The impact of transformational leadership on ...

Journal of Asia Business Studies The impact of transformational leadership on employee creativity: the role of learning orientation Jeevan Jyoti Manisha Dev

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Users who downloaded this article also downloaded: Millissa F.Y. Cheung, Chi-Sum Wong, (2011),"Transformational leadership, leader support, and employee creativity", Leadership & Organization Development Journal, Vol. 32 Iss 7 pp. 656-672 http:// dx.doi.org/10.1108/01437731111169988 Kamal Kishore Jain, Manjit Singh Sandhu, See Kwong Goh, (2015),"Organizational climate, trust and knowledge sharing: insights from Malaysia", Journal of Asia Business Studies, Vol. 9 Iss 1 pp. 54-77 http://dx.doi.org/10.1108/ JABS-07-2013-0040 Bilal Afsar, Yuosre F. Badir, Bilal Bin Saeed, (2014),"Transformational leadership and innovative work behavior", Industrial Management & Data Systems, Vol. 114 Iss 8 pp. 1270-1300 http://dx.doi.org/10.1108/IMDS-05-2014-0152

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The impact of transformational leadership on employee creativity: the role of learning orientation


Jeevan Jyoti and Manisha Dev

Jeevan Jyoti is an Assistant Professor and Manisha Dev is a Scholar both based at the Department of Commerce, University of Jammu, Jammu, India.

Abstract Purpose – This research aims to explore the relationship between transformational leadership and employee creativity. In addition, we intend to study the moderating role played by learning orientation in the relationship between transformational leadership and employee creativity. Design/methodology/approach – Data have been collected from employees working at the Airtel and Aircel call centers of J&K (India). A two-step approach to structural equation modeling (SEM) was applied. Confirmatory factor analysis was conducted to assess the proposed measurement model fit and construct validity. The structural model was generated to test the significance of the theoretical relationships. Findings – The results revealed that there is a positive relationship between transformational leadership and employee creativity, and it is being moderated by learning orientation. Research limitations/implications – Although this study expands our knowledge about the role of learning orientation between transformational leadership and employee creativity, the prospects for further research are still present. The cross-sectional design of study might not have been able to extract the true essence of the cause-and-effect relationship between transformational leadership and employee creativity. Practical implications – Transformational leaders promote followers’ creativity, so the management may find it valuable to invest in transformational leadership training for supervisors and team leaders, or use personality testing to screen for high-caliber candidates, who have high potential of becoming a transformational leader. The characteristics of a transformational leader, when coupled with the learning orientation of employees, yield positive results in the form of employee creativity, which managers can use to generate sustainable competitive advantages for their organizations. Originality/value – This paper is original, as it contributes to existing theory by establishing the moderating role played by learning orientation in between transformational leadership and employee creativity. The moderation has been proved via SEM with the help of latent constructs, which is seldom done. Keywords Transformational leadership, Employee creativity, Idealized influence, Inspirational motivation, Learning orientation, Structural equation modeling Paper type Research paper

Introduction

Received 14 March 2014 Revised 13 May 2014 22 July 2014 Accepted 7 August 2014

Today, we are living in an era when change has become constant. For running an organization smoothly, effectively and efficiently, the most valuable and indispensable resources organizations have are their human resources (Mosadeghrad, 2003). The success of an organization depends on hard-working, loyal and involved managers and employees. The management of employees is largely dependent on the quality of leadership (Bushra et al., 2011). Leaders are concerned to create a willingness in the minds of the led to perform the specific objectives of their organizations, which requires a balance between the objectives of the organization and the needs of its people (Jung et al., 2010). Leadership creates the bond which facilitates working together for people (Shibru and Darshan, 2011), and organizations at present, are more concerned about understanding, developing and improving their leaders’ potentials (Bushra et al., 2011). Transformational leadership is a modern approach that looks at where the organization should be heading,

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DOI 10.1108/JABS-03-2014-0022


and it determines how to handle the internal and external changes that employees need to make to reach corporate goals (Tichy and Devanna, 1986). In the global market, the environment is dynamic, and many organizations have shifted the paradigms of their leadership from a transactional to a transformational style to fulfil their strategies and achieve their goals (Howell and Avolio, 1993; Bass, 1999; Judge and Piccolo, 2004; Barling et al., 2010). Transformational leaders are knowledgeable, dynamic and proactive and capable of leading themselves and their subordinates to embrace changes, exerting extra efforts to meet the ever-increasing demands of competition (Ahangar, 2009, p. 360). Leaders with transformational mindsets tend to take their followers beyond their own self-interests for the benefits of their groups, organizations or societies (Ergeneli et al., 2007). They can change teams or organizations by creating, communicating and modeling a vision and inspiring employees to achieve the intended vision (Mcshane and Glinow, 2003, p.429). It is a main driver of employee creativity and influences business outcomes greatly, such as efficiency, effectiveness, performance, success, survival and sustainability. The existing literature has focused on the relationships between transformational leadership and employee creativity (Jung et al., 2003; Jung, 2001; Sosik et al., 1998; Shin and Zhou, 2003; Mumford et al., 2002). The idea for this research has been generated by previous findings that transformational leadership affects creativity both directly and indirectly. In the present paper, we propose to investigate the relationship between transformational leadership, employee creativity and learning orientation. This article is an attempt to find out what role learning orientation plays between transformational leadership and employee creativity, and it has been investigated by using structural equation modeling (SEM).

