Skip to main content
SpringerLink
Log in

Leadership instills organizational effectiveness: a viewpoint on business organizations

  • Original Article
  • Published:
SN Business & Economics Aims and scope Submit manuscript

Abstract

This study explores the leadership (transformational, transactional, distributive, and servant leadership) effects on organization effectiveness. To analyze data and test the hypotheses, this research used structural equation modeling (SEM). A structured questionnaire was used to collect data from the 100 different DSE (Dhaka Stock Exchange) listed organizations in Bangladesh to do the organizational survey. Based on SEM outcome over the organizational context analyzed, this study concluded that transformational, distributive, and servant leadership significantly influenced organizational effectiveness. However, transactional leadership failed to associate with organizational effectiveness. The result of this also confirms the gender association between transactional leadership and organizational effectiveness as moderator. The findings provide novel and significant insights to the organizations to understand the leadership role to ensure their organizations’ effectiveness. This study's outcome also creates an opportunity to extend further research in other countries with bigger samples to draw a general conclusion. Finally, this paper gives a plea to the practitioners and offers valuable examples of how organizations can use the leadership role to ensure organizational effectiveness.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Data availability

All data generated or analyzed during this study are included in this published article.

References

  • Aboramadan M, Dahleez KA (2020) Leadership styles and employees’ work outcomes in nonprofit organizations: the role of work engagement. J Manag Dev 39(7/8):869–893. https://doi.org/10.1108/JMD-12-2019-0499

    Article  Google Scholar 

  • Amah E (2012) Corporate culture and organizational effectiveness: a study of the nigerian banking industry. Eur J Bus Manag 4(8):212–228

    Google Scholar 

  • Bakari H, Hunjra AI, Niazi GSK (2017) How does authentic leadership influence planned organizational change? The role of employees’ perceptions: integration of theory of planned behavior and lewin’s three step model. J Chang Manag 17(2):155–187

    Article  Google Scholar 

  • Barkema HG, Baum JAC, Mannix EA (2002) Management challenges in a new time. Acad Manag J 45(5):916–930

    Article  Google Scholar 

  • Baskoro BD (2021) The nexus of transactional leadership, knowledge sharing behavior and organizational creativity: empirical evidence from construction workers in Jakarta. J Work-Appl Manag. https://doi.org/10.1108/JWAM-02-2021-0020

    Article  Google Scholar 

  • Bass BM (1985) Leadership and performance beyond expectations. Lawrence Erlbaum Associates, Philadelphia

    Google Scholar 

  • Bellamy C (2019) Employees’ perceived servant leadership and organizational commitment within an academic health science center (Doctoral dissertation, Grand Canyon University)

  • Benson AM, Blackman D (2011) To distribute leadership or not? A lesson from the islands. Tour Manag 32:1141–1149

    Article  Google Scholar 

  • Biloslavo R, Lombardi R (2021) Knowledge transferring and small and medium enterprise’s (SME’s) effectiveness: emerging insights and future directions. Bus Process Manag J 27(6):1747–1774

    Article  Google Scholar 

  • Birasnav M (2014) Knowledge management and organizational performance in the service industry: the role of transformational leadership beyond the effects of transactional leadership. J Bus Res 67(8):1622–1629

    Article  Google Scholar 

  • Bosak J, Kilroy S, Chênevert D, Flood PC (2021) Examining the role of transformational leadership and mission valence on burnout among hospital staff. J Organ Eff 8(2):208–227

    Google Scholar 

  • Cameron KS (1986) A study of organizational effectiveness and its predictors. Manag Sci 32(1):87–112

    Article  Google Scholar 

  • Caniëls MCJ, Semeijn JH, Renders IHM (2018) Mind the mindset! The interaction of proactive personality, transformational leadership and growth mindset for engagement at work. Career Dev Int 23(1):48–66. https://doi.org/10.1108/CDI-11-2016-0194

    Article  Google Scholar 

  • Daft RL (2013) Organization theory and design, 11th edn. South-Western Cengage Learning, Boston

    Google Scholar 

  • Daft RL, Armstrong A (2021) Organization theory and design, 13th edn. Nelson Education, Toronto

    Google Scholar 

  • De Jong JP, Hartog DND (2007) How leaders influence employees’ innovative behaviour. Eur J Innov Manag 10(1):41–64

