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IMPACT OF PARTICIPATIVE LEADERSHIP AND EMPLOYEE VOICE THROUGH CONSCIENTIOUSNESS ON ORGANIZATIONAL EFFECTIVENESS: 3-TIME LAGGED STUDY ON BANKING SECTOR OF PAKISTAN

ALAMGIR KHAN WAZIR

Faculty of Management Sciences, International Islamic University, Islamabad, Pakistan

HAFIZ GHUFRAN ALI KHAN

Faculty of Management Sciences, International Islamic University, Islamabad, Pakistan

*Corresponding Author:
HAFIZ GHUFRAN ALI KHAN
Faculty of Management Sciences, International Islamic University,
Islamabad, Pakistan
Tel: +92 051-9019761
Email: hafiz.ghufran@iiu.edu.pk

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Abstract

Drawing on trait activation theory, we hypothesize that participative leadership directly and positively affect organizational effectiveness. This model has been tested through 3-time lagged study design. On time 1 independent variable and moderator have been tested. At time 2 intermediary variable and on the 3rd time dependent variable is tested. Results of the study have confirmed that the participative leadership has a positive influence on organizational effectiveness used as an outcome variable and it has indirect influence through employee voice. The mediation analysis is also significant with employee voice as an intermediary variable. Result shows the indirect path is stronger in the presence of people having high conscientious trait and insignificant for individuals having low trait. In the end limitations, future directions for research besides theoretical and practical implications of the current study are discussed

Keywords

Participative Leadership; Conscientiousness; Voice; Organizational Effectiveness; Trait Activation Theory

Introduction

Nowadays organizational survival has become a toughest task, only through changing procedures, systems, structure and technology, one can’t guarantee organizational survival, and organizations also have to change the minds of their managers and employees [1]. It is doubtless to say that the survival and growth of every organization depends upon its human resource and employees, these employees turn strategies of organization into reality [2]. There are certain outcome of participative leadership which include improved decision making, job performance and less turn over [3]. Resistance to change will be minimized and effectiveness will be enhanced due to participative leadership style, as in this style every employee is involved in decision making and employee’s suggestions and ideas are valued [4]. The participative leadership-job performance relationship is not consistent and empirical studies have not yet established definite conclusion about this correlations [5]. From employee perspective it enhances employee motivation, satisfaction, employee sense of power, job performance in different nations [6] and it also improves leader effectiveness in different cultures [7].

Literature Review

The participative leadership is not studied till today as an antecedent of employee voice behavior. The reason behind participative leadership style as an antecedent of employee voice is as this type of leadership style “facilitate conversation, encouraging employee to share their ideas, one of the most effective leadership style, workers feel that their opinion counts”. Encouragement, facilitation, and feeling of employees that what they say is valued will make the participative leadership as an antecedent of employee voice because employee voice needs internal motivation which will be incorporated through these characteristics of participative leadership [8]. Through provision of encouragement, support, and influence, this type of leadership aids his lower staff in joint activities and organizational decision-making process. Participative leadership prefers consultation over direction and endeavor to build consensus among team members [8].

Organizational behavior scholar defined voice as it is an extra-role behavior i.e. discretionary, no formal reward is attached with voicing behavior and it challenges status quo [9]. Employee voice was first introduced by Hirschman in 1970 in his seminal book. Employee voice is defined by a study “discretionary communication of ideas, suggestions, concern, or opinions about work related issues with the intent to improving organizational or unit functioning” [10]. Massive studies have also proved that voice stave off crisis [11] enhancement in organizational process, innovation and organizational performance [12]. Employee voice has positive impact on organizational effectiveness. Organizational effectiveness can be improved through when employees have new ideas and suggestions through raising their voice. Employee voice contributes to organizational effectiveness [13] and it is the leader which plays a huge role in shaping employee behavior [14]. Two sides of voice with challenging status require further formal decision making on one side and on the other side it improves effectiveness of organization through improving individual innovative ability and co-ordination [13].

Voice behavior needs motivation and this motivation is actually provides participative leadership. Participative leadership provides motivation to the employee as this motivation act as catalyst for employee to raise voice for suggestion, concern or dissatisfaction [15] and employee voice contribute to organizational effectiveness in terms of suggestion for change and improvement and this input by voice is more than that of task performance and organization citizenship behavior. This is evident from the recent voice meta-analysis [16]. Voice has positive effects on organizational effectiveness but this research is limited and few studies have explained this relationship [17]. Researchers often argue that employee voice enhances organizational effectiveness but there is less research on outcome of employee voice at organizational level [18].

