the relationships among emotional intelligence, leadership styles and perfprmance of employees in enterprise in hanoi, vietnam

i
Thai Nguyen University
Socialist Republic of Vietnam
Southern Luzon State University
Republic of Philippines
THE DISERTATION OF DBA
THE RELATIONSHIPS AMONG EMOTIONAL INTELLIGENCE,
LEADERSHIP STYLES AND PERFORMANCE OF EMPLOYYEES IN
ENTERPRISES IN HANOI, VIETNAM
Name of Student : Nguyen Thi Thu Huong
English Name : Alice
Date of Birth : 13/02/1977
Course : SLSU-DBA1
2012
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ABSTRACT
This study aims to determine the effect of leadership styles and emotional intelligence on
employee performance. The subjects of this study include 375 leaders and 730 subordinates in
enterprises in Hanoi, Vietnam. The questionnaire has two parallel forms, one for the leaders to
rate themselves and another in which subordinates can rate owns performance and
leadership styles, emotional intelligence of their leaders. Leadership styles and emotional
intelligence were identified as the independent variables and employee performance as the
dependent variable. Data obtained from each of the research instruments was then
statistically analysed. Through linear regression analysis it was concluded that there is a
significant relationship between leadership styles and employee performance, However, only
three leadership styles: the transactional leadership, the transformational leadership and the
charismatic leadership was seen to have a positive effect on the significant subscales of
employee performance and a visionary leadership has no significant effect on employee
performance. Simple correlation analysis showed that there is a positive significant
linear relationship between emotional intelligence and employee performance. Moreover, this
results showed that a combination of the various leadership styles and emotional intelligence of

the leader will bring more effective and enhance employee performance. However, out of four
leadership styles, the visionary leadership combine leader’ emotional intelligence has negative
effect on employee.
Finally, although emotional intelligence and leadership styles had a significant effect on
employee performance, the emotional intelligence, charismatic leadership were affected more
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than others.
This research therefore adds a new dimension to employee performance, leadership styles
and emotional intelligence, since no similar study has been conducted. As this research takes
place in the Vietnam context, the findings of this study were expected to provide references to a
corporate body in operating the human resource management strategy and developing the
leadership style.
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ACKNOWLEDGEMENTS
Firstly, I am deeply indebted to Dr. Adwin Bernal and sincerely grateful for your infinite
patience, direction, support, wisdom, and guidance throughout the research
Additionally, I would like to thank the following individuals for their contributions and
cooperation throughout the research:
•
All the leaders and employees who took the time to complete the questionnaires.
•
Dr Nguyen Thanh Hai and Trinh Thi Hieu, from the International training center of
Thai nguyen University, for their help and assistance with the research.
•
My colleagues in The University of Labour and Social Affair, for their continuous
encouragement and support through the good and bad times, and also for helping with the
proofreading of the document
Finally, Many thanks and much appreciation to my family members and friends who both
supported and encouraged me throughout this process.
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Contents
ABSTRACT ii
ACKNOWLEDGEMENTS iv
LIST OF TABLES vii
CHAPTER I: INTRODUCTION 1
1. Background of the study 1
2. Statement of Objectives 4
3. Statement of the Problem 4
4. Hypotheses 5
5. Significance of the study 5
6. Scope and Limitations of the Study 6
CHAPTER II: REVIEW OF RELATED LITERATURE AND STUDIES 9
2.1.Leadership 9
2.2.Emotional intelligence 18
2.3.Employee performance 23
2.4. Relationship between employee performance, leadership and emotional intelligent 30
CHAPTER III: RESEARCH METHODOLOGY 36
3.1.Research design 36
3.2.Population and Sample 37
3.3.Measuring Instruments Used 37
3.5. Data gathering procedure 39
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3.6. Statistical Analysis 40
CHAPTER IV: RESULTS AND DISCIUSSIONS 45
4.1.The Survey Respondents 45
4.2.Relationship Between Leadership Styles and Employee Performance 46
4.3.Relationship Between Employee Performance and Leaders’ Emotional 49
4.4.
Relationships among
Emotional Intelligence, Leadership Styles and 53

