 2010). Initiating structure can be conceptualized as the

extent to which the leader defines his or her and employees’ roles in the process of goal

attainment. Consideration behavior is the extent to which the leader creates job relations with the

employees relying on mutual trust, and respect for others (Koçel, 2011; Robbins, et al., 2010).

The University of Michigan Studies again came up with two dimensions while studying on the

behavior characteristics of leaders being: employee-oriented leaders and the production oriented

leaders. Employee- oriented leaders stress the relations of the employees while production

oriented leaders focus on technical side of the job. (Koçel, 2011; Robbins, et al., 2010).

Blake and Mouton (1981) created a matrix that is mostly used in organizational development

programs. They gathered the factors that leaders behave under two main categories being: concern

for production and concern for relations. Their matrix is used especially in trainings (Koçel,

2011).

According to Mc Gregor’s X and Y (1960) theories leaders have different assumptions about

employers’ behaviors and these assumptions effect the way that the leader behaves. X theory

presupposes that average worker does not like to work and is not willing to take responsibility.

That is why in order for effective working environment, workers should be kept under control and

even should be punished when necessary. Y theory on the other hand presupposes that work is as

usual and normal as play, for workers that no one is lazy by definition. Everyone has a potential

and workers learn to take responsibility as they increase their potential. Leaders in favor of theory

X, perform an authoritarian style of leadership while leaders in favor of theory Y perform a

democratic style of leadership.

Likert (1977) categorized 4 dimensions in order to conceptualize the behaviors of the leaders

being, exploitive authoritative, benevolent authoritative, consultative, and participative (Koçel,

2011).

Contingency Theories

Contingency theories stress the situations that the leadership function occurs. According to

contingency theories of leadership, effective leader takes the situations into account when making

the leadership decision. ―It all depends” (Bradshaw, 2009) is a very short way of explaining what

contingency approach proposes. Contingency theories of leadership assume the third variable of

the leadership function contingencies (situations) to be the most important variable (Koçel, 2011)

Fiedler’s (1981) emphasizes three situations or contingencies that determine the behaviors of the

leaders:

Leader member relations

Task Structure


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Position Power

House and Martin in Path-Goal Theory of Leadership (Evans, 1966) stress four behaviors which

can be used according to the situation.

Achievement-oriented,

Directive,

Participative,

Supportive

―Attracting followers by charisma, providing individual attention to each subordinate, inspiring

followers to take up challenges at the grassroots, and serve as a role model by selfless services

that provide rational for his/her presence other than mere pecuniary considerations to

subordinates‖ (Mahalinga Shiva & Suar, 2011) can be considered as the main functions of leaders

in the NGOs.

Organizational Culture

Robbins, et al., (2010) define organizational culture as ―a system of shared meaning held by

members that distinguishes the organization from the other organizations‖. In other words culture

is the set of values which are collectively shared by the members of the organization.

Organizational culture is very closely related with effectiveness especially in the NGO literature.

(Mahalinga et al., 2011).

Robbins et al., state that the characteristics of organizational culture can be listed as follows:

Innovation and risk taking

Attention to detail

Outcome orientation

People orientation

Team orientation

Aggressiveness

Stability

Deal and Kennedy (1982) identified four categories that most of the companies fell into with

respect to culture:

Tough-guy macho culture

The work hard /play hard culture

The bet-your company culture

The process culture

Tough-guy macho culture is consisted of individuals taking high risks. The work hard /play hard

culture consists individuals that are not willing to take risks where having fun and being in action

are the rules. The bet-your company culture refers to atmosphere where high risk with slow

feedback is taken. The process culture refers to environment where very little or no feedback is

present and it is hard for individuals to measure what they do (Robbins, et, al., 2010).


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The way that the individuals within the organization learn the culture is another important aspect

of the culture. Culture is transmitted to individuals through

Stories

Rituals

Material Symbols

Language (Robbins, et, al., 2010).

Organizational culture in NGOs has some characteristics unique to the NGOs. Table 2 which is

adapted from Tyler (2005) presents the characteristics of the civil society as a sector while making

important comments on the culture within the NGOs.

Table 2 Characteristic of Civil Society and Culture within NGOs

Commitment of ideological kind to involvement of

community Mason (1996)

Having participatory decision-making process Paton and Cornforth (1992)

Being open to innovation, and having high degree of

responsiveness

Mason ( 1996) Commonwealth of

Australia (2001)

Providing services that are not to be provided

otherwise, filling the gaps of the markets Herman and Heimovics (1994)

Stressing the organizational culture because of its

supportive dimension on decision making Paton and Cornforth (1992)

Meeting the need of the individuals for expressing

their behavior Mason (1996)

Commitment to public sector of the employers and

volunteers that lower wages are accepted. O’Connell (1988), Paton (1992)

Source: Tyler (2006, pp.221-222)

Effectiveness

Effectiveness ―determines how well a service is provided or how successful a department or

program is meeting previously established objectives‖ (Fine & Synder, 1999, p. 24). Robbins

(1983) and Miles (1980) provide a very detailed analysis of approaches related to organizational

approaches. Since there are different classifications, (Miles, 1980; Robbins, 1983; Rojas, 2000;

Herman & Renz, 1998; Herman & Renz, 1999; Herman & Renz,2008; Arıkan, 2009) and

different understandings related to definition and conceptualization of organizational

effectiveness, it can be considered as a jungle (Miles,1980, p.355). Table 3 presents the definitions

on effectiveness.