Conceptual analysis Transformational leadership Transformational leadership has been a popular concept in management literature because of its motivational and relational style (Gardner et al., 1998; Howell et al., 1993). Bums (1978) conceived of the notion of transformational leadership. He distinguished between characteristics of transformational and transactional leadership. Transformational leaders motivate employees to work for longer hours and produce more than is expected of them (Bass, 1985). They treat their followers in a paternalistic fashion, guide them in all situations, help them whenever required, deliver knowledge to them, polish their skills and treat them equally (Bass, 1985; Hall et al., 2008). It is a form of leadership in which relationships are organized around a collective purpose in ways that transform, motivate and enhance the actions and ethical aspirations of followers (Burns, 1978). According to Bass (1994), Bass and Avolio (1994), and Hartog et al. (1997), transformational leaders are those who want to develop their followers’ full potentials, higher needs, good value systems, moralities and motivations. This development motivates the followers to unite, change goals and beliefs (Bass, 1999, 1994; Bycio et al., 1995; Rafferty and Griffin, 2004), and look forward beyond their self-interests to achieve organizational interests. This style suits dynamic organizational environments (Bartram and Casimir, 2007; Hartog et al., 1997; Pillai et al., 1999; Twigg et al., 2008). Bass and Avolio (1995) advanced the work of Burns and divided transformational leadership into four components: 1. Inspirational motivation: Hartog et al. (1997) defined inspiration as the capacity of a leader to act as a model for subordinates. Inspirational motivation refers to the ways leaders take to inspire their followers to achieve both personal and organizational goals. Inspirational leadership is about communicating a vision with fluency, confidence, optimism and enthusiasm and giving motivational examples that energize others (Yammarino and Dubnisky, 1994, p. 791). 2. Idealized influence: This component refers to the charismatic actions of the leader that focus on values, beliefs and a sense of mission (Antonakis et al., 2003). These

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charismatic actions include talking about his/her most important values and beliefs and emphasizing the collective mission and purpose, as well as considering the ethical implications of his/her decisions. Colloquially speaking, leaders with idealizing characteristics can walk in the way that they talk about walking (Avolio, 2005). 3. Individual consideration: This refers to treating followers as individuals and not just as members of a group (Dionne et al., 2004). Leaders will satisfy their followers by advising, supporting and paying attention to their individual needs and motivate them to develop themselves.


4. Intellectual stimulation: Intellectual stimulation is that characteristic of leaders which challenges their followers’ ideas and values when solving problems. Hartog et al. (1997) claimed that intellectual stimulation encourages followers to question their own values, assumptions and beliefs and even those of their leaders. Learning orientation Learning orientation is conceptualized as a set of values that influences the degree to which an organization is satisfied with the theories it has in use (Argyris and Schon, 1978), its mental models (De Geus, 1988) and its dominant logics (Bettis and Prahalad, 1995), which may or may not have had their base in the marketplace. It influences the degree to which firms are likely to promote generative learning as a core competency (Sinkula et al., 1997). It may also be described as a process of information acquisition, information dissemination and shared interpretation that increases both individual and organizational effectiveness due to its direct impact on outcomes (Kaya and Patton, 2011). It is also viewed as the degree to which firms proactively question existing beliefs and practices, as well as their influence on organizational performance (Argyris and Schon, 1978). It gives insights that have the potential to change behavior (Huber, 1991; Slater and Narver, 1995) by impressing on employees the continual desire to improve and extend their skills and knowledge (Kohli et al., 1998). Learning orientation is composed of four dimensions, namely, commitment to learning, shared vision, open-mindedness and intraorganizational knowledge-sharing (Calantone et al., 2002; Hurley and Hult, 1998; Hult and Ferrell, 1997; Hult, 1998; Sinkula et al., 1997; Moorman and Miner, 1998): 1. Commitment to learning: Is defined as an organizational value, which is likely to encourage a climate of learning (Sinkula et al., 1997). The committed organization considers learning as an investment that is crucial for survival (Calantone et al., 2002). Commitment to learning concerns the organization’s dedication to acquiring new knowledge through its employees (Tajeddini, 2009). 2. Shared vision: Is defined as an organization-wide focus on learning and, without shared vision, learning by members of an organization is less likely to be meaningful (Sinkula et al., 1997). The concept of shared vision in learning theory is based on internal communication through which various divisions are encouraged to overcome cross-functional communication barriers to increase information flow and coordinate actions with other departments (Brown and Eisenhardt, 1995). 3. Open-mindedness: This is the critical evaluation of an organization’s daily operations and the acceptance of new ideas (Sinkula et al., 1997). In other words, it is a process through which an organization engages in reviewing its existing knowledge or its old assumptions and habits (Nguyen and Barrett, 2006). 4. Intraorganizational knowledge-sharing: This is the collective belief or behavioral routine related to the spreading of learning amongst different units within an organization (Moorman and Miner, 1998). It keeps the knowledge and information gathered from various sources alive and serves as a reference point for future actions (Calantone et al., 2002).


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Employee creativity


Creativity refers to the development of novel, potentially useful ideas, which enhance the efficiency and effectiveness of processes (Gong et al., 2009). Employee creativity refers to individuals’ generation of novel and useful products, ideas and procedures that are the raw materials for innovation (Cummings and Oldham, 1997). Creativity is derived from an individual’s accumulated creative thinking, skills and expertise based on his/her formal education and past experiences (Amabile, 1998; Gong et al., 2009). Employee creativity could contribute to competitive advantage for the organization; therefore, it is considered as one of the most significant aspects of an organizational environment (Sosik et al., 1999). It is a process that transcends the regular or routine behavior, which an employee undertakes to arrive at creative outcomes (Dewett, 2006). Redmond et al. (1993) reported that the creative attitude of employees would add to the value of an organization.