4.5.Most Effective Leadership Style in Vietnamese Companies 54
CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMADATIONS 56
5.1. Summary of Findings
56
5.2. Conclusion
58
5.3. Recommendations
59
5.3.1.Recommendations for the leaders 59
5.3.2.Recommendations for the enterprises 60
5.3.3.Recommendations for future researchers 61
APPENDIXES
62
Appendix G: 78
Appendix H: 79
Appendix I: 80
Appendix K: Covariance Matrix 87
List of
References
90
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LIST OF TABLES
Table 4.1: Sample and Response Rates…………………………………………………45
Table 4.2. The Distribution of the Participants in Terms of Gender…………………… 46
Table 4.3. Leadership Style Survey – Item Descriptions…………………………………47
Table 4.4: Means and standard deviations of leadership style……………………………48
Table 4.5. Emotional intelligence Survey – Item Descriptions……………………………50
Table 4.7: Means and standard deviations of employee performance……………………52
T
able 4.12. Correlations between Emotional Intelligence and Employee performance….55

1
CHAPTER I: INTRODUCTION
1. Background of the study
In the global competitive market of today, Human Resources are playing a vital role in
almost all aspects of life and in organizational development. As more and more organizations
are making progress, by making the use of human resources, they need some means to
increase the performance in human resource by increasing the efficiency of leaders and
their followers. Emotional Intelligence is playing the vital role in the performance of
the leaders. T.Quang & N.T.Vuong (2002) state that management styles are profoundly
influenced by the social cultures in which organisations operate. It is important to identify the
most suitable style of management to the specific operating circumstances of an organisation.
This research investigates the relationships among employee performance, leadership styles
and emotional intelligence in enterprises in Hanoi, Vietnam.
To understand clearly that relationships, there is a need to consider some features of the
Vietnamese culture. Vietnam has a deep cultural heritage, which was developed over 4,000
years. However, Vietnam’s history is characterized by turbulence due to centuries of foreign
invasions and occupations. The northern part of Vietnam was strongly influenced by the
Chinese culture due to 1,000 years of dominance of the Chinese feudalism.
In general, the Vietnamese people are hospitable and industrious. The history and
geographic vicinity meant that Vietnamese people share many of the cultural and business
practices of their Chinese neighbours. In the words of Hofstede (1980), the Vietnamese
culture can be described as high power distance, high collectivism, moderate uncertainty
avoidance, and high context (Swierczek, 1994, Quang, 1997; Ralston et al., 1999).
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The high power distance characteristic is present in the daily life of Vietnamese as well
as in business. In the family, sons and daughters have to obey parents’ orders. In
organisations, there is a clear subordinate-superior relationship. Titles, status, and formality
are very important in Vietnamese society. Collectivism has existed for a very long time in
Vietnam. It is characterised by tight social frameworks and self-functioning communities.
People expect ‘in groups’ to look after their members to protect them, and provide them with

security in return for their loyalty. Vietnamese people place importance on fitting in
harmoniously and avoiding losing the other’s face. In conflicts, they prefer to come out with a
win-win situation. Vietnamese culture displays moderate uncertainty avoidance. People in
society feel threatened by ambiguous situations and try to avoid these situations by providing
greater job stability, establishing more formal rules, and rejecting deviant ideas and
behaviour. One of the distinctive features in the Vietnamese society is indirect speech,
resulting from the importance of saving face. In compensation, the Vietnamese have a very
good sense of humour that surfaces often in every opportunity and conversation.
In economy, Vietnam is a nation in transition and a country full of opportunities. It has a
large, young, dynamic and highly literate population that has potential to be developed as a
resource to attain high levels of sustained economic growth (Quang, 2006). Before 1986,
Vietnam was a command economy dominated by large bureaucratic state-owned enterprises
(SOEs), an inefficient agricultural base and small family businesses. Vietnam started a
profound economic reform in 1986 that aimed to transform the country from a command
economy into market oriented economy called Doi moi.
As a consequence, Vietnam has substantially elevated its economy and the living
standards of Vietnamese people. The country reaped average economic growth rate (GDP) of
3
over 7% during the 1990s and early 2000s, especially more than 8% in 2006, which made
it one of the highest growing economies in the World (World Bank, 2006).
Excessive reliance on factor accumulation to support rapid growth is bound to be
unsustainable. There is a limit to how fast factors can grow to support a rapidly growing
economy. Although Vietnam has a large population base, people with necessary education
and skill to work in industry and services are getting increasingly scarce. This has led the
SEDP to identify skills and human capital as one of the breakthroughs for the next five years.
At the same time, rapid growth in credit, which is the basis for brisk growth in capital
accumulation, has led to macroeconomic instability, forcing the government to pursue a
tighter monetary policy in recent year.
Another sign of weakness in Vietnam’s economy is its persistent macroeconomic
instability. For four years in a row, Vietnam has had one of the highest inflation rates in Asia,