    Article  Google Scholar 

  • Douglas S, Merritt D, Roberts R, Watkins D (2021) Systemic leadership development: impact on organizational effectiveness. Int J Organ Anal. https://doi.org/10.1108/IJOA-05-2020-2184

    Article  Google Scholar 

  • Eagly AH, Carli LL (2003) The female leadership advantage: an evaluationof the evidence. Leadersh Quart 14(2003):807–834

    Article  Google Scholar 

  • Epitropaki O, Martin R (2013) Transformational–transactional leadership and upward influence: the role of Relative Leader-Member Exchanges (RLMX) and Perceived Organizational Support (POS). Leadersh Q 24:299–315

    Article  Google Scholar 

  • Eva N, Robin M, Sendjaya S, van Dierendonck D, Liden RC (2019) Servant leadership: a systematic review and call for future research. Leadersh Q 30(1):111–132

    Article  Google Scholar 

  • Giambatista R, McKeage R, Brees J (2020) Cultures of servant leadership and their impact. J Values-Based Leadersh 13(1):12

    Google Scholar 

  • Gibb CA (1954) Leadership. In: Lindzey G (ed) Handbook of social psychology, vol 2. Addison-Wesley, Reading, MA, pp 877–917

    Google Scholar 

  • Gold HA, Malhotra A, Segars HA (2001) Knowledge management: an organizational capabilities perspective. J Manag Inf Syst 18(1):185–214

    Article  Google Scholar 

  • Grant CP (2011) The relationship between distributed leadership and principal’s leadership effectiveness in North Carolina. ProQuest L.L.C., Ph.D. Dissertation, North Carolina State University. http://repository.lib.ncsu.edu/ir/bitstream/1840.16/6673/1/etd.pdf

  • Greenleaf RK (1991) The servant as leader. The Greenleaf Center for Servant-Leadership, Indianapolis

    Google Scholar 

  • Hamstra MR, Van Yperen NW, Wisse B, Sassenberg K (2011) Transformational-transactional leadership styles and followers’ regulatory focus. J Pers Psychol. https://doi.org/10.1027/1866-5888/a000043

    Article  Google Scholar 

  • Haq IU, Raja U, Alam I, De Clercq D, Saleem S (2021) Servant leadership and mistreatment at the workplace: mediation of trust and moderation of ethical climate. Pers Rev. https://doi.org/10.1108/PR-04-2019-0172

    Article  Google Scholar 

  • Harris A, Leithwood K, Day C, Sammons P, Hopkins D (2007) Distributed leadership and organizational change: reviewing the evidence. J Educ Change 8(4):337–347

    Article  Google Scholar 

  • Hasan I, Islam MN, Khan SR (2020a) Ready-made garment industry attractiveness: the case of Bangladesh garments’ blue-collar employees. Int Jo Emerg Mark. https://doi.org/10.1108/IJOEM-03-2019-0232

    Article  Google Scholar 

  • Hasan I, Islam MN, Chowdhury MAF (2020b) Transformational human resource management: crafting organizational efficiency management. In: Ordóñez de Pablos P, Zhang X, Chui KT (eds) Handbook of research on managerial practices and disruptive innovation in Asia. IGI Global, USA

    Google Scholar 

  • Hasan I, Ahmed SP, Ahmed SU, Yousuf TB (2021) Online messaging services: a developing country perspective. Int J Mob Commun 19(1):75–98

    Article  Google Scholar 

  • Hassan NA, Zailani S, Rahman MK (2021) Impact of integrated audit management effectiveness on business sustainability in manufacturing firms. Manag Res Rev. https://doi.org/10.1108/MRR-10-2020-0658

    Article  Google Scholar 

  • Hoch JE (2014) Shared leadership, diversity, and information sharing in teams. J Manag Psychol 29(5):541–564

    Article  Google Scholar 

  • Islam MZ, Jasimuddin SM, Hasan I (2018) Determinants that influence knowledge sharing: an integrated literature review. Int J Knowl Manag Stud 9(4):363–380

    Article  Google Scholar 

  • Islam MN, Furuoka F, Idris A (2020a) The impact of trust in leadership on organizational transformation. GBOE 39(4):1–10. https://doi.org/10.1002/joe.22001