Literature review Various researchers and scholars have described transformational leadership as going beyond individual needs, focusing on a common purpose, addressing intrinsic rewards and higher psychological needs, such as self-actualization, and developing commitment with and in followers (Bass, 1985; Kirby et al., 1992; Leithwood, 1992). Shamir et al. (1993) stated that transformational leaders motivate followers in three important ways: 1. by increasing follower self-efficacy; 2. by facilitating follower’s social identification with their group or organization; and 3. by linking the organization’s work values to its followers’ values. Transformational leaders allow employees to think creatively, analyze their problems from numerous angles and explore new and better solutions for problems by using technology (Sosik et al., 1998; Schepers et al., 2005; Gumusluoglu and Ilsev, 2009). Earlier, research on transformational leadership has demonstrated a significant relationship between transformational leadership and subordinates’ performance and commitment (Masi and Cooke, 2000; Sparks and Schenk, 2001; Goodwin et al., 2001). Dubinsky et al. (1995) found that a transformational leadership style used by managers led to employees being more committed, more satisfied and less stressed. Gill et al. (2006) claimed that organizations can reduce job stress and burnout by applying transformational leadership. Thus, transformational leadership was found to be related to increased organizational performance (Boerner et al., 2007); increased employee motivation (Bono and Judge, 2003); and greater employee commitment, loyalty and satisfaction (Bass and Riggio, 2006). When they are learning-oriented, transformational leaders inspire their employees’ learning motivation and their ability to solve problems in their jobs, (Redmond et al., 1993). Several researchers have also focused on exploring mediating and moderating roles in workplaces like Gong et al. (2009), who explored the mediating role of creative self-efficacy between learning orientation, transformational leadership and employee creativity. Arendt (2009) examined the moderating role of leaders’ humor between transformational leadership and follower’s creativity. Yunus and Anuar (2012) claimed trust as a moderating effect between emotional intelligence and transformational leadership styles. Further, Cheung and Wong (2011) focused on the relationship between transformational leadership, leader support and employee creativity, which revealed that the relationship between transformational leadership and followers’ creativity is stronger when there is high degree of task-and-relations support offered by leaders. Furthermore, Phipps et al. (2012) conceptually explored the influence of transformational leadership on group creativity and the moderating role of organizational learning culture. After reviewing the literature, it has been found that a number of studies have focused on transformational leadership and employee creativity (Sosik et al., 1998; Jung, 2001; Mumford et al., 2002; Jung et al., 2003; Shin and Zhou, 2003). Further, the study by

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Phipps et al. (2012) explored the moderating role of organizational learning culture between transformational leadership and creativity conceptually, which needs to be tested empirically. The added value of the present study lies in its empirical examination of the moderating role played by learning orientation between transformational leadership and employee creativity. Further, the moderation has been checked using a structural model by developing the latent interaction variable through product indicator technique as suggested by Little et al. (2007), which is superior to hierarchical regression. Objectives


The review of literature led to the identification of a research gap, which helped to frame the objectives of the study, which are as follows:

to explore the impact of transformational leadership on employee creativity; and

to examine the role played by learning orientation between transformational leadership and employee creativity.

Theoretical framework and hypotheses development On the basis of the research gap and the objectives derived, we have designed a theoretical model. The theoretical model traces the relationship between transformational leadership and employee creativity with the moderating role of learning orientation (Figure 1). Transformational leadership and employee creativity Studies on leadership have revealed positive relationships between leadership and employees’ creative behavior (Amabile, 1996). Bennis and Nanus (1985) suggested that followers of transformational leaders have much confidence and trust in their leaders. This trust would eventually encourage them to take risks for the fulfillment of organizational tasks. Mayer et al. (1995) reported that transformational leaders stimulate critical thinking and encourage their followers to take risks and initiatives most of the time. Transformational leaders ensure that followers have their support for risk-taking behavior and they own the consequences of the actions of their followers. This support changes workers’ attitudes and encourages them to involve themselves in creative work processes (Hartog, 2003). Transformational leaders develop new patterns for the accomplishment of work and are desirous to face more and greater challenges, which develops the creative ability of their followers (Howell and Avolio, 1993), through intellectual stimulation and motivation (Mumford et al., 2002; Jung et al., 2003). Motivation amongst followers urges them to put more effort into problem-solving and they involve themselves willingly in creative work behaviors (Avolio and Bass, 1988). Cheung and Wong (2011) reported a positive Figure 1 Impact of transformational leadership on employee creativity .

e1 e2 e3 e4

1 1 1 1

e9

IM ID IC

0.32

TL 0.65 0.93

IS

1

0.85 0.97

EC

ec10 0.93

ec8 0.54 0.50

ec6

0.53

ec7

1 1

1

1

e5 e6 e7 e8

Notes: TL = transformational leadership (predictor); EC = employee creativity (outcome); IM = inspirational motivation; ID = idealized influence; IC = individual consideration; IS = intellectual stimulation; ec6 to ec10 = manifest variables


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relationship between transformational leadership styles and employees’ creativity because that leadership style challenges employees and energizes them to seek novel approaches to their work (Yunus and Anuar, 2012). Podsakoff et al. (1990) argued that, when leaders support followers in problem-solving, it encourages them to become involved in novel activities. Oldham and Cummings (1996) found that employees become more involved in creative activities when they are supervised in supportive manners. Sosik et al. (1997) found that, compared to other forms of leadership, transformational leadership was more effective at encouraging followers to think more divergently and to adopt generative and exploratory thinking processes that yielded more creative ideas and solutions. The above literature led to the creation of the following hypothesis: H1.

