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Ways CEOs Deliver Their Personal Values and Follower Commitment:

Comparison between Founders and Professional Managers

Abstract

The current study identified three typical approaches leaders employ to deliver

personal values to their followers and examined the corresponding psychological

reactions the followers generate in response to the value-delivering attempts. Results

showed that leaders using authoritarian way would result in followers’ compliance,

indicating the lowest level of value alignment. When leaders use policy-driven and

inspirational ways to transfer their personal values, they would achieve higher levels

of value congruence, identification and internalization, from their followers.

Additionally, the study investigated differences between CEOs who are founders of

the companies and those who are not in the value delivery process. Interesting

findings were discussed in terms of their implications for managerial practices.

Limitation and suggestions for future research were also presented in the paper.

Key words: value delivery, follower commitment, leadership behavior

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Ways CEOs Deliver Their Personal Values and Follower Commitment:

Comparison between Founders and Professional Managers

INTRODUCTION

Despite the growing recognition of the importance of leadership values as well

as leader-member value congruence in organizations (e.g., Bass & Steidlmeier, 1999;

Jung & Avolio, 2000), little is known about how leaders deliver their personal values

to followers and what kind(s) of psychological reaction the followers generate in

response to them (Meglino & Ravlin, 1998). Additionally, in emerging economies

such as China, small and private firms are blooming at an unprecedented pace (Lau &

Busenitz, 2001). Business led by organizational founders has been playing a critical

role in the rapidly growing economy (Chow & Tsang, 1994). Although Deeks (1973)

has claimed, over 30 years ago, the distinction between founder and “professional

manager (non-founder leader, who are non-family or non-owner and are often

recruited externally or improved internally)” to be a critical variable in organizational

research, little empirical research has examined whether or how the distinction would

affect value delivery from leaders to followers.

The current study, conducted in Chinese organizational context, aims at

examining the value transferring process and attempts to introduce a dynamic view of

leaders’ value-delivering behaviors and their corresponding outcomes in order to

better understand the mechanism of value-sharing among leaders and followers.

Based on literature review and Chinese organizational context, we identified three

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value-delivering approaches, namely, authoritarian, policy-oriented, and inspirational.

We then tested hypotheses on the effects of the approaches on the psychological

reactions from the followers in response to them. Finally, we investigated the

differences the top leader (CEO) being a founder makes in the process and discussed

the results and implications.

LITERATURE REVIEW AND HYPOTHESE

Theoretical background

Values are at the core of our personality (Rokeach, 1973). When it comes to

organizations, common shared-values by members are the most silent power in

organizational life (Posner & Schmidt, 1992). When individual values converge

around a particular set of assumptions and norms, organizational core values are

likely to form. Of the factors that shape organizational values, CEO values are the

most influential one (Collins & Porras, 1996; Drucker, 1988). Such values dictate the

ways organizations conduct business, treat employees, or deal with customers, and

suppliers (Barney, 1986). Through developing the strategy of the organization,

controlling the operational system and constituting the HR policy, the CEO shapes,

strengthens or modifies organizational value system by instilling his/her personal

values into the organization (Ciulla, 1999).

Many leadership theories, such as transformational leadership (Avolio,

Waldman & Yammarino, 1991; Bass, 1990, 1996), charismatic leadership (Conger &

Kanungo, 1994; Shamir, House & Arthur, 1993), visionary leadership (Nanus, 1992;

Westley & Mintzberg, 1989), and LMX theory (Graen, 1976; Graen & Cashman,

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1975), regard CEO values as important sources through which the leader exerts strong

impact on the organization. In the area, the emphasis on leadership values can be

observed in the shift of focus from transactional to transformational processes,

through which CEOs seek to rouse the consciousness of the followers by delivering in

them higher moral values (Yukl, 1999).

Value sharing, or value congruence, between leaders and followers has also

been a topic of research for many years. Results have shown that value congruence is

functional in a number of areas, including HR selection (Adkins, 1994), trust and felt

trust between leaders and followers (Lau, Fu & Liu, 2002), and the quality of

leader-member exchange (LMX) relationship (Ashkanasy & O’Connor, 1997). In fact,

the Person-Organization fit theory, which has been heavily studied, refers essentially

to the congruence of values between members and their organizations (Chatman, 1991;

O’Reilly, Chatman, & Caldwell, 1991).

