Seediscussions,stats,andauthorprofilesforthispublicationat:http://www.researchgate.net/publication/223907246

EffectsofleadershiponorganizationalperformanceinRussiancompanies

ARTICLEinJOURNALOFBUSINESSRESEARCH·FEBRUARY2002

ImpactFactor:1.48·DOI:10.1016/S0148-2963(00)00174-0

CITATIONS

55

DOWNLOADS

1,854

VIEWS

297

1AUTHOR:

DetelinElenkov

AngeloStateUniversity

25PUBLICATIONS706CITATIONS

SEEPROFILE

Availablefrom:DetelinElenkov

Retrievedon:21June2015

Effects of leadership on organizational performance in

Russian companies

Detelin S. Elenkov*

School of Management, New York Institute of Technology, 1855 Broadway, New York, NY 10023, USA

Received 1 February 2000; accepted 1 July 2000

Abstract

This study investigated concurrently the main effects of the transformational- and transactional-leadership behaviors on organizational

performance of Russian companies, the moderating effects of support for innovation on the relationship between the transformational-

leadership behaviors and organizational performance, and the impact of group cohesiveness on transformational-leadership behaviors in a

Russian context. The results demonstrated that transformational leadership directly and positively predicted organizational performance of

Russian companies over and beyond the impact of transactional leadership; Russian managers who displayed more transactional-leadership

behaviors also made a positive contribution to the achievement of organizational goals; support for innovation significantly moderated the

relationship between transformational leadership and organizational performance; and group cohesiveness was positively related to the

ratings of transformational leadership. These research findings were, then, used to draw conclusions concerning finding new effective ways to

promote organization development (OD) and to achieve better organizational performance results in Russia. The potential benefits for

Russian companies of Full Range of Leadership Development Modules, process consultation (PC), sensitivity training, and other OD

techniques were discussed. D 2002 Elsevier Science Inc. All rights reserved.

Keywords: Leadership; Organizational performance; Russia

For almost 10 years now, Russia has been undergoing a

transformation from a centrally planned economy to a mar-

ket-oriented one. Accordingly, the Russian government has

introduced a series of sweeping economic reforms, including

the use of freely fluctuating market prices, the initiation of a

process that will ultimately break down economic monopo-

lies, the creation of conditions for the establishment of a

private sector in many areas of economic activity, the

elimination of most food subsidies, and the reduction of

subsidies for fuel and most other basic commodities.

However, there is a wide range of statistical evidence that

indicates that the state of the Russian economy has been

deteriorating sharply since the end of the cold war. Russian

gross domestic product fell about 45% from 1989 to 1997.

Real capital investment plunged by 92%over the same period.

Moreover, net productive investment has turned negative as

aging equipment has become unusable. The output of the oil

industry — one of Russia’s main sources of export revenue

— has dropped by about 50% (Koretz, 1998).

Many business scholars, political economists, business

executives, and politicians agree that economic problems in

Russia have a lot to do with the style of management at

various levels in that country. Statistical evidence has

demonstrated that economic inefficiency in Russia has been

a long-lasting problem. Paradoxically, Russia would earn

twice as much as its present total GDP, if all the raw

materials that the country produce were sold abroad. In

other words, Russian companies have appeared to subtract,

not add, value to the raw materials they consume. By this

measure, ‘‘Russia would be better off if every industrial

worker stopped working.’’ (The Economist, Dec. 5, 1992:

p. S10). Although business experts may find some faults

with the above-mentioned measure of economic (in)effi-

ciency, macro-economic policies, as well as company man-

agement in Russia, are clearly in a desperate need for radical

improvements in order to reverse the negative trends of the

recent past and to achieve positive economic results in a not-

very-distant future.

One possible way of achieving the hoped-for improve-

ments is to make appropriate changes in Russian companies

by creatively taking advantage of the best modern theories of* Tel.: +1-261-1602; fax: +1-261-1593.

E-mail address: delenkov@nyit.edu (D.S. Elenkov).

Journal of Business Research 55 (2002) 467–480

0148-2963/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved.

PII: S0148 -2963 (00 )00174 -0

management and organizational behavior has to offer. These

theories have been credited for helping managers in the

United States, Japan, and other countries in finding adequate

solutions to the most fundamental problems facing their

companies (e.g., Pfeffer, 1995; Hackman and Wageman,

1995). It has already been recognized that studies testing

management and organizational behavior theories, which

have originated in the West, in a Russian context may be

of particular value to achieve organizational improvements in

Russian companies and international joint ventures in that

country (Welsh et al., 1993; Buchko et al., 1998). Besides,

such studies can give management scholars an opportunity to

re-evaluate the applicability of conceptualizations and mea-

surement techniques that have been developed and employed

in studies conducted in the West in a new cultural context

(Banai and Teng, 1996; Elenkov, 1998). Unfortunately,

research efforts in this area have been mostly sporadic and

the used measurement techniques have seldomly been

adapted to the specificity of cognitive abilities of Russian

managers. This is not to say that we know absolutely nothing

about the potential applicability of Western schools’ manage-

ment and organizational behavior theories in Russia, as some

significant results have already been obtained by a number of

researchers (Welsh et al., 1993; Luthans, 1993; Holt et al.,

1994; Puffer et al., 1994, 1997; Veiga et al., 1995; Banai and

Teng, 1996; Gurkov, 1996; Filatochev et al., 1996; Ralston

et al., 1997; Arino et al., 1997; Stewart and May, 1997;

Elenkov, 1998; Buchko et al., 1998; May et al., 1998;

Randall and Coakley, 1998; Luthans et al., 1998a,b; Bradley,

1999; Fey and Beamish, 1999).

For example, Welsh et al. (1993) highlighted both some

potential benefits and likely problems of transporting US-

based human resource management theories and techniques

to Russia. The findings of their research indicated that

extrinsic rewards and behavioral management interventions

had a positive impact on the performance of Russian textile

workers, while a participative intervention did not result in

improved individual performance. Using organizational

behavior techniques, developed in the West, Holt et al.

(1994) revealed that Russian workers felt uncertain about

the benefits of adjusting to a market economy, and that

social infrastructure in Russia was inadequate to cope with

the new expectations for self-direction and individual

responsibilities in Russian companies. Puffer et al. (1997)

examined the beliefs about work of 292 Russian managers

who were surveyed using Buchholz’s 45-item instrument

depicting six major belief clusters. The researchers found

important differences in some beliefs among managerial

groups depending upon managerial level, age, and gender.

In another recent study, Buchko et al. (1998) found that US-

based theories regarding antecedents, correlates, and con-

sequences of organizational commitment were generally

applicable to Russian companies. Luthans et al. (1998b)

made, in turn, a case for the use of behavioral management

as a pragmatic and effective way to help Russian managers

improve individual on-the-job performance. The five-step

Organizational Behavior Model was presented. The success-

ful use of the Organizational Behavior Model in a Russian

factory was, then, given a detailed attention. The researchers

stressed the importance of contingently administered social

reinforcers to increase employee performance at little or

no cost.

Relatively few management and organizational behavior

studies have, however, explored leadership behaviors in

Russia. Early research on that topic (e.g., Blazyca, 1987;

Aage, 1991; Laszlo, 1992) essentially argued that leadership

studies on that country should shift focus from recommend-

ing changes at the government level to finding appropriate

ways to achieve effective decision making in the private

sector. Accordingly, Collop (1986) suggested that business

leaders in Russia should be offered multi-stage training

programs emphasizing flexibility and founded on the belief

that leaders should not be expected to be effective unless

they could draw on specific knowledge and information on

which to base their decision making. McColl (1991) added

that an effective leader in the economies in transition should

develop and/or refine his or her expertise in six fundamental

areas: a powerful business vision; a workable plan; the

ability to set goals; tenacity and perseverance; the power

to mold cooperative teams; and strong values and ethics. In

another early study on leadership in Russia, Puffer et al.

(1994) presented a set of leadership traits of Russian

managers in ‘‘the traditional Russian society,’’ during the

communist regime, and in the beginning of 1990s. The

researchers focused the discussion in their article mainly on

four leadership traits: leadership motivation, drive, honesty

and integrity, and self-confidence. In a more recent article,

Luthans et al. (1998a) argued that a better understanding and

analysis of the so-called ‘‘dark side’’ of leadership appeared

to be necessary, taking into account the continuing crises

facing transforming former communist countries to some

form of capitalism. Luthans et al. examined the character-

istics and reasons for the potential of this negative side of

leadership. Moreover, they made a case in favor of the use

of more democratic leadership approaches in Russia and

other post-communist countries. However, Luthans et al.

