The Emerging Role of Transformational Leadership in Globalized Markets - A Literature Review

T h e J o u r n a l o f D e v e l o p i n g A r e a s
Special Issue on Sydney Conference Held in April 2015
Volume 49 No. 6 2015
THE EMERGING ROLE OF
TRANSFORMATIONAL LEADERSHIP
Mostafa Sayyadi Ghasabeh
Claudine Soosay
Carmen Reaiche
University of South Australia, Australia
ABSTRACT
This paper presents a literature review of leadership over the years and the emerging role of
transformational leadership. We also argue that this form of leadership is appropriate in the context
of globalized markets, where there is increasing diffusion of goods, services, values and technologies
globally, which results in the convergence of societies toward a uniform pattern of economic,
political and cultural organization. There are various issues and consideration existing in the
leadership literature as “the core of the criticism in the literature is that organisations of all sorts
(corporations, government agencies, and not-for-profit organisations) tend to be over-managed
(and/or over-administrated) and under-led” (Mills 2005, p.19). Mills (2005) highlights the vital
importance of leadership in both political and business areas, and argues that organisations in both
areas, in the absence of effective leadership, are not capable of effectively implementing changes at
the organisational level. This paper adopts a conceptual approach aiming to convey the importance
of transformational leadership amongst other styles. In this paper, we review the role of leadership
in the business area and establish the need to investigate transformational leadership, as an ideal
leadership form in enabling firms to accomplish sustainable competitiveness as they operate in global
markets. Based on the various leadership theories discussed be further argued that leadership is highly
essential for business organisations to achieve a sustained change and eventually higher degree of
effectiveness, especially when operating in global markets. Transformational leadership, comprising
characteristics of idealised influence, individualised consideration, intellectual stimulation, and
inspirational motivation has been found to have implications for higher leadership effectiveness in
new market environments and production locations. Various empirical studies highlighted
transformational leadership as an enabler of innovation. To demonstrate the role of transformational
leadership in organizational innovation, it can be argued that these leaders facilitate the generation
of new knowledge and ideas through applying intellectual stimulation aspect that motivates
employees to approach organizational problems in a more novel approach. Accordingly, we establish
the appropriateness of transformational leadership as a managerial-based, output-based as market-
based competency for firms in globalized markets. We conclude by providing suggestions and scope
for empirical investigation into local organizations to evaluate the extent of transformational
leadership apparent and how effective they can be in globalized markets. The findings from empirical
studies could provide managerial and research implications on a Nation’s competitiveness in today’s
dynamic and globalized environments.
JEL Classifications: M10, M120
Keywords: Leadership, Transformational Leadership, Globalized Markets, Local Firms
Corresponding Author’s Email Address: [e-mail]