However, little research has explicitly examined the specific ways leaders

transfer their values or how leaders make their followers align values with

themselves’. To investigate different approaches and their corresponding outcomes,

we primarily adopted two theoretical frames: the power theory (Bass, 1960; French &

Raven, 1959) and the identity theory (Ashforth & Mael, 1989; Stryker & Serpe, 1982;

Turner, 1975). The power theory helps us understand why a CEO can

influence/modify follower values and what approaches he/she is likely to employ to

do so; the identity theory helps us identify the corresponding outcomes. Specifically,

leadership behaviors and follower commitment are addressed as independent and

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dependent variables in this paper.

Three Value-delivering Approaches

Leadership power and influence behaviors jointly determine leadership

effectiveness (Yukl, 2002). Value delivery from leaders to followers, in essence, is a

process of exerting influence over the followers. Leadership occurs only when people

are influenced to do what is oriented by their leaders’ motivational values

(Kuczmarski & Kuczmarski, 1995).

According to the power theory, leader’s power is derived in part from the

opportunities inherent in a person’s position in the organization (“Legitimate power”),

and in part from expertise or symbolic attributes of the leader (“Referent power”)

(French & Raven, 1959). Consistent with the two types of power, we identified two

value-delivering approaches: policy-oriented and inspirational. A CEO using

policy-oriented way makes official requests in order to exert influence, although the

requests may derive only from the leader’s personal preference; whereas an

inspirational CEO transfers personal values mainly relying on individual referent

power to develop a stimulating appeal to the values. More than the two approaches,

we added a third one, the authoritarian approach, based on research and our

knowledge of leadership in Chinese organizational context.

One major characteristic distinguishing Chinese leaders from Western is that

they rely heavily on paternalistic leadership (Farh & Cheng, 2000; Westwood, 1997).

Paternalistic leadership behaviors such as strict discipline, paternal benevolence,

severe punishment of unmoral and disloyal behaviors, are associated with Chinese

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traditional norms. Among these norms, for example, wu lun (the five cardinal

relationships, Yang, 1993) emphasizes the absolute authority of the superior and the

obedience of the inferior. Based on the understanding, we therefore identified another

approach, authoritarian one, which is believed to suit the Chinese mentality and is

also consistent with the assertiveness and pressure tactics used by authoritative

leaders as presented in influence literature (e.g., Kipnis, Schmidt & Wilkinson, 1980;

McFarland, 2002).

The above three approaches can also be categorized into two different

orientations – institutional and individualistic (Moreland & Levine, 2001).

Policy-oriented approach is institutional because it is routine-based, system-driven

and relies on company regulations and group norms that are consistent with the

leader’s personal values. The inspirational and authoritarian approaches, on the other

hand, are more individualistic because both approaches rely more on informal and

individual ways. However, they are the two extremes of a pole in terms of dealing

with the disagreement on value orientation: authoritarian leaders are likely to inhibit

and depress the disagreement (Lamb & Publow, 1992), while inspirational leaders try

their best to encourage the agreement. More specifically and comparatively,

authoritarian leaders are enforcers, they simply do not allow differences;

policy-oriented leaders are trainers, they use formal procedures to handle differences;

inspirational leaders are mentors, who are persuasive and persistent and work out

differences together with their followers.

Followers’ reactions to leader’s value-delivering behaviors

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According to Schein (1968), leadership is a managerial socializing process

associated attitudes and values. A CEO’s primary responsibility is to make followers

identify with him/her and the organization, thus making them collectively achieve

organizational goals (Richards & Engle, 1986). Ideally, leaders would want to see

followers internalize the values they are trying to deliver so the followers could be

fully committed to the organizational goals.

We use follower commitment as the indicator for value congruence for both

theoretical and practical concerns. Theoretically, commitment has been defined as the

relative strength of an individual’s attachment to and involvement in a particular

organization, group, or person (Becker, 1992). Commitment to leader is characterized

by the follower’s belief in and acceptance of the leader’s goals and values, and a

desire to maintain stable relationship with him/her (Chen, Tusi, & Farh, 2002).

Additionally, comparing to Western cultures, individual commitment in oriental

cultures contains more moral components, which are always directed by individual

value orientations (Hofstede, 1980). The more the follower’s values align with those

of the leader, the more likely he/she would be committed to the leader.

