Abstract
Orientation: Multinational corporations (MNCs) in Africa are facing leadership, effectiveness and cultural challenges.
Research purpose: The purpose was to determine the relationship between transformational leadership, perceived organisational effectiveness and organisational culture from the perspective of a MNC in Africa.
Motivation of the study: Transformational leadership, organisational culture and perceived organisational effectiveness have been studied in different contexts, yet it is not clear how these three variables relate to one another in a selected MNC in Africa.
Research approach, design and method: A survey was conducted amongst a non-probability sample of 400 employees from a population of 1256 employees. A quantitative research approach was applied and structural equation modelling was used to analyse the data.
Main findings: The results indicated that organisational culture did not positively relate to transformational leadership; perceived organisational effectiveness positively related to organisational culture; perceived organisational effectiveness did not positively relate to transformational leadership; and organisational culture mediated perceived organisational effectiveness and transformational leadership.
Practical and managerial implications: The research highlighted the important role of organisational culture in transformational leadership and overall perceived organisational effectiveness.
Contribution or value add: This study found that the MNC should focus on organisational culture in order to improve transformational leadership and perceived organisational effectiveness. An academic contribution was the dynamic relationship between the three variables.
Keywords: transformational leadership; perceived organisational effectiveness; organisational culture; multinational corporation; Africa.
Introduction
Background and contextualisation of the study
Multinational corporations (MNCs), also referred to as multinational enterprises, transnational corporations or transnational enterprises are key actors in contemporary international economic relations and have consistently grown in scope and influence because of globalisation (Zekeri, 2016). According to Leke, Chironga and Desvaux (2018), for global and African-based organisations looking to access new growth markets, Africa offers exciting opportunities to build large, profitable businesses. Its population is young, fast-growing and increasingly urbanised, whilst rapid technology adoption makes the continent a fertile arena for innovation, its population is young, fast-growing and increasingly urbanised, whilst rapid technology adoption makes the continent a fertile arena for innovation, although Africa’s business environment remains poorly understood by many executives in the developed world.
Yet Zekeri (2016) stated that the number of MNCs in Africa has increased over the years in various sectors of the African economy, such as manufacturing, production and services, and that the following have played a significant role in the expansion of MNCs and their activities worldwide:
- the developments in transportation and in communications technologies and costs
- organisational innovation within large organisations and institutions, which have made control at a distance possible
- the favourable political environment after the Second World War.
- the sustained liberalisation and privatisation programmes of many developed and developing countries.
Research gap and purpose
Mello (2019) stated that people are critical to the success of any global endeavour. If one adopts the perspective that people do determine an organisation’s success or failure, people management needs to be a key strategic issue in any global undertaking. Ironically, people are often neglected in the planning and establishment of global operations. Global leadership has been identified as a critical success factor for large MNCs (Mello, 2019).
Recently, leadership has also come under the spotlight as a key factor shaping how successfully organisations can deal with crises such as a pandemic (Wardman, 2020). People look to leaders for crisis management and need trust, stability, compassion and hope in the current unprecedented COVID-19 situation (Bierema, 2020). According to Van Dongen (2014), to ensure continued existence and growth in a competitive and rapidly changing global environment, organisations must develop leaders that are willing to take on and effectively handle both current issues and future challenges. Brown (2020) stated that the hope is that post-pandemic leaders will display the characteristics of resilience, vulnerability and empathy, yet the research of Wardman (2020) showed that many organisations do not have a structured process in place for developing their leaders, especially during a pandemic or in preparation for a pandemic. The pandemic posed another challenge to organisations: as they adapted to the digital era, more employees started to work from home. Organisational leaders had to develop new strategies on how to maintain their culture whilst ensuring that systems were in place for continued organisational effectiveness.
Multinational Corporations in Africa are facing leadership, effectiveness and cultural challenges (Amusan, 2018) and it led to the researchers addressing this research gap by specifically focusing on transformational leadership, perceived organisational effectiveness and organisational culture at a large MNC that provides insurance, investment and financial services worldwide. For the purpose of this research, only African branches were selected. It is against this background that the study aimed to establish that transformational leadership, perceived organisational effectiveness and organisational culture interact with one another in this MNC.
