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© 2018 IJRAR October 2018, Volume 5, Issue 4 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138) IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 242 Points of intersection between Transformational, Entrepreneurial and Sustainable Leadership models Author Name: Shambhavi Pandey Affiliation: PHD Scholar at Symbiosis International University, Co- Founder Healted Technologies Pvt. Ltd. Postal Address: M 13, Kubera Bahar Society, Baner Pashan Link Road, Pashan, Pune 411021 Abstract: Leadership has attracted a lot of attention for research and theory building since decades. Scholars, academicians and practitioners, all find this field of study very interesting and relevant for both study and practice. Historical data suggests that though numerous theories of leadership have been propounded, the one which has been ruling the minds of practitioners and academicians alike is the Transformational Leadership Theory. The term ‘transformational leadership’ was first used by James Downton in 1973, which was later popularized by James McGregor Burns in 1978 (Diaz-Saenz, 2011). There is ample empirical research about Transactional Leadership, Laizzez faire Leadership and recent theories of Sustainable Leadership and Entrepreneurial Leadership and their effect on business performance. Each of these leadership styles differ from each other in very minute terms, so it becomes imperative for a researcher, in today’s dynamic market scenario, to study combination of leadership styles for maximum organizational effectiveness. While some researches indicate that Transformational Leadership style has a positive impact on entrepreneurial business performance, others believe that a combination of Transformational and Transactional Leadership styles should be used to gain maximum effectiveness. In today’s dynamic business and economic scenario it is imperative for businesses to be sustainable and entrepreneurial (to be constantly innovative). While on one hand the focus of sustainable leadership is to keep optimum balance between people, planet and profits; yet at the same time the startup business ecosystem and the general economic climate globally warrants a leader to be entrepreneurial i.e. constantly innovative. This gives rise to a relatively new style of leadership called Entrepreneurial leadership, which is practiced both in startups as well as established businesses working in entrepreneurial capacities. This paper aims to understand the points of intersection between the three leadership styles viz: Sustainable

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Page 1: IJRAR October 2018, Volume 5, Issue 4 -ISSN 2348 1269, P ...ijrar.org/papers/IJRR1904024.pdf · followers, trying to persuade them to nurture shared goals and a strong sense of purpose

© 2018 IJRAR October 2018, Volume 5, Issue 4 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 242

Points of intersection between Transformational,

Entrepreneurial and Sustainable Leadership

models Author Name: Shambhavi Pandey

Affiliation: PHD Scholar at Symbiosis International University, Co- Founder Healted Technologies

Pvt. Ltd.

Postal Address: M 13, Kubera Bahar Society, Baner Pashan Link Road, Pashan, Pune – 411021

Abstract: Leadership has attracted a lot of attention for research and theory building since decades.

Scholars, academicians and practitioners, all find this field of study very interesting and relevant for both

study and practice. Historical data suggests that though numerous theories of leadership have been

propounded, the one which has been ruling the minds of practitioners and academicians alike is the

Transformational Leadership Theory. The term ‘transformational leadership’ was first used by James

Downton in 1973, which was later popularized by James McGregor Burns in 1978 (Diaz-Saenz, 2011).

There is ample empirical research about Transactional Leadership, Laizzez faire Leadership and recent

theories of Sustainable Leadership and Entrepreneurial Leadership and their effect on business performance.

Each of these leadership styles differ from each other in very minute terms, so it becomes imperative for a

researcher, in today’s dynamic market scenario, to study combination of leadership styles for maximum

organizational effectiveness. While some researches indicate that Transformational Leadership style has a

positive impact on entrepreneurial business performance, others believe that a combination of

Transformational and Transactional Leadership styles should be used to gain maximum effectiveness.