Operationally, among multiple commitment-related measures, O’Reilly and

Chatman’s (1986) measure of three types of commitment can differentiate the

“amount” of individual’s psychological attachment to his/her leader (Organ, 1990). To

examine the outcomes of value-delivering behaviors, in the study, we adopted that

three types of commitment, compliance, identification and internalization (Kelman,

1958; O’Reilly & Chatman, 1986), to indicate levels of value congruence. The three

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should be different from each other with compliance standing for the lowest level of

value congruence, identification the middle, and internalization the highest. However,

some researchers report it’s hard to distinguish identification and internalization in

practice (e.g., Martin & Bennett, 1996; Sutton & Harrison, 1993), while the

compliance and the identification/internalization components of commitment are

uncorrelated (Sutton & Harrison, 1993). When being correlated with other

organizational dimensions, identification and internalization share similar patterns,

compliance generates a different set of relationships (e.g., Harris, Hirschfeld, Field, &

Mossholder, 1993). In this study, we are inclined to regard the three as distinct

aspects that can be differentiated in terms of the level of value congruence as well as

the underlying mechanism of value-sharing. Specifically,

Compliance is exchange based and is likely to occur when an individual adopts

attitudes and behaviors of a leader in order to gain specific rewards from and avoid

specific punishments by the leader (Kelman, 1958). When it comes to value

delivering from leader to follower, followers may comply with the leader if the leader

uses authoritarian approach (Yukl & Falbe, 1990). The followers may also comply

when he/she is obedient, lazy, or apathetic (Kipnis et al., 1980; Yukl & Tracey, 1992).

However, in Chinese organizations, the authoritarian approach may be effective

because of followers’ strong belief in obligation to authority, which is consistent with

of Chinese social norms (Farh & Cheng, 2000). Based on the arguments, we

hypothesize:

Hypothesis 1a: CEOs using authoritarian approach to deliver personal values will likely result in followers’ compliance, but not identification nor internalization.

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Identification is affiliation based and is likely to occur when followers accept

the leaders’ influence to establish or maintain a satisfying relationship with the leader

(Kelman, 1958). In this situation, followers respect their leaders’ values although they

may not fully adopt them because their respect often originates from the positions of

the leaders. Leaders who rely on legitimate power to exert influence are most likely to

use policy-oriented approach to deliver their values to the followers because they need

rules and regulations to establish the legitimacy of their influence. The organizational

legitimacy can actually reinforce the follower’s self-categorization as one member of

the group as well as a subordinate of his/her leader, which in turn drives them to

identify with the leader (Fielding & Hogg, 1997). Thus, we hypothesize:

Hypothesis 2a: CEOs using policy-oriented approach to deliver personal values will only result in followers’ identification, but not as likely in followers’ internalization.

Internalization is affection based and is likely to occur when people are willing

to adopt certain attitudes and behaviors because they are satisfied with the content

expressed in the specific attitudes and behaviors of the leaders (Becker, Billings,

Eveleth & Gilbert, 1996; Kelman, 1958). That is to say, only when the values (the

content) are in followers’ favor, the values can be really internalized by the followers.

Inspirational approach is an attempt to develop enthusiasm and high level of

commitment by arousing strong emotions and linking a request or proposal to a

person’s needs, values, hopes, and ideals. Therefore, leaders using the approach are

likely to make followers feel useful, improve their self-efficacy, thus perform

exceptional efforts (Bono & Judge, 2003; Deluga, 1995; Yukl, 1999). Thus, we

hypothesize:

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Hypothesis 3a: CEOs using inspirational approach to deliver personal values will not only result in followers’ identification but also likely to induce internalization.

The role the CEO identity plays in the value-delivering process

The above-hypothesized effects, however, may vary due to the identity of the

CEO – whether the CEO is a founder or professional manager, between whom there

are distinctive characteristics (Deeks, 1973). Compared to professional managers,

founders are more achievement-oriented. They are more willing to take risks and are

loyal to their own companies (Schein, 1983). Individually, founders are seen to be

personal, emotional and involved. In literature, founders are found to play a critical

role in creating and developing organizational culture, which is essentially based on

leader-member shared values (Reimann & Wiener, 1988). Professional managers, on

the other hand, are often regarded as power- and influence-oriented. They are

welcomed for bringing in much needed functional skills and are loyal to their

professions rather than organizations (Dyer, 1989). Unlike founders, professional

managers are seen to be impersonal, rational and less involved.