    Article  Google Scholar 

  • Islam MN, Furuoka F, Idris A (2020b) Employee championing behavior in the context of organizational change: a proposed framework for the business organizations in Bangladesh. J Asia Bus Stud. https://doi.org/10.1108/JABS-03-2020-0083

    Article  Google Scholar 

  • Jaroliya DD, Gyanchandani R (2021) Transformational leadership style: a boost or hindrance to team performance in IT sector. Vilakshan XIMB J Manag. https://doi.org/10.1108/XJM-10-2020-0167

    Article  Google Scholar 

  • Kanter RM (1997) Strategies for success in the new global economy: an interview with Rosabeth Moss Kanter. Strateg Leadersh 25(6):20–26. https://doi.org/10.1108/eb054603

    Article  Google Scholar 

  • Karaa D, Uysalb M, Sirgyc MJ, Leed G (2013) The effects of leadership style on employee well-being in hospitality. Int J Hosp Manag 34:9–18

    Article  Google Scholar 

  • Ketkar S, Kock N, Parente R, Verville J (2012) The impact of individualism on buyersupplier relationship norms, trust and market performance: an analysis of data from Brazil and the USA. Int Bus Rev 21(5):782–793

    Article  Google Scholar 

  • Kline RB (1998) Principles and practice of structural equation modeling. Guildwood, New York

    Google Scholar 

  • Kock N (2011) Using WarpPLS in e-collaboration studies: descriptive statistics, settings, and key analysis results. Int J e-Collab 7(2):1–18

    Google Scholar 

  • Kovynyov I, Buerck A, Mikut R (2021) Design of transformation initiatives implementing organisational agility: an empirical study. SN Bus Econ 1(79):1–28. https://doi.org/10.1007/s43546-021-00073-6

    Article  Google Scholar 

  • Kuhnert KW, Lewis P (1987) Transactional and transformational leadership: a constructive/developmental analysis. Acad Manag Rev 12(4):648–657

    Article  Google Scholar 

  • Leach L, Hastings B, Schwarz G, Watson B, Bouckenooghe D, Seoane L, Hewett D (2021) Distributed leadership in healthcare: leadership dyads and the promise of improved hospital outcomes. Leadersh Health Serv 34(4):353–374

    Article  Google Scholar 

  • Lee YH (2019) Emotional intelligence, servant leadership, and development goal orientation in athletic directors. Sport Manag Rev 22(3):395–406

    Article  Google Scholar 

  • Lee H, Choi B (2003) Knowledge management enablers, process, and organizational performance: an integrative view and empirical examination. J Manag Inf Syst 20(1):179–228

    Article  Google Scholar 

  • Linnenluecke MK, Griffiths A (2010) Corporate sustainability and organizational culture. J World Bus 45(2010):357–366

    Article  Google Scholar 

  • Lowe KB, Galen Kroeck K, Sivasubramaniam N (1996) Effectiveness correlates of transformational and transactional leadership: a meta-analytic. Leadersh Q 7(3):385

    Article  Google Scholar 

  • Nguyen HN, Mohamed S (2011) Leadership behaviors, organizational culture and knowledge management practices: an empirical investigation. J Manag Dev 30(2):206–221

    Article  Google Scholar 

  • Ozcelik H, Langton N, Aldrich H (2008) Doing well and doing good: the relationship between leadership practices that facilitate a positive emotional climate and organizational performance. J Manag Psychol 23(2):186–203

    Article  Google Scholar 

  • Packard T (2009) Leadership and performance in human services organizations. Chapter 7 in the handbook of human services management. SGAE, London, pp 143–164

    Google Scholar 

  • Parolini J, Patterson K, Winston B (2009) Distinguishing between transformational and servant leadership. Leadersh Org Dev J 30:274–291

    Article  Google Scholar 

  • Pitelis CN, Wagner JD (2019) Strategic shared leadership and organizational dynamic capabilities. Leadersh Q 30(2):233–242

    Article  Google Scholar 

  • Politis JD (2002) Transformational and transactional leadership enabling (disabling) knowledge acquisition of self-managed teams: the consequences for performance. Leadersh Org Dev J 23(4):186–197

    Article  Google Scholar 

  • Rafferty AE, Griffin MA (2004) Dimensions of transformational leadership: conceptual and empirical extensions. Leadersh Quart 15(3):329–354. https://doi.org/10.1016/j.leaqua.2004.02.009