averaging nearly 16 percent a year between 2008 and 2011. Along with high inflation,
Vietnam has also been coping with persistent pressure on its currency, falling levels of foreign
exchange reserves, an underperforming stock market, high sovereign spreads and domestic
capital flight. It has thus become an exception to the broader trend of the rest of the emerging
markets in Asia, which are dealing with appreciating currencies, rising foreign exchange
reserves, and increasing capital inflow.WEF showed more pessimistic view of Vietnam's two-
digit surging inflation situation currently. In addition, high state budget deficit ratio (6 per
cent in 2010) and substandard infrastructure continue to be the major concerns of experts to
Vietnam (road infrastructure ranked at No 123 and port at No 111). The quality of education,
despite gaining significant progresses from last year, was still ranked in the low average
group.
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Global Competitiveness Report (GCR) 2011 - 2012 announced by the World Economic
Forum (WEF) ranked Vietnam at the 65th position on a total of 142 countries surveyed. The
country dropped six spots from last year, losing points in 10 of the 12 indicators considered by
WEF. For Vietnam to improve this ranking and become more competitive in the
global environment, it is necessary to find out how enterprises work more efficiently and
identify how human resources are managed by looking into the level of emotional intelligence
and the leadership styles that can possibly facilitate the utilization of human resources to the
fullest. This is the reason why this study on the the relationships among emotional
intelligence, leadership styles, and performance of employees in enterprises in Hanoi,
Vietnam was undertaken.
2. Statement of Objectives
This study was intended to achieve the following specific objectives:
1. To statistically test the significance of relationship between leadership styles and
employee performance;To statistically test the significance of relationship between
employees’ performance and leaders’ emotional intelligence;
2.
To statistically test the significance of any relationships among
emotional intelligence,

leadership styles and employee performance; and
3. To identify the leadership style which is most effective in Vietnamese companies.
3. Statement of the Problem
This study attempted to examine the relationships among leadership styles, emotional
intelligence and employees’ performance. It specifically found answers to the following
specific problems:
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1. Is there any relationship between leadership styles and employee performance?
2. Is there any relationship between the employee performance and the leaders’ emotional
intelligence?
3.
Is there any relationship among
emotional intelligence, leadership styles and
employees’ performance?
4. Which leadership style is most effective in Vietnamese companies?
4. Hypotheses
The following hypotheses were statistically tested:
H
1:
There is a relationship between leadership styles and employees’ performance
H
2:
There is a relationship between employee performance and emotional
intelligence
H
3: There is a relationship among
emotional intelligence, leadership styles and
employees’ performance.
5. Significance of the study
There has been no known research regarding the relative effectiveness of

emotional intelligence and leadership styles with respect to employees’ performance in a
Vietnam organisation. This study therefore investigated and explored the relationship
between employees’ performance, leadership styles and emotional intelligence in
Vietnam organisations.
This study offers empirical evidence to prove the role of leadership styles and emotional
intelligence of leaders in their work. This information will help Vietnamese leaders improve
their leadership skills, enhance leadership effectiveness in their work, and help Vietnamese
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enterprises have grounds to develop strategies to improve effective use of human resources to
increase competitiveness and success in business.
6. Scope and Limitations of the Study
Scope and Limitations of this study were as follow:
1. One of the main limitations of the literature review was that there was too little
information on the Emotional intelligence tool used in this study, especially in the context
relevant to this study. Because emotional intelligence is a new topic in Vietnam, there are too
little research in this topic which can provide the literature about emotional intelligence in the
context relevant to this study.
2. The data generated by this research is limited to the geography, the sample
composition in this research chosed in Hanoi. Therefore, in the region the custom and habits
can be affect to behavior of the leaders, maybe they have the similar action for the same
situations in psychology.
3. Another shortfall of the sample, there were no differences between males and
females regarding overall emotional intelligence. In fact, the demography can be affect to
emotional intelligence and leadership styles.
4. Definition of Terms
Emotional intelligence – Emotional intelligene is the capacity for recognizing our own
feelings and those of others, for motivating ourselves, and for managing emotions well in
ourselves and in our relationships.
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Leadership –Leadership is defined as a process of social interaction where performance