Literature review
The theoretical framework, transformational leadership, perceived organisational effectiveness and organisational culture are discussed next.
Theoretical framework
Contingency theory suggests that in order for organisations to be effective, organisational functions must fit with the organisation or external environment aspects to achieve organisational goals (Harney, 2016). Rekers (2013) stated that organisational culture and globalisation have a direct influence on organisational functions. The contingency theory claims that there is no best way to organise a corporation, to lead a company or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situations that MNCs constantly face. Contingent leaders should therefore be flexible in choosing and adapting to succinct strategies to suit changes in situation at a particular period in time in the running of the organisation (Samimi et al., 2020). To contextualise transformational leadership, organisational effectiveness and organisational culture, contingency theory is therefore suitable as a theoretical framework for this study.
Transformational leadership
Meraku (2017, p. 336) defined leadership as the process of influencing people so that their efforts are oriented towards achieving the goals of the organisation. The current COVID-19 pandemic has added another layer organisations have to contend with. As Nohria (2020) stated, whilst many leaders think crisis management is not their job, creating organisations that are strong and resilient in the face of uncertainty requires a new mindset, and that must be driven from the top. Certain leadership styles suited to a fast-moving world may not be successful in dealing with current leadership challenges, hence the ongoing development of the potential of employees in the organisation is regarded as a vital tool to keep abreast of competitors (Avolio, 2005). According to Rentfrow (2020), some universal leadership principles have been identified as being effective when employed specifically in a MNC.
Goleman (2000) found that effective leadership in a multinational environment could be achieved by employing three primary leadership styles:
- mobilising people toward change using vision
- serving by building emotional bonds
- leading others to greatness by developing people for future responsibility.
Tokar (2020) stated that leadership in organisations is a management approach in which leaders help set strategic goals for the organisation whilst motivating individuals within the group to successfully carry out assignments in service to those goals. Van Dongen (2014) agreed that leadership implies the capability to extract the utmost potential in others. Business leaders and chief human resource officers recognise the need to manage relationships actively and strategically with workforce segments beyond the enterprise, which increasingly has an impact on how an organisation delivers services and interacts with customers, especially in the current pandemic (Van Dongen, 2014).
Greeshma (2020) labelled these leaders as transformational, leaders with a style that extends beyond mere interaction, not only influencing and inspiring employees to look past their own interests, but also generating awareness of and alignment with the organisation’s purpose and mission. The theory of transformational leadership was first coined by Downton (1973). Downton (1973) categorised three leadership tendencies: transactional leadership, charismatic leadership and inspirational leadership. Avolio, Waldman and Yammarino (1991), Bass and Avolio (1990) mentioned the four Is of transformational leadership, namely idealised influence (modelling ethical and socially desirable behaviour, exhibiting enthusiasm about company strategy), inspirational motivation (to impart a vision that is appealing and worthy), intellectual stimulation (empowering employees to constantly be learning) and individualised consideration (giving employees a feeling of ownership in company goals and independence in the workplace). This work of Bass and Avolio (1990) was used as part of measuring transformational leadership.
Perceived organisational effectiveness
According to Mohamad (2020, p. 123), perceived organisational effectiveness means that an organisation optimises its resources and capabilities to achieve short-term and long-term objectives. An organisation is effective if it finds a balance between the demands of owners, employees, customers and community. Efficiency is created by setting objectives and goals that are clear, communicating effectively, securing resources from the environment, exhibiting great leadership and having an efficient and harmonious internal structure (Manoharan & Singal, 2019). Babalola and Nwanzu (2020) stated that effective functioning is the goal for every organisation. Perceived organisational effectiveness is the central question in any form of organisational analysis, the decisive dependent variable for organisational researchers and a consequence of the multitude of activities and behaviours of employees that is highly sought-after by organisational practitioners. Perceived organisational effectiveness aids in the assessment of the progress made towards the fulfilment of mission and the achievement of the organisation’s set goals (Mwai, Namada, & Katuse, 2018).
