The Value Based Leadership Theory

Managers do things right

Leaders do the right things…

Value Based Leadership Theory

Moscow 1999

“Leaders are dealers in hope” Bonaparte Napoleon

“We will build a winning tradition” Vince Lombardi to the Green

Bay Packers

Consider the above quotations. These statements of leaders reflect

commitment to a value position. In this paper I am going to describe a

brand new theory of leadership, developed by Professor House - the Value

Based Leadership Theory. I will also present a preliminary test of several

hypotheses derived from Value Based Theory. The tests of hypotheses are

based on data descriptive of 25 relationships between chief executives and

their immediate subordinates. As a concrete example, I am going to present

the results of the real interviews, which took plase in Russia in 1999

among the CEOs. In the process of testing these hypotheses I replicate the

study of charismatic leadership in the U. S. presidency conducted by House,

Spangler & Woycke (1991) using a sample of chief executive officers and

different measurement methods. What I am trying to prove in this paper is

the following: It was considered to think that managers are always the

leadres in the organization. This opinion was proved to be wrong. According

to the first research which appaered in press in the end of 70-s: manager

is the position, and leader is the person who leads others to the desired

result. According to the personal trends and characteristics, managers

should be leaders, and they are, but not always. The question of leadership

is a very interesting topic for me, personally.

I am deeply interested in the question of leadership, and I do think,

that this question and the existing theories have a long life to live.

Leadership is a real fact, which has already been proved. You can be a born

leader, but you also can create the leader in yourself. You can manage to

influence, motivate and enable others. You can succeed, because there is

nothing impossible for a human being. Especially, if he is intelligent on

the one hand and really wishes to achieve something on the other.

A BRIEF HISTORICAL REVIEW

During the period between the mid-seventies and the present time a

number of theories have been introduced into the leadership literature.

These new theories and the empirical research findings constitute a

paradigm shift in the study of leadership. The theories to which I refer

are the 1976 Theory of Charismatic Leadership (House, 1977), the

Attributional Theory of Charisma (Conger & Kanungo, 1987), and the

Transformational Theory (Burns, 1978; Bass, 1985), and Visionary Theories

of Leadership (Bennis & Nanus, 1985; Sashkin, 1988; Kousnes & Posner,

1987).

I believe these theories are all of a common genre. They attempt to

explain how leaders are able to lead organizations to attain outstanding

accomplishments such as the founding and growing of successful

entrepreneurial firms, corporate turnarounds in the face of overwhelming

competition, military victories in the face of superior forces, leadership

of successful social movements and movements for independence from colonial

rule or political tyranny. They also attempt to explain how certain

leaders are able to achieve extraordinary levels of follower motivation,

admiration, respect, trust, commitment, dedication, loyalty, and

performance.

The dependent variables of earlier theories are follower expectations,

satisfaction, and normal levels of performance. The dependent variables of

the more recent theories include a number of affective consequences such as

followers’ emotional attachment to leaders; followers’ emotional and

motivational arousal, and thus enhancement of follower valences and values

with respect to the missions articulated by leaders; followers’ trust and

confidence in leaders; and values that are of major importance to the

followers. These more recent theories also address the effect of leaders

on several follower conditions not addressed in earlier theories, such as

followers' self-worth and self-efficacy perceptions, and identification

with the leader’s vision.

Earlier theories describe leader behavior that are theoretically

instrumental to follower performance and satisfy follower needs for

support, generally referred to as task-and person-oriented leader behaviors

(Fleishman & Harris, 1962; Katz & Kahn, 1952; Likert, 1961; Feidler, 1967;

House, 1971, House, 1996). In contrast, the more recent theories stress

the infusion of values into organizations and work through leader behaviors

that are symbolic, inspirational and emotion arousing.

Earlier theories take follower attitudes, values, desires, and

preferences as given. The more recent theory claim that leaders can have

substantial, if not profound effects on these affective and cognitive

states of followers. Accordingly, leaders are claimed to transform both

individuals and total organizations by infusing them with moral purpose,

thus appealing to ideological values and emotions of organizational

members, rather than by offering material incentives and the threat of

punishment, or by appealing to pragmatic or instrumental values.

Also, McClelland (1975) introduced a theory intended to explain leader

effectiveness as a function of a specific combination of motives referred

to as the Leader Motive Profile (LMP). As will be shown below, this theory

complements the newer theories referred to above.

Since the early 1980s, more than fifty empirical studies have been

conducted to test the validity of the more recent theories of leadership.

Empirical evidence is discussed in more detail below. First, however, the

valued based leadership theory will be described.

VALUE BASED LEADERSHIP THEORY

The theory is intended to integrate the newer theories and the

empirical evidence alluded to above. Value based leadership is defined as

a relationship between an individual (leader) and one or more followers

based on shared strongly internalized ideological values espoused by the

leader and strong follwower identification with these values. Ideological

values are values concerning what is morally right and wrong. Such values

are expressed in terms of personal moral responsibility, altruism, making

significant social contributions to others, concern for honesty, fairness,

and meeting obligations to others such as followers, customers, or

organizational stakeholders. Value based leadership is asserted to result

in: a) exceptionally strong identification of followers with the leader,

the collective vision espoused by the leader, and the collective; b)

internalized commitment to the vision of the leader and to the collective;

c) arousal of follower motives that are relevant to the accomplishment of

the collective vision; and d) follower willingness to make substantial self

sacrifices and extend effort above and beyond the call of duty.

