BASES OF POWER AND JOB PERFORMANCE

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1 BASES OF POWER AND JOB PERFORMANCE Chaw Tee Yin Corporate Master in Business Administration 2010

2 Puss, KltidnuH l\1akjumat Akotl m h. IIVF.R m I A fa ARAWAJ. P.KHIDMAT MAKI.UMAT AKADEMIK ~i'n'lllllllill BASES OF POWER AND JOB PERFORMANCE CHAW TEE YIN A dissertation submitted in partial fulfillment of the requirements for the degree of Corporate Master in Business Administration Faculty of Economics and Business UNIVERSITI MALAYSIA SARA W AK 2010

3 APPROVAL PAGE I certify that I have supervised and read this study and that in my opinion it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality, as a research paper for degree of Corporate in Business Administration. Dr. Lo May Chiun Supervisor This is research was submitted to the faculty of Economics and Business, UNIMAS and is accepted as partial fulfillment of the requirement for the degree of Corporate Master in Business Administration. Professor Dr. Shazali Abu Manshor Dean, Faculty Economic and Business UNIMAS ii

4 DECLARATION AND COPYRIGHT Name: Chaw Tee Yin Matric Number: I hereby declare that this research is the result of my own investigation, except where otherwise stated. Other sources are acknowledged by footnotes giving explicit references and a bibliography is appended. Signature: cpjjll Date: 21 June 2010 Copyright by Chaw Tee Yin and Universiti Malaysia Sarawak iii

5 ACKNOWLEDGEMENT The writing of this dissertation has been assisted by the generous help of many people. I feel that I was very fortunate to receive assistance from them. I wish to express my sincere appreciation to them. First and foremost, I would like to thank my supervisor, who has been very supportive since the day I started this dissertation. I wish to express my utmost gratitude to her for her invaluable advice and patience in reading, correcting and commenting on the drafts of the dissertation, and more importantly, for her generosity which I has received throughout my entire program. Her kindness and spiritual support has made me feel more confident during the study period. Without her generous assistance and encouragement, this dissertation could never have been completed. I would like to express my gratitude to the people who have indirectly or directly contributed to the completion. of this project. Thank you for the exchange of ideas and the long talks about the project. Furthermore, I wish to extend my sincere thanks to the Kuching citizens as the respondents for their participation in my research. Your kindness is highly appreciated. Thank you. Finally, I would like to thank my parents for their continuous support and encouragement throughout my studies and my entire life. ' Also, I would like to thank my husband for financial support. Specially, sincere thanks are directed to my husband for their enonnous assistance in searching infonnation and with my survey in Kuching and for their emotional and spiritual encouragement throughout my research study. iv

6 ABSTRAK KUASA ASAS DAN PRESTASI KERJA OLEH CHAW TEE YIN Objektif umum kajian ini adalah untuk rnenyelidik sarna ada penggunaan kuasa asas oleh penyelia akan rnernpengaruhi prestasi kerja. Secara khususnya, tujuan kajian ini adalah untuk rnelihat terdapat perhubungan signifikan di antara kuasa asas dengan prestasi kerja. Kajian ini juga rnenyelidik sarna ada kuasa kedudukan yang rneliputi kuasa paksaan, kuasa ganjaran dan kuasa sah rnanakala kuasa peribadi termasuklah kuasa rujukan, kuasa pakar, kuasa rnaklumat dan kuasa perhubungan akan rnernpengaruhi prestasi kerja seperti pentadbiran, pengetahuan kerja, kornunikasi, kerjasarna, rnembuat keputusan, pengurusan kos, pengurusan sumber manusia, tindakan bebas, pekerjaan pengetahuan, kepirnpinan, rnenguruskan perubahan dan perbaikan, respons pelanggan, penarnpilan peribadi, keteguhan, keselarnatan dan respon pekerja. Borarig soal selidik digunakan untuk mendapatkan rnaklurnbalas daripada 100 penyelia yang dipilih secara rawak sebagai responden di Kuching. Data adalah dikumpul dan dianalisis dengan rnenggunakan Statistical Package for Social Science (SPSS) Windows Version Pearson Correlation dan Multiple Linear Regression digunakan untuk rnenguji hipotesis-hipotesis kajian ini. Pearson Correlation rnelaporkan bahawa secara urnurn, ada hubungan yang signifikan antara kuasa asas dengan prestasi kerja. Kajian ini juga rnendapati bahawa tidak ada signifikan antara kuasa paksaan, kuasa sah dan kuasa pakar dengan prestasi kerja. Prestasi pekerja dapat ditingkatkan jika pernbolehubah-pernbolehubah ini diberi perhatian yang mencukupi oleh penyelia dalarn sebuah organisasi. v