Transformational leadership enhances employee creativity.


Transformational leadership, learning orientation and employee creativity Research has shown that transformational leadership (Sosik et al., 1998) and learning orientation (Janssen and Van Yperen, 2004) are determinants of creativity in the workplace. In this study, learning orientation has been proposed as a potential moderator between transformational leadership and employee creativity because learning orientation helps employees develop their understanding of their environment and improve their knowledge of appropriate strategies, motivating them to work smartly and hard (Sujan et al., 1994). Learning orientation, as a moderator, clarifies the boundaries with which the relationship between transformational leadership and employee creativity occur. It provides an additional boost to the positive relationship expected between transformational leadership and employee creativity. Learning culture emphasizes the open exchange of information and ideas that facilitates learning and its creative application. Transformational leaders provide critical support to the learning and development of their employees by modeling learning behavior, encouraging people to contribute new ideas and ensuring the dissemination of knowledge that promotes creativity. Transformational leaders treat followers as individuals, show concern for their unique problems and approaches to work and they provide development opportunities. They delegate autonomy and use their greater knowledge and experience to develop their followers (Avolio and Gibbons, 1998; Bass, 1985; Dvir et al., 2002) through continuous learning processes, which facilitate creativity (Shalley, 1991). Studies reported that transformational leaders emphasize the alignment of employee visions and objectives with their leaders’ and organizations’ visions and objectives, which consequently develops intrinsic motivation among employees and encourages them to get involved in creative work processes (Gardner and Avolio, 1998). Leaders can enhance followers’ creativity through their manipulations of the organizational learning culture (Phipps et al., 2012). Transformational leadership orients followers by sharing information, enhancing employees’ visions, knowledge, competencies and commitments to learning, which ultimately results in enhanced creativity. Furthermore, transformational leaders welcome and promote new ideas, as well as share knowledge with their followers and encourage them to think unconventionally when searching for solutions to problems. Leaders provide critical support for the learning and development of followers. They ensure the dissemination of knowledge and learning by modeling learning behavior and encouraging people to contribute new ideas (Gephart et al., 1996). They encourage the procurement and circulation of information and the shared use of learning that helps to boost creativity. Transformational leaders are also able to motivate their followers intrinsically (Joo and Lim, 2009) toward learning new concepts, ideas and technologies, which each result in creative behavior. Thus, transformational leadership, when associated with learning orientation, helps to enhance the level of creativity as the transformational leaders create learning-oriented environments through inspirational motivation, idealized influence, individual consideration and intellectual stimulation (Arendt, 2009), which encourages the followers to accomplish extraordinary things, develop preferences for challenging and demanding tasks, which themselves result in more creative activities. Therefore, learning orientation complements the efforts of the transformational leader, who

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is considerate about providing learning opportunities for his/her followers and helps to boost the creativity of employees. So, the next hypothesis is: H2.

Learning orientation moderates the relationship between transformational leadership and employee creativity.

Research design and methodology This research is evaluative in nature. It evaluates the relationships between transformational leadership, employee creativity and learning orientation. The following steps have been undertaken to make this research objective.


Sample design and data collection The population for the study comprised 1,157 employees working in two leading call centers, namely, Airtel and Aircel at J&K (India). All of these employees were contacted to generate research information. Only 202 employees gave required responses (17.45 per cent). Data were collected from multiple respondents to avoid the problem of common method variance. The questionnaire technique has been used for data collection. Two questionnaires were framed. One pertained to information about transformational leadership and learning orientation, which was completed by the employees. The other questionnaire pertained to employee creativity, which was filled by their immediate superiors, i.e. team leaders (N ⫽ 55). The creativity ratings of more than one employee were procured from one team leader, which could cause the problem of data dependence (Hofmann, 1997). So, to check this, ANOVA has been applied and the results revealed an insignificant difference in the creativity ratings of different team leaders (F ⫽1.04, p ⬎ 0.05). Hence the data are not nested, and the problem of dependence does not exist. The demographic information included gender, age and qualification. Sixty-eight per cent of respondents were male, and 32 per cent were female. Most of the respondents (90 per cent) were aged between 20 and 30 years. Majority (60 per cent) of the respondents were undergraduates, 30 per cent were graduates and 10 per cent were postgraduates. Age, qualification and gender were considered as control variables, as these can affect employees’ levels of creativity (Tag and Chan, 2010; Shalley et al., 2000; Mumford et al., 2002). Generation of scale items All scales in the model were measured with multiple-items on a 5-point Likert-type scale, ranging from “1 (strongly disagree)” to “5 (strongly agree)”. Thirty items of learning orientation was adapted from Sinkula et al. (1997), Denison (2000) and Hult and Ferrell (1997). This construct comprised four dimensions, namely, commitment to learning (ten statements), shared vision (nine statements), open-mindedness (seven statements) and intraorganisational knowledge-sharing (four statements). The 24-item scale of transformational leadership was adapted from Avolio et al. (1999). Zhou and George’s (2001) scale was used to measure employee creativity, which consisted of 13 items. The scale items were improvised to suit the selected sector, i.e. call centers, wherever it was required (see Appendix 1). A pilot survey was conducted on 100 employees (selected conveniently) working in the call centers. EFA was applied for factor identification and for the summarization of the scale items. Initially, the learning orientation construct comprised 30 items that were reduced to 16 items and converged under four factors, namely, commitment to learning, shared vision, open-mindedness and intraorganizational knowledge-sharing. The same procedure was followed for transformational leadership and employee creativity. Transformational leadership resulted in a four-factor solution, namely, inspirational motivation, idealized influence, individual consideration and intellectual stimulation with 16 items. The employee creativity construct resulted in a one-factor solution with four items. All other criteria were within the threshold limit (e.g. KMO ⬎ 0.5, Communalities ⬎ 0.7, Eigenvalue ⬎ 1 and variance explained ⬎ 60 per cent).