When delivering values to their followers, founders are more likely to achieve

high levels of commitment than professional managers. There are two reasons that

can be used to explain for the difference. First, the inner drives to deliver personal

values are different. Being owners or partial owners of the firm, founders always try

their best to maximize the interests of their companies. Thus they are more likely to

want followers to share their personal values, commit to and be inspired by those

values, and eventually work hard to fulfill those values. On the other hand,

professional managers are often only agents, whose personal interests are not always

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consistent with that of the organizations’. Therefore, they are less likely to be as

devoted to the company as the founders (Schein, 1983).

Secondly, comparing to founder CEOs, professional managers lack trust from

followers. According to agency theory (e.g., Fama, 1980; Eisenhardt, 1989), the

property right owned by a principal is an important basis for people to trust the owner.

Being agents, professional managers lack such a basis for being trusted. They are not

only monitored by their principals, but also by their followers. Regardless how hard

they work, until they establish their credibility, professional managers are generally

viewed as less committed to the organization, more concerned with short-term goals

and with their own embedded interests (Kouzes & Posner, 1993). As a result, they

usually have a more difficult time convincing their followers of their true motives,

and worse still, their intentions are often misinterpreted.

The reasons may appear stronger in China. Until the economic reform that

started in 1978, almost all companies were state-owned in the planning system. The

economic reform made it possible for individuals to establish their own businesses

(Lau & Busenitz, 2001). In 1990s, many people, which had been working for

state-owned firms, quitted their jobs to chase their dreams in life and worked for some

explicit purposes, therefore, they have strong incentives to deliver their values to their

followers and arouse their enthusiasm (Chang & MacMillan, 1991). On the other hand,

because an equitable compensation system is yet to be established in China, the pay of

professional managers is relative low and does not often reflect their contributions to

the company. Therefore, professional managers in China may lack strong motivation

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to put forth their maximum efforts. And even if they try to instill their values into the

followers, followers are more critical about the ways they use and are likely to

discredit them.

Based on the main effects suggested by H1a, H2a, and H3a and the arguments

on the influence of CEO identity, we further generate the following set of hypotheses:

Hypothesis 1b: Comparing to professional managers, founders using authoritarian approach to deliver personal values are more likely to achieve follower compliance. That is, the relationship between authoritarian value-delivering behaviors and followers’ compliance in founder group is likely to be stronger than that in professional manager group. Hypothesis 2b: Comparing to professional managers, founders using policy-driven approach to deliver personal values are more likely to achieve follower identification. That is, the relationship between policy-driven value-delivering behaviors and followers’ identification in founder group is likely to be stronger than that in professional manager group. Hypothesis 3b: Comparing to professional managers, founders using inspirational approach to deliver personal values are more likely to achieve follower identification as well as internalization. That is, the relationship between inspirational value-delivering behaviors and followers’ identification/internalization in founder group is likely to be stronger than that in professional manager group.

METHOD

Data collection

Participants were 451 employees from 28 companies located in 12 cities

including Beijing, Shanghai, Guangzhou, and Chengdu, which are dispersed in China.

All responses were collected from the employees via two waves of on-line

questionnaire survey1 over a six-week period, which was designed to minimize the

effect of the common method bias. The first questionnaire included items on

1 Researchers who have compared on-line and traditional mail respondents have concluded that there no significant responses biases between these two methods (refer to: Mehta & Sivada, 1995; Tse, 1998).

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leadership behaviors, and company and individual information. The second

questionnaire included questions on the CEO’s identity (whether he/she is a founder

or not), the leader’s traits (credibility) and self-reported commitment. Company code

(assigned by the researchers) and individual birthday were used to match the

respondents from the two surveys.

At the very beginning of the project, an invitation letter was sent to each of 89

CEOs who had attended executive training programs at a business school in North

China. Thirty one of them explicitly declined our invitation. We then sent emails to

the rest of the CEOs, asking for their support for the study. Those CEOs were required

to ask their employees to help complete the first questionnaire within two weeks. In

the text of the email, the organization code was assigned and the hyperlink directing

to the on-line questionnaire was provided.

Three weeks later, we closed the access to the questionnaire and got 761

responses from 31 companies and then the second email was sent to the CEOs of the

31 companies, asking them to continue encouraging their employees to complete the

second questionnaire within three weeks. We closed the second survey at the

designated time and got 480 responses from 28 of the 31 companies. Matching the

two waves of survey data, 451 responses were available for our hypotheses testing,

with 4 to 40 from each of the 28 companies.

The majority of the CEOs are male (25; 89% of the total of 28), and most have

over three years of business administration experiences. The average age of the firms

is about seven years and twelve of them have more than 100 employees. Detailed

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information on the sample demographics is provided in Table 1.

