Increased economic globalisation has brought frequent discontinuous change to the workplace, such as currency volatility, short product cycles and changing governmental regulations. In response, many organisational theorists are touting the importance of cultivating 'innovative' and 'creative' workplaces to ensure corporate survival and long-term viability. However, creativity is a complex process that demands great personal involvement from employees, especially given that most creative ideas are likely to fail; and even successful ideas often require a substantial investment in time and money before returns can be realised. This makes the effectiveness of creative behaviour difficult to measure and track through biannual performance reviews. Thus, fostering employee creativity presents a difficult challenge for managers. Recently, theorists have argued that managers require certain skills and behaviours beyond technical expertise.
Transformational and charismatic leadership theory offers insight into the effective management of employee creative behaviour. This leadership paradigm describes behaviour that causes followers to overcome great odds and perform beyond expectations. However, managers rarely operate in a vacuum, but are resourced and constrained by organisational policies, practices and procedures. Therefore, the effectiveness of their behaviour may be coloured by employee perceptions of those organisational factors (organisational climate).
The main aim of this thesis was to develop and test an integrated model of transformational/transactional leadership behaviour and organisational climate, and explore the effect of these factors on individual reactions (creative behaviour, attitudes and perceptions) in creative work contexts. The relative merit of two models were compared: the first conceptualised climate as a moderator of the effect of leadership behaviour and follower reactions, while the other conceptualised climate as a mediator between leadership behaviour and follower reactions. A further aim was to determine other possible mediating variables that might explain the effect of leadership behaviour.
Study 1 (N=176) used an experimental design to simulate the creative work context and assess whether organisational climate for innovation (low versus high support for innovation) would moderate the effect of leadership behaviour (transformational versus transactional) on follower reactions (creative behaviour, attitudes and perceptions). The presence of a reward was also manipulated with half of participants informed that they would be rewarded based on their performance, while the other half were not. Undergraduate students participated in this study and were asked to respond, via computer, to a problem involving traffic congestion and parking shortages at their university. Leadership behaviour and organisational climate were manipulated using scripts and presented on the participants' computer screen. Task specific self-efficacy was tracked over two time points, and assessed as a possible mediator between leadership-climate interaction and follower reactions. Results showed that leadership behaviour and climate for innovation did interact on important attitudinal and performance outcomes, and this interaction did not differ between reward conditions. Specifically, followers working under the transformational leader produced more novel and detailed responses when placed in the highly innovative climate (innovative) organisation, compared to the low (traditional organisation); transactional leadership was not affected by climate for innovation on these measures. However, a different pattern of interaction occurred on the attitudinal variables. That is, followers under the transformational leader did not differ in terms of task satisfaction, change in task-efficacy, and level of commitment to their leader between the traditional and creative organisations. Conversely, those working under the transactional leader were adversely affected by the innovative climate on these measures, compared with the traditional climate. Mediation analysis revealed that change in task-efficacy significantly carried the influence of the leadership style-climate interaction on task satisfaction.
Study 2 (N=76) built upon study1 by focusing on different levels of transformational leadership (+/-1 standard deviation from the mean), and examining how this would interact with different levels of climate for innovation on employee attitudinal reactions. The role of climate as a moderator and mediator of transformational leadership were compared. Also, leader-member relations and job specific self -efficacy were assessed as mediators of the effect of transformational leadership on employee attitudes. Results indicated that transformational leadership and climate for innovation interacted in terms of employee commitment to their leader, perceived effectiveness of their leader, and rated quality of relationship with their leader (LMX). The pattern of interaction was consistent across these variables such that the effect of relatively high transformational leadership did not reliably differ across low versus high perceptions of climate for innovation. Alternatively, relatively low transformational leadership showed a reliable positive association between climate for innovation and these measures. Mediation analysis showed that LMX mediated between the transformational leadership by innovative climate interaction and both employee commitment to, and perceived effectiveness of, their leader. An assessment of climate as a mediator of transformational leadership was significant on employee wellbeing.
Study 3 (N=439) extended study 2's analysis to a large sample of multiple industrial and service organisations, and incorporated a molar measure of climate in place of an innovation specific measure. The purpose of this study was to test the generalisability of the findings from study 2 to a different context and a broad-based measure of climate. Again, the effect of leadership and climate on employee attitudes was examined. LMX was again assessed as a mediator of leadership behaviour on employee attitudes. Results were consistent with the findings of study 2. That is, managers rated low on transformational leadership resulted in a significant positive relationship between organisational climate and employee 'leader-related' attitudes (leader satisfaction, leader effectiveness and LMX). Managers rated as high on transformational leadership were equally effective on these leader-related attitudes, irrespective of employee perceptions of organisational climate. Although, follow-up analyses showed that managers rated high on transformational leadership were associated with a significant positive relationship between employee perceptions of their organisation's climate and the effectiveness of their leader. Again, similar to study 2, LMX was found to mediate the relationship between transformational leadership by climate interaction and both employee satisfaction with, and perceived effectiveness of, their leader.
The findings of this thesis gave mixed support for the integrated model. However, all studies indicated that climate be conceptualised as a moderator, rather than a mediator, of transformational leadership. Furthermore, the findings suggested that self-efficacy and LMX may be important mediators of the effect of leadership behaviour in combination with organisation climate. These findings were discussed in terms of past research and theory, while theoretical contributions and practical implications were highlighted. Methodological strengths and possible weaknesses of this research program were outlined, and culminated in suggestions for future research.