The title Value Based Leadership Theory has been chosen to reflect the

essence of the genre of leadership described by the theory. The 1976

theory of charismatic leadership is a precursor to the value based

leadership theory. The title “charismatic leadership” has been chosen

because of its cavalier popular connotation. The term charisma is often

taken in the colloquial sense, rather than the somewhat technical sense

conceived by Max Weber. The word charisma commonly invokes impressions of a

person who is charming, attractive, and sometimes macho, flamboyant, and

sexually appealing. In contrast, Value Based Leadership is intended to

convey the notion of a leader who arouses follower latent values or causes

followers to internalize new values. Such value communication can be

enacted in a quiet, non-emotionally expressive manner or in a more

emotionally expressive manner. Examples of leaders who have communicated

values to followers in an emotionally expressive manner are Winston

Churchill, Lee Iacocca, Martin Luther King, and John F. Kennedy. Examples

of leaders who have communicated values to followers in a less emotionally

expressive manner are Mother Teresa, Mahatma Ghandi, and Nelson Mandela.

A second reason for abandoning the term charisma is that in current

usage it implies that the collectivities led by charismatic leaders are

highly leader-centered and that the leader is the source of all, or almost

all, organizational strategy and inspiration of followers. One popular

conception of charismatic leadership is that it is necessarily highly

directive and disempowering of followers (Lindholm, 1990). In this paper,

I hope to demonstrate the huge potential for value based leadership to be

empowering and effective.

The Process and Effects of Value Based Leadership

In this section, an overview of what Value Based leadership is and how

it works is presented. There is both theory and empirical evidence to

suggest that value based leadership has a substantial effect on

organizational performance. Waldman and his associates reported two studies

of value based leader behavior as an antecedent to organizational

profitability (Waldman, Ramirez & House, 1996; Waldman, Atwater & House,

1996). In these studies value based leadership accounted for between

fifteen and twenty five percent of firm profitability over the three years

following the time at which value based leadership was assessed. The

design of these studies controlled for executive tenure, firm size,

environmental turbulence, and prior firm profitability.

The theoretical process by which value-based leadership functions is

described in the following paragraphs. Evidence for this process is

presented in more detail in later sections in which the specific theories

contributing to value based leadership theory is discussed.

Value based leaders infuse collectives, organizations, and work with

ideological values by articulating an ideological vision, a vision of a

better future to which followers are claimed to have a moral right. By

claiming that followers have this right, the values articulated in the

vision are rendered ideological - expressions of what is morally right and

good. Ideological values are usually, if not always, end values which are

intrinsically satisfying in their own right. In contrast to pragmatic

values such as material gain, pay, and status, end values cannot be

exchanged for other values. Examples of end values are independence,

dignity, equality, the right to education and self-determination, beauty,

and a world of peace and order. Ideological values theoretically resonate

with the deeply held values and emotions of followers.

Acccording to value based leadership theory the visions articulated by

this genre of leaders are consistent with the collective identity of the

followers, and are emotionally and motivationally arousing. Emotional and

motivational arousal induces follower identification with the collective

vision and with the collective, results in enhncement of follower self-

efficacy and self-worth, and have powerful motivtional effects on followers

and on overall orgnizational performance.

Leaders of industrial and government organizations often articulate

visions for their organizations. Such visions need not be grandiose.

Visions of outstanding leaders in the normal work world can embrace such

ideological values as a challenging and rewarding work environment;

professional development opportunities; freedom from highly controlling

rules and supervision; a fair return to major constituencies; fairness,

craftsmanship and integrity; high quality services or products; or respect

for organizational members, clients or customers and for the environment in

which the organization functions. Whether conceived solely by the leader,

by prior members of the collective, or jointly with followers, the

articulation of a collective ideological vision by leaders theoretically

results in self-sacrifice and effort, above and beyond the call of duty, by

organizational members and exceptional synergy among members of the

collective.

Follower respect, trust, and self-sacrifice are stimulated by

identification with the values inherent in the leader's vision and the

leader's demonstration of courage, determination and self-sacrifice in the

interest of the organization and the vision. According to this

perspective, value based leaders use follower value identifiction, and the

respect and trust they earn to motivate high performance and a sense of

mission in quest of the collective vision, and to introduce major

organizational change. For some individuals, latent values are brought to

consciousness as a result of the vision articulated by value based leaders.

Also, some individuals change their values to be consistent with those of

the leader.

Visions articulated by value based leaders need not be formulated

exclusively by a single leader. The collective vision may have been

initially conceived by leaders and members of the collective who preceded

the current leader. In this case, the leader is one who perpetuates the

vision by continuing to communicate it and institutionalizing it through

the establishment and maintenance of institutional means such as

strategies, policies, norms, rituals, ceremonies, and symbols.

Alternatively, organizational visions can be formulated by leaders in

conjunction with organizational members.

The effects of the articulation of and emphasis on ideological values

are rather profound. Organizational members become aware of ideological

values that they share with the leader and as a collective. Members

identify with the collective vision and with the organization--thus a high

level of collective cohesion is developed. Collaborative interactions

among organizational members is enhanced. Individuals experience a sense

of collective efficacy and a heightened sense of self-esteem as a result of

their cohesion and the leader's expressions of confidence in their ability

to attain the vision. Further, motives relevant to the accomplishment of

the vision are aroused and organizational members come to judge their self-

worth in terms of their contribution to the collective and the attainment

of the vision.