Conscientious is a stable personality dimension [19] these are those individuals who are indeed careful, thorough, well-ordered, well disciplined, and able to grasp their desire in check, devoted to their objectives, are determined, reliable, truthful, hard-working and achievement-endeavoring [20-23]. It is both used as trait as well as resource [24] apropos the COR theory it is expressed as resource because these people are busy in obtaining valuable resources for accomplishment of their important goals [25]. Past studies [26,27], have shown that employee with this trait shown most willingness to speak up with ideas for the betterment. Consequently, the study provide an opportunity for the leader to know employees who have high conscientiousness, they would ostensibly share better ideas with organization, the input would be used in company policies, departmental improvement and employees more satisfaction with the job [28]. As per the findings of a recent study, it has positive outcome comprising longevity, academic achievement, job performance, marital stability and satisfaction and also enhances behaviors related to health [29]. Apart from positive outcomes there are studies which show less positive outcome are associated with too high conscientious people. Such type of individuals connect in obsessive-compulsive behavior [30] experience greater negative affect [31] react more poorly to negative performance feedback [32] unfavorable response to negative life incidents [33] do their work poorly compared to their moderate colleague [34].

According to Barnard [35] effectiveness is achievement of organizational objectives and pays attention to “goal accomplishment” and organizational survival. Barnard also added that organization is a collaborative system and he measured organizational effectiveness with internal balance, adapting to external conditions, action and skillful leadership. Etzioni [36] also has a similar view point as Barnard said that effectiveness is the accomplishment of its goals. They defined organizational effectiveness as with fulfillment of customer needs [37]. Organizational effectiveness is a diverse concept and there is no clear definition of organizational effectiveness and it is widely considered that it is the efficiency through which an organization or establishment achieves its aims and objectives [38].

On the bases of above discussion following hypotheses have been developed.

H1: Participative leadership is directly related to organization effectiveness

H2: Participative leadership is positively related to employee voice

H3: Employee voice is positively related to organizational effectiveness

H4: Employee voice act as mediating variable between participative leadershiporganizational effectiveness relationships

H5: The indirect path (mediated path) is moderated by a fourth variable conscientiousness in such a way that the relationship will be greater in case of high conscientiousness.

Method

Sample and Procedure

Keeping in view the ever growing and aggressive service sector of Pakistan, we have taken the private banks based in twin cities of Rawalpindi and Islamabad as the target population of current study. Whole data have been collected from same employees of the same banks at 3-different intervals after a time lag of one month each. Banks were selected randomly from these two cities and 330 questionnaires were distributed on first time (T1) out of which 231 fully filled responses were received back at a response rate of 70%. On the 2nd time (T2) we again circulated 231 questionnaires and got back 211. During the 3rd time (T3) we distributed 211 questionnaires and received back 200 questionnaire.

Control Variables

Demographic variables used in this study are gender (male, female), age (in years), education (1=High school/Secondary school, 2=Bachelor’s degree, 3=Master’s degree, 4=Doctoral degree), experience (in years) controlled as it may influence other variables [39].

The demographics characteristic shows that there were 161(70%) male and 69 (30%) female. In order to show their age bracket there were about 19% employee whose ages are in the limit ‘25 years or less’, 69% employees are between age group ‘26-35’, about 9% employees fall within the age group 36-45, and 3% employees age come in age group above 46 year old.

Experience of the employee shows that there were 44% employees whose experience fall in 1-4 years, 33% employees have experience in between 5-9 years, 18% employees have between 10-14 years and 5% employees have more 15 years’ experience.

Education of employees shows that 21% employees were ‘Bachelor’s Degree’ holder, and 79% employees with having ‘Master Degree’.

Measures

Participative leadership: is assessed with six items taken from the “Empowering Leadership Questionnaire” by Arnold et al. [40] was used by Huang et al. [6] to assess the leader behavior (1 represents strongly disagree while 5 represents strongly agree). Following items are some of them. “My immediate supervisor encourages us to express ideas/suggestions”. And “my immediate supervisor uses our suggestions to make decisions that affect us”. Reliability Cronbach’s α=0.90.

Employee voice: has been measured with Six-item scale borrowed from Van Dyne et al. [9] and used by Hsiung [17]. ‘1’ is used for ‘strongly disagree’ and ‘5’ for ‘strongly agree’.