According to Rahmawati, Haerani, Taba and Hamid (2016), there are three main perspectives in analysing the effectiveness of the organisation, namely:
- perspective optimisation purposes, namely effectiveness assessed according to how much an organisation managed to achieve a worthy goal; focusing on a worthy goal achieved optimally; allowing a clearly recognisable assortment of often conflicting objectives; and noting some of the obstacles in order to achieve objectives.
- system perspective, namely the effectiveness of the organisation considering the integration of a variety of factors related to following a pattern (input, conversion, output and feedback) and including the environment as an external factor. In this perspective, the goal is not treated as an end state or as static, but as something that can be changed in the course of time (Karam, Haidar, Khawaja, & Al Laziki, 2017).
- the perspective of human behaviour, namely the concept of perceived organisational effectiveness, emphasising people behaviour in the organisation that affects the success of the organisation in the long term.
The balanced scorecard, according to Rigby (2017, p. 58), is a management tool to establish organisational effectiveness. A balanced scorecard defines an organisation’s performance and measures whether management is achieving desired results. The balanced scorecard translates mission and vision statements into a comprehensive set of objectives and performance measures that can be quantified and appraised. The study of Ramoutar-Prieschl (2015) investigated organisational effectiveness by providing insights into the factors associated with the balanced scorecard. The questionnaire used by Ramoutar-Prieshl (2015) to measure organisational effectiveness was used in this study.
Organisational culture
Organisational culture consists of a set of values and beliefs shared by members of a group that determine the way people think and act within the group context (Schein, 1984). Thus, organisations will differ from each other because of their culture (Alves & Alves, 2015). Recent studies have supported the notion that cultural factors play a crucial role within the business and management field (Boscari, Danese, & Romano, 2016). Organisational culture has been attracting more attention in the last few decades because of its potential role in improving the organisation’s prospects from the managerial perspective (Fisher & Wilmoth, 2018). Organisational culture is a collection of behaviours and traits in an organisation. It includes the behaviour, values and beliefs of those within the organisation (Groysberg, Lee, Price, & Cheng, 2018). According to Robbins and Judge (2019), the culture in the organisation is created and maintained in the organisation for a long time and is embedded amongst the employees. Joseph and Kibera (2019) argued that cultural values and assumptions build the mental frame for reasoning and responding to stimuli within the business environment. The values and assumptions determine employees’ perceptions of time, the nature of human activities and the horizontal and vertical relationships at the various levels within the organisation. The culture shared by most of the organisational members determines how the firm relates with its internal and external environment in the search for solutions to the organisation’s concerns about performance and survival in times of crisis (Morgan & Vorhies, 2018).
According to Rozkwitalska (2017, p. 1), the role of organisational culture seems to be more significant in multinational organisations, namely MNCs that need to create a consistent culture which combines all divergent subcultures in each country of their operations. For a MNC that is expanding its business globally, it is imperative to incorporate a cross-cultural framework that improves cross-cultural understanding and interactions. Its expatriate leaders need to develop the mindset of a globalist by mastering cross-cultural core competency (Lee & Shah-Hosseini, 2019). According to Janz (1987), rules, power and shared values are essential factors when measuring organisational culture. Janz (1987) stated that rules protect the rule user, power distribution varies from organisation to organisation and the way in which values are shared by employees may also differ. In this study, the organisational culture questionnaire of Janz (1987) was used to measure organisational culture.
Development of the hypotheses
In this study, four research hypotheses were developed and investigated. The development of each of these hypotheses is discussed next.
Transformational leadership and organisational culture
Bass and Avolio (1992) found that an organisation’s culture derives from its leaders and that culture affects the development of its leadership. Furthermore, effective leaders need to be attentive to the beliefs, values and assumptions in an organisation – in short, the organisational culture. Kolisang’s (2011) research showed that a strong organisational culture with values and internal guides for increased autonomy at lower levels can prevent top administration from expanding its personal power at the expense of middle-level administration.
The relationship between transformational leadership and organisational culture highlighted the following hypothesis:
Hypothesis 1: Organisational culture will be positively related to transformational leadership.