In today’s dynamic business and economic scenario it is imperative for businesses to be sustainable and

entrepreneurial (to be constantly innovative). While on one hand the focus of sustainable leadership is to

keep optimum balance between people, planet and profits; yet at the same time the startup business

ecosystem and the general economic climate globally warrants a leader to be entrepreneurial i.e. constantly

innovative. This gives rise to a relatively new style of leadership called – Entrepreneurial leadership, which

is practiced both in startups as well as established businesses working in entrepreneurial capacities. This

paper aims to understand the points of intersection between the three leadership styles viz: Sustainable

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© 2018 IJRAR October 2018, Volume 5, Issue 4 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 243

Leadership, Transformational Leadership and Entrepreneurial Leadership and to be able to suggest a

combination leadership style which could be tested further for maximum effectiveness.

Keywords: Sustainable Leadership, Entrepreneurial Leadership, Transformational Leadership,

Organizational Effectiveness, Business Performance

Review of Literature: Literature in the domain of Leadership suffers a major drawback of being

fragmented. This paper is a humble attempt to consolidate available literature on Transformational

Leadership, Sustainable Leadership and Entrepreneurial Leadership and draw out major points of

intersection, thereby suggesting a combination model of leadership for further application, testing and

research.

Transformational Leadership: Effectiveness of leadership is also dependent upon the follower’s

belief in the Leader’s capabilities and acumen, which is dependent on contextual, cultural and

situational factors in which the leader operates. Transformational leaders sell their vision by buying

in the value system of the followers. It has more of an emotional and psychological appeal rather

than winning followers by promising the end result of material gains. These leaders infuse passion

by leading by example – they show sincerity in both thought and action. Idealized influence

(behavior) can be defined as transformational leaders who display behaviors that enable them to be

role models for their followers. Idealized influence (attributed) defines the sense of loyalty,

admiration, trust, and respect that followers attribute to these leaders (Puffer and McCarthy 2008).

Inspirational motivation refers to the fact that transformational leaders set high expectations on

employees and employ imagery and signs to emphasize struggle and communicate the significance

of organizational goals (Hoffman et al. 2011). Transformational leadership is closely related to

desired outcomes for individuals (e.g., Casimir, Waldman, Bartran, & Yang, 2006; Judge & Piccolo,

2004; Liu, Siu, & Shi, 2010) and teams (e.g., Bass, Avolio, Jung, & Berson, 2003; Peus,

Kerschreiter, Frey, & Traut-Mattausch, 2010; Schaubroeck, Lam, & Cha, 2007; Schaubroeck, Lam,

& Peng, 2011).

Keeping Burn’s research as fundamental, Bass and Avolio (1997) proposed three major styles of

leadership viz: Transformational leadership, Transactional leadership and Laissez faire leadership.

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© 2018 IJRAR October 2018, Volume 5, Issue 4 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 244

Accroding to Bass, Transformational leadership was a style in which the leader tried to bring in the

consciousness of right and wrong among the followers and motivated them to perform ‘beyond

expectations’. Bass and Avolio (1997) described the following four characteristics of

transformational leaders as a part of the MLQ (Multi Factor Leadership Questionnaire):

a) Idealised Influence: When the leader is leading by example, being a role model for the

followers, trying to persuade them to nurture shared goals and a strong sense of purpose.

b) Inspirational Motivation: When the leader describes the desired end state in simplistic

terms, gets the followers buy in, motivates them to achieve more than expected and gives

work which is both meaningful and challenging for the followers.

c) Intellectual Stimulation: This refers to those traits of leaders which challenge and

encourage the intellectual capacities of their followers for constructive problem solving.

d) Individualized Consideration: This refers to those leaders who spend quality time

coaching and mentoring their followers for superior performance and personality

development.

They described Transactional Leaders as people characterized by the following three characteristics,

based on contingent reinforcement:

a) Contingent Reward: Here the leaders give rewards to the followers for good performance

and consequently punish or discipline them with strict action or threats for poor

performance.

b) Management by Exception: Here the leader intervenes only when the set standards of

performance are not met or to point out a mistake.