7 ABSTRACT BASES OF POWER AND JOB PERFORMANCE BY CHAW TEE YIN (The purpose of this study is to investigate whether power bases of supervisors will be influence on job perfonnance. In addition, this study also to investigate whether positional power such as coercive power, reward power and legitimate power and personal power such as expert power, referent power, infonnation power and connection power will have influence on job perfonnance such as administration, knowledge of work, communication, teamwork, decision making, expense management, human resource management, independent action, job knowledge, leadership, managing change and improvement, customer responsiveness, personal appearance, dependability, safety and employees' responsivenes~ This study attempts to detennine if there is a relationship between positional power and personal power and job perfonnance. In addition, this study also investigates significant relationship positional and personal power and job perfonnance. The instrument used is a questionnaire to collect data from a total of 100 respondents through simple random sampling technique. All data are analyzed using Statistical Package for Social Science (SPSS) Windows Version The Pearson Correlation and Linear Regression are used to test the seven hypotheses. The Pearson Correlation reported that generally, there are significant relationships between bases of power and job perfonnance this study also finds out that there are no significance between coercive power, legitimate power and expert power with job perfonnance. Employees' perfonnance can be improved if these variables given the appropriate attention by supervisors in an organization. vi

8 Pusa idmat 1111klumat Akademi ' Uj\j1 ERSlll Y fa SARAWAK TABLE OF CONTENTS TITLE PAGE APPROVAL PAGE 11 DEC LARA TION AND COPYRIGHT ACKNOWLEDGEMENT ABSTRAK ABSTRACT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES CHAPTER 1 INTRODUCTION 1ll iv v VI vii-ix x Xl Background Research Objectives Research Questions Statement Of Problems Definition OfKey Terms Significances Of Study Scope Of Study Organization Of Chapters Conclusion 9 CHAPTER 2 LITERATURE REVIEW Introduction The Bases Of Power 10 vii

9 2.3 Position Power Personal Power Job Perfonnance Definition Of Leadership Types Of Leadership Styles Leadership In Action And Leader's Power Role Of Leader's Power In Enhancing Employee Job Perfonnance Theoretical Framework Development Of Hypothesis Conclusion 28 CHAPTER 3 METHODOLOGY Introduction Research Site And Sampling Data Collection Instrument Data Analyze Procedure Research Questionnaire Measures Pilot Test Statistical Analyses Measurement Scale Conclusion 34 CHAPTER 4 FINDINGS AND RESULTS Introduction Respondents' Profile viii

10 4.3 Reliability Test 4.4 Correlation Analysis 4.5 Hypothesis Testing 4.6 Conclusion CHAPTER 5 RECOMMENDATION AND CONCLUSION 5.1 Introduction 5.2 Conclusion 5.3 Implications Of Study 5.4 Limitations Of Study 5.5. Future Study BIBLIOGRAPHY APPENDIX 1: Research Questionnaire APPENDIX 2: SPSS Output ix

11 LIST OF TABLES Table 4.1 Summary ofthe Distribution Questionnaires 35 Table 4.2 Demographic Characteristic ofrespondents Table 4.3 Results of Reliability Analysis 39 Table 4.4 Correlation Analysis -Pearson Correlations Matrix 40 Table 4.5 Regression Analysis for Bases ofpower and Job Perfonnance 41 Table 4.6 Summary ofhypothesis Testing Results 44 x

