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Charismatic leadership, change and innovation in an R&D organization

Neil Paulsen
The University of Queensland Business School, The University of Queensland, Brisbane, Australia

Change and innovation in R&D 511

Diana Maldonado
Sugar Research and Development Corporation, Brisbane, Australia, and

Victor J. Callan and Oluremi Ayoko

The University of Queensland Business School, The University of Queensland, Brisbane, Australia
Abstract
Purpose The purpose of this paper is to investigate the effects of the charismatic dimension of transformational leadership on team processes and innovative outcomes in research and development (R&D) teams. Design/methodology/approach Data are collected by surveying 34 teams that totalled 178 participants. Surveys measured charismatic leadership style, team identity, cooperative strategies and team innovation. Findings Results reveal the importance of managers assuming a charismatic style of leadership to encourage innovation. Charismatic leaders promote team innovation by supporting a sense of team identity and commitment, and encourage team members to cooperate through the expression of ideas and participation in decisions. Research limitations/implications The study is conducted in a single R&D organization and future research should explore the inuence of these factors in other settings. The measures of team innovation are based on the perceptions of the team members, and future research needs to include a wider variety of data sources over time. Practical implications Successful team leaders who employ a more charismatic style facilitate more cooperative interactions in teams. Teams with a strong team identity combined with the exercise of cooperative behaviours are more innovative. Originality/value The preliminary model tested enhances the understanding of the importance of the leaders in inuencing team processes and innovation. Leaders who are more transformational in style inuence followers by affecting their sense of identity. This sense of identity inuences how well teams adopt and follow more cooperative strategies to resolve issues and to make decisions. In turn, the model shows how these factors inuence team innovation. Keywords Innovation, Transformational leadership, Charisma, Research and development, Team performance Paper type Research paper
Journal of Organizational Change Management Vol. 22 No. 5, 2009 pp. 511-523 q Emerald Group Publishing Limited 0953-4814 DOI 10.1108/09534810910983479

1. Introduction The research and development (R&D) activity is constantly evolving and changing (Howells, 2008). R&D organisations continue to explore new organisational forms and strategies that require their staff to be more effective leaders and members of

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multi-disciplinary research teams. Importantly, there is a growing body of evidence that leadership style is among the key factors in promoting innovative performance, especially when linked to the use of self-directed teams (Amabile et al., 2004; Zaccaro et al., 2001). However, as Jung et al. (2003) conclude, our understanding of the links between leadership styles and levels of innovation is limited. The current study examines the inuence of the team leader on levels of innovation by exploring the leaders inuence on team interactions in a large R&D organization. Conceptually, the research extends our understanding of the interaction between leadership styles, cooperative strategies in teams, and group identication in predicting higher levels of innovation, as reported by team members. We put forward an exploratory model to improve our understanding of how a key leadership style (i.e. charismatic leadership) directly inuences innovation, but also shapes innovative outcomes through positively inuencing critical team dynamics especially around team identication and cooperation. 1.1 Team leadership in R&D contexts Mumford et al. (2002) characterize creative work as highly demanding, time-consuming, resource intensive and requiring a high level of persuasion and politics. The tasks developed in this kind of work are uncertain, very risky and involve unforseen processes, and as a result, setbacks and disruptions are likely to occur (Kim et al., 1999). As creative and innovative work is complex, it demands the collaborative efforts of creative people with different areas of expertise (Mumford et al., 2002). This need for collaboration puts additional strain on leaders of innovation. R&D is mostly developed in teams, and mainly through diverse teams that bring together people from different functions and backgrounds (Keller, 2006). Working in diverse teams helps organizations to bring together the array of information and knowledge needed to encourage innovation (Lovelace et al., 2001; Somech, 2006). Accordingly, West (2002) emphasises that team members have to interact with each other and build the emotional resources needed to engage in these interactions. The leader needs to encourage group dynamics and processes to build a sense of identity that encourages the necessary sense of community, trust and teamwork to turn creative ideas into innovative products and services (Keller, 2006; Somech, 2006). Many team leaders in the R&D environment are scientists who, in their formal education, have not been trained in management or leadership practices. As Shim and Lee (2001) suggest, a major challenge for these team leaders is not only to display their technical skills, but also to lead and manage successfully a range of other roles that are critical to gaining team success. In the R&D context, a critical set of roles are around leading teams to promote good team spirit, trust and support, and to build group dynamics and processes that encourage the necessary teamwork to turn creative ideas into innovative products and services (Keller, 2006; Somech, 2006; Thamahin, 2003). 2. A model of team leadership 2.1 Transformational and charismatic leadership styles According to Avolio and Bass (2004), transformational leaders raise followers consciousness levels about the importance and value of designated outcomes and the ways of achieving them. These leaders mostly operate in change contexts that require followers to work towards the vision of the organization. Transformational leadership