The third leadership style as described by Avolio and Bass was Laissez Faire or non-leadership where

leaders avoid clarifying expectations, addressing conflicts, and making decisions. Thus,

Transformational Leadership, in particular, brings about a positive change in organizations and

individuals alike for the larger good of the society. Bass, also suggested, based on the work of Burns,

that Transformational and Transactional Leadership can co-exist at any given point of time and this

particularly depends on the followers need and ability to develop a shared vision with the leader.

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IJRAR1904024 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 245

Sustainable Leadership: In today’s economically volatile world of innovation and invention, it is

becoming increasingly important to weave the three pillars of sustainability viz: People, Profits and

Planet into the business fabric. This is slightly broader in scope as compared to the previous business

philosophies centered on major stakeholders within the firm, clients or shareholders. Now

sustainability demands taking care of a variety of stakeholders including taking care of the needs of

the lesser privileged population residing in and around the company’s operation, the government, the

environment, employees, shareholders, other businesses and enterprises directly or indirectly

dependent on the firm and the society at large. Keeping the above in mind a new style of leadership

– Sustainable Leadership has come into being which maximizes shareholder value, profits and firm

performance with a sustainable mindset in the long term. The three principles that ground

sustainable development are environmental integrity, economic prosperity, and social equity

(Bansal, 2005; Brundtland, 1987). Because each of these principles individually represents a

necessary, but insufficient condition, it means that if any one of them is not supported, then

economic development will not be sustainable. Keeping the above context in mind sustainable

leaders are defined as people having the mindset to build sustainable business solutions keeping in

mind the interests of a variety of stakeholders directly or indirectly related to the business or the

geography of business operation. There have been numerous studies which indicate that sustainable

leaders have a systems thinking, long term vision and the ability to motivate and mobilize resources

for profitability in the long term and not for short term gains. There is growing social pressure on

companies to consider “people, planet and profit” and to respond to the concerns of multiple

stakeholders, both inside and outside the business (Galpin et al., 2012). Organizations, therefore, are

in desperate need of sustainable leaders who can balance short-term and long-term priorities and

create value for a variety of stakeholders.

Avery and Bergsteiner (2010) identified 23 sustainable leadership practices/ principles which they

feel if any corporation, whether in the developing or developed market, adopted, could grow and

flourish under any economic circumstances in the long term. (Appendix A) Hargreaves and Fink

(2004) specified the Seven Principles of Sustainable Leadership and provided examples using an

education system. The seven principles of sustainable leadership are: Depth (matters), Length (lasts),

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Breadth (spreads), Justice (does no harm to and actively improves the surrounding environment),

Diversity (promotes cohesive diversity), Resourcefulness (develops and does not deplete material

and human resources), and Conservation (learns from the best of the past to create an even better

future) (Hargreaves and Fink, 2012). However, the sustainability pyramid given by Avery and

Bergsteiner is by far the most comprehensive model of sustainable leadership available in

contemporary literature. Their leadership philosophy is diametrically opposed to the short term

Anglo-US shareholder first philosophy. Avery first identified 19 leadership competencies which she

called the Rhineland or Queenbee style. She also tested them on a sample of 14 organizations which

were already working on these principles to some degree from other parts of the world like: USA,

UK, Australia, Europe, Scandinavia, South Africa and Thailand. She concluded that these principles

of sustainable leadership helped organizations thrive in diverse cultures, locations and market forces

in the long run. Then she along with Bergsteiner expanded the list to 23 essential competencies and

divided them into four blocks namely: Foundation Practices, Higher Level Practices, Key

Performance Drivers and Performance Outcomes. The fourth block or the top of the pyramid is what

contributes significantly to sustainability according to their research.

1) Foundation Practices: They form the lowest strata of the pyramid or the bed rock and can be

introduced anytime whenever the management decides. They include: programs for developing

people continuously, maintaining amicable labour relations, ensuring long term retention of staff,

implementing internal succession planning, valuing people, practicing ethical behaviour,

environmental and social responsibility, stakeholder approach for a strong shared vision etc.