Coefficient α for this scale was 0.92. Example items “I develop and make recommendations concerning issues that affect this work group”. “I speak up and encourage others in this group to get involved in issues that affect the group”.

Conscientiousness: is assessed through using (John et al. 1991) “Big Five Inventory (BFI)” and used by Fong et al. [41]. Cronbach’s alpha=0.80. Every question in the instrument is asked with 1-5 labels. “1=strongly disagree, 5=strongly agree”. Sample item like

“I see myself as someone who….

• Does a thorough job”

• Can be somewhat careless (Reversed code)”.

Organizational effectiveness: 12 measurement items of this variable were taken from Gold et al. [42]. The scales were used by Abd Rahman et al. [43]. The reliability for this measure α is 0.93. the same 1-5 scale were used for this variable where “1” are for strongly disagree and “5” are for strongly agree. Example item like

“Over the past two years, my organization has improved its ability to…..

“Innovated new products/services”

“Coordinate the development efforts of different units”.

Statistical Analysis

Statistical analysis has been performed on SPSS (23-version) and AMOS (23- version). Before Hypothesis testing, Bivariate correlation and confirmatory factory analysis (CFA) is conducted. There is sufficient correlation among all variables. CFA, being measurement component of structured equation modeling (SEM) shows all latent variables have acceptable discriminant validity. All model fit like chi-square test, SRMR, RMSEA, TLI, and CFI are used for structure models. All have acceptable value. Moderation and mediation is done through preacher and Hays instructions and PROCESS Macro is used. For moderated mediation model 7 first stage is used.

Results

Descriptive Statistics

Bivariate Correlation

In order to know the relationship among various variables a Pearson correlation analysis is conducted on SPSS. A correlation articulates the power of association or co-occurs with between to variables and its value lies between -1 and +1.

The correlation coefficient represented by the letter “r” its value is given in bold letter in the above Table 1 which shows some kind of the relationship between the variables. All the relationship we had developed in the form of hypothesis is correctly developed.

Table 1: Descriptive statistics and correlation.

Variable Mean Std. Deviation 1 2 3 4
PL 3.850 .4733 .90      
EV 3.870 .8440 .760 .92    
CS 3.664 .8909 .388 .08 .80  
OE 3.565  0.7344 .674  0.735 .063 .93

The direct and positive correlation between participative leadership and organizational effectiveness is (0.674, p<.01), the correlation between participative leadership and employee voice is (0.760 and p<.01), positive correlation exists between employee voice and organizational effectiveness (0.735 and p<.01).

Confirmatory Factor Analysis (CFA)

Prior to hypothesis testing, we first carried out confirmatory factor analysis to make sure that the 4-latent variable (Participative leadership, Conscientiousness, Employee voice, and Organizational effectiveness) has acceptable discriminant validity. CFA which is the measurement component of Structure Equation Modeling consists of chosen variables of this study together with their respective scale items and latent construct. The said four-factor-model is Participative leadership with 5- item, Conscientiousness with 5-item, Employee Voice with 6-item, Organizational Effectiveness with 4-item.

The composite reliability which is in between 0.79 and 0.83 for each construct is good and it exceeding the acceptable value of 0.60, so we acknowledge that all constructs are internally reliable and backing the suggestions of Bagozzi et al. and Fornell et al. [44,45]. With reference to Fornell et al. [45] recommendations, composite reliability would be better when it is greater than 0.5. Conversely all the factors loading were significant of measurement model (α<.001) contributing to convergent validity [46].

Average variance extracted (AVE) illustrates the proportion of variance construed by the latent factor from measurement error. It would be better construed by the latent variables and smaller the relative measure error is if the AVE is greater [47]. According to Hair et al. [48] recommendations, more than 0.5 value of AVE shows that the construct has high reliability. The AVE value for our study is greater than 0.50 except for Organizational effectiveness which is 0.37 (Table 2).

Table 2: Confirmatory factor analysis.

Construct No of Items Cronbach α Variable Standardized factor loading AVE Composite Reliability
PL 5 0.90 PL1 0.67 0.53 0.83
PL2 0.75
PL3 0.76
PL4 0.71
PL5 0.74
CS 5 0.80 CS1 0.47 0.52 0.83
CS2 0.57
CS3 0.72
CS4 0.75
CS5 0.62
EV 6 0.92 EV1 0.79 0.55 0.81
EV2 0.85
EV3 0.67
EV4 0.71
EV5 0.75
EV6 0.68
OE 4 0.93 OE1 0.69 0.37 0.79
OE2 0.76
OE3 0.53
OE4 0.37

Structured Equation Modeling

Subsequent to the measurement model, now we were conducting tests for structural models using SEM. Age, Gender, Qualification and Experience were keep constant due to their association with main variables of the study.