outcomes are strongly influenced by the leader’s ability to influence the behavior of their
followers.
Leadership styles - is the manner and approach of providing direction, implementing
plans, and motivating people.
Employee’s Performance – Employees’ performance is a relative concept defined in
terms of some referent employing a complex set of time-based measurements of generating
future results. Employees are performing different jobs in an organization depending upon the
nature of the organization. They mainly perform tasks are inter-related to achieve the
targets. These are to be performed by the employees properly so they can give their best out
put at the job. This will have great impact on the total production, sales, profit, progress and
market position of the company in the market. In this study, employees’ performance will be
evaluation through seven factors: Quality, productivity, job knowledge, reliability, Initiative,
teamwork, custormer service.
Transformational leadership – Transformational leaders are described as leaders who
improve followers’ accomplishments and success by influencing their values and needs.
Transformational leaders change their followers’ attitudes, beliefs, and values to align them
with the attitudes, beliefs, and values of the organization. Transformational leaders guide their
followers towards self development and higher levels of success.
Charismatic leadership: Charismatic leaders are describle as one of five types: (1)
socialized charismatic which refers to a leader who is in pursuit of fulfilling the needs of the
group members and providing intellectual stimulation to them; (2) personalized charismatic
referring to a leader who offers consideration, help, and support to group members only
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when it helps to achieve their own goals; (3) office holder charismatic pertaining to a
leader who owns respect and recognition through the office or status he holds not because
of his personal characteristics; (4) personal charismatic which refers to a leader who exerts
influence on others owing to his personal traits and skills not his high status or position; and
(5) divine charismatic referring to a leader who is believed to be endowed with a gift or
divine grace
Transactional Leadership: The transactional leadership style as being based on

traditional bureaucratic authority and legitimacy. Transactional leaders are able to entice
subordinates to perform and thereby achieve desired outcomes by promising them
rewards and benefits for the accomplishment of tasks.
Visionary leadership: Visionary leadership is the ability to create and express a
realistic, attainable, and attractive vision of the future for organizations which grow
continuously. Visionary leaders should create inspiring and innovative visions
for their organizations rendering them credible in the eyes of the people in the
organization at the same time.
ECP - ECP is abbreviation of Emotional Competency Profiler, it is identified by
Wolmarans to measure emotional intelligence through seven onstituent competencies: self-
motivation; self-esteem; self- management; change resilience; interpersonal relations;
integration of “head and heart” and emotional literacy.
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CHAPTER II: REVIEW OF RELATED LITERATURE AND STUDIES
Introduction
The purpose of this study is to investigate the effects of emotional intelligence and
leadership styles and employees’ performance. This chapter reviews literature related TO
THE three factorS and the relationships among them. The literature review includes the
following topics: (1) leadership theories, (2) research and findings on emotional intelligence,
(3)employee performance, (4) Relationship between emotional intelligence, leadership and
employee performance.
2.1.Leadership
There are various theories of leadership, which attempt to explain the factors
involved in the emergence of leadership, the nature of leadership, or the consequences of
leadership (Bass, 1990). These theories attempted to identify various leadership styles,
which is the general manner in which leadership is practiced (Barling, Fullagar and
Bluen, 1983).
2.1.1. Traditional leadership approach
Three traditional leadership approaches that have been developed over time are the
trait approach, the behavioural approach and the situational/contingency approach.