________________________

Insert Table 1 about here. ________________________

Measures

Value-delivering behaviors. We used leadership behaviors to capture the

approaches leaders employ to deliver their personal values. Scales measuring

value-delivering behaviors were developed by the authors in reference to works by

Strange and Mumford (2002), Yukl and Falbe (1990), and House et al.’s (1999). For

example, six items indicating inspirational approach were developed based on one of

the subscales included in the Global Leadership and Organizational Behavior

Effectiveness (GLOBE) project survey instrument. A sample item reads: “The CEO is

highly involved and enthusiastic when talking about his values/beliefs.”

Originally, each dimension of the value-delivering way contained six items. To

refine the instrument, we used the data collected from the 310 respondents2 who

responded the first but not the second survey to conduct exploratory factor analyses

(EFA). Principal component analysis with varimax rotation was used to obtain the

factor structure among the 18 items. Eventually, four items were maintained for each

dimension and the refined EFA results are shown in Table 2.

________________________

Insert Table 2 about here. ________________________

Follower commitment. Follower commitment was measured by nine items

2 The data from those respondents was not used to test hypotheses.

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adopted from O’Reilly and Chatman (1986) and Becker (1992) with a few

modifications to fit the purposes of this study. Three items are used to measure each

dimension of commitment: compliance, identification, or internalization. The original

English protocol and the back translation were compared and modifications were

made to resolve discrepancies and ensure accuracy of meaning (Brislin, 1970).

All the scales were measured on a six-point Likert-scale. Their means, standard

deviation, inter-correlations and reliabilities are provided in Table 3. The Conbrach’s

α shown in the table are all over 0.7, demonstrating acceptable internal consistency of

the items in each scale.

________________________

Insert Table 3 about here. ________________________

DATA ANALYSES AND RESULTS

LISREL was used to test our hypotheses. The technique is ideal for the purpose

for two reasons: first, our conceptual framework involves multiple inter-correlated

independent variables (IVs) and dependent variables (DVs); secondly, the program

allows for simultaneously estimating path coefficients of multiple groups (samples)

and comparing the path coefficients across the groups (Jǒreskog & Sǒrbom, 1993).

Unlike conventional methods such as multiple regression, in which we need to control

some predictor variables to generate unique variance due to the IVs, in LISREL, we

do not need to introduce control variables since the technique is to reproduce the real

(observed) relationships among the target IVs and DVs according to the parsimonious

structural model.

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One primary purpose of our study is to compare founders and professional

managers, the multi-group structural equation modeling makes it possible for us to

examine the overall construct validity and to further test our hypotheses between the

two groups of leaders. Specifically, we first examined configural invariance and

factorial invariance to guarantee measurement equivalence across groups (Mullen,

1995; Myers, Calantone, Page & Taylor, 2000). Then, based on an acceptable

factorial invariance model, we investigated the structural (path) parameters to

compare the two groups of leaders.

Construct validity and measurement equivalence

Configural invariance was examined by running the 6-factor (3 IVs and 3 DVs)

CFA model (Model 0) separately for the founder and professional manager group to

see whether they shared the same conceptual framework ( )2()1(formform Λ=Λ ). We

evaluated the fit indices of the two separate models and the results suggested

reasonable configural invariance of latent constructs (χ2174=272.55, RMSEA=0.06,

TLI=0.94, CFI=0.95 for Model 0Founder, and χ2174=278.89, RMSEA=0.05, TLI=0.95,

CFI=0.96 for Model 0Pro-manager). The fit indices and estimated factor loadings of the

models also demonstrated acceptable convergent and discriminant validity for the

constructs in our study. Given the acceptable configural invariance, we developed a

baseline model (Model 1) for investigating factorial invariance, in which the two

groups were stacked and no constraints were imposed across groups.

By constraining all the 21 factor loadings to be equal across two groups,

factorial invariance was examined by comparing Model 2 against Model 1. The

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chi-square difference was investigated and there was no significant difference (∆χ215 =

23.08, p > .05) between the two models, suggesting reasonable measurement

equivalence across the two groups (see Table 4 for detail).