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Result A two-step approach to SEM using AMOS was applied, as suggested by Anderson and Gerbing (1988). CFA was conducted in step one to assess the proposed measurement model fit and construct validity, while step two aimed at developing and estimating the structural model for testing the significance of the theoretical relationship.


Measurement validation After the survey, the collected data were used to assess the scale-level reliability and validity of the study. For the evaluation of internal consistency among the items, Cronbach’s alpha was assessed (Cronbach, 1951). Scale reliability was also assessed via composite reliability that assesses whether the indicators are sufficient in their representation of their respective latent variables or not (Tang and Chang, 2010). The Bentler–Bonnet Delta Coefficient indicates that the scale was measuring its intended concept (Hair et al., 2009). A scale with Bentler–Bonnet coefficient values of 0.90 or above implies strong convergent validity (Bentler and Bonnet, 1980). Convergent and discriminant validity were assessed as a part of the construct validity, as the multiple items used to measure the same construct should be in agreement, while items between different constructs should be distinct (Campbell and Fiske, 1959). Using CFA, we established convergent validity by the magnitude (⬎ 0.5) and significance of the factor loadings (Segars, 1997). For the assessment of discriminant validity, we compared the variance extracted with a squared correlation of different scales, as recommended by Fornell and Larcker (1981). All standardized loadings were highly significant (SRW ⬎ 0.50, p ⬍ 01), indicating the good quality of the measurement items. An analysis of shared variance among the indicators of each construct, i.e. the average variance extracted (⬎ 0.50) also established the convergent validity (Table I). Further, the average variance extracted of each construct was more than the squared correlation between the constructs used in the study (Table II), which established discriminant validity. Cronbach’s alpha and composite reliability were all above the conventional cutoff limit (⬎ 0.7). Cross-validation of measurement models Cross-validation uses two samples drawn from the same population and the sampling units in each group with the same characteristics. It provides a second confirmation of a measurement theory that survived initial testing. In this study, we split the sample into two groups, i.e. Aircel and Airtel call centers’ employees, and again tested the measurement models. The results

Table I The results of scale-level reliability and validity assessment Construct

Standardized loadings

Learning orientation Commitment to learning Shared vision Open-mindedness Intra-organizational-knowledge-sharing

0.982 0.662 0.581 0.857

Transformational leadership Inspirational motivation Idealized influence Individual consideration Intellectual stimulation

0.874 0.993 0.682 0.949

Employee creativity Ec10 Ec8 Ec6 Ec7

0.943 0.553 0.500 0.563

Average variance extracted

Bentler–Bonnet coefficient delta

Composite reliability

Cronbach’s alpha

0.770

0.961

0.982

0.792

0.874

0.978

0.982

0.860

0.639

0.943

0.988

0.793

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Table II Discriminant validity and correlation matrix Constructs Learning orientation Transformational leadership Employee creativity

Learning orientation

Transformational leadership

Employee creativity

0.770 0.177 (0.421**) 0.051 (0.227**)

0.874 0.082 (0.287**)

0.639

Notes: Values on the diagonal axis represent average variance extracted; squared correlations are given below the diagonal axis; and values within the parentheses represent correlation; **p ⬍ 0.01


matched the results of the overall tested measurement models with slight variations in their regression weights. Further, the chi-square difference test also gave insignificant results (⌬␹2 ⬍ 3.84, p ⬎ 0.05), thereby supporting our measurement models. Impact of transformational leadership on employee creativity: the role of learning orientation To test the moderating effect, all the conditions described by Baron and Kenny (1986) were first satisfied. These conditions are:

the moderator should not directly relate with dependent variables;

the moderator hypothesis is supported if the interaction is significant; and

another property of the moderator variable is that, unlike the mediator–predictor relationship (where the predictor is causally antecedent to the mediator), moderators and predictors are at the same level in regard to their role as causal variables, antecedent or exogenous to certain criterion effects. That is, moderator variables always function as independent variables.