12 LIST OF FIGURES Figure 2.1 Diagram ofthe Relationship between Bases of Power and Job Perfonnance 25 xi

13 CHAPTER ONE INTRODUCTION 1.1 Background What makes an efficient, effective, and good leader? Or simply, who is a world-class leader? These similar questions pose the greatest challenge to all leaders regardless ofthe area of specialization. Today, the rapidity and continuous flow of business transactions and emerging trends in the corporate world require the most functional and applicable attributes of leaders. Aside from the required outstanding scholastic credentials, very satisfactory personal characteristics and exceptional work knowledge, the style of leadership is one of the most essential factors that contribute to the overall stature of the organization - profit or non-profit in nature. The advancement of ideas and innovations has been swift, as different organizations have to promote ideas that can meet the demands of the more knowledgeable and sophisticated market (Armstrong, 2000). To meet these challenges and achieve a competitive edge, there is a need to formulate and implement strategies based on innovation, technology and the development of intellectual capital. Few companies, even those at the leading edge of international business, have all the management processes, culture and tools in place to create and harness knowledge in a systematic way. Furthermore, the continuous and dynamic competition in the global business arena has been exceedingly stiff and complex. With this consideration, the organization must be able to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals (Pearce & Robinson, 2000; Thompson & Strickland, 2003). One of the contemporary management concerns in the business world today is the concept of leadership. In business industries in Malaysia, leadership practices are crucial for the enhancement of job performances of employees. Actually, there are significant researchers 1

14 and studies written by business and academic researchers, policymakers and experts that specifically discusses the concept of leadership. Accordingly, leadership is noted to be one of the well-documented topics not only in Malaysia but also from other nations. Bass (1990) stated that there are various authors who provide definition encompassing the concept of leadership. This variety of definition is a product of many scholars' dedication in undertaking their research on the context of leadership. The definition of leadership that would be widely accepted by the majority of theorists and researchers might say that leadership is a process of social influence in which one person is able to enlist the aid and support of others in the accomplislunent of a common task (Chemers 1997). The major points of this definition are that leadership is a group activity, is based on social influence, and revolves around a common task. Other definitions will be presented in the following discussions wherein the examination of key attributes and application will be conducted. Although this specification seems relatively simple, the reality of leadership is very complex. Intrapersonal factors (i.e. thoughts and emotions) interact with interpersonal processes (i.e. attraction, communication, influence) to have effects on a dynamic external environment. Each of these aspects brings complexity to the leadership process. It is then the purpose of this research to attempt to make that complexity more manageable, thus increasing the ability of understanding what effective leadership is particularly in relation to job performances of employees in Malaysian businesses. Malaysia is one of the best countries in Asia in terms of economic growth and development. Thus, understanding the leadership styles employed in this country might be relevant in overcoming the complex and broad ranging challenges and arguments brought about by misunderstandings, disregard or stereotype images from variety of cultures and histories. Also, it will serve as a model in which other countries may imitate especially on the 2

15 entrepreneurial and economic dealings. The remarkable perfonnance of Malaysia in the global marketplace is attributed to the efficient management and control of authorized figures who lead specified areas. With this fact, the concept of leadership - the act of leading - is not overlooked. Thus, this research predominantly attempts to provide theoretical distinction or comparison of the leadership style in the said country. According to Hofstede (2001), the notions and context about organizational leadership and management are frequently exported to different nations regardless of the values that these ideas have been developed. Some authors agreed that while the emergence of leadership approaches is widely acceptable to be a common in different cultures, the manner that these styles have been operational is commonly observed as culturally specified. There are some arguments that exist regarding the context of leadership styles across different cultures, especially in Malaysia compared to other countries. Moreover, there are also some arguments that leadership styles often affect the job perfonnances of an individual (Thompson & Strickland, 2003). Therefore, the primary goal of this research undertaking is to evaluate the leaders' power and job performances of employees in business industry ofmalaysia. 1.2 Research Objectives The general objective of the study is to evaluate and investigate the performance of employees in accordance to the current leadership styles of managers of the selected companies in Malaysia. This study attempts to review and analyse the type of leadership imposed by managers on their employees. In the recent studies of employee work performance, leadership type is the greatest source of the improvement of a business. These studies expose the positive as well as the negative treatment accorded to the employees as a result of an effectivelineffective job perfonnance. 3