Table 3 Definitions of Organizational Effectiveness

Author Definition

Georgopoulos and

Tannenbaum

(1957)

―… the extent to which an organization as asocial system, give

certain resources and means, fulfills its objectives without

incapacitating means and resources and without placing undue strain

upon its members

Etzioni (1960)

Katz and Kahn

(1966)

―… the ability of an organization to achieve its goals‖

Yuchtman and ―…the effectiveness of an organization [is defined] in terms of


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Seashore (1967) bargaining position, as reflected in the ability of the organization, in

either absolute or relative terms, to exploit its environment in the

acquisition of scarce and valued resources.‖

Steers (1975)

―… an organization’s capacity to acquire and utilize its scarce and

valued resources as expeditiously as possible in pursuit of its

operative and operational goals.‖

Cummings (1977)

―…the effective organization is one in which the greatest percentage

of participants perceive themselves as free to use the organization and

its subsystems as instrument for their own ends.‖

Goodman and

Pennings (1977)

―…organizations are effective if relevant constraints can be satisfied

and if organizational results approximate or exceed a set of referents

for multiple goals.

Pfeffer ( 1977)

―…effective organizations are those that accurately perceive patterns

of resource interdependence, correctly perceive demands, and then

respond to demands made by those groups that control the most

critical interdependencies.‖

Source: Miles (1980).

Main measures of organizational effectiveness are productivity, efficiency, profit, quality, growth,

turnover, job satisfaction, absenteeism, control, planning and setting goals (Campbell, 1977). The

list can be extended. The most significant point to be stressed in this part is that ―effectiveness is

not one thing. Perhaps a better way to think of organizational effectiveness is an underlying

construct that has no necessary and sufficient operational definition but that constitutes a model

or theory of what organizational effectiveness is‖ (Campell, 1977, p.18).

Lecy, Schimitz and Swedlund (2011) presented a structural literature review on NGO

effectiveness and concluded the following:

there is broad scholarly consensus that unidimensional measures of effectiveness are not

useful—even though such measures are commonly used by NGO/NPO rating agencies; (2)

the scholarship on NGO/NPO effectiveness is dominated by conceptual works, while

empirical studies remain rare; (3) a consensus on how to operationalize effectiveness

remains elusive. These results suggest that progress in our understanding of NGO/NPO

effectiveness requires enhanced efforts at crossing disciplinary divides, adding empirical

analyses, and increasing attention to develop shared categories and methodologies (Lecy,

et.al, 2011).

EMPIRICAL STUDY

Methodology

This study is ontologically realist; epistemologically positivist. The study is quantitative because,

statistical analyses are implemented on the data gathered from the questionnaires.

Linear regression has been utilized in order to determine the effect of the independent variables of

the study (leadership and organizational culture) on the dependent variable (effectiveness).

Participants have been delivered questionnaires with a five point Likert scale with one being

strongly disagree and five being strongly agree. The questionnaire included following categories.

Leadership


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Organizational Culture

Organizational Effectiveness

Data Gathering

Data gathering of this study was very complicated. The researcher succeeded in contacting 139

solidarity NGOs. Data gathering process was dependent on the personal relations. 17 of the

questionnaires were not properly filled out, that is why net figure of properly filled out

questionnaire was 122. The sample of the research is about 30 percent of the population given the

whole population is around 400. The survey questionnaires of Wadongo’s (2014) and Coşkun’s

(2005) studies have been adapted.

Hypotheses

The study has two hypotheses:

Hypothesis 1: Leadership effects organizational effectiveness.

Hypothesis 2: Organizational culture effects organizational effectiveness.

This study refers to leadership in terms of being democratic, respecting others, being participative

in decision making and taking risks when necessary.

Moreover study refers to organizational culture in terms of motivational climate within the

organization, the atmosphere that relies on trust and confidence and members’ willingness about

taking responsibility.

Lastly the study refers to effectiveness in terms of achieving the previously set objectives, using

benchmarking as an indicator, and diversifying the sources of revenue.

Results of the Analysis

Table 4 provides the summary of the statistics. The Adjusted R square value of the results is 26.60

percent is that independent variables describe the 26.60 percent of the impact on dependent

variable. In other word 26.60 percent of the total variation of the total market can be

explained.The dependent variable of the study is effectiveness while independent variables are

leadership and organizational culture.

Table 4 Model Summary

R

R

Square

Adjusted

R

Square

Std.

Error of

the

Estimate

Change Statistics

Durbin-

Watson

R

Square

Change

F

Change df1 df2

Sig. F

Change

0.527 0.278 0.266 0.60201 0.278 22.92 2 119 0 1.584

As it can be seen in Table 5 there is no problem with the significance of the study.