Organisational culture and organisational effectiveness
Locander, Hamilton, Ladik and Stuart (2002) conducted research on the effect of culture on organisational performance, which showed a statistically significant relationship between organisational culture and performance: r (0.658); p < 0.01. In contrast, a study conducted by on MNCs in the Egyptian market found no direct or indirect relationship between organisational culture and performance.
The relationship between organisational culture and organisational effectiveness highlighted the following hypothesis:
Hypothesis 2: Perceived organisational effectiveness will be positively related to organisational culture.
Organisational effectiveness and transformational leadership
According to Ivana and Nukic (2014), empirical research and analysis indicated that transformational leadership has a positive effect on individual performance and organisational outcomes. Harris, Leithwood, Day, Sammons and Hopkins (2007) reported that transformational leadership has a positive impact on follower performance and firm outcomes. The results of this study are in line with these findings. Madachian, Hussein, Noordin and Taherdoost (2016) stated that leadership is one of the vital factors for improving organisational performance.
The relationship between organisational effectiveness and transformational leadership highlighted the following hypothesis:
Hypothesis 3: Perceived organisational effectiveness will be positively related to transformational leadership.
Organisational culture is a mediator between perceived organisational effectiveness and transformational leadership in multinational corporations
According to Randeree (2009), leadership is above all responsible for providing proper organisational structure and shaping the flow of organisational culture. Effective leadership in companies tends to increase both the efficiency of employees and the efficiency, effectiveness, flexibility and productivity of the entire organisation; these in turn enhance the company’s performance. This study aimed to validate this notion. One of the assumptions of organisational performance is that employees’ capabilities improve organisations’ internal processes. These capabilities are influenced by several factors, including organisational culture that is divided into various factors and aspects, each of which has a different effect on performance. In fact, the existence of culture helps the organisation to have a clear, defined and understandable set of values aligned with its strategic goal and direction (Obafolli, Adame, & Garcia, 2018).
Organisational culture as a mediator between perceived organisational effectiveness and leadership in MNCs highlighted the following hypothesis:
Hypothesis 4: Organisational culture mediates perceived organisational effectiveness and transformational leadership.
A graphic presentation of the hypothesis is presented here.
The relationship between work engagement and talent management highlighted the following hypotheses:
According to research conducted by Church (2013), talent management positively relates to work engagement. The findings of Sopiah, Kurniawan, Nora and Narmaditya (2020) confirmed that talent management positively influences work involvement and employee performance. There is a significant positive relationship between talent management and work engagement (Toka & Hamida, 2020). Nobutaka (2021) found that talent management has an impact on work engagement. A summary of the hypotheses is illustrated in Figure 1.
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FIGURE 1: Hypothesised relationships and conceptual model. |
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Method
The research method, research context, sample, research approach and design, research instrument, data collection procedure, data analysis, measurement model evaluation and ethical considerations are discussed next.
Research method
In this study, a quantitative research approach was applied within a positivic research paradigm. Edmonds and Kennedy (2010) described quantitative analysis as a kind of academic analysis within which the researcher decides what to study, asks specific narrow questions, collects quantifiable data from participants, analyses these numbers and statistics and conducts the inquiry in an unbiased, objective manner. Bless and Higson-Smith (1995) stated that quantitative research is a research that depends on quantifying with the purpose of comparison and analyses of different variables. For this study, current, proven and tested questionnaires on the variables of transformational leadership, perceived organisational effectiveness and organisational culture were used. Data were collected directly from the sample group prepandemic. From the analysis of the statistical data gathered, conclusions were drawn.
Research context
This study was conducted at a large organisation that provides insurance, investment and financial services worldwide. The population was a selected MNC in Africa. Although the selected MNC has a direct presence in 32 African countries, only 4 countries, namely Namibia, Angola, Zambia and Botswana within the Southern African Development Community region, were considered for this study (the target population). The reason for this decision was that these four countries were accessible and executing the study in these countries was feasible and logistically practical. South Africa was excluded from the sample as it is seen as the parent country. The selected MNC had 1256 employees in managerial positions employed across the four Southern African countries, as per the sample frame provided by the human resources department at the headquarters in South Africa. These ranged from senior managers to intermediate managers and junior managers who were classified on the questionnaire as others. From a total population of 1256, a sample of 400 employees were targeted. A total of 262 respondents from the targeted sample completed the questionnaire on transformational leadership, organisational culture and organisational effectiveness.