(1998a) recommended against the application of transfor-

mational leadership in Russian companies.

Most of the prior research on leadership in Russia,

suffered, however, from the common mistake of accepting

certain stereotypical views of enterprise management in that

country, instead of truly analyzing the transformation taking

place in companies there (see Liuhto, 1999a for a compre-

hensive review of that topic). Besides, it has recently been

emphasized that post-Soviet management has less experi-

ence in managing organization-cultural change than in

executing concrete measures within an enterprise, due to

the fact that a Soviet manager’s duties excluded that of

learning change (Liuhto, 1999b). Therefore, learning orga-

nization development (OD) and change techniques origi-

nated in the West appears to be a critically important task

facing Russian leaders.

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480468

Evidently, there is a great need for further empirical

research, as well as for using more rigorous methodology

to investigate the dynamic changes taking place in Russian

companies and to find effective ways to promote their

organizational development. As it has already been demon-

strated that leadership research holds a great promise to

bridge the gap between the postulates of Western manage-

ment and organizational behavior theories and the require-

ments of business practice in Russia, further empirical tests

of Western leadership concepts and the use of measurement

techniques, which take into consideration the specificity of

cognitive abilities of Russian managers appear to offer an

opportunity to find effective ways to improve organizational

performance of Russian companies.

1. Leadership styles

Transactional leadership has dominated leadership re-

search since World War II. It is embodied in the path-goal

model (House, 1971) that attempts to explain why and when

leadership-by-contingent-reward works. According to Burns

(1978), transactional leadership behaviors are founded on an

exchange process in which the leader provides rewards in

return for the subordinate’s effort. In essence, leader–

follower relationships are believed to be based on a series

of transactions or bargains between leaders and followers. In

addition, transactional leadership is assumed to critically

depend on contingent reinforcement, either positive or

negative. Transactional leaders clarify how a follower’s

needs will be met in exchange for enactment of the

follower’s role; or the leader may react only if followers

fail to meet their role requirements. Thus, transactional

leaders have been presumed to take advantage of contingent

reward and active/passive management-by-exception leader-

ship approaches (e.g., Bass, 1985, 1997; Hater and Bass,

1988; Howell and Avolio, 1993; Sosik et al. 1997). The

distinction between active and passive management-by-

exception primarily depends on the timing of the leader’s

intervention. In the active form of management-by-excep-

tion, the leader continuously monitors performance out-

comes to take corrective action before omissions or mistakes

become a serious problem. The leader actively searches for

deviations from what is expected. In passive management-

by-exception, the leader takes corrective action only after a

significant problem has emerged. The leader waits until the

task is completed before determining that a problem exists

and then intervenes with criticism or takes more serious

punitive measures.

More recently, several new leadership theories variously

labeled transformational, charismatic, or inspirational have

been proposed (House, 1977; Burns, 1978; Bass, 1985;

Tichy and DeVanna, 1986; Conger and Kanungo, 1987;

Shamir et al., 1993; Yammarino, 1994). Research on trans-

formational leadership theory has expanded the range of

leadership characteristics being systematically examined

beyond the boundaries of transactional theories. Instead

of simply catering to the immediate self-interests of fol-

lowers, the transformational leader has been conceived to

broaden followers’ views towards transcending self-inter-

ests for the good of the group, increasing awareness about

the issues of consequence, and increasing the need for

growth and self-actualization (Yukl, 1994; Bass, 1997;

Northouse, 1997; Waldman and Yammarino, 1999). Such

behaviors broaden the range of leadership beyond simply

focusing on constructive or corrective transactions. Exam-

ples of this new focus on leadership include the work of

House (1977), Bass (1985), Bennis and Nanus (1985),

Tichy and DeVanna (1986), Conger and Kanungo (1987),

Boal and Bryson (1988), Howell and Frost (1989), Shamir

et al. (1993, 1998), Yammarino (1994), Podsakoff et al.

(1996), Pawar and Eastman (1997), Wofford et al. (1998),

Pillai and Williams (1998), Waldman and Yammarino

(1999), and Avolio (1999). All of these approaches share

the common perspective that effective leaders transform or

change the basic values, beliefs, and attitudes of followers

so that they are willing to perform beyond the minimum

levels specified by the organization. Transformational lea-

dership fits very well into a strategy oriented towards

massive changes.

Some of the transformational leadership research (e.g.,

House, 1977; Bass, 1985; Bennis and Nanus, 1985; Conger

and Kanungo, 1987; Howell and Frost 1989; Shamir et al.,

1993; Pawar and Eastman, 1997; Waldman and Yammarino,

1999) have been primarily conceptual in nature, focusing on

the identification of the key transformational behaviors, and

the development of theories of their antecedents and con-

sequences. Another part of this research has focused on

empirically testing these conceptual frameworks (e.g.,

Waldman et al., 1987; Yammarino and Bass, 1990; Podsak-

off et al., 1990; Sosik et al., 1997; Yammarino et al., 1998).

Generally speaking, the empirical results have verified the

impact of transformational leader behaviors on employee

attitudes, effort, and job performance. In particular, leader-

ship researchers found that transformational behaviors are

not uncommon in different organizational settings, nor are

they limited to executives and world-class leaders. Some

degree of transformational leadership is being practiced at

the most senior levels down to the first level of management

in industrial settings, among students, and among military

officers of various ranks (e.g., Bass, 1985; Avolio et al.,

1988; Yammarino and Bass, 1990; Pillai and Williams,

1998). In addition, transformational leadership has been

positively correlated with how effective the leader is per-

ceived by subordinates, how much effort subordinates say

they will expend for the leader, how satisfied the subordi-

nates are with the leader, and how well subordinates

performed as rated by the leader (e.g., Hater and Bass,

1988; Podsakoff et al., 1990; Pillai and Williams, 1998;

Shamir et al., 1998; Avolio, 1999; Yorges et al., 1999).

The contrast between transactional leadership with trans-

formation leadership has not been postulated to mean the

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480 469

models are unrelated. The models differ with regard to the

process by which the leader motivates subordinates, as well

as in the types of goals set. While conceptually distinct,

transactional and transformational leadership may both be

practiced to some degree by the same individual manager.

Prior empirical research has indicated that transformational-

and transactional-leadership behaviors can be displayed by

the same leader in different amounts and intensities while

also complementing each other (Bass, 1985, 1997; Bass and

Avolio, 1990; Howell and Avolio, 1993; Wofford et al.,

1998; Yammarino et al., 1998). Many transformational

leaders reportedly engage in transactional behaviors, but,

more importantly, they often supplement those behaviors

with some elements of transformational leadership.

2. Research objectives

It is important to note that leadership research has mostly

focused on the impact of leader behaviors on the follower’s

individual performance and satisfaction, rather than organi-

zational performance. While the effects of leader behaviors

on employee individual performance are interesting, they

do not capture the most important effects of these

behaviors. In particular, the most important effects of

transformational-leader behavior appear to be on superior

organizational performance, rather than improved indivi-

dual job performance.

In an attempt to address the above-mentioned concern

and to bridge the gap between the postulates of management

and organizational behavior theories, which originated in

the West, and the requirements of business practice in

Russia, this study has examined whether transformational-

and transactional-leadership behaviors predict organiza-

tional performance of Russian companies over a 6-month

period while considering contextual factors, such as support

for innovation and group cohesiveness, as moderators. It

should be noted that little research has examined how these

contextual variables moderate leadership behaviors in pre-

dicting performance over an extended period of time

(Howell and Avolio, 1993). Moreover, because Bass and

colleagues (e.g., Bass, 1985, 1997; Yammarino and Bass,

1990; Bass and Avolio, 1994) argue that the effects of

transformational leadership behaviors augment or supple-

ment the effects of transactional leadership behaviors, the

effects of the transformational behaviors have been exam-

ined in the empirical context of the effects of the transac-

tional leader behaviors.

In brief, the study has been designed to investigate: (a)

the main effects of the transformational- and transactional-

leadership behaviors on organizational performance of Rus-

sian companies; (b) the moderating effects of support for

innovation on the relationship between the transformational

leadership behaviors and organizational performance; and

(c) the impact of group cohesiveness on transformational

leader behaviors in a Russian context. As a whole, this

suggests that leadership behaviors may have a number of

important effects on organizational performance of Russian

companies. Therefore, another key objective of this study

has been (d) to investigate possible ways to use the findings

of leadership research in order to improve organizational

performance in Russia.

