Exploring The Relationship Between Leadership Style, Knowledge Management Practices And Innovative Behavior 1
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Ramita Abdul Rahim , Nor Fazalina Salleh , Sharifah Fazirah Syed Ahmad , 4 Raja Munirah Raja Mustapha
Faculty of Business Management Universiti Teknologi MARA, Shah Alam, Selangor, Malaysia
[email protected] Abstract—In today’s highly competitive marketplace, the organizations have realized the importance of innovative behavior of employees. They believed creativity and innovation provides greater benefits in dealing with challenges of globalized economy. Although previous studies have given great attention to the innovative behavior of employees, however, less emphasis is placed on sustaining this element. The practices and how to sustain innovative behaviors was not substantially discussed in previous literature. Past researchers also have discussed factors to sustain innovation activities in the organization. One of the main factors is leaders’ role. Leadership style is crucial in organizations to boost innovation performance. It is, therefore, imperative to investigate these leadership practices and most importantly understand how these variables can influence the practices and sustainability of innovation in organizations. Another main factor besides leaders’ role which is believed to have an influence towards employees’ innovative behavior is knowledge management practices. Knowledge management practices are able to enhance innovation in an organization Industries should, therefore, build a culture in which knowledge is valued across their business. Many organizations realized the importance of knowledge management practices but not many are willing to invest in it. This investigates practices and issues of knowledge management in organizations. The instrument used for data collection is a survey questionnaire responded by 84 employees working in private organizations in Shah Alam. Data was analyzed using Pearson Product Moment Correlation Coefficient and results indicate that transformational and transactional leaders have positive relationships with innovative behavior. This means that to boost innovativeness, leaders must able to demonstrate and practices transformational and transactional leadership styles. Knowledge responsiveness was found to be more important for organizations when responding to customer needs. The findings of this study assist managers in identifying and using the appropriate leadership styles, and thus contribute towards increased innovative behavior among employees.
Keywords—Leadership Style, Transformation Leadership, Transaction Leadership, Laissez Faire, Knowledge Management Practices, Innovative Behavior, Malaysia.
I.
INTRODUCTION
Innovation according to [1] and [2] is a process by which value is created for customers through public and private organizations that transform new knowledge and technologies into profitable products and services for national and global markets. A high rate of innovation in turn contributes to more intellectual capital, market creation, economic growth, job creation, wealth and a higher standard of living. Similarly, other researchers define innovation as the process of creating something new in the organization [3]. Innovation includes fostering creativity, supporting research and development and experimentation, developing new processes, introducing new products and services, and technological leadership. Likewise, [4] say that innovation is both creating and bringing new technologies, new products, new services, new marketing ideas, new systems and new ways of operating into profitable use. Innovative behaviour of employees is the key of increasing innovation performance in the organization. However, the issue with innovation is in the measuring of successful innovation. According to [5], measures of innovative success vary by company and industry and have suggested measuring innovation in terms of patent creation and also research and development. For example, in measuring innovation some companies create patent after patent and boast of their innovative capabilities while other companies may measure innovation according to the amount of money spent on research and development, which directly correlates with the amount of innovative products, processes and services. However, [6] believe that innovation has nothing to do with how many R&D dollars the organization has or how many patents have been registered, but is related to the employees that the organization has and how it leads employees to be innovative. To increase innovation, organizations need to focus on the variables that are believed to be able to increase innovative behavior of employees. According to [1], [7], [8] and [9] it is an undeniable that the effectiveness of knowledge
management implementation effectiveness, and efficiency.