2) Higher Level Practices: It was noted in this research by Avery and Bergsteiner that if the

Foundation Practices are in place then they promote/ form the base for the next level of practices

i.e. the Higher Level Practices which include the six practices of: consensual decision making,

creating self-managing employees, harnessing the power of teams, developing a trusting

atmosphere, forming an organizational culture that enables sustainable leadership, and sharing

and retaining the firm’s knowledge. For example: Trust cannot be taught like a skill, it comes as

by product of continued ethical behaviour and valuing people along with a shared long term

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vision. Therefore, ‘Turst’ is shown in the Higher Level Practices as succession to the Foundation

Practices.

3) Key Performance Drivers: The Key Performance Drivers are a product of both the lower level

practices of the pyramid viz: the foundation practices and the higher level practices. Avery

stressed in her model that if there are strong practices in place to enthuse trust and autonomy in

decision making among employees then that will automatically result in quality and innovation.

(quality and innovation being a part of the key performance drivers – the third level of the

pyramid). Thus, the key performance drivers depend on a combination of various foundation

practices and higher level practices to be in place.

4) Performance Outcomes: The following five elements form the top of the pyramid which are a

result of the interactions of the elements of the bottom 2 layers of the pyramid:

Integrity of brand and reputation

Enhanced customer satisfaction

Solid operational finances (all firms have to survive financially including in the short

term).

Long-term shareholder value.

Long-term value for multiple stakeholders.

The pyramid is such that it offers flexibility and interaction in all directions – top down as well as

bottom up. Moreover, elements in the same strata also influence each other and those below and above

them. Some of the well-known organizations practicing sustainable leadership practices across the globe

are: Munich Re, BT (British Telecom), Colgate, Holcim. Most of these compaies who practice all 23

competencies are privately owned, as for public listed companies who have pressures to deliver short

term targets it is difficult to practice all the 23 sustainability competencies. However, research shows

that there are firms operating in sustainable contexts who do practice at least the initial 18 competencies

of sustainable leadership if not 23. Avery and Bergsteiner in their paper titled ‘Sustainable leadership

practices for enhancing business resilience and performance’ also cite a case wherein they exemplify

how Walmart uses the sustainable leadership competencies for maximizing financial outputs and gaining

competitive advantage. Inspite of paying more for products from ethical suppliers – an extraordinary

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reversal by an enterprise built around a low-cost strategy and taking socially responsible measures to

benefit the ordinary American in areas of health and environment, its bottom line wasn’t affected.

Entrepreneurial Leadership: Visser, de Coning, and Smit (2005) found that transformational

leadership and entrepreneurship had a significant positive relationship, but how entrepreneurship

functions as a subset of transformational leadership was unresolved. Renko et al. suggested further

research examining various organizational contexts and the position leaders occupy so as to better

understand how the entrepreneurial leadership style is used in organizations. Research is

inconclusive as to which combination of these leadership styles is effective for entrepreneurs, and

which positively affects business performance and business longevity.

Another important landmark in the history of Entrepreneurial Leadership literature is Entrepreneurial

Orientation (EO) – a term coined defined and explained extensively by Miller (1985) and later by

Lumpkin and Dess. EO is in a nut shell a firm’s entrepreneurial behaviour exemplified by a few key

competencies like: Risk Taking, Proactiveness, Innovativeness, Competitive Aggressiveness and

Autonomy. The entrepreneurial leadership style has yet to be studied in depth using the same

variables, such as entrepreneurial orientation, gender, emotional intelligence, innovation, and

performance (Renko et al., 2015). Entrepreneurial Leadership according to Renko et al, involves

directing the efforts of a group towards achieving those organizational goals which require

recognizing and exploiting entrepreneurial opportunities. For example: new product development to

gain competitive advantage over the prevalent line of products, or recognizing a new market

segment or sales channel for the existing products, or developing a new feature of a product to suit

the requirements of a particular customer segment.