We used a three-step procedure through SEM in which we first assessed the impact of the predictor, i.e. transformational leadership on employee creativity. The results (Model 1) revealed that transformational leadership is significantly related with employee creativity (SRW ⫽ 0.32, p ⬍ 0.05), but the intensity of the relationship was low. In the second step, we added the moderating variable, i.e. learning orientation, to find out the impact of the predictor and moderating variable on employee creativity. The result revealed that learning orientation was insignificantly related with employee creativity (p ⬎ 0.05), which satisfied the condition for testing the moderation effect (Model 2) (Figure 2). In the third step, the latent interaction construct was created by using the product indicator approach, as suggested by Little et al. (2007). There are four manifest variables, each of the predictor (transformational leadership), as well as the moderator (learning orientation); thus, 16 manifest variables were generated that represented the latent interaction variable, i.e.: 1. X1 ⫽ Inspirational Motivation (IM) ⫻ Commitment to Learning (CL). 2. X2 ⫽ Inspirational Motivation (IM) ⫻ Shared Vision (SV). 3. X3 ⫽ Inspirational Motivation (IM) ⫻ Open-mindedness (OP). 4. X4 ⫽ Inspirational Motivation (IM) ⫻ Intraorganisational Knowledge-sharing (IOK). 5. X5 ⫽ Idealized Influence (ID) ⫻ Commitment to Learning (CL). 6. X6 ⫽ Idealized Influence (ID) ⫻ Shared Vision (SV). 7. X7 ⫽ Idealized Influence (ID) ⫻ Open-mindedness (OP). 8. X8 ⫽ Idealized Influence (ID) ⫻ Intraorganisational Knowledge-sharing (IOK). 9. X9 ⫽ Individual Consideration (IC) ⫻ Commitment to Learning (CL). 10. X10 ⫽ Individual Consideration (IC) ⫻ Shared Vision (SV).


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Figure 2 Impact of learning orientation and transformational leadership on employee creativity e1 e2 e3 e4

1

CL 0.97 SV 0.65

1 1

OM

1

IOK

0.56

LO

0.84 0.13

e13 1

EC e5 e6 e7


e8

1 1 1 1

0.51

IM ID

0.85 0.97

IC

0.66

IS

0.93

ec10

0.54

ec8

0.51 0.51

ec6 ec7

1 1 1 1

e9 e10 e11 e12

TL

0.93

Notes: LO = Learning orientation (Moderating variable); TL = transformational leadership (predictor); TLXLO = interactive effect; EC = employee creativity (outcome); IM= inspirational motivation; ID = idealized influence; IC = individual consideration; IS = intellectual stimulation; CL = commitment to learning; SV = shared vision; OM = open-mindedness; IOK = intra-organizational knowledge sharing; ec6 to ec10 = manifest variables 11. X11⫽ Individual Consideration (IC) ⫻ Open-mindedness (OP). 12. X12 ⫽ Individual Consideration (IC) ⫻ Intraorganisational Knowledge-sharing (IOK). 13. X13 ⫽ Intellectual Stimulation (IS) ⫻ Commitment to Learning (CL). 14. X14 ⫽ Intellectual Stimulation (IS) ⫻ Shared Vision (SV). 15. X15 ⫽ Intellectual Stimulation (IS) ⫻ Open-mindedness (OP). 16. X16 ⫽ Intellectual Stimulation (IS) ⫻ Intraorganisational Knowledge-sharing (IOK). Finally, we added this latent interaction variable, with transformational leadership (predictor) and learning orientation (moderator). The result revealed that the interaction effect of learning orientation and transformational leadership is significant (SRW ⫽ 0.62, p ⬍ 0.005), thereby providing support for the significant interaction effect of learning orientation as a moderating variable between transformational leadership and employee creativity. Further, the addition or deletion of control variables did not change the relationship, so these were not shown in the final results (Figure 3). We have also plotted the simple slope graph to check the relationship between transformational leadership and creativity visually in the presence of high and low learning orientations. We conducted a simple slope analysis using one standard deviation above and below the mean of the moderating variable. The tests of the simple slope indicated that the relationship between transformational leadership and employee creativity increased when learning orientation was high and vice versa (Figure 4).

Discussion This paper discusses how transformational leadership and learning orientation potentially facilitate employee creativity, thus increasing the dynamic capabilities of organizations as they compete in a continually changing environment. It constantly emphasizes learning orientation for improving competence and raising skills mastery. Our study explored the following issues:

the impact of transformational leadership on employee creativity; and

the moderating effect of learning orientation in the relationship between transformational leadership and employee creativity.

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Figure 3 Moderating impact of learning orientation between transformational leadership and employee creativity e4

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Notes:: LO = learning orientation (Moderating variable); TL = transformational leadership (predictor); TLXLO = interactive effect; EC = employee creativity (outcome); IM= inspirational motivation; ID = idealized influence, IC = individual consideration; IS = intellectual stimulation; CL = commitment to learning; SV = shared vision; OM = open-mindedness; IOK = intra-organizational knowledge sharing; ec6 to ec10 = manifest variables

Figure 4 Simple slope analysis

Notes: TL = transformational leadership; EMC = employee creativity

Our study has several important findings. First, our results demonstrated that transformational leadership is positively related to employee creativity. This finding is consistent with the results of Shin and Zhou (2003), who suggested that followers are prone to remain loyal and to rely strongly on a transformational leader to encourage and guide