Each of these leadership approaches describes different dimensions of leadership, and has
its own effect on the association between the leader and his followers(Senior,1997). The
leadership trait model was established in the early 1900s, with its associated theories and
perspectives. In essence, this was the first attempt at the theoretical understanding of the
nature of leadership. Most leadership research before 1945 suggested that certain traits
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were inherent in all leaders and were transferable from one situation to another (Hersey and
Blanchard, 1988). This research led to the identification of some traits that are
inherent in most leaders. The trait approach attempts to explain leadership effectiveness in
terms of the personality and psychological traits of the leader (Maude, 1978). These traits
included emotional intelligence; having an extrovert personality (charisma); dominance;
masculinity and conservatism and being better adjusted than non-leaders (Senior, 1997).
Numerous studies identified emotional intelligence as a critical element for the success
of a leader and as a vital resource for any group (Senior, 1997). Alternative approaches to
leadership began to develop after the decline in popularity of trait theories (Swanepoel, et
al., 2000). Researchers moved away from assessing individuals in terms of traits, and
focused on assessing how leaders’ behaviour contributes to the success or failure of
leadership (Draft, 1999). But the move away from the trait approach ignited research
where leaders were studied either by observing their behaviour in laboratory settings
or by asking individuals in field settings to describe the behaviour of persons in positions
of authority, then applying different criteria of leader effectiveness to these descriptions.
This resulted in the development of a leadership-behaviour model which led to the
establishment of the “behavioural school of leadership”. The behavioural approach to
leadership suggests that the leader’s behaviour, not the leader’s personal
characteristics, influence followers (Shriberg, Lloyd, Shriberg and Williamson, 1997).
Extensive research has been done in the area of behavioural approaches to leadership. The
main behavioural models include the Theory of Lewin, Lippit and White (1939), McGregor’s
Theory (1960), the Managerial Grid Model of Blake and Mouton (1964) and the Ohio State
University of Michigan Models (Bass, 1990). The restrictions of these behavioural theories
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are their omission of situational factors on the level of leader effectiveness. One concern is
whether one particular method of leading is appropriate for all situations, regardless of the
development stage of the organisation, the business environment in which it operates, or
the type of people employed by the organisation (Senior, 1997). The perception of
leadership progressed past the view that there is one best way to lead, and the theorists
began to focus on how a leader ought to behave in order to be effective (Senior, 1997).
Dissatisfaction with the trait and behavioural theories gave rise to the
situational/contingency approach to leadership. This approach to leadership examined how
leadership changes from situation to situation. According to this model, effective
leaders diagnose the situation, identify the leadership style that will be most effective, and
then determine whether they can implement the required style (Mullins, 1999; Swanepoel, et
al., 2000). Prominent among these theories are Fielder’s Contingency Theory of leadership,
the Path-Goal Theory of leader effectiveness which embodies transactional leadership,
Hersey and Blanchard’s Life-Cycle Theory, the Cognitive- Resource Theory, and the
Decision-Process Theory (Bass, 1998). Situational approaches to leadership have come
about as a result of attempts to build upon and improve the trait and behavioural
approaches to leadership. The situational approaches emphasise the importance of
the situation as the dominant feature in effective leadership, together with the leader
and the followers (Mullins, 1999). Different environments require different types of
leadership (Hersey and Blanchard,1988). Situational leadership does not promote an ideal
leadership style, but rather considers the ability of a leader to adapt to the environment.
Situational leadership studies the behaviour of leaders and their followers in varying
situations (Hersey and Blanchard, 1988). Hersey and Blanchard (1988) argued that there was
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no best leadership style, but rather that there could be best attitudes for managers. The major
advance of the situational approach is the recognition that for different development levels
and different types of situations, different leadership styles are more effective.
Organisations and their environments have changed rapidly over the past years and as a
result a new style of leadership, one that is less bureaucratic and more democratic, is needed
in order to ensure the survival of organisations (Johnson, 1995). There have also been

numerous criticisms regarding the traditional approaches already discussed. Consequently, a
new style of leadership has emerged in order to ensure the survival of organisations and to
overcome limitations of the trait, behavioural and contingency theories of the past. The
new theories of leadership evolved in reaction to the increasingly sophisticated traditional
models, which became difficult to implement (Bass, 1990; Carlton, 1993).
2.1.2. Recent Approaches to Leadership
This new leadership approach suggests that there are four views of leadership –
transactional leadership and transformational leadership, vision leadership and charismatic
leadership.
2.1.2.1. Charismatic Leadership Theory
Sinha (1995) defines charisma as a ‘‘magical aura’’ which only a few leader may be
granted. Max Weber (cited in Sinha, 1995) maintains that there are three bases of
authority which are traditions, rights and privileges and charisma which is synonymous
with heroism and an exemplary character of a person.
Owing to his character, strength and skill, super human qualities are attributed to a
leader who saves his followers from a crisis or a catastrophic event and becomes an idol
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providing direction and inspiration to his followers.
The charismatic leader attaches utmost importance to his vision, speech, capacity
to take risks and above all the emotions of his subordinates (Sinha, 1995). Robert J. House
(as cited in DuBrin, 1995) identified nine effects which charismatic leaders have on their
followers such as group member’s trust in the correctness of the leader’s beliefs, congruence
between the leader’s and the group’s beliefs, acceptance of the leader, affection for the
leader, willing obedience to the leader, identification with and admiration for the leader,
emotional involvement of the group member in the mission, challenging goals of the group
member and belief in the accomplishment of the mission.
Later, these nine effects were statistically clustered into three dimensions: referent
power refers to the ability of the leader to influence others with the help of his desirable
traits and characteristics; expert power refers to the ability of the leader to influence others
through his specialized knowledge and skills; job involvement refers to the ability of