Renko et al have developed a new measurement scale called the ENTRELEAD scale to test the

environmental, organizational, and follower-specific contingencies that may influence the success of

entrepreneurial leadership. They, in their research, have defined Entrepreneurial Leadership as

‘influencing and directing the performance of group members toward the achievement of

organizational goals that involve recognizing and exploiting entrepreneurial opportunities’. The

purpose of them developing this scale was to measure a leader’s entrepreneurial behaviour and

characteristics. Considering the dynamicity of today’s economic scenario, employees at each level

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have to seize entrepreneurial opportunities, be innovative and agile to remain relevant for the

business.

Thus, they need to display and practice entrepreneurial competencies and behaviours at each stage of

their career. Renko et al address the research gap concerning the conceptual framework of

Entrepreneurial Leadership and focus on the actions, processes and attributes that are typical of this

leadership style. They then proceed to measure these attributes through developing the

ENTRELEAD scale of measuring entrepreneurial leadership characteristics. Scholarly work in the

decade of 2000 has researchers writing about leaders who practice entrepreneurial behaviours in

mature organizations. (Gupta et al (2004), Macmillan and Mcgrath (2000), Thornberry (2006)).

There are still others like Jensen and Luthans 2006; Peterson, Walumbwa, Byron and Myrowitz

2009; Soriano and Martinez 2007; Swiercz and Lydon 2002 whose work revolves around

entrepreneurs or new founders of businesses who have to assume leadership roles so as to make their

businesses grow. Then there is a third category of existing research which deals with similarities and

differences between leaders and entrepreneurs. Thus, there is still a conceptual research gap on

dealing with entrepreneurial leadership as an independent leadership style which to an extent has

been addressed by Renko et al.

Additional research is needed to understand how context impacts leadership style, as well as the relationship

between transformational leadership, transactional leadership, or laissez-faire leadership and the

entrepreneurial leadership style. Discovering the relationship between these leadership styles will result in a

significant contribution to the leadership literature through developing a new understanding of how the

combination of leadership styles can facilitate organizational performance.

Research Methodology: An analysis of the three style of Leadership viz: Transformational, Sustainable

and Entrepreneurial was carried out and the key competencies and traits characteristic of each model were

identified. Next these behaviours or traits were then clubbed into broader competencies for ease of

comparison. Weber and Watson’s Literature Review Matrix was used to analyze the presence / absence of

these key competencies in the three leadership styles (as described by the above three models of leadership

viz: The ENTRELEAD Scale by Renko et al, The Multifactor Leadership Questionnaire by Avolio and Bass

and the Sustainability Pyramid by Avery and Bergsteiner).

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Analysis and Findings: According to Renko et al, there are huge overlaps between Transformational and

Entrepreneurial Leadership apart from one major distinction i.e. ‘Opportunity Recognition and Exploitation’

which is a critical competency of Entrepreneurial Leadership while it is not a part of Transformational

Leadership. The points of convergence, as stated above, are many like: Apart from being role models,

entrepreneurial leaders also encourage their followers to think and act entrepreneurially in order to achieve

shared goals, in doing so they continually challenge and stimulate their follower’s intellect. Thus, this leads

us to the first three paradigms of Transformational Leadership behaviour as measured by the MLQ

(Multifactor Leadership Questionnaire) which are Idealised Influence, Inspirational Motivation and

Intellectual Stimulation. They empower and encourage their followers to make their identities in the

organization and recognize themselves as an important part of the organizational vision and mission, thus,

this particular trait also coincides with the fourth dimension of the Transformational Leadership behaviour

as measured by the MLQ viz: Individual Consideration.