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them to a new work frontier. The reason might be that transformational leadership enhances employees’ abilities to develop new ideas and question the existing operating rules (Bass and Avolio, 1990). It has been observed that transformational leaders show empathy, consideration and support for employees. These qualities help workers to overcome their fears of challenging the status quo, which leads to higher creativity. Learning orientation was not found to exert a direct influence on creativity. One of the reasons may be that the provision of learning orientation alone is not sufficient to stimulate creative work. This is because employees may not be fully aware of when and how to use learning opportunities to enhance their creative performance. The other reason is that service sector employees rely relatively more on empathy than they do on equipment in building close interactions with customers (Arendt, 2009). Further, the interactive effect of transformational leadership and learning orientation helps to increase the level of creativity. One reasonable explanation is that employees rely on a transformational leader to provide clear guidance on how to make good use of learning opportunities for enhancing their levels of creativity. In addition, employees may learn more from the valuable experience provided by such leaders who make their followers learning-oriented, and so they are better able to generate creative ideas in practice. Moreover, a transformational leader uses learning opportunities tactically to induce creative thoughts among his or her followers. Similarly, the interactive effects of transformational leadership and learning orientation were found to influence employee creativity significantly. The rationale behind this is that transformational leadership is crucial for encouraging employees to learn, reach their full potential and break through learning boundaries (Slater and Narver, 1995). Sinkula et al. (1997) indicated that transformational leaders have a high personal commitment to learning. They view learning as a key ingredient in enhancing creativity. They motivate and instill learning-oriented behaviors in those around them. Transformational leaders communicate effectively, share information and generally keep the workforce up to date with important information to make their employees creative. Transformational leaders encourage employees to think out of the box and value open-mindedness to cope with rapidly changing technologies and turbulent markets. Such leaders have specific mechanisms for sharing learned lessons from team to team and that leads to enhanced creativity. We believe that the impact of transformational leadership is positively magnified by learning orientation, as the latter boosts employee confidence and serves as a good role model for nudging employees towards a creative work frontier.

Theoretical implications The present research contributes to prior research by providing a support for the positive impact of transformational leadership on employee creativity. The main contribution lies in its establishment of the moderating role played by learning orientation between transformational leadership and employee creativity. This is a pioneer study regarding the moderating effect of learning orientation between transformational leadership and employee creativity. Theoretically, our findings implied that employees’ creativity levels could be led positively by the idealized influence, individual consideration, inspirational motivation and intellectual stimulation of a transformational leader. However, such leading can be driven effectively by learning orientation, which is provided by the transformational leader. Based on our findings, the attributes of transformational leadership can be extended to accommodate the work needs of highly creative employees in the service context. This investigation is important for academicians in many ways. We tested the moderating role of learning orientation between transformational leadership and creativity empirically, which has been proved via the significant interaction effect. When transformational leaders instill learning among their employees, it makes them more creative and innovative through the generation of new ideas, which spawns sustainable competitive advantages for organizations.

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Managerial implications


This study can help team leaders to identify and justify key components that may be more critical in a rigorously competitive market. They should understand, manage and utilize transformational leadership thoroughly to provide corporate proactivity and market-driven strategies. Practically, the findings of this study would be important applied in service industries because service employees, to a large extent, rely on the socio-emotional support and recognition of transformational leaders to build long-term and close interactive relationships with customers. The study has helped to generate the following suggestions for management, as well as leaders, and implementation of these could result in positive outcomes at both the employee and organizational levels:

Team leaders must emphasize the motivation of their employees to introduce meaningful and novel strategies into their work so that it leads to creativity. Leaders should understand their followers within the organization clearly, besides expanding their strategic horizons to maintain and increase the levels of business excellence continuously.

Transformational leaders promote followers’ creativity. So, the management may find it valuable to invest in transformational leadership training for supervisors and team leaders, or use personality testing to screen for high-caliber candidates, who have a high potential for becoming good transformational leaders.

It is also suggested that management should facilitate learning by cultivating and sustaining an organizational climate that nurtures learning efforts among individual employees to build a strong relationship between transformational leadership and employee creativity.

Team leaders should be encouraged to promote learning environments by suggesting new ways to complete assignments and by helping employees to develop their strengths. They should assign projects that are within the capabilities of followers, clarify task roles and provide adequate resources to do the jobs requested.

In call centers, employees are engaged in selling services to customers, so the information regarding customers and any new services introduced should be shared with them. Furthermore, information about day-to-day changes in call plans and call rates should be communicated to employees. Besides these strategies, a formal process of information-sharing should be adopted.

The management should create an environment in which individuals are able to learn by themselves, and share their learning experiences within the organization, at both the inter- and intradepartmental levels.

Team leaders should clearly communicate and translate their visions into specific goals tied to individual followers, and then promote an open learning environment for the followers to pursue and successfully complete those goals.

Conclusion Transformational leadership is more effective at encouraging followers to think more divergently and to adopt generative and exploratory thinking processes that yield more creative ideas and solutions. Thus, we believe that creative employees can be led effectively if leaders adopt a transformational style and promote an open environment for learning that encourages innovation and creative problem-solving. Our findings strongly support the hypothesis that learning orientation moderates the relationship between transformational leadership and employee creativity. The results offer both theoretical and managerial implications that will be useful for researchers and managers of service firms when they are designing management strategies. This study opens up a new line of inquiry between transformational leadership and employee creativity in the field of organizational behavior by introducing learning orientation as a moderator.


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Limitations of the study Although this study expands our knowledge of the role of learning orientation between transformational leadership and creativity, the prospects for further research remain. All possible precautionary efforts were made to ensure the objectivity, reliability and validity of the study, yet certain limitations were discovered. These limitations should be considered for future reference when regarding the findings and implementations of the study. These limitations were that the data were collected from two call centers only, so the results lack generalizability. Team leaders were not contacted for procuring information about the extent of learning orientation amongst their employees. The cross-sectional design of the study might not have been able to extract the true essence of the cause-and-effect relationship between transformational leadership and employee creativity.