3. Hypotheses

3.1. Leadership and performance

Generally, transformational and transactional leadership

have been postulated to have different effects on subordinate

performance. In an earlier article, which served as a source

of valuable ideas for the current study, Howell and Avolio

(1993) used measures of leadership, locus of control, and

support for innovation to predict the consolidated-unit

performance of 78 managers in a large Canadian financial

institution. Results revealed that three transformational-

leadership measures were associated with a higher internal

locus of control and significantly and positively predicted

business-unit performance over a 1-year period. Transac-

tional measures of leadership, including contingent reward

and management by exception (active and passive), were

each negatively related to business-unit performance. Causal

relationships between the transformational-leadership beha-

viors and unit performance were also moderated by the level

of support for innovation at the business-unit level.

In addition, motivational potential of transformational

leadership reportedly surpasses that of leadership models

characterized by leader–follower exchanges or transactions

(e.g., Bass, 1985, 1997; Podsakoff et al., 1990). The real

essence of transformational leadership is that these leaders

are believed to lift ordinary people to extraordinary heights

(Boal and Bryson, 1988), cause followers to do more than

they are expected to do (Yukl, 1994), and motivate them to

perform beyond the level of expectations (Bass, 1985,

1997). Managers who are transforming leaders are assumed

to pay more attention to the individual subordinate, sharing

his or her concerns and development needs and treating each

employee with respect. By appealing to the self-interests of

followers, as well as their shared values, transformational

leaders can help their followers collectively maximize

performance (Howell and Avolio, 1993).

Moreover, substantial evidence now exists indicating

that transformational-leadership factors will positively

influence organizational performance (e.g., Yammarino

and Bass, 1990; Bass and Yammarino, 1991; Keller,

1992; Bass and Avolio, 1994; Avolio, 1999). Furthermore,

House et al. (1991), Howell and Avolio (1993), Bass and

Avolio (1994), Podsakoff et al. (1996), Waldman and

Yammarino (1999), and others have recently begun to

isolate some of the specific attributes and behaviors that

are believed to make charismatic and transformational

leaders particularly effective at achieving superior indivi-

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480470

dual or group performance. Because of the extent to which

transformational-leadership behaviors have been found

to augment the impact of transactional-leader behaviors

on criterion variables, it could be hypothesized that, as

compared with transactional leadership, transformational

leadership would be more highly related to organizational

performance outcomes.

Hypothesis 1: Transformational-leadership behaviors

would be more highly associated with organizational

performance than would transactional behaviors in

Russian companies.

On the basis of a series of investigations, Bass (1985)

proposed three leadership factors describing transformation-

al leaders. These factors were labeled charisma, individu-

alized consideration and intellectual stimulation. Charisma

has been defined as a factor characterizing the leader’s abi-

lity to instill pride, faith, and respect. A charismatic leader is

believed to have a gift for seeing what is really important,

and to be capable of transmitting a sense of mission to the

followers. Individualized consideration has been defined as

behavior on the part of the leader that indicates that he/

she respects followers and is concerned about their person-

al feelings and needs. The leader is supposed to provide

coaching and teaching, and to treat each follower as an in-

dividual. Intellectual stimulation has been viewed as a lead-

ership behavior that challenges followers to re-examine

some of their assumptions about their work and rethink

how it can be performed. The leader is supposed to arouse

followers to search for new ideas, to emphasize creative

problem solving, and to encourage the use of reasoning be-

fore taking action.

Hypothesis 2a, b, and c: Charismatic leadership, leader-

ship based on individualized consideration and, leader-

ship based on intellectual stimulation will each positively

predict organizational performance of Russian compa-

nies over a 6-month period of time.

Transactional leadership (Contingent Reward and Man-

agement-by-Exception) has also been correlated with per-

formance outcomes. By clarifying subordinate work goals

and associated rewards, the transactional leader brings forth

the expected effort and performance to achieve those goals.

Transactional leadership based on contingent reward is

believed to result in followers achieving the negotiated

outcomes. Rewards are then provided consistent with

satisfactory completion of the agreement. As long as the

leader and follower find the exchange mutually rewarding,

the relationship is likely to continue and expected perfor-

mance will be achieved. Previous research has generally

shown that contingent-reward leadership behavior can

positively affect followers’ job satisfaction and individual

or group performance (Klimoski and Hayes, 1980; Podsak-

off and Schriesheim, 1985; Podsakoff et al., 1982),

although in other circumstances, the impact was negative

(Yammarino and Bass, 1990; Howell and Avolio, 1993).

This research has also shown that contingent reward leader-

ship was positively related to the follower’s job involve-

ment (Podsakoff et al., 1982, 1984). Considering the im-

portance of employees’ job satisfaction, job involvement,

and other similar correlates of organizational commitment

for performance results of Russian companies (Buchko

et al., 1998), it could be hypothesized that contingent-

reward leadership would positively relate to organizational

performance in Russia.

Hypothesis 3: Contingent reward leadership will posi-

tively predict organizational performance of Russian

companies over a 6-month period of time.

Contingent reprimand or disapproval, as exemplified by

management-by-exception, has generally been presumed to

have a negative impact on the job performance of followers,

particularly if the leader passively waits for problems to

arise before setting standards or taking any necessary action

(Hater and Bass, 1988; Bass and Yammarino, 1991; Yam-

marino and Bass, 1990). Leadership researchers has re-

ported a negative relationship (Bass et al., 1987; Hater

and Bass, 1988; Bass and Avolio, 1990; Howell and Avolio,

1993) and no relationship (Hunt and Schuler, 1976; Podsak-

off et al., 1982, 1984) between leaders’ contingent sanction-

ing behavior and followers’ performance. In particular,

Podsakoff et al. (1984) have argued that, if leaders criticize

followers after the fact or do not specify the behaviors to be

performed to avoid punishment, then such behavior is likely

to have a negative impact on the follower’s on-the-job effort

and performance.

Hypothesis 4a and b: Management-by-exception leader-

ship that is active or passive will negatively predict

organizational performance of Russian companies over a

6-month period of time.

3.2. Leader context

As it has already been mentioned, previous research on

transactional and transformational leadership has primarily

been concentrated on comparing the effects of transactional

and transformational leadership on employee attitudes,

effort, and job performance. Less attention has been paid

to evaluating other key factors that may also directly influ-

ence performance or moderate the impact of transformational

and transactional leadership on criterion variables, including

the context within which the leader and his or her followers

operate (Howell and Avolio, 1993; Podsakoff et al., 1996;

Pawar and Eastman, 1997; Sosik et al., 1997; Shamir et al.,

1998). As a result, our ability to predict the specific condi-

tions under which various types of leadership behaviors will

effectively influence performance criterion variables has

remained somewhat deficient (Podsakoff et al., 1996).

However, some recent theoretical conceptualizations and

empirical findings have suggested that certain contextual

factors may moderate the impact of transformational leader-

ship on group effectiveness and organizational performance

(e.g., Howell and Avolio, 1993; Pawar and Eastman, 1997;

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480 471

Sosik et al., 1997; Pillai and Meindl, 1998). Based on

findings of prior research on Russia, two of those contextual

factors — support for innovation and group cohesiveness

— appear to be epistemologically adequate for the study of

the effects of transformational- and transactional-leadership

behaviors on organizational performance of Russian compa-

nies. In particular, leadership researchers have contended

that transformational leaders are likely to find more ready

acceptance in organizations that are open to creative sugges-

tions, innovation, and risk taking. In contrast, in organiza-

tions bound by rigid rules and punitive actions, leaders who

openly seek improvement in the ways to perform the job may

be viewed as too unsettling and, therefore, inappropriate for

the stability and continuity of the existing structure (Bass and

Avolio, 1990; Howell and Avolio, 1993). Thus, organiza-

tions in which there is a stronger support for innovation and

risk taking may be more conducive to transformational

leadership and they could show better performance results

than organizations that are too orderly and rigidly structured.

In an earlier article, Elenkov (1995) highlighted the impor-

tance of support for innovation for strategic performance of

Russian aerospace companies. Those companies’ strategic

approaches and performance results were also greatly differ-

ent from the misguided managerial efforts and dismal

performance outcomes generally demonstrated in other sec-

tors of the Russian economy.

Hypothesis 5: Support for innovation will moderate the

relationship between transformational-leadership beha-

viors and organizational performance of Russian com-

panies, as transformational-leadership behaviors will

result in higher performance when support for innovation

is high rather than low.