Sample
For the purposes of this research, the sample was calculated as follows: target population size for survey (N) = 1256 and the targeted sample size (S) = 400. According to Sekaran (2000), for a sample of 1000 a 14% target is sufficient. To increase the response rate, a target sample of 400 was chosen. Hence the sampling fraction for each stratum was determined as 400/1256 = 0.32. The selected sampling method was proportional stratified random sampling. The total number of managers in each stratum (junior, intermediate and senior management) was supplied by the human resources department in the organisation and these numbers were used for the given calculations to determine how many questionnaires should be distributed to each stratum.
Table 1 illustrates that the sample size of responses was 262 across all four countries where the data were collected. Botswana contained most respondents with a percentage (%) value of 47 (n = 123), followed by Namibia, which had 33% of their respondents participating in the study. Zambia and Angola had the least number of participants taking part in the research study, with percentages of 15% and 5%, respectively.
| TABLE 1: Total sample size at each country setting. |
Research approach and design
To reach the goal of this research, a survey research design was employed. According to the National Science Foundation (2000), surveys are resourceful because numerous variables can be calculated without a substantial increase in either time or expenditure. Data are gathered relatively quickly from multiple respondents with limited costs and variations on the research design. Survey strategies offer the possibility of sampling from substantial predetermined groups. Thus, a survey method is exceedingly attractive at a point in which simplification of a sample is a fundamental research objective. The survey method is at times the only way to create a clear image of the mindsets and features of a huge population (Nardi, 2006). A self-administered questionnaire survey design was utilised for data collection purposes.
Research instrument
The following instruments discussed, namely transformational leadership, organisational culture and organisational effectiveness, are those that were used in the study.
Transformational leadership: The 21-item Multifactor Leadership Questionnaire by Bass and Avolio (1990, 1992) was utilised to measure the leadership variable. In the study of Louw, Muriithi and Radloff (2017), a Cronbach’s alpha assessment was performed to establish the reliability of the scales of the measuring instrument and the scores were considered very reliable compared with the minimum acceptable score of 0.7 (Nunnally & Bernstein, 1994). In their study, the Cronbach’s alpha was determined to be 0.7894. Sufficient evidence of validity and reliability for the scales measuring the independent and dependent variables is thus provided.
Organisational culture: The 18-item organisational culture questionnaire adapted from Janz (1987) was utilised to measure organisational culture. Day and Carroll (2003) determined the reliability of this questionnaire to be 0.8298.
Perceived organisational effectiveness: The 50-item questionnaire developed by Ramoutar-Prieshl (2015) was used to measure perceived organisational effectiveness. The questionnaire is based on the balanced scorecard. The Cronbach’s alpha for this section was determined by Ramaoutar-Prieschl in his study to be 0.8912.
Data collection procedure
In the data collection process, the primary researcher travelled to all four locations to ensure that the questionnaires were distributed to the identified sampled employees. A contact person from the human resources department assisted the researcher with the distribution of the questionnaire. Participation was voluntary. The completed questionnaires were placed in a sealed box to ensure confidentiality and the signed consent forms were placed in a separate sealed box from the completed questionnaires. The returned responses with missing values were excluded from the analysis.
Data analysis
The SPSS analysis software was used for the analysis of data. Descriptive statistics were reported in the form of frequencies, means and chi-squares. In terms of inferential statistics, the structural equation modelling (SEM) was used. Structural equation modelling’s goal is to determine the interrelationships amongst latent variables; it is also the same as path analysis because researchers will look at hypothesised relationships between constructs (Best & Kahn, 2006). For this reason, path analysis was used to test for mediation using the partial least squares path modelling approach. Confirmatory factor analysis (CFA) was conducted as part of SEM; Florian, Young and Rouse (2010) stated that CFA is a statistical technique used to verify the factor structure of a set of observed variables. Confirmatory factor analysis permits the investigation of the hypothesis that a relationship between determined variables and their underlying latent constructs exists. Bootstrapping was used to estimate the parameters and associated standard errors in the direct and indirect effect in the statistical analysis of the structural equation model through the non-parametric method.