Results of various fit statistics were reported like Chi-squared statistics (χ2), standardized mean square residual (SRMR), the Tucker-Lewis index (TLI) [49], “Comparative fit index” (CFI) [50], the “root mean-square error of approximation” (RMSEA) [51,52], and “Akaike information criterion” (AIC) [53].

Acceptable value for the CFI and TLI is 0.90 or more depicts a good model fit while that for “RMSEA” should be ≤0.06 shows a good model fit [54].

Hypothesis 1 (H1) states that Participative leadership has significant and positive relationship with employee voice (0.67). This hypothesis is accepted with CFI value (0.958) and TLI value (0.942). Whereas RMSEA value (0.051) and SRMR value (0.046) are within the recommended range. In the end it shows that the said model is fitted well with the data (Table 3).

Table 3: Structured equation modeling.

Chi-square 138
DF 87
Significance 0.000
TLI 0.942
CFI 0.958
RMSEA 0.051

Hypothesis 2 (H2) states that Participative leadership (PL) has positive association with organizational effectiveness (OE). The said hypothesis depicts the direct relationship of independent variable, Participative leadership with dependent variable, Organizational effectiveness. PL has significant relationship with OE by (0.34). Tests of fitness are given below in the Table 4 they include CFI, TLI, Chisquare etc. (Figure 1).

internet-banking-commerce-employee-voice

Figure 1: Participative leadership, Employee voice, and Organizational effectiveness.

Table 4: Tests of fitness.

Chi-square 47.53
DF 23
Significance 0
TLI 0.89
CFI 0.94
 RMSEA 0.063
SRMR 0.054

From the table we conclude that more participative style of the leadership will enhance organizational effectiveness.

Hypothesis 3 (H3) is about the relationship between employee voice and organizational effectiveness is (0.73). Sharing concerns, suggestions, ideas and opinions by employee with organization surely contribute to the organization. This is evident from the Table 5 given below.

Table 5: Relationship between employee voice and organizational effectiveness.

Chi-square 57.84
DF 29
Significance 0
TLI 0.93
CFI 0.95
 RMSEA 0.053
SRMR 0.052

Moderated Regression Analysis

To test the moderation Hypothesis, (H5) Conscientiousness is used as an interaction variable between the proposed relationships, it will be stronger in case of high conscientiousness. For this purpose we used SPSS-23 version PROCESS MACRO by Hayes et al. [55].

It is shown in the Table 6 below, the result confirms significant interaction effect of participative leadership and conscientiousness on employee voice.

Table 6: Moderated Regression Analysis predicting employee voice.


 
Dependent variable=Employee voice
b SE T
Constant 20.8747 0.3936 53.0408
Participative leadership 0.1128 0.0993 1.1359
Conscientiousness 0.1048 0.0711 1.4739
Interaction effect 0.0233 0.0117 2.0021

In the table the significance of interaction effect is p<0.05 and 95 % confidence interval (LLCI 0.004 and ULCI 0.0463) here zero (0) did not lie between the two upper and lower confidence interval hence we conclude that conscientiousness moderated the said relationship between participative leadership and employee voice. H:5 is supported from this assertion.

Conditional Effect of X on Y at Values of the Moderator(s)

For low score of the moderator i.e. conscientiousness the correlation between participative leadership and employee voice is insignificant. b=0.002, 95% CI [-0.083, 0.308], t (207)=1.135, p=0.26.

For high score value of the moderator, conscientiousness, the said relation is significant. b=0.395, 95% CI [.023, 0.474], t (207)=2.785, p=0.045 (Figure 2).

internet-banking-commerce-moderating-effect

Figure 2: The Moderating Effect of Conscientiousness on the relationship between participative leadership and employee voice.

Moderated Mediated Analysis

The conception “Moderated mediation” first devised by James and Brett in 1984 [56]. It occurs as the mediated path strength or weakness is contingent on the level of some other variables, put it another way when mediation is contingent on level of the moderator [57]. Here in this Figure 3. “W” work as a moderator which affect the indirect path “a”.

internet-banking-commerce-indirect-path

Figure 3: Moderated Mediated Analysis affecting indirect path.