The result is strongly internalized member commitment, and intrinsic

motivation to contribute to the organization and to the collective vision.

Members are more inclined to support changes in technology, structure and

strategies introduced by top management, which may result in an

organizational culture characterized by values oriented toward teamwork and

meeting customers', clients', constituents' and competitive needs. There

ensues a marked reduction in intra-organizational conflict and a high

degree of team effort and effectiveness. As noted above, members expend

effort above and beyond the call of duty, and sacrifice their self-interest

in the interest of the organization. As a result, individual motivation,

organizational culture, strategy and structure are likely to become aligned

with the collective vision.

A reinforcing process may also occur whereby organizational members

increase their respect for and confidence in the leader and each other

based on the resulting organizational success. As a result, their initial

confidence and motivation is further reinforced. Such effects are

consistent with the notion of romanticized leadership (Meindl, Ehrlich &

Dukerich, 1985). The resulting increased confidence in the leader in turn

gives the leader more influence and thus contributes to the leader's

ability to further influence organizational performance.

This is an “ideal type” theoretical scenario. Clearly all the aspects

of this scenario will not always come to fruition in response to value

based leadership. No such claim is made. Rather, it is argued that

organizational members will be motivated on the basis of shared

internalized values and identification with the leader and the collective,

which are far more motivational than alternative bases of motivation.

It is possible that value based leaders may introduce flawed

strategies and that the result may be organizational decline or failure

rather than improvement and success. It is also possible that the leader

may stand for socially undesirable values such as ethnocentrism, racism,

persecution, dishonesty, or unfair or illegal competitive practices

(Lindholm 1990). Regardless of the strategy or values expressed by the

leader, it is argued that a relationship based on value identification

between leader and organizational members will result in increased member

commitment and motivation, as well as increased organizational cohesion.

EMPIRICAL EVIDENCE

There is extensive empirical evidence with respect to the effects of

behaviors specified by value based leadership theory. Charismatic,

visionary, and transformational theories of leadership are precursors of

the leader behaviors specified by value based leadership theory. Tests of

these theories have been based on various operationalizations that qualify

as measures of value based leadership including interviews (Howell &

Higgins, 1990), laboratory experimentation (Howell & Frost, 1989;

Kirkpatrick & Locke, 1996), questionnaires (Lowe, Kroeck & Sivasubramaniam,

1995), and quantified archival data (House, Spangler & Woycke, 1991). In

all of these tests, the leader behavior measured consists of articulating

an organizational vision and behaving in ways that reinforce the values

inherent in the vision, thus qualifying as indirect evidence relevant to

the effects of value based leadership. Space limitations prevent a

detailed review of the evidence. However, Bass and Avolio (1993), House

and Shamir (1993), Lowe et al,. (1995), and Yukl (1994), present overviews

of these studies. With surprising consistency these empirical studies have

demonstrated consistently that value based leader behavior predicts unusual

levels of leader effectiveness directed toward enhancing organizational

performance.

Support for the effects of value based leadership is illustrated by a

recent meta-analysis of the charisma subscale of the Bass and Avolio (1989)

Multifacet Leadership Questionnaire (MLQ). The MLQ charisma subscale

describes relationships between subordinates and superiors. Superiors who

receive high scores on this scale are described by subordinates as having

an exciting vision of the future for the organization they lead, and being

exceptionally motivational, trustworthy, and deserving of respect.

Support for the theoretical main effects of value based leader

behavior has been demonstrated at several levels of analysis including

dyads, small informal groups, major departments of complex organizations,

overall performance of educational and profit making organizations, and

nation states. The evidence is derived from a wide variety of samples

including military officers, educational administrators, middle managers,

subjects in laboratory experiments and management simulations, US

presidents and chief executive officers of Fortune 500 firms (Bass &

Avolio, 1993; House & Shamir, 1993; Waldman, Ramirez & House, 1996).

The evidence shows that the effects of value based leader behavior are

rather widely generalizable in the United States and that they may well

generalize across cultures. For instance, studies based on the charisma

scale of the MLQ have demonstrated similar findings in India (Periera,

1987), Singapore (Koh, Terborg & Steers, 1991), The Netherlands (Koene,

Pennings & Schreuder, 1991), China, Germany, and Japan (Bass, 1997).

In summary, the studies based on various operationalizations of value

based leadership clearly show that this genre of leadership results in a

high level of follower motivation and commitment and well-above-average

organizational performance, especially under conditions of crises or

uncertainty (Pillai & Meindl, 1991; House, Spangler, & Woycke, 1995;

Waldman, Ramirez & House, 1996; Waldman, Atwater & House, 1996).

NEWLY INTEGRATED THEORIES

The value based theory of leadership integrates the precursor theories

discussed above with a number of assertions advanced in several

psychological theories of motivation and behavior. Following is a brief

review of the psychological theories that are integrated into the Value

Based Leadership Theory.

McClelland's Theories of Non-conscious Motivation

According to this theory, the motivational aspects of human beings can

be understood in terms of four non-conscious motives in various

combinations (McClelland, 1985). These motives are the achievement, power,

affiliation, and social responsibility motives. McClelland has developed a

theory of entrepreneural effectiveness based on the role of achievement

motivation, and a more general theory of leader effectiveness consisting of

theoretical assertions concerning the optimum combination of the above four

motives for effective leadership. This theory is entitled the Leader

Motive Profile Theory (LMP). In the following sections we discuss the four

motives discussed by McClelland and the LMP theory.

