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The impact of empathy on leadership effectiveness among business leaders in the United States and Malaysia

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International Journal of Economics Business and Management Studies - IJEBMS
ISSN: 2226-4809; EISSN: 2304-6945
Vol. 2, No.3 (September, 2013) 83-97
Indexing and Abstracting: Ulrich's - Global Serials Directory
*The material presented by the author(s) does not necessarily portray the viewpoint of the editors and the management of the Asian
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Citation: Rahman, W. A. & Castelli, P. A. (2013). The impact of empathy on leadership effectiveness among business leaders in the
United States and Malaysia. International Journal of Economics Business and Management Studies, 2(3), 83-97.
The Impact of Empathy on Leadership Effectiveness
among Business Leaders in the United States and Malaysia
Wan Abdul Rahman, W. A.
School of Distance Education, Universiti Sains Malaysia, Malaysia
Email: afezah@gmail.com
Patricia Ann Castelli
College of Management, Lawrence Technological University, USA
Abstract
Global markets have increased the challenges faced by business organizations causing
them to manage their employees across varying cultures, different time zones, and
complex organizational structures. Thus, more effective leadership skills are required to
enhance business survival and continuity. Empathy is a pivotal leadership tool in today’s
global market. This study investigated the impact of empathy on leadership effectiveness
by testing four hypotheses to determine the relationships between empathy, leadership
effectiveness, and leaders’ backgrounds using a sample of 216 business leaders located in
the United States (51.9%) and Malaysia (48.1%). Davis’s Interpersonal Reactivity Index
(IRI) was used to measure empathy and to test the impact of empathy on leadership
effectiveness in the United States and Malaysia. The results indicate that American
business leaders have significantly higher empathy than Malaysian business leaders, and
that leaders with higher empathy appear to be more effective. The clear implication is
that multinational organizations need to develop leaders with high empathy skills.
Keywords: Empathy; empathic leader; leadership effectiveness.
1. Introduction
To stay competitive it is imperative that business leaders to acquire empathy skills so that they can relate
effectively to diverse groups of employees, and achieve the desired results demanded by today’s global
market (Kayworth & Leidner, 2002). According to Voss, Gruber, and Reppel (2010), empathy skills allow
leaders to understand better other peoples’ perspectives and opinions, making the work environment more
enjoyable and productive. Goleman (1995) states that empathy is a must-have virtue for leaders because it
can inspire, motivate, envision, and lead others to greater effectiveness. Goleman (1995) added that
empathy has an important role in leadership because empathy enables leaders to connect with their people.
Empathy ensures that connections occur between people so that everybody is included and no employee
feels left out, and as such, an empathic leader is perceived as an effective leader (Cockerell, 2009). An
effective leader increases employee optimism, motivation, and commitment, as well as organizational
vision (Goleman, Boyatzis, & McKee, 2002).
According to Leslie, Dalton, Ernst, and Deal (2002), and McCuddy and Cavin (2008), in the rapidly
growing global market there are more leaders working across borders, distances, and cultural boundaries.
These leaders need to adapt to multicultural differences, have exceptional knowledge of business
operations, have effective time management skills, and be able to act and think beyond traditional
boundaries. Additionally, being an effective leader requires the ability to take the perspective of others
(McCormick, 1999). McCormick (1999) further notes that the ability to take the perspective of others
means that leaders should be able to see the world through others’ eyes. Thus, leaders must acquire
empathy to promote behaviors that are necessary for effective global leadership (Bailie, 2011).
2. Literature review
2.1 Empathy
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84 Vol. 2, No.3 (September 2013)
Empathy is defined as a skill of understanding others’ feelings, predicaments, and challenges better
(Marques, 2010). Empathy also defined as the skill of sensing other people’s emotions, allows for
understanding beyond someone’s apparent surface behavior by putting oneself in another’s shoes and
taking an active interest in their concerns (Goleman, 2000; Mencl & May, 2009). According to Voss,
Gruber, and Reppel (2010), empathy skills allow leaders to understand better other peoples’ perspectives
and opinions, making the work environment more enjoyable and productive. Marques (2010) states that, to
achieve leadership effectiveness, leaders must develop empathy skills to their fullest potential since
empathy enhances a sense of leadership by providing leaders with the awareness to listen, serve their
followers, and have greater understanding of interrelationships within the group. Thus, followers may be
more likely to invest energy and commitment in their performance to the group.