In our proposed model the indirect path is affected by a 4th variable known as Conscientiousness. In order to know this conditional indirect effect we used the PROCESS Macro by Hayes et al. [55].

As we already hypothesized that with high level of conscientiousness the indirect effect would be greater. For this we used PROCESS Macro and Model no7. If zero comes in between the two confidence intervals, it reveals that it does not strengthen the indirect path. If zero is not anywhere in these two intervals subsequently “moderated mediation” happening.

Conditional Indirect Effect(s) of X on Y at Values of the Moderator(s)

The conditional indirect is significant for those employees who consider themselves high conscientious with 95% CI [LLCI: 0.0700, ULCI: 0.0155]. Here zero (0) does not lie between the lower and upper confidence interval. From Table 7 give below, the conditional indirect effect is not significant for those employees who have low score on conscientiousness with [LLCI: -0.0469 ULCI: 0.0068]. Zero (0) lies in between the lower and upper confidence interval, hence it’s not significant.

From the above assertions, Index of moderated mediation (Table 7) and conditional indirect effect (Table 8) we conclude that hypothesis 5 (H5) is supported. High conscientiousness moderates the indirect relationship.

Table 7: Index of moderated mediation.

Mediator  Index  SE(Boot) Boot LLCI  Boot ULCI
M 0.001 0.0021 0.0065 0.0023

Table 8: Conditional indirect effect.

Conscientiousness Effect Boot SE Boot LLCI Boot ULCI
Low 0.0041 0.0116 -0.0469 0.0068
High 0.0091 0.0198 0.07 0.0155

Discussions

Our first hypothesis stated that participative leadership is significantly and positively associated with employee voice. The result of our study shows that participative leadership is positively related to employee voice. Our second hypothesis is about the direct relationship of participative leadership with organizational effectiveness turned positive in our results which has been supported by previous studies too [6,58,59].

Previously, various studies have revealed that employee voice as suggestions, ideas and opinions about issues related to organizational enhanced effectiveness [13], and as per Parke et al. [60] recent study stated that despite other effects of employee voice on organization, it “practically” contribute to the organizational effectiveness.

In our study employee voice acts as mediator between participative leadership and organizational effectiveness and for these both of the direct and indirect effect is significant and supported by the results of our study, so the mediation hypothesis is also accepted. The straight path from participative leadership to organizational effectiveness is (0.34) and the indirect relation from participative leadership to employee voice is (0.67) and employee voice to organizational effectiveness is (0.73), so both the direct and indirect path are positive and significant hence partial mediation occurs. The results that participative leadership is correlated with employee voice also supported by other studies that participative climate and participative management theoretically links and encourages employees to speak up and their new ideas and suggestions are valued [61].

When the indirect path ‘a’ is effected by a fourth variable is known as first stage of moderated mediation. Through index of moderated mediation and conditional indirect effect, we have concluded that both methods showed significant relationship. The significance of this path is known through lower and upper confidence interval. When zero (0) lies in between the lower and upper confidence interval then the indirect path is not moderated by a moderator and hence no moderated mediation takes place. Our result shows that zero (0) did not lay between the upper and lower confidence interval consequently the indirect path is moderated by a variable conscientiousness. This path is significant only for those employees who are high conscientious and insignificant for low conscientious. As a result the moderated hypothesis is accepted. Previous studies have shown that one of the Big Five Personality Traits, conscientiousness is related to employee voice [27,62,63].

Limitations and Future Research Direction

The limitations of the study are regarding data which was collected through self-report measured model, but this limitation is partly done away with 3-different time’s data collection technique [64]. The data was collected only from banking sector based in twin cities of Islamabad and Rawalpindi so the applicability of this study should be verified through a separate study in other institutions. Another limitation of the study was the small sample size collected from employees of the banks so the common method variance question may arise [65].

Keeping in views the above limitations of the study and others, there are opportunities for future research directions. First the same model should be tested in other businesses and population and in other culture also for generalizability of the study. In our study the time gap for the data collection in the 3-time-lagged design is just one month which may not be better for causality. As there is no universally recommended lag, it usually starts from 1-moth to over years as quoted in these studies [66,67]. Some studies suggested shorter time lags of one month, 6-month and 6-week for better causality [68]. Hence 3 month time lag would be good for future researcher for better causal effect.

In this study we only discussed employee voice which effect organizational effectiveness and didn’t consider the associated behavior of employee silence as quoted in the study of Liu et al. [69] which could be considered for any future research.

References

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