Measurement model evaluation
Factor analysis was used to determine the construct validity of the questionnaire (Best & Kahn, 2006). This was done to ensure that the questionnaire was valid in a Southern African environment. In this study, content validity was conducted on all research instrument variables, and measuring items agreed and corresponded accordingly. This was achieved through consultation with professionals in both language and research, and each construct was assessed and modified appropriately for the study purpose. To measure internal consistency, the researcher used Cronbach’s alpha. According to Gliem and Gliem (2009), the Cronbach’s coefficient alpha is a measure of squared correlation between observed scores and true scores. The reliability of the questionnaires used was assessed using Cronbach’s alpha coefficient. The Cronbach’s alpha coefficient measures internal consistency, which refers to the degree to which the measuring instrument items are consistent in the construct that the instrument is attempting to measure. Bryman and Bell (2007) stated that Cronbach’s alpha, once computed, will produce a value that varies between 1 (representing perfect internal reliability) and 0 (representing no internal consistency), with the values 0.60 and 0.70 typically used as a cut-off point for a good level of internal reliability. In this study, a score of 0.70 was used as a cut-off score.
Ethical considerations
During the research stages, the researcher ensured that all processes undertaken in data gathering were ethical. The Faculty Research Ethics Committee of Tshwane University of Technology approved the study and permission was also obtained from the selected MNC to conduct the study at the organisation. The study followed the ethical principles of voluntary participation and harmlessness, autonomy and confidentiality disclosure, as well as analysis and reporting. These are explained briefly:
- The anonymity and confidentiality, interests of the subjects, identity and wellbeing were protected during the survey.
- Participants were informed that their participation was voluntarily and harmless.
- Participants gave their consent to participate in the study by signing a consent form.
- The purpose and outcomes of the study were clearly explained to the participants before the study commenced.
- Autonomy of the participants was preserved throughout the research process.
Results
Descriptive statistics
Demographic profiles of participants are presented in Table 2. Male participants made up 66% of the respondents in the study, whilst 34% were female. The age group of 26–35 years old (n = 120; 45%) predominated. Respondents who had been in service in the organisation for 11–20 years formed a majority of 87%, whilst the rest of the categories only constituted 13% of the total. Whilst 16% participants had a grade 12 qualification, 84% of participants overall had a post-grade 12 qualification. Just over a third of the participants had a diploma or degree (n = 93; 36%). Respondents in the intermediate management group constituted the highest proportion at 49% (n = 128), whilst 29% were in junior management and 22% in senior management positions.
| TABLE 2: Demographic profiling of respondents. |
Factor and reliability analysis
The factor and reliability analysis of the three variables is discussed next.
Reliability analysis to measure Cronbach’s alpha scores is presented in Table 3. Cronbach’s alpha was used to determine the acceptability of internal consistency. Reliability was acceptable when the Cronbach’s alpha score was 0.70 and above. All Cronbach’s alpha scores were above 0.70, which is an indication of reliability being acceptable for all three variables: transformational leadership (0.7994), perceived organisational effectiveness (0.8896) and organisational culture (0.8139).
| TABLE 3: Cronbach’s alpha scores for transformational leadership, perceived organisational effectiveness and organisational culture. |
Inferential statistics
The correlation and mediation analyses are presented next.