Achievement Motivation

Achievement motivation is defined as a non-conscious concern for

achieving excellence in accomplishments through one's individual efforts

(McClelland, Atkinson, Clark, & Lowell, 1958). Achievement motivated

individuals set challenging goals for themselves, assume personal

responsibility for goal accomplishment, are highly persistent in the

pursuit of goals, take calculated risks to achieve goals and actively

collect and use information for feedback purposes. Achievement motivation

is theoretically predicted to contribute to effective entrepreneurship

(McClelland, 1985) and effective leadership of small task oriented groups

(House et al., 1991). Litwin and Stringer (1968) demonstrated

experimentally that small groups led by managers who enacted achievement

oriented and arousing behaviors were more effective than groups with

managers who did not.

In management positions at higher levels in organizations, and

particularly in organizational settings where technical requirements are

few and impact on others is of fundamental importance, managerial

effectiveness depends on the extent to which managers delegate effectively

and motivate and co-ordinate others. Theoretically, high achievement

motivated managers are strongly inclined to be personally involved in

performing the work of their organization and are reluctant to delegate

authority and responsibility. Therefore, high achievement motivation is

expected to predict poor performance of high-level executives in large

organizations. House et al. (1991) found that achievement motivation of

U.S. presidents was significantly inversely related to archival measures of

U.S. presidential effectiveness.

Affiliative Motivation

Affiliative motivation is defined as a non-conscious concern for

establishing, maintaining, and restoring close personal relationships with

others. Individuals with high affiliative motivation tend to be non-

assertive, submissive, and dependent on others (McClelland, 1985).

Theoretically, highly affiliative motivated managers are reluctant to

monitor the behavior of subordinates, to convey negative feedback to

subordinates even when required, or to discipline subordinates for ethical

transgressions or violations of organizational policies. Highly

affiliative motivated managers are also theoretically expected to manage on

the basis of personal relationships with subordinates and therefore show

favoritism toward some. House et al. (1991) found that the affiliative

motive was significantly negatively correlated with U.S. presidential

charismatic leadership and archival measures of U.S. presidential

effectiveness.

Power Motivation

Power motivation is defined as a non-conscious concern for acquiring

status and having an impact on others. Individuals with high power

motivation tend to enjoy asserting social influence, being persuasive,

drawing attention to themselves, and having an impact on their immediate

environment including the people with whom they interact. Theoretically, if

enacted in a socially constructive manner, high power motivation should

result in effective managerial performance in high level positions

(McClelland, 1975; 1985). However, unless constrained by a responsibility

disposition, power motivated managers will exercise power in an impetuously

aggressive manner for self aggrandizing purposes to the detriment of their

subordinates and organizations.

High power motivation induces highly competitive behavior. Therefore,

when unconstrained by moral inhibition, power motivation is theoretically

predictive of leader effectiveness when the role demands of leaders require

strong individual competitiveness, aggressiveness, manipulative exploitive

behavior, or the exercise of substantial political influence. The power

motive was found by House et al. (1991) to significantly predict

presidential charismatic behavior and archival measures of presidential

effectiveness.

Responsibility Disposition

According to McClelland, individuals who have a high concern for the

moral exercise of power will use power in an altruistic and collectively-

oriented manner. Indicators of high concern for responsibility are

expressions of concern about meeting moral standards and obligations to

others, concern for others, concern about consequences of one’s own action,

and critical self judgment.

Winter and Barenbaum (1985) developed and validated a measure of

concern for moral responsibility, which they label the responsibility

disposition1. The measure is based on quantitative content analysis of

narrative text material. Winter (1991) demonstrated that the

responsibility disposition, in combination with high power and low

affiliative motivation, was predictive of managerial success over a sixteen-

year interval.

The responsibility motive should be predictive of leader integrity and

leaders' concern for the consequences of their own actions on others.

Leaders with high responsibility disposition are expected to stress the

importance of keeping one's word, honesty, fairness, and socially

responsible behavior. Thus, we expect the responsibility disposition to be

associated with value based leader behavior, supportive leader behavior,

fairness, follower trust and respect for the leader and commitment to the

leader’s vision, and consequently organizational effectiveness.

Leader Motive Profile Theory

McClelland (1975) argued that the following combination of non-

conscious motives are generic to, and predictive of, leader effectiveness:

high power motivation, moderate achievement motivation, high concern for

the moral exercise of power, and power motivation greater than affiliative

motivation. This combination of motives is referred to by McClelland

(1975) as the Leader Motive Profile (LMP).

According to LMP theory, the power motive is necessary for leaders to

be effective because it induces them to engage in social influence

behavior, and such behavior is required for effective leadership. Further,

when the power motive is higher than the affiliative motive, individuals do

not engage in the dysfunctional behaviors usually associated with high

affiliation motivation - favoritism, submissiveness, and reluctance to

monitor and discipline subordinates. Finally, when high power motivation

is coupled with a high concern for moral responsibility, individuals are

predicted to engage in the exercise of power in an effective and socially

desirable manner. Earlier research, also reviewed by McClelland (1985),

suggests that the achievement motive is a better predictor of leader

effectiveness and success in entrepreneurial organizations than LMP.