In addition, it has been suggested that the extent of

transformational leadership may be influenced by group

cohesiveness, because group members could set different

expectations for appropriate behavior, and possibly even

have different beliefs than that of the leader (Podsakoff

et al., 1996). Cohesiveness is considered important because

it has been found to be related to the group’s productivity

(Mullen and Cooper, 1995). Members of highly cohesive

groups also experience satisfaction from interpersonal rela-

tionships. This way, group members may be more likely to

reinforce their leader’s transformational-oriented behaviors,

especially if they are united behind their leader’s vision, and

if they jointly embrace his or her performance objectives. It

should also be noted that group cohesiveness is intuitively

related to collectivism, one of the most important values of

the Russian managerial culture (Holt et al., 1994; Puffer

et al., 1994; Elenkov, 1998).

Hypothesis 6: There will be a positive relationship

between group cohesiveness and transformational-lea-

dership behaviors in Russian companies, as stronger

group cohesiveness will be associated with a higher

degree of transformational-leadership behavior than will

weaker group cohesiveness.

4. Method

4.1. Sample

Using data from the 1998 Directory of the State Institute

for Statistics of Russia, a stratified random sample was

drawn from the pool of more than 50,000 private companies

included in that information source. The stratification was

based on geographical location and industry. This way, 350

small single-business private companies, located in five

regions surrounding major industrial centers in the European

part of Russia, were selected. Those industrial centers were

Moscow, Suzdal, St. Petersburg, Novgorod, and Petroza-

vodsk. In an attempt to increase the variability of the

measures, the sample also included managers representing

companies doing business in a wide range of industries

(information services, automotive parts, food, textile and

clothing, financial services, pulp and paper, home appli-

ances, chemical, pharmaceutical, computer services, elec-

trical equipment, and electronics industries). While the

industries in which these organizations operate vary, all of

these companies are comparable in that they are all small,

privately owned firms, consisting primarily of well-edu-

cated, professional employees.

The focus of this study was set on small single-business

companies, that is, companies employing 50 people or less

and offering products and/or services in a single industry

sector, for two main reasons: First, such companies have

generally short histories, and the influence of organizational

factors on perceptions of leadership behaviors (potentially, a

threat to construct validity) may be considered to be rela-

tively low in those cases; Second, managers in each one

of those companies face similar environmental pressures

and/or opportunities. Therefore, the respondents’ percep-

tions concerning leadership behaviors would be relatively

less contaminated by environmental influences, which in a

country such as Russia may be a crucial factor (e.g., Holt

Table 1

Distribution of the Russian companies (n= 350)

By industry

Information and Computer Services 56

Financial Services 21

Electronics and Electrical Equipment 52

Home Appliances 44

Automotive Parts 27

Food 59

Textile and Clothing 42

Pulp and Paper 23

Chemical and Pharmaceutical Products 26

By geographic region

Moscow 99

Suzdal 65

St. Petersburg 80

Novgorod 52

Petrozavodsk 54

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480472

et al., 1994). Table 1 provides information about the Russian

companies included in the study.

Each one of the selected private companies was ap-

proached with a request to identify a top manager willing

to participate. That request was made in a letter signed by

one of the Vice Presidents of the Russian Chamber for

Commerce and Industry. Upon agreement to participate, up

to three of the top manager’s immediate subordinates were

also identified. This way, 950 Russian managers were

contacted to fill in the research questionnaires. Due to the

involvement of an influential government official in the

implementation of the sampling plan, 751 respondents (253

senior managers and 498 immediate subordinates) returned

completed and usable questionnaires. Thus, the overall

response rates were 84% (n = 253) for senior managers

and 77% (n = 498) for followers. Those participants were

either CEOs, corporate managers responsible for different

functional areas, business-unit directors, or deputy directors.

Managers ranged in age from 27 years to 65 years, with the

average age being 45.5 years. More than 90% (91.8%) of

the respondents had obtained a college degree, with ap-

proximately one-third of those holding advanced degrees

(comparable to Master’s or PhD degrees in the United

States). Professionalism was generally high in the sample,

with almost two-thirds (66%) of the respondents indicating

that they belonged to a professional organization.

4.2. Procedure

Data collection was done by using two questionnaires.

Both questionnaires were translated into Russian and back-

translated into English until there was an agreement among

translators that the English and Russian versions were

compatible. Participants were told that there were no right

or wrong answers, but that their opinions mattered. Thus,

the subjects were encouraged to provide their responses by

saying how they truly felt about each item.

The first questionnaire was designed to obtain structured

data about organizational performance (OPQ). It was sent to

the executives identified as contact managers (i.e., the lea-

ders). The second questionnaire consisted of four parts seek-

ing information about demographic characteristics, leadership

behaviors, support for innovation, and group cohesiveness. It

was sent to the identified subordinates of the contact man-

agers. This way, data were gathered from both top managers

and their immediate subordinates, i.e., the followers.

The survey questionnaires were administered to the

respondents in their work settings during normal working

hours. Included with each packet was a letter indicating the

general nature of the research project and assuring all

respondents that their individual responses would remain

anonymous. The second questionnaire was sent first. Six

months later, the identified leaders were asked to complete

the OPQ, in order to collect information about organiza-

tional performance. By using this procedure, the problem of

common-method bias was minimized. In addition, the

hypothesized relationships were examined over an extended

period of time, and this can also be considered an improve-

ment over most of the previous leadership research. Com-

pleted surveys were mailed directly by the respondents in

pre-addressed stamped envelopes.

4.3. Measures

A great deal of effort was made in this study to select or

develop measurement instruments, which took into account

the specificity of cognitive abilities of Russian managers,

and which would greatly minimize common-method biases.

4.3.1. Leadership behavior

Leadership behavior was measured with Bass and Avo-

lio’s (1990) Multifactor Leadership Questionnaire (MLQ)-

Form 10, which became a part of the second questionnaire

in this study. The original version of MLQ was developed

by Bass (1985) who generated a total of 142 items of

leadership behavior by a literature search and in an open-

ended survey of 70 senior executives. A response allocation

analysis pared the 142-item list down to 73 items. Principal

components factor analyses of the 73 items resulted in three

transformational and two transactional factors providing

scales with acceptable reliability.

Previous research using the original version of MLQ has

been criticized on the grounds that both leadership beha-

viors and effects were assessed in the same measure (e.g.,

Howell and Avolio, 1993). As subordinates provided both

the transformational leadership ratings and the criterion

ratings, the results could have been potentially biased by

same-source data. Therefore, a decision was made to follow

the approach of Howell and Avolio (1993) and to use Bass

and Avolio’s (1990) MLQ-Form 10, which included only

items measuring leadership behaviors.

The three scales used to measure transformational leader-

ship were (a) charisma (sample item: ‘‘he/she makes me go

beyond my self-interests for the good of the group’’), (b)

intellectual stimulation (sample item: ‘‘provides reasons to

change my way of thinking about problems’’), and (c)

individualized consideration (sample item: ‘‘spends time

coaching me’’).

The scales measuring transactional leadership were (a)

contingent reward (sample item: ‘‘gives me special recogni-

tion when my work is very good’’), (b) active management

by exception (sample item: ‘‘is alert for failure to meet

standards’’), and (c) passive management by exception

(sample item: ‘‘things have to go wrong for him or her to

take action’’). Participants in the study were asked to judge

how frequently their manager engaged in specific leadership

behaviors. Each behavior was rated on a five-point Likert

scale ranging from not at all (0) to frequent if not always (4).

4.3.2. Support for innovation

In order to measure the degree of support for innovation

in the participating Russian companies, items originally

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480 473

developed by Siegel and Kaemmerer (1978) were used.

Based on data collected during a pilot study involving 15

Russian students at a major US university, principal com-

ponents analysis of Siegel and Kaemmerer’s items, yielded

one factor, labeled organizational support for innovation,

which accounted for 85% of the common variance. Each

item was rated on a four-point scale ranging from strongly

disagree (0) to strongly agree (3).

4.3.3. Group cohesiveness

Group cohesiveness was assessed by using a scale which

included five items originally proposed by Kerr and Jermier

(1978). Kerr and Jermier offered six items that could

measure the degree to which work groups were closely knit

and cohesive. Taking advantage of data provided by the

above-mentioned group of Russian students, it was found

that one of Kerr and Jermier’s original items had a very low

item–total correlation. That item was accordingly excluded

from the research instrument.