In Table 4 the mean, standard deviation (SD) and Pearson correlation coefficients are presented. Perceived organisational effectiveness had the highest mean score (3.6) and the lowest SD = 0.05. Transformational leadership had the second highest mean score, whilst organisational culture had the lowest mean score (2.9); the SD for both was equal to 0.09. The Pearson correlation measures if there is a significant relationship between different paths and whether the relationship is negatively or positively correlated. As shown in Table 4, there was a negative relationship between transformational leadership and organisational culture (r = −0.003) as well as between organisational culture and perceived organisational effectiveness (r = −0.435). The transformational leadership and organisational effectiveness path was positively correlated (r = 0.134). The organisational culture and perceived organisational effectiveness path was the only path that was significant; this indicates that the path was negatively correlated.
| TABLE 4: Mean, standard deviation and Pearson correlations between transformational leadership, perceived organisational effectiveness and organisational culture. |
Mediation effects: Structural equation results
Path analysis using SEM was used to measure if organisational culture was the mediator. The direct effect and total effects are presented and discussed in Tables 5 and 6.
| TABLE 5: Direct effects between different paths. |
| TABLE 6: Total effects between different paths. |
Coefficients (Coef.) in Table 5 were about 0.55 with a significant level (p = 0.001) for organisational culture, predicting perceived organisational effectiveness, and also for transformational leadership, predicting perceived organisational effectiveness. There was a change in coefficient and a change in the significant level (Coef. = 0.18; p = 0.431). Therefore, this is an indication that organisational culture was a mediator in transformational leadership, predicting perceived organisational effectiveness. The mediation model is illustrated in figure 2.
The path from leadership to organisational culture had a negative coefficient and was significant (p-value = 0.02). The path from leadership to perceived organisational effectiveness and path from organisational culture to organisational effectiveness had positive coefficients of 1.11 and 1.14, respectively, with the p-value of 0.020 and 0.001. Thus, both paths were significant. The different paths of the mediation effect are illustrated in table 7.
| TABLE 7: Path analysis between transformational leadership, perceived organisational effectiveness and organisational culture. |
Discussion
The results from this study showed a high correlation between organisational culture and transformational leadership. The relationship was significant at 0.05 but the coefficient was negative, meaning that transformational leadership could have a negative effect on organisational culture and vice versa.
This study showed that the path between organisational culture and perceived organisational effectiveness was 1.14 with a p-value of 0.001 and thus was significant. There was a high and positive correlation between the subfactors of organisational culture and perceived organisational effectiveness, meaning that as awareness of one increased so did the other. The results showed that culture had a strong impact on organisational performance. The MNC’s values that govern it indicate that the organisation understands the importance of culture for its operations and sustainability in the long term. Culture and performance are interlinked, as culture provides the foundation upon which effective performance can take place. The path analysis of the 3 variables is presented in table 8.
| TABLE 8: Path analysis of the three variables. |
The path from leadership to organisational effectiveness had positive coefficients of 1.11 with the p-value of 0.020. Madachian et al.’s (2016) view that leadership is one of the vital factors for improving organisational performance supports these results. Leaders, as key decision-makers, determine the acquisition, development and deployment of organisational resources, the conversion of these resources into valuable products and services and the delivery of value to organisational stakeholders. Thus, they are strong sources of managerial and sustained competitive advantage (Lincoln & Guba, 1985). There is a significant relationship between leadership and perceived organisational effectiveness (Ahmad et al., 2020; Ali & Anwar, 2021), as reflected in the findings of this study.
Previous studies confirmed that there is a significant relationship between organisational culture and leadership (Syakur, Susilo, Wike, & Ahmadi, 2020; Zoghbi-Manrique-de-Lara & Viera-Armas, 2017) and that organisational culture mediates the relationship between leadership and organisational commitment (Abdullah, Shamsuddin, & Wahab, 2015). Leadership and organisational culture influence organisational performance (Omira, 2015). The results from this study showed a strong correlation between culture and leadership. The relationship was significant at 0.05 but the coefficient was negative, meaning that leadership could have a negative effect on culture and vice versa. There are some cultures that make it very difficult for leaders to be effective.