________________________

Insert Table 4 about here. ________________________

Hypotheses testing

Having obtained acceptable CFA results, we constructed a structural model,

Model 3 (see Figure 1), to estimate the paths from IVs and DVs for both groups. In

this model, we didn’t constrain any path coefficient to be the same across the two

groups. Path coefficients and their significance levels are provided in Figure 1, with

“F” indicating the coefficients estimated from founder group and “M” indicating the

coefficients estimated from professional manager group (see Figure 1 for detail).

________________________

Insert Figure 1 about here. _________________________

After obtaining the independent path coefficient from each group, we then

constrained all pairs of path coefficient to be equal across groups and obtained the

“overall” effects3 of the IVs on the DVs, which are indicated by the letter “O” in

Figure 1. The coefficients designated by letter “O” can be interpreted as the main

effects hypothesized in H1a, H2a, and H3a.

Results

H1a suggests CEOs using authoritarian approach will result in followers’

3 To test the main effects, another way is to run a structural model in which two subgroups are mixed. We also did in that way and got reasonably consistent results as reported in this paper.

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compliance without identification and internalization. The LISREL results indicate

that H1a is partially supported: the authoritarian approach relates to compliance (β

= .18, p < .05) without identification (β = -.15, n.s.), and additionally, the approach

negatively relates to internalization (β = -0.19, p < .05). H2a suggests CEOs using

policy-driven approach can achieve followers’ identification but not internalization

and it is partially supported. Results show that CEOs using policy-oriented approach

can not only achieve significant improvement in identification (β = .25, p < .05), but

also in internalization (β = .19, p < .05). H3a is supported because the inspirational

approach significantly relates to both internalization (β = .25, p < .05) and

identification (β = .23, p < .05).

Constraining a specific path to be equal across the two groups, we examined

the difference between the founder group and the professional manager group on the

particular path between the IV and the DV. For example, Model 4 was acquired by

constraining the path from inspirational approach to internalization to be the same

across the two groups. Results from model comparison indicate a worse fit from

Model 2 (the factorial invariance model) to Model 4 (∆χ27 = 17.49, p < .05), thus

demonstrating a significant difference between founder group and professional

manager group on the relationship between leader’s inspirational approach and

follower internalization. Incorporating the path coefficients independently estimated

from Model 3 (βFounder = .39, p < .05; and βPro-manager = .14, n.s.), we know founders

using inspirational approach are more likely to achieve followers’ internalization than

professional managers.

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Model 5 ~ Model 12 shown in Table 4were obtained through the same

technique as used in Model 4, i.e., by constraining a particular path coefficient to be

equal across the two groups. Results show that, of those paths from IVs to DVs, two

are significantly different between the founder group and the professional group. One

of them is the path from inspirational approach to follower identification (∆χ27 =

15.31, p < .05); the other is from policy-oriented approach to follower compliance

(∆χ27 = 17.37, p < .05). That means when exercising inspirational approach, leaders

who are founders are more likely to achieve follower identification than their

counterparts who are not founders. The same is true with the effect of policy-oriented

approach on follower compliance.

Statistically, the above results provide support for H3b, but not for H1b and

H2b. However, the patterns revealed are generally consistent with what are

hypothesized. One interesting is that when leaders use the authoritarian approach,

those who are founders are able to achieve compliance (β = .27, p < .05), but not

identification (β = -.13, n.s.) or internalization (β = -.15, n.s.); however, those who are

professional managers, using the same approach, cannot achieve compliance (β = .12,

n.s.), and what’s more their behaviors will significantly decrease follower

identification (β = -.22, p < .05) and internalization (β = -.26, p < .05). The results

show that the pattern for the relationship between value-delivering behaviors and

follower commitment are different for founders and professional managers. Even

when the same type of leadership behaviors is used, it is harder for professional

managers to make followers’ values align with the values of their own, thus harder for

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them to achieve high level(s) of commitment.

DISCUSSION AND CONCLUSION

Discussion and implications

This study identified three distinct approaches which are believed to be typical

ways Chinese CEOs use to deliver their personal values to followers. Accordingly, we

operationalized three types of follower commitment, compliance, identification and

internalization, as the outcomes of the value delivery process to represent the different

extent to which followers share the values of the leaders. The inquiry not only offers

theoretical links between value-delivering leadership behaviors and follower

commitment, but also provides practitioners with some unique managerial

implications.

Specifically, our results show that different value-delivering approach will

result in different levels of follower commitment. Authoritarian approach can only

result in followers’ compliance, whereas inspirational approach relates to high levels

of follower commitment, identification and internalization. Policy-oriented approach

may also relate to identification and internalization but the relationships seem not as

strong as those with the inspirational way. In order to obtain value congruence from

their followers, generally speaking, CEOs should use inspirational way as much as

they can.