    Article  Google Scholar 

  • Rencher AC (1998) Multivariate statistical inference and applications. Wiley, New York

    Google Scholar 

  • Roy MH, Dugal SS (2005) Using employee gainsharing plans to improve organizational effectiveness. Benchmarking 12(3):250–259

    Article  Google Scholar 

  • Rukmani K, Ramesh M, Jayakrishnan J (2010) Effect of leadership styles on organizational effectiveness. Eur J Soc Sci 15(3):365–369

    Google Scholar 

  • Samancioglu M, Baglibel M, Erwin BJ (2020) Effects of distributed leadership on teachers’ job satisfaction, organizational commitment and organizational citizenship. Pedagog Res. https://doi.org/10.29333/pr/6439

    Article  Google Scholar 

  • Savage-Austin AR, Honeycutt A (2011) Servant leadership: a phenomenological study of practices, experiences, organizational effectiveness, and barriers. J Bus Econ Res (JBER). https://doi.org/10.19030/jber.v9i1.939

    Article  Google Scholar 

  • Shen J, Zhu CJ (2011) Effects of socially responsible human resource management on employee organizational commitment. Int J Hum Resour Manage 22(15):3020–3035

    Article  Google Scholar 

  • Shiva MM, Suar D (2012) Transformational leadership, organizational culture, organizational effectiveness, and programme outcomes in non-governmental organizations. Voluntas 23(3):684–710

    Article  Google Scholar 

  • Spears LC (2002) Focus on leadership: servant leadership for the 21st century. Wiley, New York

    Google Scholar 

  • Tayal R, Upadhyay RK, Singh R (2021) Transformational leadership: an antecedent for organizational effectiveness in Indian banks. VINE J Inf Knowl Manag Syst. https://doi.org/10.1108/VJIKMS-09-2020-0165

    Article  Google Scholar 

  • Taylor A, Cocklin C, Brown R, Wilson-Evered E (2011) An investigation of champion-driven leadership processes. Leadersh Q 22:412–433

    Article  Google Scholar 

  • Thompson KN (2010) Servant-leadership: an effective model for project management, Ph.D. Dissertation, Capella University. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.365.7418andrep=rep1andtype=pdf

  • Tyagi N (2021) Aligning organizational culture to enhance managerial effectiveness of academic leaders: an interface for employee engagement and retention. Int J Educ Manag. https://doi.org/10.1108/IJEM-10-2020-0447

    Article  Google Scholar 

  • Van Dierendonck D, Nuijten I (2011) The servant leadership survey: development and validation of a multidimensional measure. J Bus Psychol 26:249–267

    Article  Google Scholar 

  • Van Dierendonck D, Stam D, Boersma P, De Windt N, Alkema J (2014) Same difference? Exploring the differential mechanisms linking servant leadership and transformational leadership to follower outcomes. Leadersh Q 25(3):544–562

    Article  Google Scholar 

  • Walton EJ, Dawson S (2001) Managers’ perceptions of criteria of organizational effectiveness. J Manag Stud 38(2):173–199

    Article  Google Scholar 

  • Weissenberger-Eibl MA, Hampel T (2021) Bridging the gap: integrating external knowledge from open innovation platforms. SN Bus Econ 1(98):1–32. https://doi.org/10.1007/s43546-021-00101-5

    Article  Google Scholar 

  • Yasin Ghadi M, Fernando M, Caputi P (2013) Transformational leadership and work engagement: the mediating effect of meaning in work. Leadersh Org Dev J 34(6):532–550

    Article  Google Scholar 

  • Zepke N (2007) Leadership, power and activity systems in a higher education context: will distributive leadership serve in an accountability driven world? Int J Leadersh Educ 10(3):301–314

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Business and Entrepreneurship, Independent University, Bangladesh (IUB), Dhaka, Bangladesh

    Ikramul Hasan

  2. Department of Business Administration, University of Asia Pacific, Dhaka, Bangladesh

    M. Nazmul Islam

Authors
  1. Ikramul Hasan
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. M. Nazmul Islam
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ikramul Hasan.

Ethics declarations

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Hasan, I., Islam, M.N. Leadership instills organizational effectiveness: a viewpoint on business organizations. SN Bus Econ 2, 26 (2022). https://doi.org/10.1007/s43546-021-00193-z

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s43546-021-00193-z

Keywords

Search

Navigation