4.3.4. Organizational performance

The measure of organizational performance represented

the degree to which a company achieved its business

objectives. In order to develop an adequate measure of

organizational performance of Russian companies, a second

pilot study was conducted. A group of 38 Russian business

executives enrolled in a management seminar were asked to

identify business objectives common for most Russian

companies irrespective of their industry. A list of 29 ob-

jectives was prepared. A response allocation analysis aimed

at identifying the most essential business objectives of

Russian companies pared the 29-item list down to seven

items. This way, the Organizational Performance Question-

naire (OPQ) was constructed incorporating seven items

designed to assess the degree to which each one of the

seven business objectives identified through the response

allocation analysis was achieved.

4.4. Statistical analysis

A hierarchical regression analysis was used to test the

first hypothesis. The hierarchical multiple regression model

is very useful to assess the effect of some major set of

variables after a prior set of variables has been held constant

(e.g., Tabachnick and Fidel, 1983). This way, we could enter

variables of major importance on later steps, with lesser

variables given highest priority for entry. This technique

allows to evaluate the major set for what it adds to the

prediction of the criterion variable over and above the lesser

set — a methodological feature of critical importance for

testing Hypothesis 1.

Partial least squares (PLS) model was used to conduct

statistical data analysis for testing 2a–c, 3, 4a and b, 5, and

6. It has been regarded as a powerful multivariate analysis

technique that is ideal for testing structural models with

latent variables (Wold, 1985; Howell and Avolio, 1993).

Besides, PLS has been praised as a technique that belongs to

the second generation of multivariate data analysis techni-

ques (Fornell, 1982). In essence, PLS maximizes variance

explained in either the measurement model, the structural

model, or both, depending on the decision made with

respect to the epistemic relationships between constructs

and measures (Fornell and Bookstein, 1982). PLS has also

been found to be a highly effective procedure for first

establishing the construct validity of the research instrument

and then determining how well each of the independent

variables and covariates predicted performance outcomes

(Howell and Avolio, 1993).

4.5. Results

Construct validity of all measurement instruments was

actively sought. As the content validity of a set of measure-

ment operations refers to the degree to which those opera-

tions measure the characteristics that are necessary to

measure, as judged from the appropriateness of the content

of those operations, the aid of the group of 15 Russian

students used during the development of the Support for

Innovation scale together with the help of 15 US business

students enrolled in a major US university was solicited

prior to the actual data collection. All measurement instru-

ments were thoroughly examined and, then, their validity

assured, based on the general expertise of the 30 participants

in this pilot study.

Psychometric analysis revealed that the MLQ’s scales

had Cronbach’s alphas ranging from 0.78 (for charisma) to

0.71 (for intellectual stimulation) and an average item–total

correlation of 0.68. Cronbach’s alpha for the Support for

Innovation Scale was 0.91, and the average item–total

correlation was 0.69. The reliability of the Support for

Innovation Scale was also assured by employing the

‘‘split-half’’ method (Zikmund, 1994). Cronbach’s alpha

for the adapted Group Cohesiveness Scale was 0.71, and

the average item–total correlation was 0.60. The reliability

Table 2

Correlation between transformational and transactional leadership factor

scores (n= 498) and organizational performance ratings (n= 253)

Transformational

Charisma .80**

Individualized consideration .71**

Intellectual stimulation .61**

R .81

Transactional

Contingent reward .30**

Passive management by exception .21*

Active management by exception .27*

R .47

Transformational + transactional .85

F 101.62

* P < .05.

** P< .005.

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480474

of the Organizational Performance Scale was also found to

be satisfactory, as the Cronbach alpha for that scale was

0.73, and the average item–total correlation was 0.61.

Table 2 shows the correlations between transformational

and transactional-leadership behaviors and organizational

performance ratings. As it can be seen, correlations between

the transformational-leadership factors and organizational

performance ratings were high (0.80 to 0.61, P < .01),

whereas correlations between the transactional-leadership

behaviors and organizational performance were relatively

low (0.30 to 0.21, P < .01). The multiple correlation for the

transformational variables predicting performance (0.81) was

significantly higher than the multiple correlation for the

transactional factors (0.47). A hierarchical regression analy-

sis was used to test Hypothesis 1. Transactional factors were

entered first into the regression equation, transformational

factors were entered second, and an F test was computed to

determine whether the transformational factors added sig-

nificantly to the prediction of the criterion. The F ratio of

101.62 (df = 3, 246; P < .01) supported the first hypothesis.

Table 3 displays the results of testing 2a–c, 3, and 4a and

b by using PLS analysis of the unmoderated model. As it

was predicted, there were positive and significant paths

from charisma, individualized consideration, and intellec-

tual stimulation to organizational performance. Thus, Hy-

pothesis 2a–c were all supported. In line with the prediction

of Hypothesis 3, contingent reward was significantly and

positively related to organizational performance. Contrary to

Hypothesis 4a and b, there were significant positive rela-

tionships between both active and passive management by

exception and organizational performance. Consequently,

those two hypothesis were rejected. The total variance

explained in organizational performance by contingent

reward, active management-by-exception, passive manage-

ment-by-exception, charisma, individualized consideration,

and intellectual stimulation was 41%.

Hypothesis 5 predicted that support for innovation would

moderate the relationship between charisma, individualized

consideration, intellectual stimulation, and organizational

performance. This hypothesis was supported by data pre-

sented in Table 4. The charisma–performance relationship

was positive for both high and low support for innovation.

As it was hypothesized, the relationship was significantly

stronger under high support for innovation as opposed to

low support for innovation, t = 16.63, P < .01. Similarly, the

path between individualized consideration and performance

was positive for both high support for innovation and low

support for innovation. In line with the prediction of

Hypothesis 5, the path under high support for innovation

was significantly stronger than the path under low support

for innovation, t = 10.29, P < .01. There was a positive

relationship between intellectual stimulation and perfor-

mance under high support for innovation, while there was

a negative relationship between these variables under low

support for innovation. Besides, this difference in path

coefficients was significant, t = 19.87, P < .01.

Table 3

Partial least squares analysis of the relationship between leadership

(n= 498) and organizational performance (n= 253)

Hypothesis and proposed path

Standardized

path t(252)

Hypothesis 2a: Charisma! performance 0.28 15.89**

Hypothesis 2b: Individualized

consideration! performance

0.16 6.81**

Hypothesis 2c: Intellectual stimulation

! performance

0.15 6.69**

Hypothesis 3: Contingent reward

! performance

0.19 9.28**

Hypothesis 4a: Passive management by

exception! performance

0.11 5.98**

Hypothesis 4b: Active management by

exception! performance

0.12 6.05**

** P < .005.

Table 4

PLS analysis of the moderated model (n= 160)

Hypothesis and proposed path

High SFI

standardized path t(79)

Low SFI

standardized path t(79)

Contingent reward! performance 0.20 5.01** 0.11 3.89 *

Passive management by exception

! performance

0.05 1.02 0.12 3.98 *

Active management by exception

! performance

0.07 1.57 0.13 4.10 *

Hypothesis 5: Charisma! performance 0.49a 6.27** 0.31 5.68**

Hypothesis 5: Individualized consideration

! performance

0.28a 5.30** 0.15 4.29**

Hypothesis 5: Intellectual stimulation

! performance

0.30a 5.48** � 0.02 � 0.09

Hypothesis 6: Group cohesiveness

! charisma

0.03 0.17 0.05 1.03

Individualized consideration 0.38a 5.78** 0.20 5.02**

Intellectual stimulation 0.29a 5.41** 0.11 3.91**

a The difference in path coefficients was significant at P < .05.

* P < .05.

** P < .005.

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480 475

As can be seen from the data displayed in Table 4,

Hypothesis 6 was generally supported. In the moderated

model, the paths from group cohesiveness to individualized

consideration and intellectual stimulation were positive and

significant. Moreover, the paths under high support for

innovation were stronger than the paths under low support

for innovation and the differences in path coefficients were

significant at P < .01. The group cohesiveness–charisma

relationship was positive for both high and low support

for innovation. However, the path from group cohesiveness

to charisma was stronger under low support for innovation

than under high support for innovation (although those

results failed to reach statistical significance at P < .05). In

the moderated model, the total variance explained in orga-

nizational performance by contingent reward, active man-

agement-by-exception, passive management-by-exception,

charisma, individualized consideration, and intellectual sti-

mulation was 69%. The variance explained in charisma,

individualized consideration, and intellectual stimulation by

group cohesiveness was 0.01, 0.18, and 0.15, respectively,

in the low moderated model, and 0.00, 0.27, and 0.20,

respectively, in the high moderated model.