16 Likewise, it is essential to study the existing leadership practices and status of employee job perfonnance. For this reason the following objectives are fonnulated: 1. To investigate whether power bases of supervisors will be influence on job perfonnance. 11. To investigate whether positional power such as coercive power, reward power and legitimate power will have influence on job perfonnance such as administration, knowledge of work, communication, teamwork, decision making, expense management, human resource management, independent action, job knowledge, leadership, managing change and improvement, customer responsiveness, personal appearance, dependability, safety and employees' responsiveness. iii. To investigate whether personal power such as expert power, referent power, infonnation power and connection power will have influence on job perfonnance such as administration, knowledge of work, communication, teamwork, decision making, expense management, human resource management, independent action, job knowledge, leadership, managing change and improvement, customer responsiveness, personal appearance, dependability, safety and employees' responsiveness. 1.3 Research Questions This study attempts to answer the following questions: i. Is there any significant relationship between positional power such as coercive power, reward power and legitimate power and job perfonnance? ii. Is there any significant relationship between personal power such as expert power, referent power and infonnation power and job perfonnance? 4

17 Pusat Khidmat MakJumat A demik UM _R. 11'1 If X JA ~ARAWAI< 1.4 Statement Of Problems The problem can be placed within human resource management perspective as there are issues catering to the lack ofsupport into job performance impact and the problem related to the use of position and personnel power which can play significant impact to the development of Malaysian businesses. From the recent studies about leaders' power and employee job performance as noted by Thompson & Strickland (2003), it shows that the presence of too much leadership authority can affect job performance not just in the lower levels but also in the higher ones. Aetually, the wide range of studies related to leadership as well as business management, marketing plus various phenomena affecting its totality are extensive. Given with this fact, this research goes over the related literatures conducted on the area of study. By embarking on such pursuit, the research are guided accordingly by firstly discovering where the research is coming from, what and how much have been studied regarding the topic and what it is yet to tackle. With this, the researcher of investigating on how these Malaysian human resource managers perform well and uses the leader's power into the work setting and how they possess proper quorum towards other staff in the organization they belong and how this leader's power could affect the job performances of the staff or employees. Another problem could be limited case situation towards HR perspectives in Malaysian context, as there is a lack of supporting resources pertaining to use of position and personal power towards recognizing job performance factors and the presence of research barriers to research administration is possible. For this research, the independent variable would be the perception of respondents pertaining to leader's power and for dependent variables; it would be the perception of respondents pertaining to job performances. In this way, the researcher can assess and evaluate the significant impacts ofleader's power to job performance. 5

18 1.5 Def'mition Of Key Terms This section provides definitions of the important tenns used in this study. a) Job performance - Job perfonnance is a commonly used yet poorly defined concept in industrial and organizational psychology, the branch of psychology that deals with the workplace. It most commonly refers to whether a person perfonns their job well (Campbell, J. P. 1990). b) Power - Power is defined as the potential influence that one actor could exert on another (French and Raven, 1959). c) Power Base - the source of influence in a social relationship (Ansari, 1990; Dahl, 1957; French and Raven, 1959). d) Coercive Power - Coercive power which involves the concept of influence based upon subordinates' expectation of punishment for failure to confonn to an influence attempt (French and Raven, 1959). e) Connection Power - Connection power is the belief that the other person has an affiliation with influential (Ansari, 1990). f) Expert Power - Expert power is based on subordinates' belief that their superior has particular areas of expertise (French and Raven, 1959). g) Information Power - Infonnation power is ability to control over infonnation (Ansari,1990). b) Legitimate Power - Legitimate power is dependent upon the belief of subordinates that superior has the right to prescribe and control their behaviour. (French and Raven, 1959). i) Referent Power - Referent power is defined as subordinates' desire to associate with a superior because oftheir personal liking ofthe superior (French and Raven, 1959). 6