However, the above suggestions may not be so “correct” if we take a closer

look at the difference between founder CEOs and professional managers. For founder

CEOs, the more inspirational behaviors they conduct to instill their personal values,

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the higher levels of commitment (identification and internalization) they can get from

the followers. But for professional managers, when they employ the same

individualistic approach to deliver their personal values, their followers may not buy

in. In other words, unless they have established a high level of credibility,

inspirational approach may not be the most effective way for professional managers to

deliver their values because of the inherited distrust followers generally have in them

as we previously addressed. Furthermore, professional managers should definitely

avoid using authoritarian approach, which is found to significantly decrease

followers’ identification as well as internalization. In contrast, founder leaders using

the authoritarian approach can at least achieve compliance, which may not necessarily

be dis-functional in Chinese organizations (Westwood, 1997).

In fact in our second survey instrument, we included four items measuring

CEO credibility (adopted from Rubin, Palmgreen, & Sypher (1994) scale; Cronbach α

= .88 in our study), which is designed to “check” one of our basic assumptions:

comparing to founder CEOs, professional managers are usually perceived to be less

credible. ANOVA test was performed and results showed that there was significant

difference between founder leaders and non-founder leaders in terms of perceived

credibility by followers (MFounder = 4.80, SD = .92; MPro-manager = 4.58, SD = .85; F(1,444)

= 6.12, p < .05). The results supported our arguments, however, instead of perceived

CEO credibility, we used CEO identity as a moderator in our framework for two

reasons. First, we believe that compared to perceived CEO credibility by followers,

CEO identity may bear a lot more interesting/potential moderating effect on related

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variables such as CEO’s motivation, CEO job involvement, and CEO compensation,

which should be different between founder CEOs and professional managers. Since

we have got some interesting findings, we hope our study will invoke more research

on the specific effects of those potential factors.

Secondly, the comparison between founders and professional managers can

provide unique and explicit implications for business leaders. For professional

managers, they need to be fully aware of the perceptions people carry and need to

work very hard to build up their credibility to win the trust from followers. And

because of the inherited distrust people have in them, professional managers should

rely more on the system or structure (institution-oriented) and avoid being too

personal (individual-oriented) when delivering values. Unless they have a very high

level of credibility, using inspirational way may make them look as if they are acting

or preaching. On the other hand, for those who are founder leaders, they should

capitalize the trust followers have in them and clarify their own values and seek value

congruence by taking more inspirational approach.

Limitation and suggestions for future research

In this study, we examined the value delivery process using follower reported

data. The sample size (451 in total, 192 followers under founder leaders and 259

followers under professional managers) seems reasonably sufficient for our

hypotheses testing. However, at the organizational level, our sample includes only 15

founder leaders and 13 professional managers. Also because we used a convenience

sample in which the CEOs are former students of executive programs, the results

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generated from the sample may be limited. To investigate the difference between

founder leaders and professional managers, future studies should extend sample sizes,

specifically, the number of CEOs.

As we can see from the sample, the size of the firms led by founders is

generally smaller than those led by professional managers. Although no study has

been conducted to directly examine the effects of firm size on value-delivering

process, it can be believed that a leader in a small company will be much easier to

“socialize” follower to make their values align with that of his/her own. Considering

the statistical power of using LISREL to analyze data, we didn’t include firm size in

our study, thus the threats from “small-size effects” still exist. Special attention should

be paid to the issue in future research in the area.

Conclusion

In the emerging economy of China, more and more businesses are led by

people “jumping into the sea” (Asiaweek, 1993; xiahai, one of the most popular

phrases in China in the 90’s, which describes people who quit job to start their own

businesses after the China “opened its doors to the West” and started its economic

reform). Although most of these companies are relatively small in size and product

capacity, together, they are playing an increasingly important role in the rapid growth

of Chinese economy (Chow & Tsang, 1994). The situation calls for great research

efforts to study managerial practices in those small and private firms in China. We

believe our attempt in this study will be the beginning of a stream of potential

research.