enhances
innovativeness,
Besides knowledge management, organizations also must focus on how to increase innovative behavior of employees through appropriate leadership styles. Leaders and its styles of leadership and behavior with followers or subordinates and resources are believed to have influence on the performance of an organization. According to [10] leadership is defined as the ability to influence and develop individuals and teams to achieve goals that have been set by the organization. This research focuses on transformational leadership, transactional leadership and laissez-faire leadership style. Transformation leadership style in this research is defined as superior leadership performance that occurs when leaders broaden and elevate the interests of their employees and inspire followers to look beyond their own self-interest, whereas transactional leadership helps followers identify what must be done to accomplish organizations’ desired goals and objectives [10]. In other words, transactional leaders provide tangible or intangible support and all forms of resources to followers in exchange for their efforts and performance, specify rules of the game, and set and maintain standards. Transactional leadership employs a series of rewards including pay increases and promotions, or punishment including disciplinary actions and job termination. The transactional leaders might not be successful when they could not control the rewards or punishments, or when the employees do not want the reward or act out of fear to avoid punishment. According to [11] liberal leadership style among all leadership styles is laissez-faire leadership. It is a leadership style in which the leader provides little or no direction and gives employees as much freedom as possible. Though, laissez-faire leadership might look as a weak style of leadership, the approach could be effective when employees are highly skilled, experienced, and educated [11]. With regard to the type of leadership style, this study selected three types of significant leadership style which are transformational leaders, transactional leaders and laissez faire leaders and to determine which leadership style is preferred to increase innovative behavior among employees in Malaysian organizations. II.
LITERATURE REVIEW
[12] has conducted study regarding leadership area studies by researchers. The result of study depicted in Figure 1.1. The figure shows that the most popular leadership style studied was transformational and transactional (43.3%) which is higher percentages compare to other leadership categories. Transformational and transactional style has become trendy style of leadership approached nowadays which involves in motivating, enhancing the morale of their employees through reward system and goals. Therefore, in this research,
researchers have chosen these two types of leadership style to study in Malaysian organizations environment. Figure 1.1 Frequency and percentage of major research areas done by researchers [12] NO Leadership Style Frequencies Percentages Area (%) 1 Transformational 13 43.3 and Transactional Style 2 Task oriented 6 20 leadership styles 3 Charismatic 5 16.6 leadership style 4 Contingent reward 2 6.67 leadership 5 Laissez-faire 2 6.67 leadership styles 6 Autocratic 2 6.67 leadership style 7 Polycentric 1 3.34 Leadership Styles 8 Machiavellian and 1 3.34 Bureaucratic styles 9 Synergistic 1 3.34 Leadership Style 10 Ethnocentric 1 3.34 Leadership Style 11 Expansionist 1 3.34 leadership style 12 Pygmalion 1 3.34 Leadership Style Besides of leadership style, organizations who aim to become more innovative should capitalize on their employees' ability to be innovative. As stated earlier, this study focuses on the innovative behavior of employees and the role leaders play in enabling and enhancing such behavior. The ability of employees to innovate may be defined by a variety of factors, and can be put into practice in different ways. However, there is a need to have a strong support to shape employee innovative behavior. It is about letting the employee use his cognitive abilities, taking actions that support his creativity, but this is not possible in the work environment without the support and involvement of the leadership [13]. Consequently, to initiate innovations, leaders can encourage employees to generate ideas by engaging in behaviors to explore opportunities, identify performance gaps or produce solutions for problems. However, without a good information system and knowledge, employees are unable to boost innovative behaviors. Knowledge Management is crucial because it emphasizes the importance of innovative organizational culture, where innovation, creativity and learning from mistakes and appreciated. Knowledge management helps create tools, platforms and processes for creating, sharing and
transferring of tacit knowledge in organizations. Additionally, tacit knowledge is very important for the development of innovation capability [1].
Table 1.2: Cronbach’s Alpha Scores for the Knowledge Management, Innovative Behavior and Leadership Style Items Variables
III.