Theoretically the leader motive profile is predictive of managerial

effectiveness under conditions where leaders need to exercise social

influence in the process of making decisions and motivating others to

accept and implement decisions. In formal organizations these conditions

are found at higher levels and in non-technical functions. By contrast, in

smaller technologically based organizations, group leaders can rely on

direct contact with subordinates (rather than delegation through multiple

organizational levels), and technological knowledge to make decisions.

Thus LMP theory is limited to the boundary conditions of moderate to large

non-technologically oriented organizations (McClelland, 1975; Winter,

1978; 1991), and to managers who are separated from the work of the

organization by at least one organizational level.

Several studies have demonstrated support for the LMP theory. Winter

(1978) found that LMP was predictive of the career success of entry level

managers in non-technical positions in the US Navy over an eight-year

interval. Both McClelland and Boyatzis (1982), and Winter (1991), in

separate analyses of the same data but with different operationalizations

of LMP, found similar results at AT&T over a sixteen-year interval.

McClelland and Burnham (1976) found high-LMP managers had more supportive

and rewarding organizational climates, and higher performing sales groups

than low-LMP managers did in a large sales organization. House, et al.

(1991) found that the motive components of the LMP predicted US

presidential charisma and presidential performance effectiveness.

Since high LMP leaders have greater power than affiliative motivation

it is expected that they will be assertive and at least moderately

directive. Further, since they have high responsibility motivation it is

expected that thay will have highly internalized idological values - values

concerning what is morally right and wrong - and that they will thus stress

ideological value orientation, integrity, and fairness, as explained above,

both verbally and through personal example.

The Path-Goal Theory of Leadership

The essence of path-goal theory is that leader behaviors will be

effective when such behaviors complement formal organizational practices

and the informal social system by providing direction, clarification,

support and motivational incentives to subordinates, which are not

otherwise provided (House, 1971; House & Mitchell, 1974; House, 1996).

According to the 1996 version of path-goal theory, leaders who give

approval and recognition of subordinates, contingent on performance and in

a fair manner, will clarify expectancies of subordinates concerning work

goals and rewards, and will effectively motivate subordinates. This theory

also predicts that leader consideration toward subordinates provides the

psychological support subordinates require, especially in times of stress

and frustration.

Path-goal theory suggests that either participative or directive

leader behavior can provide psychological structure and direction and

therefore clarify subordinates' role demands. Theoretically, directive

leader behavior will be dysfunctional and participative leader behavior

will be functional when subordinates are highly involved in their work,

perceive themselves as having a high level of task related knowledge,

and/or prefer a high level of autonomy. Meta-analyses of 135 relationships

tested in prior studies provide support for these assertions (Wofford &

Liska, 1993).

Dissonance Theory and Competing Values

According to cognitive dissonance theory, individuals experience

anxiety-inducing cognitive dissonance when their self-evaluative

cognitions, feelings and behavior are in conflict with each other

(Festinger, 1980). Under such conditions, individuals are strongly

motivated to reduce the dissonance by changing one or more of the dissonant

components--either their behavior, their cognitions, or their feelings. It

follows from dissonance theory that when leaders appeal to ideological

values of followers and also administer extrinsic material rewards strictly

contingent on follower performance, they will induce cognitive dissonance

in followers. Offering strong extrinsic incentives for doing what is

claimed to be morally correct will theoretically induce dissonance, and is

likely to undermine the effects of leaders' appeals to ideological values.

From dissonance theory, we would expect that with the exception of social

rewards such as approval and recognition, contingent reward behavior on the

part of leaders will undermine the effects of value based leader behavior.

Equity Theory

Equity theory asserts that when individuals perceive the ratio of

their contributions to their rewards (intrinsic or extrinsic) to be equal

to the ratio of contributions to rewards of others, they will believe that

they are treated fairly (Adams, 1963). We expect that under conditions of

perceived unfairness followers will feel resentment, be demotivated, will

not support and may even resist attempts by leaders to influence them.

Situational Strength

Mischel (1973) has argued that the psychological strength of

situations influences the degree to which individual dispositions such as

motives or personality traits are expressed behaviorally. Strong

situations are situations in which there are strong behavioral norms,

strong incentives for specific types of behaviors, and clear expectations

concerning what behaviors are rewarded. According to this argument, in

strong situations, motivational or personality tendencies are constrained

and there will be little behavioral expression of individual dispositions.

Thus, in organizations that are highly formalized and governed by well-

established role expectations, norms, rules, policies and procedures, there

is less opportunity for organizational members to behaviorally express

their dispositional tendencies.

Theoretically, in strong psychological situations, leader motives have

less influence on leader behavior, and leader behavior has less influence

on subordinates and on organizational outcomes than in weak psychological

situations. Studies by Monson, Healy and Chernick (1982), Lee, Ashford,

and Bobko (1990), and Barrick and Mount (1993) have demonstrated support

for Mischel's situational strength argument.

THE VALUE BASED LEADERSHIP THEORY

This theory consists of six axioms and twenty-seven propositions that

relate leader behavior, leader motives, and situational variables to leader

effectiveness.

The Parsimonious Meta–Proposition of Value Based Leadership

Value based leadership theory is based on the meta–proposition that

non-conscious motives and motivation based on strongly internalized values

is stronger, more pervasive, and more enduring than motivation based on

instrumental calculations of anticipated rewards or motivation based on

threat and avoidance of punishment. The axioms and propositions that

follow are derived from and can all be explained in terms of this

parsimonious meta-proposition.