5. Discussion

This study has been the first one to empirically test

whether transformational- and transactional-leadership

behaviors predicted organizational performance at the com-

pany level in Russia over an extended period while con-

sidering key contextual factors as moderators. Hence, one

advantage of this research project is that it investigated

concurrently the main effects of the transformational- and

transactional-leadership behaviors on organizational perfor-

mance of Russian companies; the moderating effects of

support for innovation on the relationship between the

transformational-leadership behaviors and organizational

performance; and the impact of group cohesiveness on

transformational-leadership behaviors in a Russian context.

Another advantage of this study is that survey data were

collected 6 months before the collection of criterion data,

rather than simultaneously or retrospectively. Furthermore,

it should be noted that the study was concentrated on the

effects of transactional leadership, transformational leader-

ship, support for innovation, and group cohesiveness at the

organizational level, rather than the level of the individual.

An additional advantage of the current study was that the

criterion which was used to measure organizational perfor-

mance included the potential for companies to exceed

expected levels of performance. This methodological

approach enhanced the degree to which measures of trans-

formational leadership could predict organizational perfor-

mance. The data collection approach implemented in this

study also minimized the possible biasing effects on results

associated with collecting all the data from a single source,

and the measurement instruments used in the study were

selected or developed with due account of the specificity of

cognitive abilities of Russian managers. Consequently, the

results presented in this manuscript represented the predic-

tion of organizational performance over an extended period

of time, and they were obtained by using innovative

methodological approaches. Thus, these results can be used

to draw conclusions concerning finding new effective ways

to promote OD in Russia.

It is worth mentioning that the empirical test conducted

in this study demonstrated that transformational leadership

directly and positively predicted organizational performance

of Russian companies over and beyond the impact of

transactional leadership. Moreover, transformational beha-

viors proved to be more effective than exchange-oriented

leadership behaviors for enhancing organizational perfor-

mance of those companies. In addition, the research project

indicated that Russian leaders who displayed more char-

isma, individualized consideration, and intellectual sti-

mulation positively contributed to the achievement of

organizational goals. Given the predominantly collectivist

nature of the Russian culture (e.g., Puffer et al., 1994;

Elenkov, 1998), the weakness of market signals, and the

environment of uncertainty in today’s Russia, one could

understand why, in particular, charismatic leadership proved

to be effective in that country. Most importantly, these

results suggest that Russian managers need to develop

transformational-leadership behaviors for a more effective

leadership profile and for achieving a higher level of orga-

nizational performance.

In a prior study, Luthans et al. (1998a) used a meta-

analysis and generalized observations to present an argu-

ment, however, against the application of transformational

leadership in Russian companies. One could possibly

explain this difference in leadership research findings by

taking into account the great difference in methodological

approaches that were implemented in the two studies.

Besides, the empirical evidence provided by the present

study showed that transformational- and transactional-lea-

dership behaviors could be displayed by the same Russian

manager in different amounts and intensities while also

complementing each other. That is, the present research

was not exclusively concentrated on the impact of transfor-

mational-leadership behaviors on organizational perfor-

mance, and it further emphasized the importance of the

effects of transactional leadership behaviors, support for

innovation, and group cohesiveness on organizational per-

formance of Russian companies.

In particular, the results of the present study indicated

that Russian managers who displayed more contingent-

reward leadership and management-by-exception behaviors

also made a positive contribution to the achievement of

organizational goals. One could understand those results by

referring to the likely behavioral consequences of the years

of authoritarian rule in Russia. History and traditions could

have influenced present-day Russian managers to willingly

endorse transactional styles of leadership alongside trans-

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480476

formational-leadership approaches. In addition, the research

findings showed that support for innovation significantly

moderated the relationship between transformational leader-

ship and performance. Group cohesiveness proved, in turn,

to be positively related to the ratings of transformational

leadership. Thus, it has appeared that OD approaches that

provide for a strong support for innovation and which

enhance group cohesiveness may, all other things being

equal, contribute to improving organizational performance

of Russian companies.

Because most of prior research generally showed a

negative relationship between management-by-exception

leadership and performance, it was somewhat surprising to

obtain a positive relationship in this study. The present study

was not, however, the first one to find a positive relationship

between the above-mentioned two variables. In an earlier

article, Podsakoff et al. (1984) suggested that leaders who

used contingent negative, or aversive, reinforcement, which

represented the more active form of management-by-excep-

tion, could enhance follower performance if their criticism

was perceived as fair, if it clarified performance standards,

or modified poor performance in an acceptable way to avoid

aversive consequences.

As it has already been mentioned, the results of this study

also demonstrated that the relationship between transforma-

tional leadership and organizational performance was mod-

erated by support for innovation. Notably, each one of the

three transformational leadership behaviors was associated

with a higher level of performance when support for

innovation was also stronger. Therefore, Russian companies

should be able to achieve some important strategic syner-

gies, as well as much more significant improvements in

organizational performance, by combining policies designed

to provide a stronger support for innovation with OD

techniques designed to encourage transformational-leader-

ship behaviors.

These empirical results can further be taken into

account to suggest new effective ways for Russian com-

panies to make positive changes in their organizational

systems in search for better performance results. For this

purpose, OD, or the application of behavioral science

knowledge in a systematic and long-range effort to

improve organizational effectiveness (e.g., French and Bell,

1995) can clearly benefit Russian companies. In particular,

OD techniques could be helpful to Russian organizations

in coping with environmental constraints while simulta-

neously enhancing their own internal problem-solving

capabilities. Due to the great advances that have been

made in OD theory and practice in the West, Russian

companies can now select from a wide variety of OD

techniques. The outcome goals of these techniques would

focus on better organizational performance, whereas the

process goals of these techniques would focus on impro-

ving the way people work together, including making

appropriate changes in leadership behaviors, stimulating

innovation, and enhancing group cohesiveness.

Various OD programs developed and originally applied in

the West such as those of Conger and Kanungo’s (1988)

Training in Charismatic Competencies Program, or Avolio

and Bass’ (1991) Full Range of Leadership Development

Modules can be used to train Russian managers in the

transformational–transactional-leadership paradigm. These

programs could promote self-understanding, awareness, and

appreciation of the range of potential leadership behaviors

used by both effective transformational and transactional

managers (Bass, 1997). For example, Conger and Kanungo’s

(1988) program could help Russian leaders develop and learn

five critical competencies: critical evaluation and problem

detection; envisioning; communication skills for conveying a

vision; impression management; and knowing how and when

to empower followers. In particular, employee empowerment

can be enhanced, if Russian managers develop and learn the

competence of knowing how to improve participation in

decision making; set meaningful goals; communicate high

performance expectations; remove bureaucratic constraints;

and apply appropriate systems of reward.

Full Range of Leadership Development Modules (Avolio

and Bass, 1991; Bass, 1997) could provide vital knowledge

concerning transformational and transactional leadership

conceptualizations along with target-skill training to Rus-

sian managers. The modules focus on the philosophy of

transformational and transactional leadership; learning about

alternatives that are conducive to improving oneself, as well

as one’s followers; action learning through simulations and

exercises dealing with real issues, dilemmas, and problems

encountered by the trainees back home; and adapting,

adopting, and internalizing the new ways of thinking and

acting. This training program, in essence, stresses that there

are numerous ways to be a transformational and transac-

tional leader, and that one must be both. The ultimate goal

is, however, to reduce one’s management-by-exception and

to increase components of one’s transformational leadership.

Process consultation (PC), another OD technique origi-

nated in the West, could also be useful to Russian managers

in developing and learning transformational-leadership

skills. The main purpose of PC is for the outside consultant

to assist the manager to perceive, understand, and act upon

process events (Schein, 1969). PC expert could work with

Russian leaders in jointly diagnosing what processes need

improvement. It is worth mentioning that the process con-

sultant need not be an expert in solving the particular

problem that is identified. Her or his expertise lies in

diagnosis and developing a helping relationship. If a given

problem requires technical knowledge outside the leader’s

and consultant’s expertise, the consultant usually helps

locate such an expert and then provides detailed instructions

about how to get the most out of this expert resource

(Robbins, 1998).

Furthermore, Russian companies could, benefit from

some other modern OD approaches designed to promote

positive changes in leadership behaviors and interpersonal

communications. With regard to this, it should be noted that

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480 477

sensitivity training, or T-groups, has been recognized as an

effective method of changing behavior through unstruc-

tured group interaction. The objectives of the T-groups are

to provide the trainees with increased awareness of their

own behavior and how others perceive them, greater

sensitivity to the behavior of others, and increased under-

standing of group processes. For this purpose, Russian

trainees could be brought together in a free and open

environment in which they could express their leadership

ideas, beliefs, and attitudes. Specific results that may be

obtained by Russian managers would include improved

listening skills; greater openness; increased tolerance of

individual differences; and improved conflict resolution

skills. Moreover, sensitivity training would lead to greater

group cohesiveness, which, as the empirical tests indicated,

could further promote transformational leadership behaviors

in Russian companies.