has a positive effect on innovation, team performance and project success (Jung and Sosik, 2002). In addition, the transformational style of leadership has considerable impact on raising levels of creativity and innovation (Elkins and Keller, 2003; Jung et al., 2003). At the same time, as Avolio et al. (2004) note, there is a need for greater attention to be given to understanding the processes through which such transformational leaders impact upon the work-related attitudes and outcomes of their followers. Charisma is seen to be an essential part of transformational leadership (Bass and Avolio, 1995). Keller (2006) indicates that the primary component of the transformational style that inuences more successful team outcomes is the practice around charismatic leadership. Leaders who adopt this style become an inspiration to others through their willingness to take risks and through their commitment to their change vision. The charismatic leader inspires team members with their own self-condence, assertiveness and communication of a sense of purpose and vision (Avolio and Bass, 2004; Howell and Shamir, 2005). More than other leadership styles, charismatic leaders increase team efcacy as they inspire a belief in the teams vision, inspire condence in team members abilities (Scott and Bruce, 1998; Keller, 2006), and actively engage their followers value systems (Jung et al., 2003). There is evidence that charismatic leadership is more likely to occur in environments that are uncertain and stressful for the group and the organization (Yukl, 1999). By their behaviours and actions, charismatic leaders energize followers to perform toward achieving higher goals and objectives (Dvir et al., 2002; Shamir et al., 1993), and these highly intrinsically motivated people are likely to engage in high levels of innovative behaviours (Amabile et al., 1996). Charismatic behaviours and intellectual stimulation are strong predictors of technical quality in research projects aimed at producing radical innovation (Keller, 2006). At the same level, Stocker et al. (2001) found that there were strong relationships between charismatic and consultative leadership and team outcomes, which included team innovation. Regarding R&D project success, Keller (1992) found that charismatic behaviours and intellectual stimulation inuence R&D project effectiveness. Similarly, Waldman and Atwater (1994) found that the intellectual stimulation, charisma and individualized consideration of high-level R&D managers impacted upon project success. In the model examined in the present study, we predict that the charismatic style of leadership will lead to higher levels of innovation among team members: H1. Charismatic leadership positively predicts higher levels of perceived team innovation. 2.2 Leadership and team identity Leaders inuence how team members perceive themselves and they have the potential to inuence their followers sense of belonging (Kark et al., 2003; van Knippenberg et al., 2004). Team identity involves the perception of belonging to a group (Ashforth and Mael, 1989), while creating a sense of identity in a group is an important aspect of leadership effectiveness (Hogg, 2001). Shamir et al. (1993) propose that creating a sense of collective identity is at the essence of being a charismatic leader. In other words, creating a sense of personal and social identication with a team is acknowledged as a key feature of charismatic leadership. Accordingly, these same authors suggest that the members participation is more meaningful when they are tied to a collective identity and consequently the teams potency is increased.