Future research The study provided a detailed investigation of the role of learning orientation between transformational leadership and employee creativity. For future direction, the following points should be considered. Other moderating variables should be examined to build strong relationships between transformational leadership and its outcomes, namely, employee creativity and performance. Because the study measures the perceptions of employees in the service sector, i.e. at call centers, in future, a comparison between the manufacturing and service sectors should be undertaken. A longitudinal study could be conducted to draw better inferences. Future research should also validate the proposed moderation model by using different samples and research settings and industries of different natures to generalize the findings.

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Yammarino, F.J. and Dubinsky, A.J. (1994), “Transformational leadership theory: using levels of analysis to determine boundary conditions”, Personal Psychology, Vol. 47 No. 4, pp. 787-811. Yunus, N.H. and Anuar, S.R. (2012), “Trust as moderating effect between emotional intelligence and transformational leadership styles”, Interdisciplinary Journal of Contemporary Research in Business, Vol. 3 No. 10, pp. 650-663. Zhou, J. and George, J.M. (2001), “When job dissatisfaction leads to creativity: encouraging the expression of voice”, Academy of Management Journal, Vol. 44 No. 4, pp. 682-696.

Further reading


Hair, J.J.F., Black, W.C. and David, J.O. (2006), Marketing Research: With a Changing Information Environment, Tata McGraw Hill, New Delhi.


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Appendix

Figure A1 IMPACT OF TRANSFORMATIONAL LEADERSHIP ON EMPLOYEE CREATIVITY: ROLE OF LEARNING ORIENTATION Note: The information will be used for research work only and would be kept confidential. 1. Name of organization________________ 2. Qualification:______________________ 3. Gender: F ___

M ___ 3. Age: 20-30yrs___30-40yrs___40-50yrs___above 50yrs___

4. Designation:__________


There are five alternative to each statement, tick the one, which is most appropriate for you. Key: 1. completely disagree 2. Disagree 3. Neither agree nor disagree 4. Agree 5. Completely agree S.N A 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. B 11. 12. 13. 14. 15. 16. 17. 18. 19. C 20. 21. 22. 23. 24. 25. 26. D 27. 28. 29. 30.

A. 1. 2. 3. 4. 5. B. 6. 7. 8. 9. 10.

Learning Orientation Commitment to learning Organisation’s ability to learn is the key to competitive advantage. Learning is key to improvement. Employee learning is an investment, not an expense. Learning is necessary to guarantee organisational survival. If you quit learning, you endanger your future. New and improved ways to do handle customers Failure is an opportunity for learning and improvement. Innovation and creativity are encouraged and rewarded. Employee learning is not a top priority in this organisation. Valued individual initiatives. Shared Vision Employees as well as management are eager to attain organisation goal. Involve team members in setting and achieving team targets. There is agreement on organisational vision across all levels. Employees are committed to the goals of the organisation. Up-to-date information about call rates is provided to team members. We do not have a well defined vision for the entire organisation. Targets set by top management are communicated to the team members. Employees view themselves as partners in charting the direction of the business unit. Put little efforts in sharing lessons and experience. Open-mindedness Managers encourage employees to think out of the box. Emphasis is on constant innovation. Original ideas are highly valued. Our business unit places a high value on open – mindedness. Encourage searching for new ways for doing things. Welcome application of new concepts. Continually judge the quality of decisions and activities. Intra-organisational knowledge sharing Unsuccessful organisational activities are properly analysed. Learned lessons are communicated widely. Have specific mechanism of sharing learned lessons from team to team. Top management repeatedly emphasises the importance of knowledge sharing in our company. Transformational Leadership Idealized Influence I feel proud to be associated with my team leader. I have complete faith in my team leader. My team leader has a sense of mission which he/she transmits to me. Team leader always expresses satisfaction when his/her expectations are met. I have a strong conviction in his/her beliefs and values. Inspirational Motivation My team leader sets high standards for my work. My team leader is a role model for me. My team leader develops ways to encourage me. He talks optimistically about the future. I have complete confidence in him /her.

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Figure A1 C. 11. 12.


13. 14. 15. D. 16. 17. 18. 19. 20.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Intellectual stimulation My team leader always shows how to look at old problems in new ways. My team leader always emphasises my use of intelligence to overcome obstacles. My team leader makes me back up my opinions with good reasoning. My team leader always mobilises a collective sense of mission. My team leader suggests new ways of completing the tasks assigned. Individualised consideration My team leader gives personal attention to me when I seem neglected. My team leader finds out what I want and helps me to get it. My team leader appreciates when I do good job. My team leader spends time in coaching and teaching every staff members. My team leader treats me as an individual rather than just a member of the group. Employee Creativity This Employee: Suggests new ways to achieve goals or objectives. Suggests new and practical ideas to improve performance. Searches out new processes and techniques. Suggests new ways to increase quality. Is a good source of creative ideas Is not afraid to take risks. Promotes and champions ideas to others. Exhibits creativity on the job, when given the opportunity. Develops adequate plans and schedules for the implementation of new ideas. Often has a new and innovative idea to deal with the customers. Comes up with creative solutions to customers’ problems. Often has a fresh approach to customer queries. Suggests new ways of completing the assignments in the call centre.

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Corresponding author Jeevan Jyoti can be contacted at: [email protected]

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VOL. 9 NO. 1 2015