19 j) Reward Power - Reward power is derived from the perception of subordinates that a superior can reward them for desired outcomes (French and Raven, 1959). 1.6 Significances Of Research This study has significant contributions III terms of theoretical development and managerial practice. The impeding theoretical significance of the research can be found at the ideal composition of research of how it can go or not go beyond the scope of research as the research findings could be at most useful in terms of instilling awareness to Malaysian managers, HR personnel and other involved parties. The audience, the readers of this research will have the utility of driving in personal growth and simple ways of understanding job performance as found in human resource positioning and personal power in certain SMEs in Malaysia thus, there gains acceptance of valuable matters and allowing possibilities of accepting human resource management research and development for Malaysia to use as reference tool. This study is a significant attempt in promoting effective leadership and imposing appropriate leaders' power to the work practices of employees. For practical reasons, this research is helpful to business practitioners for this serves as a guide for them in leading their employees for the success of the businesses, thus resulting to high job satisfaction among employee. Moreover, this research provides recommendations on how to value employees as they are taking a large part in the overall performance ofthe company. Furthermore, the purposes of the study is to show its contributions to new knowledge on uses bases of power in the workplace to help business practitioners who could use the results in order to improve their work so that employees can be better motivated to achieve the companies' missions and objectives. 7 4.

20 1.7 Scope Of Study The study intends to investigate the impact of leaders' power on the job performance of employees in selected companies in Malaysia. In relation to the challenges in business organisation in Malaysia, this research should create effective and efficient strategies that satisfy the needs of modern society in accordance to leader's power and job performance. Basically, this research study only covers the perceptions of leader's power and job performances in Malaysian business organisations. The outcome of this study is limited only to the data gathered from books and journals about leader's power, job performances, management and business reports and journals and from the primary data gathered from the result of the questionnaire survey and interview conducted by the researcher. In accordance to the validity and reliability of the data, the researcher will provide necessary actions to support the collated data such as proper use of different methods regarding the determination of samples and selection of textual information. Although inconclusive, the results of this survey should be viewed as indicative of the status of leader's power and job performances in relation to Malaysian business industry at the time of the survey. Moreover, this study provides a useful role to society since it depicts the future of a certain business with regards to leader's power and employee job performances which are crucial to business development. Furthermore, this study provides quantitative or statistical treatment for the findings. Additionally, all data will be addressed through interpretation and in-depth evaluation. For further investigation, the researcher also conducted a focus group interview with some of managers and administrators numbering to 100 participants. The questionnaires are used to collect quantitative data and the interviews will be used to provide qualitative insights into the data collected. 8

21 1.8 Organization Of Chapters With respect to chapter organization, five chapters have been considered. The first chapter, the introduction chapter illustrates the overview of the study. It also presented the significance, aims and objectives of the research. Moreover, the general ideas about the way that the study is structured are also presented. On the other hand, the second chapter presents a review and discussion on previous researchers on bases of power and job perfonnance. In the third chapter, the methods to be used for this study are shown. In the forth chapter, the results of the data gathered are analysed and presented. And finally, in the fifth chapter, the conclusions are fonnulated as well as recommendation and guidelines. 1.9 Conclusion This study examines leaders' power relevance to job perfonnance of employees. The loo target samples of the study are from managerial level employees of Malaysian medical industry companies located in the Kuching, one of the developed places in Malaysia. This allows evaluation of the views of subjects pertaining to leader's power and job perfonnance. Comparison of these views may lead to the development of new theories that may contribute to human resource management research. In this chapter, the nature of problem is presented and discussed. The backgrounds of different variables related to the study are featured. Here, the aims, objectives, problem statements and significance of the study are explained. 9