the leader to encourage group members toward the accomplishment of the job
(DuBrin, 1995).
Bass (1990) categorized charismatic leaders into five types:
Socialized charismatic: a leader who is in pursuit of fulfilling the needs of the group
members and providing intellectual stimulation to them
Personalized charismatic: a leader who offers consideration, help, and support to
group members only when it helps to achieve their own goals
Office holder charismatic: a leader who owns respect and recognition through the
office or status he holds not because of his personal characteristics
Personal charismatic: a leader who exerts influence on others owing to his personal
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traits and skills not his high status or position
Divine charismatic: a leader who is believed to be endowed with a gift or divine grace
2.1.2.2. Transactional leadership
Bass and Avolio (1997) describe the transactional leadership style as being based on
traditional bureaucratic authority and legitimacy. Transactional leaders are able to
entice subordinates to perform and thereby achieve desired outcomes by promising them
rewards and benefits for the accomplishment of tasks (Bass, 1990). Bass (1990) describes the
transactional leader’s relationship with the subordinates as having three phases. Firstly, he
recognises what subordinates want to get from their work and ensures that they get
what they want given that their performance is satisfactory. Secondly, rewards and
promises of rewards are exchanged for employee’s effort. Lastly, the leader responds to
his employee’s immediate self interests if they can be met through completing the work.
Transactional leaders are those leaders who implement structure and are understanding
towards their employees (Senior, 1997). Bass (1985:27) indicates that transactional leaders
“generally reflect on how to marginally improve and maintain the performance, how to
replace one goal for another, how to decrease resistance to particular actions, and how
to execute decisions”. This form of leadership emphasizes the clarification of goals,
work principles and standards, assignments and equipment (Bass, 1985).
Transactional leaders focus their energies on task completion and compliance and rely

on organisational rewards and punishments to influence employee performance, with reward
being contingent on the followers carrying out the roles and assignments as defined by the
leader (Bass and Avolio, 2000; Mester, et al., 2003). In other words, the leader rewards
or disciplines the followers depending on the adequacy of the follower’s performance
15
(Senior, 1997). The transactional leader is known to change promises for votes and works
within the framework of the self-interest of his or her constituency (Bass, 1990).
The transactional leader pursues a cost-benefit, economic exchange to meet
subordinates’ current material and physical needs, in exchange for ‘contracted’ services
rendered by the subordinates (Bass, 1985). Therefore, transactional leaders are thought to
have an exchange-based relationship with their followers (Burns, 1978; Senior, 1997). Bass
(1985) suggests that transactional leadership uses satisfaction of lower order needs as the
leader basis for motivation. The focal point of transactional leadership is on role
elucidation. The leader assists the follower in understanding precisely what needs to be
achieved in order to meet the organisation’s objectives (Bass, 1985).
Leaders who display a transactional leadership style define and communicate the
work that must be done by their followers, how it will be done, and the rewards their
followers will receive for completing the stated objectives (Burns, 1978, in Bass and Avolio,
1990a; Avolio, Waldman and Yammarino, 1991; Meyer and Botha, 2000). Transactional
leadership occurs when leaders approach followers either to correct a problem or to
establish an agreement that will lead to better results. Additionally, transactional
leadership concerns the style of leadership where the leader makes work behaviour more
instrumental for followers to reach their own existing goals while concurrently
contributing to the goals of the organisations (Brand, et al., 2000).
Transactional leaders are suited to a more stable business environment with little
competition, as characterized by the business arena prior to the 1980s (Tichy and
Devanna, 1986). In a stable environment, transactional leaders manage what they find and
leave things much as they found them when they move on (Howell and Avolio,1993).
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However, the current competitive business environment requires a new style of leadership in