Team building and intergroup training approaches could

also be helpful to Russian companies in their OD efforts.

Team building has recently gained popularity in the West as

an effective method of improving relationships within work

groups. Team building could possibly result in enhanced

group cohesiveness and a higher organizational capacity to

achieve process gains. Intergroup training takes team build-

ing one step further and uses it to improve the ways different

functions or project teams work together.

There are many approaches that could be used to conduct

team building and intergroup training in Russian companies.

For example, Russian trainees may be involved in a discus-

sion mediated by an expert group facilitator on the quality of

the interpersonal relationships among team members and

between the members and their leader. On the other hand,

Russian companies could try to improve the effectiveness of

interdependent functions through reengineering and reorga-

nizing the way people from those different functions work

together. Concurrent engineering may, in turn, stimulate

innovation, as new ideas will be given the chance to obtain

a faster organizational approval. This way, Russian compa-

nies could achieve significant gains in organizational per-

formance, as the hoped-for positive changes in leadership

behaviors, support for innovation, and group cohesiveness

could result in important intraorganizational synergies.

Some of the limitations of the study are those commonly

associated with field research, particularly in Russia. For

example, one of the limitations of the study is the self-

selection of geographical regions of the European part of

that country into a purposive sample. In addition, the

outcomes of the project depended upon top executives’

reports identifying their immediate subordinates. The results

of the study might also be influenced by the followers’

reports concerning their perceptions of their leaders’ beha-

viors. It is a common knowledge that individual perceptions

can be greatly affected by a host of variables at industry,

organizational, and individual levels, but data concerning

those variables were either unavailable or prohibitively

costly to obtain. To be sure, every effort has been made

to assure content validity of the measurement instruments

(see Results).

Another limitation of the current study concerns the

assumption about the transferability of Western manage-

ment and organizational techniques to Russia. According to

Holt et al. (1994), the Russians are not willing to directly

and unconditionally adopt Western managerial systems and

approaches. Therefore, further research is necessary to

determine which OD techniques will show an adequate

degree of compatibility with the dominant values of the

Russian managerial culture. More attention should also be

paid to the ways through which the targeted OD techniques

may be adapted to fit the requirements of the Russian

business environment.

Leadership research on Russia should also reveal whe-

ther there are other important moderators of the relationship

of leadership behaviors to organizational performance, or

whether there are other organizational and/or individual

characteristics which, if changed, could influence the adop-

tion and internalization of transformational-leadership beha-

viors. Clearly, additional research into the dynamics of the

leadership behaviors–contextual factors–organizational

performance is needed in the future. Further research is also

necessary to test whether the results of the current study

generalize to other cultures.

References

Aage H. Popular attitudes and perestroika. Sov Stud 1991;1:91.

Arino A, Abramov M, Skorobogatykh I, Rykounina I, Vila J. Partner selec-

tion and trust building in West European–Russian joint ventures. Int

Stud Manage Organ 1997;27(1):19–37 (Spring).

Avolio BJ. Full leadership development: building the vital forces in orga-

nizations. Thousand Oaks, CA: Sage Publications, 1999.

Avolio BJ, Bass BM. The full range of leadership development: basic

and advanced manuals. Binghampton, NY: Bass, Avolio, and Associ-

ates, 1991.

Avolio BJ, Waldman DA, Einstein WO. Transformational leadership

in a management game simulation: impacting the bottom line. Group

Organ Stud 1988;13:59–80.

Banai M, Teng B-S. Comparing job characteristics, leadership style, and

alienation in Russian public and private enterprises. J Int Manage 1996;

2(3):201–24.

Bass BM. Leadership and performance beyond expectations. New York:

Free Press, 1985.

Bass BM. Transformational leadership: industry, military, and educational

impact. Mahwah, NJ: Lawrence Erlbaum Associates, 1997.

Bass BM, Avolio BJ. Manual for the multifactor leadership questionnaire.

Palo Alto, CA: Consulting Psychologists Press, 1990.

Bass BM, Avolio BJ. Improving organizational effectiveness through trans-

formational leadership. Thousand Oaks, CA: Sage, 1994.

Bass BM, Yammarino FJ. Congruence of self and others’ leadership ratings

of naval officers for understanding successful performance. Appl Psy-

chol: Int Rev 1991;40:437–54.

Bass BM, Waldman DA, Avolio BJ, Bebb M. Transformational leadership

and the falling dominoes effect. Group Organ Stud 1987;12:73–87.

Bennis WG, Nanus B. Leaders: the strategies for taking charge. New York,

NY: Harper and Row, 1985.

Blazyca G. The new round of economic reform in Eastern Europe national

westminster bank. Q Rev 1987;31:41–53.

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480478

Boal KB, Bryson JM. Charismatic leadership: a phenomonological and

structural approach. In: Hunt JM, Baliga BR, Dachler HP, Schriesheim

CA, editors. Emerging leadership vistas. Lexington, MA: Heath, 1988.

pp. 5–28.

Bradley TL. Cultural dimensions of Russia: implications for international

companies in a changing economy. Thunderbird Int Bus Rev 1999;

14(1):49–67 (Jan.–Feb.).

Buchko AA, Weinzimmer LG, Sergeyev AV. Effects of cultural context on

the antecedents, correlates, and consequesnces of organizational com-

mitment: a study of Russian workers. J Bus Res 1998;43:109–16.

Burns IM. Leadership. New York, NY: Harper and Row, 1978.

Collop J. Training the professionals: educating the professional industrial

manager. J Eur Ind Train 1986;10(4):20–4.

Conger IA, Kanungo RN. Toward a behavioral theory of charismatic lea-

dership in organizational settings. Acad Manage Rev 1987;12:637–47.

Conger IA, Kanungo RN. Charismatic leadership: the elusive factor in

organizational effectiveness. San Francisco, CA: Jossey-Bass, 1988.

Elenkov DS. Russian aerospace multinational companies (MNCs) in global

competition: their origin, competitive strengths and forms of expansion.

Columbia J World Bus 1995;30(2):54–66.

Elenkov DS. Can American management concepts work in Russia: a cross-

cultural comparative study. Calif Manage Rev 1998;40(4):133–62.

Fey CF, Beamish PW. Strategies for managing Russian international joint

venture conflict. Eur Manage J 1999;17(1):99–106 (Feb.).

Filatochev I, Hoskinsson R, Buck T, Wright M. Corporate restructuring in

Russian privitazations: implications for U.S. investors. Calif Manage

Rev 1996;38(3):87–105.

Fornell C. A second generation of multivariate analysis: an overview.

In: Fornell C, editor. A second generation of multivariate analysis:

methods, vol. 1. New York, NY: Praeger, 1982. pp. 1–21.

Fornell C, Bookstein F. Two structural equation models: LISREL and PLS

applied to consumer exit-voice theory. J Mark Res 1982;19:440–52.

French WL, Bell CH. Organizational development. 5th ed. Englewood

Cliffs, NJ: Prentice-Hall, 1995.

Gurkov I. Changes of control and business reengineering in Russian priva-

tized companies. Int Exec 1996;38(3):359–88.

Hackman JR, Wageman R. Total quality management: empirical, concep-

tual, and practical issues. Adm Sci Q 1995;40:309–42 (June).

Hater II, Bass BM. Supervisors’ evaluations and subordinates’ perceptions

of transformational and transactional leadership. J Appl Psychol 1988;

73:695–702.

Holt DH, Ralston DA, Terpstra RH. Constraints on capitalism in Russia: the

managerial psyche. Calif Manage Rev 1994;36(3):124–41.

House RI. A path-goal theory of leader effectiveness. Adm Sci Q 1971;

16:321–39.

House RI. A 1976 theory of charismatic leadership. In: Hunt IG, Larsons

LL, editors. Leadership: the cutting edge. Carbondale, IL: Southern

Illinois Univ. Press, 1977. pp. 189–207.

House RI, Spangler WD, Woycke I. Personality and charisma in the U.S.

presidency: a psychological theory of leadership effectiveness. Adm Sci

Q 1991;36:364–96.

Howell JM, Avolio BJ. Transformational leadership, transactional leader-

ship, locus of control, and support for innovations: key predictors of

consolidated-business-unit performance. J Appl Psychol 1993;78(6):

891–903.