The Value Based Leader Behavior Syndrome

Behaviors that characterize value based leadership include a)

articulation of a challenging vision of a better future to which followers

are claimed to have a moral right; b) unusual leader determination,

persistence, and self-sacrifice in the interest of the vision and the

values inherent in the vision; c) communication of high performance

expectations of followers and confidence in their ability to contribute to

the collective; d) display of self-confidence, confidence in followers, and

confidence in the attainment of the vision; e) display of integrity; f)

expressions of concern for the interests of followers and the collective;

g) positive evaluation of followers and the collective; h) instrumental and

symbolic behaviors that emphasize and reinforce the values inherent in the

collective vision; i) role modelling behaviors that set a personal example

of the values inherent in the collective vision; j) frame-alignment

behaviors--behaviors intended to align followers' attitudes, schemata, and

frames with the values of the collective vision; and, k) behaviors that

arouse follower motives relevant to the pursuit of the vision. We refer to

these behaviors collectively as the value based leader behavior syndrome.

This specification of value based leader behaviors integrates the

behaviors specified in prior extensions of the 1976 theory of charismatic

leadership as well as behaviors specified in other theories of charismatic,

transformational and visionary leadership. House and Shamir (1993) provide

the rationale for inclusion of the above behaviors in the theoretical

leader behavior syndrome.

Axioms

Axioms are statements, the validity of which are taken for granted,

either because the enjoy substantial empirical evidence or becuse they

cannot be tested. Axioms provide a foundation for more specific

statements, such as propositions. The axioms stated here provide the

foundation for the selection of leader behaviors from among all of the

leader behaviors specified in the various theories described above.

Axioms Concerning Human Motivation

1. Humans tend to be not only pragmatic and goal-oriented, but are also

self-expressive. It is assumed that behavior is not only instrumental-

calculative, but also expressive of feelings, aesthetic values and self-

concepts. We "do" things because of who we "are," because by doing them we

establish and affirm an identity for ourselves, at times even when our

behavior does not serve our materialistic or pragmatic self-interests.

2. People are motivated to maintain and enhance their generalized self-

efficacy and self-worth. Generalized self-efficacy is based on a sense of

competence, power, or ability to cope with and control one's environment.

Self-worth is based on a sense of virtue and moral worth and is grounded in

norms and values concerning conduct.

3. People are also motivated to retain and increase their sense of self-

consistency. Self-consistency refers to correspondence among components of

the self-concept at a given time, to continuity of the self-concept over

time, and to correspondence between the self-concept and behavior. People

derive a sense of "meaning" from continuity between the past, the present

and the projected future, and from the correspondence between their

behavior and self-concept.

4. Self-concepts are composed of values, perceptions of self-worth,

efficacy, and consistency, and also identities. Identities, sometimes

referred to as role-identities, link the self-concept to society. Social

identities locate the self in socially recognizable categories such as

nations, organizations and occupations, thus enabling people to derive

meaning from being linked to social collectives.

5. Humans can be strongly motivated by faith. When goals cannot be

clearly specified or the subjective probabilities of accomplishment and

rewards are not high, people may be motivated by faith because being

hopeful in the sense of having faith in a better future is an intrinsically

satisfying condition.

6. When individual motives are aroused in the interest of the collective

effort, and when individual identify with the values inherent in the

collective vision, they will evaluate themselves on the basis of the degree

to which they contribute to the collective effort. Under conditions of

motive arousal and value identiication individuals experience intrinsic

satisfaction from their contribution to the collective effort and intrinsic

dissatisfaction from failure to contribute to collective efforts.

These axioms incorporate the extensions of the 1976 theory of

charismatic leadership offered by Shamir, House and Arthur (1993), and

House and Shamir (1995) and provide the integrative framework for the Value

Based Theory of Leadership.

PROPOSITIONS

The theory is expressed in the form of twenty-seven propositions which

assert specific ways in which leader motives and behaviors, in conjunction

with situational variables, affect follower motivation and performance and

organizational performance. These propositions are based on the leadership

and psychological theories reviewed above and reflect the extensions of the

1976 Theory of Charismatic Leadership contributed by House et al. (1991),

Shamir et al. (1993), House and Shamir (1993), and Waldman, Ramirez and

House (1996).

Propositions Concerning Leader Behavior and Its Effects

1. The motivational effects of the behaviors of the value based leader

behavior

syndrome described above will be heightened follower recognition of shared

values between leaders and followers, heightened arousal of follower

motives, heightened follower self-confidence, generalized self-efficacy and

self-worth, strong follower self-engagement in the pursuit of the

collective vision and in contributing to the collective, and strong

follower identification with the collective and the collective vision. We

refer to these psychological reactions of followers as the value based

motive syndrome .

2. The behavioral effects of the value based motive syndrome will be

heightened commitment to the collective as manifested by follower

willingness to exert effort above and beyond normal position or role

requirements, follower self-sacrifice in the interest of the vision and the

collective, and increased collective social cohesion and organizational

collaboration. We refer to these effects as the value based follower

commitment syndrome. While the value based motive syndrome described in

proposition one is not directly observable, the behaviors of the value

based follower commitment syndrome are.

Propositions Concerning Leader Attributes

3. Self-confidence and a strong conviction in the moral correctness of

one's beliefs will be predictive of proactive leadership. This proposition

is a slight modification of proposition three of the 1976 Theory of

Charismatic Leadership. This proposition has been supported by Smith

(1982), House et al. (1991), and Howell and Higgins (1991).