order to ensure the organisation’s survival and performance, namely transformational
leadership (Bass, 1985; Brand, et al., 2000).
2.1.2.3. Transformational Leadership
Transformational leadership has emerged as one of the most extensively researched
leadership paradigms to date (Bass, 1985). Perhaps the reason that research on
transformational leadership has become somewhat self-sustaining is that positive results
continue to emerge on the effects of transformational leadership (Hater and Bass, 1988).
Transformational leadership concerns the transformation of followers’ beliefs, values,
needs and capabilities (Brand, et al., 2000). Yukl (1989, in Kent and Chelladurai, 2001:204)
defines transformational leadership as "the process of influencing major changes in
attitudes and assumptions of organisational members andbuilding commitment for
the organisation's mission and objectives". ransformational leaders
therefore teach their followers to become transformational leaders in their own right (Bass,
1994).
Transformational leaders encourage subordinates to adopt the organisational vision as
their own, through inspiration (Cacioppe, 1997). In addition, it is widely accepted that
transformational leadership occurs when people engage with each other in such a way that
leaders and followers raise each other’s levels of motivation (Burns, 1978). Furthermore,
these leaders attempt to elevate the needs of the follower in line with the leader’s own goals
and objectives. Transformational leadership communicates a vision that inspires and
motivates people to achieve something extraordinary. Hughes, Ginnett and Curphy (1994)
believe that transformational leaders also have the ability to align people and the systems so
17
there is integrity throughout the organisation.
Moreover, transformational leaders are responsible for motivating their employees to
go beyond ordinary expectations by appealing to their higher order needs and moral values.
This leadership has consistently shown advantages on a range of individual and
organisational outcomes, such as objectives and performance (Bass, 1998). Through
setting more challenging expectations and raising levels of self and collective
efficacy, such a leadership style typically achieves significantly higher performance and

commitment levels from their employees (Yukl, 1998; Arnold, Barling and Kelloway,
2001; Hater and Bass, 1988 in Mester, et al., 2003) of transactional or transformational
leadership (Bass, 1997; Ristow, 1998). While transformational leadership inspires common
goals and aspirations that tend to transcend followers' individual needs and result in
the attainment of major transformation in work-place effectiveness, it would be narrow-
minded to view transformational leaders as the exclusive participants in the process of
leader-follower exchanges. Transformational leadership extends transactional leadership
to attain higher levels of subordinate performance, but achieves this addition by
utilising various motivational methods and diverse types of objectives and goals (Bass,
Avolio and Goodheim, 1987). Barling, et al., (2000) found that subordinates’ organisational
commitment was positively correlated with the transformational leadership behaviours of
their supervisors. In summary, empirical literature indicates that transformational
leadership is positively connected with leaders’ effectiveness (Bass,1998). Research by
Pruijn and Boucher (1994) shows evidence that transformational leadership is an extension
of transactional leadership; therefore these two leadership styles are not mutually exclusive,
as a leader may display a varying degree
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2.1.2.4. Visionary Leadership
Visionary leadership is the ability to create and express a realistic, attainable, and
attractive vision of the future for organizations which grow continuously. Visionary
leaders should create inspiring and innovative visions for their organizations
rendering them credible in the eyes of the people in the organization at the same time.
Visionary leaders have three qualities, which are related to their effectiveness. First, is
the ability to explain and articulate the vision to the others. Second, is to express the
vision not just verbally but through the leader’s behavior. Third, is to communicate the
vision to different leadership contexts. For example, the vision of the organization should
appeal to employees in different departments (Robbins,1998).
2.2. Emotional intelligence
The concept of emotional intelligence is not a new one. It has been suggested that it
was Aristotle who was the first to mention the importance of emotions in human

interaction (Langley, 2000). “As Aristotle put it, those who possess the rare skill to be angry
with the right person, to the right degree, at the right time, for the right purpose, and in the
right way are at an advantage in any domain of life” (Goleman, 1996 in Langley, 2000:177).
But perhaps the first real theory of emotional intelligence came from the writings of
Thorndike (1920), who believed that there were different types of intelligence. He named
the type of intelligence that is measured using IQ tests, abstract intelligence. The type
of intelligence that is used in understanding and manipulating objects and shapes, he named
concrete intelligence. The third type of intelligence that Thorndike identified was social
intelligence. He defined it as “the ability to understand and relate to people” (Bagshaw,
2000:63). This third type of intelligence is what is today known as emotional intelligence.