Table 5 ANOVA Sum of

Squares df

Mean

Square F Sig.

Regression 16.613 2 8.306 22.92 0.000b

Residual 43.127 119 0.362

Total 59.74 121


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Table 6 provides the coefficients for the linear equation as well as the significance figures for the

variables. As it can be seen all significance figures are below 0.01.

Table 6 Coefficients

Unstandardized

Coefficients

Standardized

Coefficients T Sig.

Collinearity

Statistics

B Std. Error Beta

Tolerance VIF

(Constant) 1.095 0.382

2.864 0.005

Organizational

Culture 0.31 0.102 0.297 3.022 0.003 0.626 1.597

Leadership 0.273 0.093 0.29 2.946 0.004 0.626 1.597

Therefore the regression function is :

Effectiveness= 0.310 (Leadership) + 0.273 (Leadership) +1.095.

The assumptions of the regression model should be checked as well. First assumption of the

regression model is “multicollinearity” assumption. Multicollinearity does not seem to be a

oroblem because the VIF figures are less than 10.

The second assumption of the regression model is ― autocorrelation” assumption.Durbin Watson

test results below are obtained.

0 dl du 2 4-du 4-dl 4 d

dl= 1.522 (from Durbin Watson table)

du= 1.562 (from Durbin Watson table)

4-du =2.438

4-dl= 2.478

d value of 1.584 is between du (1.562) and 4-dl (2.478) so , Ho is not rejected which means there

is no autocorrelation problem.

DISCUSSION OF THE FINDINGS

Findings of the linear regression indicate that both hypotheses are supported. The results obtained

from the linear regreession present that both leadership and organizational culture have effects on

effectiveness. As stated above the linear funtion derived from the analysis is

Effectiveness= 0.310 (Culture) + 0.273 (Leadership) +1.095

The results present that, all t values are statistically significant as well as the coefficients are all

positive. Moreover no multicollinearity and autocorrelation problem is observed.The hypotheses

are supported.The effect of leadership and organizational culture on effectiveness is presented.

The equation above means 1 standart unit increase in leadeership causes 0.310 standart unit

increase in effectiveness, and 1 standart unit increase in organizational culture causes 0.273

standart unit increase in effectiveness.As it was explianed in 3.3., this study refers to leadership in

terms of being democratic, respecting others, being participative in decision making and taking

risks when necessary and organizational culture is analyzed in terms of motivational climate

within the organization, the atmosphere that relies on trust and confidence and members’


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willingness about taking responsibility. What effectiveness represents is achieving the previously

set objectives, using benchmarking as an indicator, and diversifying the sources of revenue.

Namely, 1 standard unit increase in the democratic attitude or respecting behavior of the leader is

likely to increase the achievement of previously set objectives by 0.310 units. By the same token,

1 standard unit increase in the motivational climate of the NGO or willingness about taking

responsibility is likely to increase the diversification of the sources of revenue of the NGO or

achievement of previously set objectives by 0.273 units.

CONCLUSION

This study analyses the effect of leadership and organizational culture on organizational

effectiveness of NGOs using an empirical research. The results of the analysis show that

organizational culture; which is analyzed in terms of motivational climate within the organization,

the atmosphere that relies on trust and confidence and members’ willingness about taking

responsibility has positive effects on effectiveness. The study analyses effectiveness in terms of

achieving the previously set objectives, using benchmarking as an indicator, and diversifying the

sources of revenue. In addition, leadership; which is analyzed in terms of being democratic,

respecting others, being participative in decision making and taking risks when necessary is

shown to have positive effects on effectiveness as well.

Importance of motivational character of organizational culture and democratic leadership style can

be emphasized within this study due to specific characteristics of the NGOs. The members and

volunteers of NGOs have no financial expectations and most of them show their presence in the

NGOs with respect to making differences for the community. Moreover as it can be understood

from the definition of volunteerism, there is no obligation to participate the activities of the NGOs

for volunteers as well as for members. That is why, the atmosphere that relies on trust and

confidence is very crucial for the human resources sustainability of the NGOs. Moreover, by the

establishment of an atmosphere where members and volunteers show their willingness to

participate and take responsibility, the likelihood of the effectiveness of the NGOs increases.

One of the limitations of the study would be the low R squared score. The study only focuses on

leadership and organizational culture and leadership, but size and age have not been analyzed

because of their insignificant scores, altough literature provides researches on them. The second

limitation of the study would be the fact that most of the participants from the NGOs that fillled

out the questionniares were the presidents of the NGOs that they data they provided about the

effectiveness of the leader of the NGO might be misleading.

The managerial implications of this study would be the encouragement of the democratic

leadership and motivational atmosphere wihin the NGOs due to specific characteristics of the

NGOs such as volunterism and the absence of monetary expectations in return for the spent time

and effort.

Future research recommendation would be concentrating on relatively more institutionalized

NGOs due to difficulty of collecting delivered questionnaires.

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