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INTRODUCTION
The business environment is constantly changing as organizations are increasingly
participating in global markets. Globalized markets place demands on the roles of leaders
in organizations operating in this modern environment. In Kock and Slabbert’s (2003)
view, the emergence of global business environments drives companies to become world-
class. They argue that leaders within companies can play a crucial role in achieving a high
level of effectiveness and world class efficiency. Today’s globalized nature of
competitiveness is placing more pressure on organizations to employ effective leaders who
are capable to develop a global vision for organizations. Local strategies need to be
realigned with the global economic integration and for individual countries to remain
competitive at the same time. There are many studies that focus on the organizational and
managerial factors that drive firm competitiveness. Leadership is one such area that plays
a critical role and is a strategic prerequisite for business success in global markets. In this
paper, we review the role of leadership in the business area and establish the need to
investigate transformational leadership, as an ideal leadership form in enabling firms to
accomplish sustainable competitiveness as they operate in global markets.
THE CONCEPT OF LEADERSHIP AND THEORIES
Burns (1978, p. 2) reviewed the historical foundations of leadership, and concluded that
“leadership is one of the most observed and least understood phenomena on earth”. There
is no comprehensive definition that encompasses all of the leadership aspects. Although
the current definitions on the concept of leadership are somewhat different, it can be seen
that these definitions provide various viewpoints about leadership that could positively
contribute to define the concept of leadership. In the reviewed literature, leadership is
defined as influenced interactions with groups of followers to implement changes and
achieve the determined goals (Rost 1991; Bess & Goldman 2001; Zaccaro, Rittman &
Marks 2001; Kan & Parry 2004; Ohman 2000; Osborn, Hunt & Jauch 2002; Pearce &
Conger 2002; Mills 2005; Vroom & Jago 2007; Western 2008). Therefore, this concept of
leadership creates change through taking process-oriented and relationship-practices in
pursuit of attaining goals. In an attempt to portray the concept of leadership, various
leadership theories have been presented to date and are now briefly review below.
Trait Theory
In Judge, Piccolo and Kosalka’s (2009, p.855) view, “the leader trait perspective is perhaps
the most venerable intellectual tradition in leadership research” that highly recommends an
approach in which “great men and women with certain preferred traits influencing
followers to do what the leaders wish in order to achieve group or organizational goals that
reflect excellence defined as some kind of higher order effectiveness” (Rost 1991, p. 94-
95). Whetten and Cameron (1991) collect these traits in the second edition of Developing
Management Skills, and summarise them as being honest, inspirational, competent and
credible. Similarly, Kirkpatrick and Locke (1991, p.48) identify the following traits: “drive
(a broad term which includes achievement, motivation, ambition, energy, tenacity, and
initiative), leadership motivation (the desire to lead but not to seek power as an end in

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itself), honesty and integrity, self-confidence (which is associated with emotional stability),
cognitive ability and knowledge of the business.” Table 1 presents an illustration of the
traits of leadership.
TABLE 1. TRAITS OF LEADERSHIP
Researchers Leaders’ Traits
Stogdill (1948) Alertness, Initiative, Intelligence, Insight, Persistence,
Responsibility,
Self-confidence, Sociability
Mann (1959) Adjustment, Conservatism, Dominance, Extroversion,
Masculinity
Stogdill (1974) Achievement, Cooperativeness, Initiative, Influence, Insight,
Persistence Responsibility, Self-Confidence, Sociability,
Lord, DeVader and
Alliger (1986)
Dominance, Intelligence, Masculinity
Kirkpatrick and
Locke (1991)
Confidence, Cognitive ability, Drive, Integrity, Motivation
Zaccaro, Kemp and
Bader (2004)
Agreeableness, Cognitive abilities, Conscientiousness,
Emotional stability, Extroversion, Intelligence, Motivation,
Openness, Problem solving, Self-Monitoring, Social
Intelligence,
Source: Zaccoro, Kemp and Bader (2004)
Behavioural Theory
The paradoxes, as mentioned above, could have been the impetus for a change in the focus
of leadership studies (Marturano & Gosling 2008), and encouraged researchers instead to
embark on empirical studies to identify “leader behaviours and accompanying
categorisation schemes” (Pierce & Newstrom, 2008, p. 165). Stogdill and Coons (1957)
and Likert (1961) investigated the behaviours of leaders at both universities of Ohio and
Michigan, and also classified leadership styles, which are rated in two aspects of task and
people. These studies aimed to portray the best leadership style in both aspects of task and
people, and also illustrate the behaviours of effective versus ineffective leaders.
Ohio State Studies
To investigate effective behaviours in leaders, Stogdill and Coons (1957) conducted an
empirical study in which they employed a Leader Behaviour Description Questionnaire
(LBDQ) for subordinates to evaluate the behaviours of their leaders, using 150 items that
reflect important functions of a leader. More importantly, Stogdill and Coons (1957) rated
these behaviours using a range between two aspects of initiating structure and
consideration. They commented that a leader can score high or low on each of these
aspects. While initiating structure refers to the “behaviour that organises and defines
relationships or roles, and establishes well-defined patterns of organization, channels of