The overall results of this study were consistent with the findings of Obafolli et al. (2018) that transformational leadership and culture play an important role in empowering people. The results also supported Chang’s (2018) findings that unit-level knowledge-sharing mediates the positive relationship between firm-level transformational leadership and unit-level performance. Organisational culture insignificantly predicted leadership in the study of Tran (2021). Organisational culture mediates the relationship between leadership and organisational commitment (Abdullah et al., 2015) and in this study organisational culture was a mediating variable. Leadership and organisational culture influence organisational performance (Omira, 2015); this concurs with the findings of this study. Park, Jeong, Jang, Yoon and Lim (2018) established the importance of a leadership framework in the global arena. The hypothesis description and decision are presented in table 9.
| TABLE 9: Hypothesis description and decision. |
Practical implications
According to Ricardo and Heather (2020), whilst respecting the local culture is important, organisations still need a cultural identity that unites employees throughout all locations. It is not always simple to understand organisational culture within a MNC, but it is of practical value that transformational leaders make an effort to better understand it. The organisational culture must therefore be conducive to positively influencing transformational leadership and to properly managing perceived organisational effectiveness.
Limitations of the study
A limitation of the study was that the sample size was small, even though it fell within the prescribed guidelines; a bigger sample could have produced more representative results. Geographical location was another limitation, as the locations were geographically dispersed and sending questionnaires via electronic media yielded no acceptable response rate at the start of data gathering. Although the world has shifted to the information technology age, a number of people are still sceptical about responding to online research. Thus, the researcher had to travel to all locations to hand-deliver the copies of the questionnaires. This slowed down the data-gathering process and could have influenced the response rate negatively. Another limitation was that the study was limited to one MNC with uniform operations procedures, so the perceptions are only applicable and relevant to that organisation, and the results may not to a certain extent be generalised to other independent organisations.
Recommendations
It is important to create an awareness amongst the managers of the MNC that perceived organisational effectiveness is positively related to the organisational culture. They should also notice that organisational culture did not positively relate to transformational leadership and that perceived organisational effectiveness did not positively relate to transformational leadership. The fact that organisational culture mediated perceived organisational effectiveness and transformational leadership should be further discussed and interventions should be developed and implemented to improve the organisational culture. Participation brings forth more opinions regarding what should be done (Ahmen, 2017). All the managers should be trained on ensuring the effectiveness of the MNC. Managers should also be trained to ensure that they are transformational leaders. Hence it is important for the managers as transformational leaders to recognise that they will expand their positive influence if they have a willingness to identify the limitations of their own cultural norms and accept and adapt to the culture of the host country.
For future research, a similar study can be conducted at other global branches of the MNC to compare the findings. A qualitative research method should be used to obtain more views and rich data about transformational leadership and other valuable leadership styles and perceived organisational effectiveness and organisational culture at this MNC. Research on the effectiveness of leaders during and after the COVID-19 crisis should examine an array of activities, including the degree to which remote leaders are persuasive if they (1) clearly state their values that will guide institutional actions, (2) understand and openly discuss the travails and hopes of their organisations, (3) clearly communicate an ambitious vision of the direction that the unit will head towards and (4) demonstrate confidence that strategic goals can be achieved. These skills are referred to as charisma (Antonakis et al., 2016; Grabo, Spisak, & Van Vugt, 2017) and require training and investment. Indeed, crises can bring about changes in leadership styles (Stoker, Garretsen, & Soudis, 2019) and firms can be better prepared by ensuring they have adequately invested in professional development.
Conclusion
The purpose of this research was to determine the relationship between transformational leadership, perceived organisational effectiveness and organisational culture in a selected MNC in Africa. It was clear that perceived organisational effectiveness positively related to organisational culture and that organisational culture mediated perceived organisational effectiveness and transformational leadership. This study found that the MNC should focus on organisational culture in order to improve transformational leadership and perceived organisational effectiveness. An academic contribution was the dynamic relationship between the three variables.
Acknowledgements
Competing interests
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
Authors’ contributions
Y.T.M. did the research together with analytical analysis of the researched data and the development of a framework determining the mediating factor. I.S. was the supervisor and C.M.S. was the cosupervisor for this study.
Ethical considerations
The Faculty Research Ethics Committee of Tshwane University of Technology approved the study (no. FREC2016/FR/09/005-M5) and permission was also obtained from the selected MNC to conduct the study at the organisation.
Funding information
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Data availability
The data were recorded on an Excel spreadsheet and captured using the SPSS V23 software package. The data were kept electronically and in hard copy. The original completed questionnaires were also stored.
Disclaimer
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors.
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