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van Knippenberg et al. (2004) also report that this inuence on collective identication emerges by putting the team before the self, inspiring higher levels of self-condence and by focusing on a collective entity and shared values (Shamir et al., 1993). In particular, Paul et al. (2001) found that communication inuenced by charisma shapes a more salient collective identity, whereas other aspects of transformational leadership, such as individual consideration, make the personal identities of team members more important. In the present study and our model, it is proposed that: H2. Charismatic leadership style positively inuences group members sense of team identity. In addition, there is evidence that team identity mediates the relationship between charismatic leadership and innovation. Jaussi and Dionne (2003) found that a transformational leadership style in general enhanced followers interest in the collective and, consequently, levels of group cohesion were increased. As a result, the members accepted the group as a common source of identication, and this sense of identity was linked to increased innovation in the team. Based on previous research and theory, we propose that: H3a. Team identity predicts higher levels of team innovation. H3b. Team identity mediates the relationship between charismatic leadership and levels of perceived innovation. 2.3 Leadership and team cooperation Cooperative teamwork involves using a strategy that emphasises mutual goals, and efforts to understand the different positions of team members to nd the best solution for the team (Chen et al., 2005). Researchers including Tjosvold et al. (2005) reveal that teams with stronger team relations are better at managing conict cooperatively. Leaders play a key role in building this sense of cooperation. Cooperation is inuenced by the leaders encouragement of in-group relations and their support of a sense of belonging to the team (de Cremer and van Knippenberg, 2002; de Cremer and van Vugt, 2002). By emphasising a sense of belonging, leaders shift team members focus away from their personal interests towards the pursuit of group interests, thus fostering more cooperation within the group. Besides, the direct effect of the leader, leaders can inuence team identity, which in turn mediates the leader-cooperation relationship (de Cremer and van Knippenberg, 2002). de Cremer and van Vugt (2002) found that the inuence of highly committed leaders was higher in groups with a strong social identity. In addition, van Knippenberg et al. (2004) report that leadership inuences team members identication with the collective, and this sense of collective identity acts a mediator for the effects of the leadership on the team members behaviours. Leaders inuence the way the members perceive themselves and their group, which in turn inuences the motivation of the members to cooperate. A strong sense of connection between the group members is likely to result in a more productive team (Llorens Montes et al., 2005). In this study, we propose in our model that: H4a. Charismatic leaders positively inuence the levels of cooperation in the team. H4b. Team identity inuences the levels of cooperation in the team.

H4c. The relationship between leadership and cooperation is mediated by team identity. 2.4 Cooperation and team innovation Cooperation behaviours are closely linked to innovation because they inuence the thinking processes in groups to achieve more creative solutions (Kahai et al., 2003). Studies reported by Hirst and Mann (2004) and Mann (2005) underline the importance of communication and cooperation in encouraging innovation and team performance. These studies suggest that team members should participate in open discussion, which is the most useful approach to managing conict and to encourage teams to be innovative (West, 1997). As Chen et al. (2005) found, teams that manage conict productively are more likely to have higher performing teams in terms of effectiveness and innovation. In fact, Kivimaki et al. (2000) found that participative communication was the strongest predictor of innovation effectiveness. Understanding different positions enabled people to see the limitations of their views, thus leading to high-quality outcomes. Based on these ndings, it is expected that: H5. The higher the level of cooperation in a team, the higher the levels of perceived team innovation. Also leaders have an effect on how the team interacts, its team processes, and team outcomes (West and Hirst, 2003). In fact, the strategies used by leaders to create cooperation and open communications are most likely to enhance team performance (Zaccaro et al., 2001). Furthermore, Zaccaro et al. (2001) and Lovelace et al. (2001) state that team leaders have an important role in fostering a climate that deals with issues constructively to ensure performance. Based on these ndings, it is expected that: H6. The relationship between charismatic leadership and innovation is mediated by levels of team cooperation. In Figure 1, we present an integrative model of the relationship between charismatic leadership, team identity, cooperation and team innovation. The framework summarises our arguments and represents our key hypotheses for testing. In this framework, charismatic leadership inuences team identity (de Cremer and van Knippenberg, 2002; van Knippenberg et al., 2004), while team identity promotes cooperation within groups (de Cremer and van Knippenberg, 2002). Cooperation is considered the essence of innovation (Kahai et al., 2003). On the basis of prior research,