Avery and Bergsteiner gave a sustainability pyramid model for organizations to guage their management

practices and leader’s capabilities vis a vis the sustainability perspective. They laid down a framework of 23

key elements/competencies which if followed would yield to sustainable business. (refer Appendix A). The

pyramid is divided into three sections of competencies yielding to the top crown of sustainable practices and

tangible financial returns. The bottom layer of the pyramid consists of 14 competencies called the

‘Foundation Layer’ which have been clubbed in this research paper for ease of comparison as under:

Sr. No Sustainability Pyramid

Layer

Sustainability Pyramid

Competency

Referred in this paper

as

1 Foundation Layer Developing people

continuously

Individual Consideration

2 Amicable labour relations Idealised Influence

3 Long term retention of staff Intellectual

Stimulation/Inspirational

Motivation

4 Internal succession planning Individual Consideration

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5 Valuing people Individual Consideration

6 Ethical behaviour Value/Moral Centric

7 Long term perspective Long term vision

8 CEO and top team leadership Idealised Influence

9 Considered organizational

change

Long term vision

10 Independence from financial

markets

Passion for work

11 Environmental responsibility Environmental and social

responsibility

12 Social responsibility Environmental and social

responsibility

13 Stakeholder approach

14 Strong shared vision Idealised influence

15. Higher Level Practices Devolved and consensual

decision making

Intellectual Stimulation

16 Self-management Idealized influence

17 Team Orientation Idealized influence

18 Enabling Culture Individual Consideration

19 Knowledge retention and

sharing

Intellectual Stimulation

20 Trust Value/moral centric

21 Key Performance

Drivers

Strategic, Systemic Innovation Innovativeness,

Competitive

Aggressiveness

22 Staff Engagement Individual Consideration

23 Quality Passion for work

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On comparing a similar model of key competencies framed for Entrepreneurial Leaders (ENTRELEAD

SCALE) by Renko et al, 2015 (Refer Appendix B) and Transformational Leadership models given by

Burns, Bass and James Kouze and Barry Posner (1987) and the relatively recent MLQ (Multifactor

Leadership Questionnaire) (Refer Appendix C); the following inferences can be drawn about

Entrepreneurial Leadership (EL), Transformational Leadership (TL) and Sustainable Leadership (SL):

Sr. No Key Competency/Driver/Trait/Characteristic EL SL TL

1. Risk Taking P A P

2. Innovativeness P P P

3. Proactiveness P A P

4. Competitive Aggressiveness P A A

5. Opportunity Recognition and Exploitation P P A

6. Creative Problem Solving P P P

7. Long Term Vision P P P

8. Social and Environmental Responsibility A P A

9. Passion for work P P P

10. Value/Moral Centric P P P

11. Charisma P P P

12. Individual Consideration P P P

13. Idealized Influence P P P

14. Inspirational Motivation P P P

15. Intellectual Stimulation P P P

(Read P = Present, A = Absent, in the above table)

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Hence it follows that TL is a superset for EL and SL and can be diagrammatically represented as follows:

The yellow shaded area represents the point of intersection of all three viz: TL, EL and SL consisting of

Innovativeness, Creative Problem Solving, and Passion for work, Long Term Vision, Value/Moral Centric,

Charisma, Individual Consideration, Idealized Influence, Intellectual Stimulation and Inspirational

Motivation.

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Appendix A

a

-

Developing

people

continuously

Amicable

labour

relations

Ethical

behaviour

Long term

perspective

Considered

organizational

change

Independence

from financial

markets

Environmental

Responsibility

Social

Responsibility

Long term

retention of

staff

Internal

succession

planning

Valuing

people

CEO and top

team

leadership

Stakeholder

Approach

Strong

shared

vision

Evolved and

Consensual

decision

making

Self

Management

Team

Orientation

Enabling

Culture

Trust Knowledge

retention

and sharing

Quality Staff

engagement

Strategic,

systemic

innovation

Brand and Reputation Customer Satisfaction Financial Performance

Long term shareholder value Long term stakeholder value

Sustainability

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Appendix B:

THE ENTRELEAD SCALE

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Appendix C : Multifactor Leadership Questionnaire

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