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Figure 1: Model and path coefficients

Note: F—Founder group M—Professional manager group O—Overall * p < .05

Inspirational approach

Policy-oriented approach

Authoritarian approach

Identification Compliance Internalization

F: 0.04 M: 0.18 O: 0.12

F: 0.44* M: 0.11 O: 0.23*

F: 0.27* M: 0.12 O: 0.18*

F: -0.13 M: -0.22* O: -0.15

F: 0.29* M: 0.25* O: 0.25*

F: 0.21 M: -0.18 O: -0.05

F: 0.18 M: 0.23* O: 0.19*

F: -0.15 M: -0.26* O: -0.19*

F: 0.39* M: 0.14 O: 0.25*

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Table 1: Demographics of the sample

Followers N=451

Leaders N=28

Firms N=28

Mean 35.0 (7.9)a Maximum 65 Age Minimum 20 Mean 5.3 (3.9) Maximum 27.0 Tenure/years Minimum .2 Male 65.4% 89.2% Sex Female 34.6% 10.8%

Firm Age 12.5 (11.3) less than 20 1 21 ~ 50 8 51 ~ 100 7 101 ~ 500 10

Firm size

501 and above 2 Founder 15 CEO identity Professional manager 13 Manufacturing 15 Trade & service 9 Industry Others 4

a The values in parentheses are SD.

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Table 2: EFA results (N=310) Scales & Items Fact

1 Fact

2 Fact

3 Authoritarian approach 1. Forces his values and opinions on those around him .86 .04 .04 2. Leave little room for autonomy since he wants things carried out

in accordance to his values/beliefs .82 .03 .04

3. Does not tolerate those whose values/beliefs are not consistent with his

.81 .02 .07

4. Disregard the needs of others in order to achieve the goals based on his own values/beliefs

.73 .03 -.02

Policy-oriented approach 1. Makes influence by making polite, formal, and clear requests .04 .84 .11 2. Behaves according to norms and procedures that are established

according to his values/beliefs .05 .84 .13

3. Backs up the orders with justification based on his values/beliefs .07 .67 .32 4. Will punish people only if they do not adhere to the key principles .03 .60 .11 Inspirational approach 1. Encourages us to devote ourselves to the vision and perform

exciting efforts .01 .16 .93

2. Is confident about his own values/beliefs, and develops them into a vision specifying a better future

.15 .28 .55

3. Is highly involved and enthusiastic when talking about his values/beliefs

-.03 .07 .54

4. Is willing to make personal sacrifices in the interest of his beliefs/values

.03 .35 .37

Percentage of total variance explained

22.3

20.3

14.6

Extraction Method: Maximum Likelihood. Rotation Method: Varimax with Kaiser Normalization.

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Table 3: Means, Standard deviation, correlations and reliabilities of IVs and DVs

(N=451) mean SD 1 2 3 4 5 6

Inspirational behaviors 4.17 .84 (.77)a

Policy-oriented behaviors 4.39 .77 .49** (.85)

Authoritarian behaviors 2.80 .90 .09* .06 (.76)

Internalization 3.32 1.00 .28** .26** -.05 (.82)

Identification 4.49 .99 .29** .35** -.01 .26** (.91)

Compliance 4.50 .96 .13** .06 .19** .06 .10* (.82) a The values in parentheses are Cronbach’s α. * p < .05 ** p < .01

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Table 4: Results of testing construct validity and hypotheses

Model χ2 Df RMSEA TLI CFI GFI ∆χ2 ∆df

Separate CFA model Model 0Founder

a Model 0Pro-manager

b

272.55 278.89

174 174

0.06 0.05

0.94 0.95

0.95 0.96

0.88 0.91

Model 1 (Unconstrained model)

550.33 348 0.05 0.94 0.95 0.91

Model 2 (Factorial invariance)

571.17 363 0.05 0.95 0.95 0.90 20.84 15

Model 3 (Path analysis)

583.57 369 0.05 0.94 0.95 0.90 12.40 6

Model 4(inspir internc) Model 5(inspire ident) Model 6(inspire comp) Model 7(policy intern) Model 8(policy ident) Model 9(policy comp) Model 10(auth intern) Model 11 (auth ident) Model 12 (auth comp)

588.66 586.46 584.19 583.64 583.67 588.54 583.77 583.92 584.00

370 370 370 370 370 370 370 370 370

0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

0.94 0.94 0.94 0.94 0.94 0.94 0.94 0.94 0.94

0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95

0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90

17.49* 15.31* 13.02 12.47 12.50 17.37* 12.60 12.75 12.83

7 7 7 7 7 7 7 7 7

a Founder group: N=192 b Professional manager group: N=259 c The path being constrained to be equal across groups * p < .05