No. of Items
Reliability Coefficient (Cronbach’s Alpha) (n=84)
Knowledge Acquisition (KA)
11
.85
Knowledge Dissemination (KD)
14
.86
Knowledge Responsiveness (KR)
9
.87
8
.89
Transformational Leadership
5
.94
Transaction Leadership
6
.86
Lassiez Faire
4
.83
METHODOLOGY
A correlational study is a quantitative method of research which is used to determine if there is a relationship or covariation between the two variables. The instrument used for this study was adapted from, Darroch [14], Bass and Avolio, [15]and Hackman and Oldham [16]. However, the questionnaire required some modifications to render it more appropriate to the context of this study. The questionnaire consisted of four sections, which Section A to obtain information regarding demographic of respondents, Section B: information about knowledge management practices, Section C: regarding employees’ innovative behavior and Section D: regarding leadership style preference. The instruments were adapted from [14], innovative behavior [15] and leadership style [16]. A 5-point Likert scale was used ranging from strongly disagree (1) to strongly agree (5). The population for this study was Executive officers who worked in the private organizations located in Shah Alam. The list of industries in Shah Alam was obtained from Shah Alam City Council websites’s. This website provides a listing of 4784 private organizations which are registered with Shah Alam City Council. Due to constraints, sampling technique choose for this study was convenient sampling. Convenience sampling is a non-probability sampling method. This study chooses this sampling method because the population is just too large that it is impossible to include every individual. Distribution of questionnaires was self-administered by the researchers; the respondents were given a time frame of two weeks to complete the questionnaires. A follow-up call was conducted to remind them of the due date for collecting questionnaires. The total numbers of questionnaires successfully collected was only 84 from 300 questionnaires distributed. Exploratory Data Analysis (EDA) was conducted on the data and the results met the basic assumptions of normality and linearity. Cronbach’s alpha coefficients were calculated to test the reliability of items and the result indicated acceptable value as shown in Table 1.2 (.83 to .94). The values indicate that the instrument was reliable because none of the results scored below .6. Pearson correlation and regression were used to obtain the answers for the research questions.
Knowledge Management
Innovative Behavior Innovative behavior Leadership Style
IV.
FINDINGS AND DISCUSSION
The findings indicate that knowledge management practices, and leadership role are positively related to innovative behavior among employees in the private sector. Below is the discussion of the research objectives. A.
Practices of Knowledge Management strategies in private organizations
To identify the most important item, the data was analyzed for mean scores, standard deviation and ranked in descending order. The findings indicate that knowledge management practices in private organizations shows knowledge responsiveness is most important activities for the organization. Knowledge responsiveness performance is moderately higher than knowledge acquisition and knowledge dissemination. Table 1.3 shows the results of mean score and standard deviation for knowledge management practices. The highest mean scores is knowledge responsiveness (mean = 3.68, SD = .54). It is significantly most important activity to the organization. This was followed by knowledge acquisition (mean = 3.54, SD = .53) and knowledge dissemination (mean = 3.43, SD = .50). The result has similarity with another research done by [17] which showed that knowledge acquisition and responsiveness to knowledge are more important in the organizations than knowledge dissemination.
Table 1.3: Mean Score of Knowledge Management Practices (N=84) Mean Statistic KR KA
KD
Std. Deviation Statistic
3.6827
H1: There is a positive relationship between knowledge management practices and innovative behavior of employee. The assumptions for all the requirements for correlation analysis were met. Pearson correlation is used to describe the strength and direction of linear relationships between two variables [18]. Results indicated that there is a positive relationship between knowledge management practices and innovative behavior of employees in the organizations. Table 1.4 shows that there is a moderate positive relationship between these two variables (r = 0.554, p < .05). The result proves that there is a significant positive relationship between Knowledge Management Practice (KMP) and Innovative Behavior (IB). The result appeared to support the fact that the more KM was utilized in the organization the more it would increase IB. Table 1.4: Correlation between Knowledge Management and Innovative Behavior (N=84) KMP
IB
1
.554** .000
Sum of Squares and Cross-
18.549
10.998
.223
.133
products Covariance
Innovative Behaviour (r value)
Transformational
.386**
Transactional
.358**
Lassies Faire
.326**
**. Correlation is significant at the 0.01 level (2-tailed). Table 1.5 depicts the results of correlation between leadership style and innovative behaviour. The correlation coefficient value was positive (r = .386, p < .05) indicating a weak positive relationship between transformational leadership style and innovative behaviour. The second type of leadership style (transactional) also indicated a weak positive relationship with innovative behavior (r = .358, p < .05). The correlation for the third leadership style, that is Laissez Faire style (r = .326, p