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Team identity

Cooperation

Charismatic Leadership

Innovation

Figure 1. Guiding conceptual model

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we propose and test the direct and indirect linkages in this exploratory model between charismatic leadership, team innovation, cooperation and team innovation. 3. Method 3.1 Sample The current study was conducted in a large publicly funded R&D organization that engages in scientic research to create innovative solutions for industry and the government around national issues of concern. These issues include climate change, sustainability, improved agricultural production and innovative land management practices. Our research was conducted in one division of 425 staff that was undergoing major change around the core research activities of the division, as well as the introduction of new research teams. These new teams and their new leaders were the focus of this research. The rst stage of our research included interviews and focus groups with staff members across ve locations about three months into the change, and during the creation of the new teams. These activities allowed us to identify the factors that were most likely to affect team innovation, and to develop the guiding preliminary model and survey questionnaire. This paper reports on the ndings of the survey responses of divisional members who were members of R&D teams. A total of 178 employees from 34 research teams across ve different locations responded to our survey. This sample represents a response rate of 89 per cent of the total number of employees in these teams (199). Of the respondents, 62 per cent were male and 84 per cent were older than 30 years of age. Most respondents had a high level of education, with about half of the participants holding a PhD degree. Organizational tenure was 11 years on average, with 58 per cent of the respondents belonging to the organization since the creation of the division, that is, more than ve years. 3.2 Measures To measure leadership styles in the research teams, we used the multifactor leadership questionnaire (MLQ-5x-short). The item response format of this questionnaire is a ve-point Likert scale, anchored by 0 not at all and 4 frequently, if not always. The 45-item questionnaire was developed by Bass and Avolio (1995) and considers the constructs of transformational leadership, transactional leadership and passive/avoidant leadership, as well as the effects of leadership styles. We focused on the charisma or ideal inuence measures because of their predicted impact on innovation. According to Antonakis et al. (2003), charismatic leadership consists of idealized inuence, which refers to the socialized charisma of the leader; and idealized behaviours, which refers to the charismatic actions of the leader. Therefore, we measured charismatic leadership by combining the idealized attributes and the idealized behaviours scale in the multifactor leadership questionnaire to measure charismatic behaviour and attributes. Four items on the original scale measure idealized attributes, which refers to the extent to which the leaders are admired, respected and trusted. These leaders consider the followers needs over their own needs. One item was dropped from our analysis because it affected the reliability of the scale. Another four items on the original scale measure idealized behaviours, which refers to the extent to which the leaders have a sense of purpose consistent with the underlying ethics and values of the team members. One item was dropped from our

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analysis because it affected the reliability of the scale. The nal scale had a high reliability (a 0.82), with all items loading above 0.65 in a single factor. Sample items of this scale are My team leader species the importance of having a good sense of purpose and My team leader goes beyond self-interest for the good of the group. Team identity was measured using ve of the six items of the original scale developed by Mael and Ashforth (1992). One item was dropped because it affected the reliability of the scale. The response format was a six-point Likert scale ranging from 1 strongly disagree to 6 strongly agree. Consistent with other research, the nal scale had a high reliability (a 0.92). Example items are When somebody praises my team, it feels like a personal compliment and The teams successes are my successes. To measure the extent to which cooperative strategies were used by the team to communicate and manage situations, ve items were included that measure cooperative approaches. These items were taken from a subscale of the conict management measures originally developed by Chen et al. (2005). This scale measures a strategy that emphasises mutual goals, the understanding of everyones views, orientations towards joint benet, and incorporates several different positions to nd a good solution for the team. The response format was a seven-point Likert-scale ranging from 1 strongly disagree to 7 strongly agree. This scale demonstrated high reliability (a 0.93), with all the items loading over 0.85 on a single factor. Items include Team members seek a solution that will be good for all of us and Team members combine the best positions to make an effective decision. The scale for team innovation measured the extent to which the team had engaged in innovative behaviour in the workplace and includes the three stages of innovation: idea generation, idea promotion and idea realization. Innovation behaviour was measured using a nine-item scale developed by Janssen (2001) and adapted for the team. The response format was a seven-point Likert scale ranging from 1 never to 7 always. The results indicated a high reliability (a 0.94). Items invite respondents to indicate how often the team performed activities related to idea realization (transforming innovative ideas into useful applications), idea promotion (mobilizing support for innovative ideas) and idea generation (generating original solutions to problems). 4. Results Descriptive statistics and correlations for all scales are provided in Table I. All items were signicantly and positively correlated. The strongest correlation is between team innovation and cooperation (0.63). Scale reliabilities ranged from 0.82 to 0.94.