22 CHAYfER TWO LITERATURE REVIEW 2.1 Introduction The wjde range ofliteratures related to leadership, employee job performance, leader's power as well as business management, marketing plus various phenomena affecting its totality are extensive. Given with this fact, this chapter goes over the related literatures conducted on the area of study. By embarking on such pursuit, the research may be guided accordingly by firstly discovering where the research is coming from, what and how much have been studied regarding the topic and what it is yet to tackle. Besides providing background to the study, this section provides the necessary backbone and support in order for the research to stand credible. By surveying the past publications and researches related to the study, a historical perspective may take place. The researcher also gained an idea on how such venture has been explored in the past. In this manner, this study may be able to reflect, compare itself, learn from setbacks, and produce a stronger and more efficient study. The related literatures also provide the research a rich source of data, both new and old, that will enhance and enrich the study and the direction it will plan to undertake even more. References from this segment of the paper are a product ofbroad traditional and modem researching and information retrieval. 2.2 The Bases Of Power Power does not arise spontaneously or mysteriously. Rather, it comes from specific and identifiable bases. The two major types of power are position powers and personal powers (Rahim et ai., 2001; Bass, 1960; Etzioni, 1961; Rahim, 1988; YukI and Falbe, 1991; YukI, 1994; Elangovan and Xie, 2000; Ward, 2001). Position power is based on rank in an organizational structure and is given by superiors. Personal power is based on a person's individual characteristics and is in part given by subordinates. 10

23 2.3 Position Powers A person's position in an organization provides a base for the exercise of this type of power. The major kinds of power that are attached to a position include legitimate power, reward power, and coercive power (French and Raven, 1959; Ward, 2001; Yagil, 2002). Legitimate power: This is sometimes called formal authority and is based on perceptions about the obligations and responsibilities associated with particular positions in an organization. In the work setting, such power is intended to give a manager a designated right to expect compliance from employees. Both parties agree that the subordinates are obligated to respond to those requests (French and Raven, 1959; Ward, 2001; Yagil, 2002). Reward power: Reward power is derived from control over tangible benefits, such as a promotion, a better job, a better work schedule, a larger operating budget, an increased expense account, and formal recognition of accomplishments. Reward power is also derived from status symbols such as a larger office or a parking space (French and Raven, 1959; Ward, 2001; Yagil, 2002). Coercive power: This is the power to discipline, punish, and withhold rewards; it is important largely as a potential, rather than an actual type of influence. For example, the threat of being disciplined for not arriving at work on time is effective in influencing many employees to be punctual. (French and Raven, 1959; Ward, 2001; Yagil, 2002). 2.4 Personal Powers Personal powers are attached to a person and thus stay with that individual regardless of position or organization. Personal powers are especially valuable to leaders because they do not depend on the actions of others or of the organization. The two major bases are expert power and referent power (French and Raven, 1959; Ward, 2001; Yagil, 2002). 11

24 Expert power: A major base of personal power in an organization stems from expertise in solving problems and performing important tasks. Because many people do not have specific knowledge, expertise becomes a potential base of power. The potential is translated into actual power when other people depend on, or need advice from, those who have that expertise (French and Raven, 1959; Ward, 2001; Yagil, 2002). Referent power: Referent power is the ability to influence others based on personal liking, charisma, and reputation. It is manifested through imitation. There are numerous reasons why we might attribute referent power to others. We may like their personalities, admire their accomplishments, believe in their causes, or see them as role models (French and Raven, 1959; Ward, 2001; Yagil, 2002). Information power: Information power is based on the perception by one member of the relationship that another member own or has access to information that is precious for others (Ansari, 1990). This type of power was described as being correlated to expert power (Yagil, 2002). According to Raven (1988), informational power is based on the "actual persuasive content of the communication from the agent to the target". This power is embedded in the actual content of the message. The greater the informational content of a given message, the greater the possibility that the target will obey to the instruction. Thus, infonnational power is reliant upon apparent communication to the target. It does not require observation, and it is the only power base that the changed behavior does not reliant upon the influencing agent (Raven, 1988). Connection power: Connection power is based on the perception by one member of the relationship that another member has affiliations with influential or important persons (Ansari, 1990). This power base is occasionally used when employees apply for special 12

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