4. Strong leader concern for the morally responsible exercise of power

will be predictive of constructive, collectively oriented exercise of

social influence by leaders and predictive of the value based motive and

follower commitment syndromes specified in propositions 1 and 2 above.

5. Power motivation coupled with a strong concern for the morally

responsible exercise of power will be predictive of the constructive,

collective-oriented exercise of social influence by leaders.

6. Power motivation, unconstrained by a strong concern for the moral

exercise of power, will be predictive of impetuously aggressive and self-

aggrandizing exercise of social influence.

7. Power motivation, in conjunction with a strong concern for the moral

exercise of power, will be predictive of effective leadership when the role

demands of leaders require substantial delegation of authority and

responsibility and the exercise of social influence.

8. Power motivation, unconstrained by a strong concern for the moral

exercise of power, will be predictive of effective leadership when the role

demands of leaders require strong individual competitiveness,

aggressiveness, manipulative and exploitive behavior, or the exercise of

substantial political influence.

9. Affiliative motivation will be predictive of non-assertive leadership,

close relationships with a small subgroup of followers, partiality toward

this subgroup, and ineffective leadership.

10. The leader motive profile will be predictive of proactive leadership

and leader effectiveness when the role demands of leaders require

substantial delegation of authority and responsibility and the exercise of

social influence.

11. Achievement motivation will be predictive of effective leader

performance in entrepreneurial contexts and for small task-oriented groups

in which members have direct interaction with the leader.

12. Achievement motivation will be predictive of ineffective leader

performance for the leadership of organizations in which the role demands

of leaders require substantial delegation of authority and responsibility

and the exercise of substantial social influence.

Propositions four through twelve are derived from the motivation

theories reviewed earlier.

Propositions Concerning Specific Leader Behaviors

13. Leader behaviors intended to enhance followers cognitive abilities

will increase follower and overall organizational performance when such

behaviors complement formal organizational practices and the informal

social system by providing direction, clarification, feedback,

encouragement, support, and motivational incentives to subordinates which

are not otherwise provided.

14. When leader behaviors intended to enhance followers cognitive

abilities are redundant with formal organizational practices and the

informal social system they will be viewed as excessively controlling, will

cause follower dissatisfaction, and will be resented and resisted.

15. To be accepted by followers, it is necessary for leaders to be

perceived by followers as acting in the interest of the collective and the

followers, to be perceived as fair and trustworthy in their interactions

with followers, and to be perceived as not self-aggrandizing.

16. Leader support behavior will be predictive of low follower stress,

trust in by followers, and follower satisfaction with their relationships

with leaders.

17. Leader contingent recognition and approval will be predictive of

follower role clarity, follower perceptions of leaders as fair, and

heightened follower satisfaction and motivation.

18. Directive leader behavior will result in follower role clarification

but will be dysfunctional when followers prefer to exercise independent

actions and initiative, are highly involved in their work, and/or perceive

themselves as having requisite knowledge and skills for effective task

performance.

19. Participative leader behavior will result in follower role

clarification and will be functional when followers prefer to exercise

independent actions and initiative, are highly involved in their work,

and/or when followers perceive themselves as having requisite knowledge and

skills for effective task performance.

20. Leader fairness behavior will be predictive of follower acceptance of

leaders, and the leader's vision and values.

21. Perceived lack of fairness will result in follower resentment and

resistance to the leaders vision and directions. These propositions are

based on equity theory of motivation.

Propositions 13 through 21 are based on the 1996 version of Path Goal

Theory of leadership (House, 1996).

22. Leaders arouse motives of followers by enacting specific motive arousal

behaviors relevant to each motive. For example, defining tasks and goals as

challenging arouses the achievement motive; invoking the image of a

threatening enemy, describing combative or highly competitive situations or

describing the exercise of power arouses the power motive; making

acceptance of the leader contingent on mutural acceptance of followers, or

stressing the importance of collaborative behavior arouses the affiliative

motive.

23. Leaders who engage in selective behaviors that arouse motives

specifically relevant to the accomplishment of the collective vision will

have positive effects on followers' value based motive syndrome described

in Proposition 2.

24. The more leaders engage in the value based leader behavior syndrome the

more their followers will emulate (a) the values, preferences and

expectations of the leader, (b) the emotional responses of the leader to

work-related stimuli, and (c) the attitudes of the leader toward work and

the organization.

Propositions 22 through 24 are slight revisions of propositions

advanced in the 1976 Theory of Charismatic leadership (House, 1977).

25. The use of strong extrinsic material rewards contingent on performance

will conflict with appeals to ideological values and will thus undermine

the effects of the value based leader behavior syndrome. This proposition

is based on dissonance theory (Festinger, 1980) and supported by the

findings of Korman (1970), and Dubinsky and Spangler (1995) described

above.

Propositions Concerning Social Context

26. Two necessary conditions for leaders to have the effects specified in

proposition two are that leaders have the opportunity to communicate the

collective vision to potential followers and that the role of followers be

definable in ideological terms that appeal to them. This is a modification

of one of the propositions originally advanced by House (1977).