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Mean 1. 2. 3. 4. Charisma Team identity Cooperation Team innovation 2.65 4.64 4.99 4.99

SD 0.78 1.02 1.16 0.97

1 (0.82) 0.47 * 0.56 * 0.55 *

2 (0.92) 0.53 * 0.43 *

(0.93) 0.63 *

(0.94)

Notes: *Correlation is signicant at the 0.01 level (two-tailed); values in brackets are reliability (coefcient alpha) estimates

Table I. Descriptive statistics and correlations among variables

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The model was tested using structural equation modelling (Arbuckle, 1999). This approach allows the simultaneous examination of the pathways between charismatic leadership, team processes and innovation, and to test the relationships between the variables by taking into account measurement error (Byrne, 2001). In the proposed model, charismatic leadership was hypothesized to have an effect on all other factors, with team identity and cooperation hypothesised as mediators of the relationship between leadership and innovation. The model test indicated a good t with the data (CFI 0.94; TLI 0.92; RMSEA 0.064) (Browne and Cudeck, 1993). Results from this structural equation model (Figure 2) provided support for the positive inuence of charismatic leadership on innovation (0.35, p , 0.01), on team identity (0.53, p , 0.01), and on cooperation (0.44, p , 0.01). There is also evidence of the inuence of team identity on cooperation (0.36, p , 0.01), and the inuence of cooperation on team innovation (0.41, p , 0.01). The relationship between team identity and innovation was not signicant. In terms of mediation effects, we found support for the mediating role of team identity in the relationship between charismatic leadership and cooperation. There was also evidence of a mediating role for cooperation in the relationship between team identity and innovation. However, only partial support was found for the mediating role of team identity on the relationship between charismatic leadership and innovation. Our results indicate that team identity did not predict innovation directly but the impact of team identity was mediated by cooperation. These results provide support for all of our hypotheses, except for H3a. 5. Discussion Results provide evidence of the positive effect of charismatic leadership on levels of team innovation and the mediating effect of team interactions on the relationship between charismatic leadership and innovation. In particular, our results provide evidence of the signicant inuence of charismatic leadership during a period of transformational change on the sense of belonging to a team, as well as on the way the team cooperates. As others propose (Shamir et al., 1993; de Cremer and van Knippenberg, 2002; van Knippenberg et al., 2004), leaders who are more transformational in style inuence followers by affecting their sense of identity. At the same time, this sense of identity inuences how well teams adopt and follow a cooperative strategy to resolve issues and make decisions. In turn, the current study and its model study show how these factors in turn inuence team innovation behaviour.