Howell JM, Frost PI. A laboratory study of charismatic leadership. Organ

Behav Hum Decis Processes 1989;43:243–69.

Hunt JG, Schuler RS. Leader reward and sanctions: behavior relations

criteria in a large public utility. Carbondale, IL: Southern Illinois Univ.

Press, 1976.

Keller RT. Transformational leadership and the performance of research and

development project groups. J Manage 1992;18:489–501.

Kerr S, Jermier JM. Substitutes for leadership: their meaning and measure-

ment. Organ Behav Hum Perform 1978;22:375–403.

Klimoski RJ, Hayes NJ. Leader behavior and subordinate motivation. Pers

Psychol 1980;33:543–55.

Koretz G. How sick is the Russian bear? Bus Week 1998;45:30 (October 5).

Laszlo E. Changing realities of contemporary leadership: new opportunities

for Eastern Europe. Futures 1992;24(2):167–72.

Liuhto K. The transformation of the Soviet enterprise and its management

— a literature review. ESRC Working Paper Series 146. University of

Cambridge, Cambridge, UK, 1999a.

Liuhto K. The organizational and managerial transformation in turbulent

business environments — managers’ views on the transition of their

enterprise in some of the European former Soviet republics in the

1990’s. Turku Sch Econ Bus Adm, Ser A, 1999b.

Luthans F. A paradigm shift in Eastern Europe: some helpful management

development techniques. J Manage Dev 1993;12(8):53–61.

Luthans F, Peterson SJ, Ibrayeva E. The potential for the ‘‘dark side’’

of leadership in post-communist countries. J World Bus 1998a;33:

185–201.

Luthans F, Stajkovic A, Luthans BC, Luthans KW. Applying behavioral

management in Eastern Europe. Eur Manage J 1998b;16(4):466–75.

May RC, Bormann-Young CJ, Ledgerwood DE. Lessons from Russian

human resource management experience. Eur Manage J 1998;16(4):

447–59.

McColl HL. Post-Berlin wall executive leadership. Dir Boards 1991;15(2):

51–2.

Mullen B, Cooper C. The relation between group cohesiveness and perfor-

mance: an integration. Psychol Bull 1995;102:210–27 (March).

Northouse PG. Leadership. Thousand Oaks, CA: Sage, 1997.

Pawar BS, Eastman KK. The nature and implications of contextual influ-

ences on transformational leadership: a conceptual examination. Acad

Manage Rev 1997;22(1):80–109.

Pfeffer J. Producing sustainable competitive advantage through effective

management of people. Acad Manage Exec 1995;9:55–69 (February).

Pillai R, Meindl JR. Context and charisma: a ‘‘meso’’ level examination of

the relationship of organic structure, collectivism, and crisis to charis-

matic leadership. J Manage 1998;24(5):643–71.

Pillai R, Williams E. Does leadership matter in the political arena? Voter

perceptions of candidates’ transformational and charismatic leadership

and the 1996 U.S. presidential vote. Leadership Q 1998;9(3):397–416.

Podsakoff PM, Schriesheim CA. Leader reward and punishment behavior: a

methodological and substantive review. In: Staw B, Cummings LL,

editors. Research in organizational behavior. San Francisco, CA: Jos-

sey-Bass, 1985. pp. 41–56.

Podsakoff PM, Todor WD, Skov R. Effects of leader contingent and non-

contingent reward and punishment behaviors on subordinate perfor-

mance and satisfaction. Acad Manage J 1982;25:810–21.

Podsakoff PM, Todor WD, Grover RA, Huber VL. Situation moderators of

leader reward and punishment behaviors: fact or fiction? Organ Behav

Hum Perform 1984;34:21–63.

Podsakoff PM, MacKenzie SB, Moorman RH, Fetter R. Transformational

leader behaviors and their effects on followers’ trust in leader, satisfac-

tion, and organizational citizenship behaviors. Leadership Q 1990;1:

107–42.

Podsakoff PM, MacKenzie SB, Bommer WH. Transformational leadership

behaviors and substitutes for leadership as determinants of employee

satisfaction, commitment, trust, organizational citizenship behaviors. J

Manage 1996;22:259–98.

Puffer SM, Levintan V, Walck CL, Waterman M. Understanding the bear:

a portrait of Russian business leaders. Acad Manage Exec 1994;8:41–

54 (Feb.).

Puffer SM, McCarthy DJ, Naumov AI. Russian managers’ beliefs about

work: beyond the stereotypes. J World Bus 1997;32(3):258–76.

Ralston DA, Holt DH, Terpstra RH, Kai-Cheng Y. The impact of national

culture and economic ideology on managerial work values: a study of

the United States, Russia, Japan, and China. J Int Bus Stud 1997;28(1):

177–207.

Randall LM, Coakley LA. Building successful partnerships in Russia

and Belarus: the impact of culture on strategy. Bus Horiz 1998;41(2):

15–22.

Robbins SP. Organizational behavior: concepts, controversies, applications.

Upper Saddle River, NJ: Simon and Schuster, 1998.

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480 479

Schein EH. Process consultation: its role in organizational development.

Reading, MA: Addison-Wesley, 1969.

Shamir B, House RJ, Arthur MB. The motivational effects of charismatic

leadership: a self-concept-based theory. Organ Sci 1993;4:577–94.

Shamir B, Zakay E, Breinin E, Popper M. Correlates of charismatic leader

behavior in military units: subordinates’ attitudes, unit characteristics,

and superiors’ appraisals of leader performance. Acad Manage J 1998;

41(4):387–409.

Siegel SM, Kaemmerer WF. Measuring the perceived support for innova-

tion in organizations. J Appl Psychol 1978;63:553–62.

Sosik JJ, Avolio BJ, Kahai SS. Effects of leadership style and anonymity on

group potency and effectiveness in a group decision support system

environment. J Appl Psychol 1997;82(1):89–103.

Stewart WS, May RC. The state of entrepreneurship in Russia: obstacles to

new venture creation. Int J Entrepreneurship 1997;1(1):51–68.

Tabachnick B, Fidell L. Using multivariate statistics. New York, NY:

Harper and Row, 1983.

Tichy N, Devanna M. Transformational leadership. New York, NY:

Wiley, 1986.

Veiga JF, Yanouzas JN, Buchholtz A. Emerging cultural values among Rus-

sian managers: what will tomorrow bring? Bus Horiz 1995;38(3):20–7.

Waldman DA, Yammarino FJ. CEO charismatic leadership: levels-of-

management and levels-of-analysis effects. Acad Manage Rev 1999;

24(2):266–85.

Waldman DA, Bass BM, Einstein WO. Leadership and outcomes of per-

formance appraisal processes. J Occup Psychol 1987;60:177–86.

Welsh D, Luthans F, Sommer S. Managing Russian factory workers: the

impact of U.S.-based behavioral and participative techniques. Acad

Manage J 1993;36:58–79.

Wofford JC, Goodwin VL, Whittington JL. A field study of a cognitive

approach to understanding transformational and transactional leader-

ship. Leadership Q 1998;9(1):55–84.

Wold H. Systems analysis by partial least squares. In: Nijkamp P, Leitner H,

Wrigley N, editors. Measuring the unmeasurable. Dordrecht, The Neth-

erlands: Martinus Nijhoff, 1985. pp. 221–52.

Yammarino FJ. Indirect leadership: transformational leadership at a dis-

tance. In: Bass BM, Avolio BJ, editors. Improving organizational effec-

tiveness through transformational leadership. Thousand Oaks, CA:

Sage, 1994. pp. 26–47.

Yammarino FJ, Bass BM. Long-term forecasting of transformational leader-

ship and its effects amongnaval officers: some preliminary findings. In:

Clark KE, Clark MB, editors. Measures of leadership. West Orange, NJ:

Leadership Library of America, 1990. pp. 151–71.

Yammarino FJ, Spangler WD, Dubinsky AJ. Transformational and contin-

gent reward leadership: individual, dyad, and group levels of analysis.

Leadership Q 1998;9(1):27–54.

Yorges SL, Weiss HM, Strickland OJ. The effect of leader outcomes on

influence, attributions, and perceptions of charisma. J Appl Psychol

1999;84(3):428–36.

Yukl GA. Leadership in organizations. 3rd ed. Englewood Cliffs, NJ:

Prentice-Hall, 1994.

Zikmund WG. Business research methods. Forth Worth, TX: The Dryden

Press, 1994.

D.S. Elenkov / Journal of Business Research 55 (2002) 467–480480