27. The emergence and effectiveness of value based leaders will be

facilitated to the extent to which a) performance goals cannot be easily

specified and measured, b) extrinsic rewards cannot be made clearly

contingent on individual performance, c) there are few situational cues,

constraints and reinforcers to guide behavior and provide incentives for

specific performance, and d) exceptional effort, behavior and sacrifices

are required of both the leaders and followers. This proposition is based

on the earlier discussion of strength of situations and dissonance theory

and is a modest modification of one of the propositions originally advanced

by Shamir et al. (1993).

The hypotheses were tested within the context of a latent structure

casual model, using Partial Least Squares Analysis (PLS). This modelling

procedure requires that substantive hypotheses be modelled in the form of

paths connecting the hypothesized variables. The variables are latent

constructs composed of scores on manifest indicators. The The slopes of

these relationships are presented in Figure 3. This finding supports the

competitive hypothesis 5a which states that LMP will have greater effects

in non-entrepreneurial firms than in entrepreneurial firms, and will be

discussed below.

IMPLICATIONS

In this section we first discuss the implications of the findings

with respect to the value based leadership. Next we discuss the

implications of the findings for each of the five theories that were

integrated in the models tested. We then discuss the more general

implications of the study for the discipline of Organizational Behavior.

Value Based Leadership

Thomas (1988), House et al. (1991), and by Waldman, Ramirez and House

(1996)

demonstrate longitudinally, and with adequate controls for spurious

relationships, that leaders have substantial effects on the performance of

the organizations they manage. However, there have been no studies, other

than the U.S. presidential study (House et al., 1991), that investigate the

leader motives and behavior that lead to such leader effects. Thus there

has been a "black box" concerning how leader processes influence overall

organizational performance that remains to be explained.

Collectively, the findings of the present study help to understand the

phenomena in the "black box." More specifically, the findings show, in

some detail, important relationships between chief executives' motives and

behavior and subordinates' motivation and commitment to their organization.

Having shown how the components function, it is now possible to test

linkages between leader behavior, subordinate responses, and organizational

effectiveness using longitudinal quasi experimental designs.

Implications for Specific Theories

In this section we discuss the implications of the study findings for

each of the theories that are integrated to form the Value Based Theory of

Leadership.

Achievement Motivation Theory

Achievement motivation has a more positive effect on CEMS and all

leader behaviors in entrepreneurial firms than in non-entrepreneurial

firms. This finding constitutes yet another confirmation of achievement

motivation theory concerning the specific conditions under which

achievement motivation is predicted to result in high performance.

Moral Responsibility Theory

The bivariate relationships between the moral responsibility

disposition and value based leader behavior, leader fairness and CEMS, and

the moderating effect of responsibility on the relationships between the

power motive, and CEMS, leader charisma, and support/reward behavior all

provide support for Moral Responsibility Theory. Moral responsibility

motivation is clearly an important disposition that deserves further

investigation and attention.

Leader Motive Profile Theory

The positive relationships between LMP and executive value based

leader behavior, support/recognition behavior, and directiveness provide

support for LMP Theory. These two relationships are consistent with the

interpretation that because high LMP leaders have low affiliative

motivation they enact social influence in an impersonal and more proactive

and assertive manner than low LMP leaders.

The findings are consistent with the propositions that LMP affects

leader behavior, and leader behavior in turn has a positive effect on CEMS.

These findings suggest a re-specification of the boundary conditions for

the role of LMP in organizational functioning. Contrary to the initially

specified boundary conditions, LMP has negligible effects on leader

behavior and CEMS in non- entrepreneurial firms and positive effects in

entrepreneurial firms. These findings imply that LMP has its' major impact

on organizational outcomes through its' influence on leader behavior under

weak psychological conditions.

Path Goal Theory

As predicted by the Path-Goal Theory of Leadership (House, 1996),

leader contingent

recognition and supportive behaviors are predictive of CEMS, and leader

directiveness is more strongly negatively related to CEMS in

entrepreneurial firms. Thus Path-Goal theory is provided additional

support in the present study.

CONCLUSION

The major conclusions that can be drawn from the above findings and

discussion are: 1) the value based theory of leadership successfully

integrates five prominent theories of leadership (transformational,

charismatic, visionary, LMP, and path-goal theories) and assertions drawn

broadly from established psychological theories of motivation and behavior;

2) the components of the value based theory of leadership are rather

strongly and quite consistently supported, although their exact

combinations remain to be established; 3) the psychological theories

integrated within the value based theory are largely supported; 4) the

value based theory of leadership, with various kinds of

operationalizations, has rather broad generalizability; 5) the theory

supported by the U.S. presidential study holds for CEOs with respect to

effects of leader behaviors on subordinates' cognitions and affective

responses; 6) a re-specification of the boundary conditions of LMP should

be further investigated; and 7) the motives that are most appropriate for

effective leadership are contingent on the orientation of the collective

being led.

Beginning with the 1976 theory of charismatic leadership (House,

1977), a new leadership paradigm has emerged. This paradigm consists of

several theories of similar genre (House, 1977; Bass, 1985; Conger &

Kanungo; 1987; Bennis & Nanus, 1985; 1987; Sashkin, 1988) and concerns the

determinants of exceptionally effective or outstanding leadership.

According to this paradigm, value based leaders infuse organizations and

work with ideological values which are intrinsically and powerfully

motivational. Value oriented motivation is stronger, more pervasive, and

more endurable than pragmatic oriented motivation. The theories of the new

paradigm are now integrated and formalized as the Value Based Theory of

Leadership. Hopefully, this theory and the supporting research will

stimulate further leadership research and further development of leadership

and organizational behavior theory.

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