Team identity

0.36** Cooperation 0.04

TLI = 0.92 CFI = 0.94 RMSEA = 0.064 0.41**

0.53** 0.44** Charismatic leadership 0.35** Note: **p < 0.01 Innovation

Figure 2. Final model statistics

The current study provides further evidence of the importance of cooperative behaviours in teams. It is through cooperation among members and frequent communication that teams create an environment that fosters innovative behaviours. As many studies reveal (West, 1997; Kivimaki et al., 2000; Mann, 2005), open discussions and joint decision making are strategies that are more likely to produce innovation. The present study adds to this body of research by suggesting that team identity and a charismatic leadership style are factors that can facilitate these cooperative interactions especially during a period of major change. In fact, this study provides evidence of a strong relationship between team identity and cooperation. Members who highly value their team membership and team outcomes tend to engage in more cooperative behaviours. This is aligned to Tjosvold et al.s (2005) observations of the link between strong team relations and cooperative behaviours. Members in teams with a strong team identity are more likely to participate in shared decision making and to nd solutions that are mutually benecial for the members of the team. Furthermore, the results in this study add to previous research ndings by providing evidence that high levels of cooperation mediate the relationship between team identity and innovation. These ndings imply that a team with a strong team identity, combined with the exercise of cooperative behaviours, fosters innovation. More specically, it is through cooperation that teams with a strong identity are likely to show high levels of innovation. Charismatic leadership has both a direct and indirect inuence on innovation. Charismatic leadership inspires team members to engage in innovative behaviours by intrinsically motivating their members to look for new approaches and solutions for the benet of the group (Keller, 2006; Jung et al., 2003). As Mumford et al. (2002) assert in the R&D context, a charismatic leader with good expertise and a good reputation is essential in an environment that values professional achievements. Scientic leaders who have great technical expertise and problem-solving abilities are admired, respected and trusted. They are more likely to provide feedback to their followers through a style that creates a sense of consideration of followers needs over their own. Equally important is that the charismatic inuence of leaders provides a sense of purpose that is consistent with the underlying ethics and values of team members (Avolio and Bass, 2004). Indirectly, charismatic leadership inuences innovation through its effects on team processes. Charismatic team leaders inuence the development of a strong team identity, as suggested by Shamir et al. (1993) and van Knippenberg et al. (2004). These authors suggest that creating a strong sense of belonging to a collective is the essence of charismatic leadership. Furthermore, our results provide evidence for the inuence of charismatic leadership on cooperation. Zaccaro et al. (2001) argue that strategies used by leaders to create cooperation and effective communication amongst team members are likely to produce innovation. This study provides evidence of the mediating role of cooperation between leadership and innovation. In addition to the direct effect of charismatic leaders on innovation, a charismatic leader can inuence team innovation through the development of cooperative behaviours amongst team members. As West et al. (2003) and Zaccaro et al. (2001) suggest, leaders have the potential to inuence an environment that supports cooperative approaches to discussion and an open and free climate. Leaders can inuence the degree to which people collaborate with each other

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and participate openly in discussions to support the integration of different ideas, and how the team generates, promotes and realizes ideas (Kurtzber and Amabile, 2001; Hirst and Mann, 2004). Overall, the preliminary model proposed in this study provides a satisfactory understanding of the importance of the charismatic leader in inuencing team processes and innovation. The managerial implications are that successful team leaders who employ a more charismatic style can inspire and motivate team members to perform at their best (Shamir et al., 1993). This style of leadership in particular sets a clear direction and purpose for followers, and these leaders work on establishing an environment of mutual trust and respect in which members value their team membership (Paul et al., 2001; Avolio and Bass, 2004). Most signicantly, this type of leader seems to raise the chances of facilitating cooperative team behaviours that promote innovation even during a very challenging period of major restructuring. Leaders in a R&D environment therefore need to be aware of the importance of effective group processes, and need to be active in promoting effective communication and discussion. Charismatic leaders through their position and style seem to have more inuence in determining that their team processes will be translated into more innovative outcomes. Finally, this study was conducted in a single R&D organization experiencing transformational change, and the results might have limited potential for generalization for other contexts. Consequently, future research should explore the inuence of these factors in other settings. However, the focus on a single, specic type of organization avoids the noise that might result from comparing multiple organizations. In addition, the measures of team innovation are based on the perceptions of the team members, measuring the extent to which team members were involved in different stages of innovation. Further research needs to include a wider variety of data sources (e.g. from others outside of the team) to indicate these subjective levels of team innovation, as well as the incorporation of more objective indicators (e.g. the impact of outputs generated). Our nding that the charismatic leader raises the chances of more cooperative team behaviours that promote innovation needs to be examined in more depth, possibly through interview or observational studies of charismatic leaders working through change with their team members. This line of enquiry supports Yukls (1999) observation that transformational theories do not explain very well how leaders inuence processes within the group, as well as how the group interacts with others outside of the group. Finally, we encourage future studies to expand and test the preliminary model put forward here towards developing a more robust explanation of the relationship between these variables.
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