Gardner and Stough (2002) point out that by placing themselves in the same position as their employees,
leaders are using empathy to help motivate their employees by earning their trust. Goleman et al. (2002)
note that empathy helps leaders to increase their capacity and willingness to understand situations, and
accept proposed changes and opinions of others. Empathy enables leaders to be sensitive towards others so
that they can create an atmosphere of openness, making these leaders more flexible and open to new ideas
and perspectives that lead to effective leadership (Goleman, 2001). Empathy has become increasingly
important to the success of leadership because empathic leaders are more likely to have an appropriate
degree of openness about diversity and the differences between cultures (Atwater & Waldman, 2008; Choi,
2006). According to Martinovski, Traum, and Marsella, (2007), empathy also plays an important role in
developing trust in leader-employee relationships.
According to Gardner and Stough (2002), leaders can also use positive emotions to earn trust from their
employees and create bonding through their ability to understand others. Tager (2004) stated that empathy
also allows leaders to be more aware of changing environments and be willing to adapt and do things
differently. Adaptability provides leaders an advantage in cross-cultural situations and prevents them from
offending employees (Stull, 1986). According to Mahsud, Yukl, and Prussia (2010), empathy enables
leaders to have a better understanding of new social surroundings, and helps them quickly learn and adapt
to new environments. In the same vein, empathy skills also help leaders have a positive attitude towards
adapting to new environments and trends which create a collaborative atmosphere.
2.2 Leadership effectiveness
According to Cicero, Pierro, and Van Knippenberg (2010), leadership effectiveness is defined by a leader’s
ability to mobilize and influence followers. However, McCuddy and Cavin (2008) opine that the definition
of leadership effectiveness depends mostly on the successful and punctual accomplishment of tasks from a
leader’s set of objectives. McCuddy and Cavin (2008) further add that leadership effectiveness is especially
pivotal in the rapidly growing global market because it determines the success of organizations. Thus, a
leader’s ability to mobilize and influence followers is important because it is a path to the successful and
punctual accomplishment of leadership objectives.
According to Leslie et al., (2002), and McCuddy and Cavin (2008), in the rapidly growing global market
there are more leaders working across borders, distances, and cultural boundaries. These leaders need to
adapt to multicultural differences, have exceptional knowledge of business operations, have effective time
management skills, and be able to act and think beyond traditional boundaries. Additionally, being an
effective leader requires the ability to take the perspective of others (McCormick, 1999). McCormick
(1999) further notes that the ability to take the perspective of others means that leaders should be able to
see the world through others’ eyes. Thus, leaders must acquire empathy to promote behaviors that are
necessary for effective global leadership (Bailie, 2011). This study is concerned with investigating this
apparent relationship between empathy and leadership effectiveness in the United States and Malaysia.
Over the past two decades, there has been significant research addressing the relationship between empathy
and leadership effectiveness (Atwater & Waldman, 2008; Choi, 2006; Goleman, 1995; 2000; Rosete &
Ciarrochi, 2005). For instance, Rosete and Ciarrochi (2005) demonstrate that empathy plays an important
role in effective leadership. This is because empathy creates dynamic interpersonal skills, which motivate
employees and improve the effectiveness of leaders (Undung & Guzman, 2009). Empathy gives leaders the
ability to read and be aware of people’s emotions; thus, leaders are able to perform critical leadership
activities (Skinner & Spurgeon, 2005). Skinner and Spurgeon (2005) further point out that the importance
of empathy in leadership behavior cannot be underestimated because empathy gives leaders the power to
read between the lines; thus, they are able to make appropriate decisions.
W. A. Rahman & P. A. Castelli
International Journal of Economics Business and Management Studies 85
Empathy has also been related to different leadership styles, such as transformational leadership,
charismatic leadership, and servant leadership (Gardner & Stough, 2002; Maibom, 2009; Popper, 2000).
For instance, in research on transformational leadership, low job turnover, leadership effectiveness, and
individual advancement were related to leaders who had a high degree of empathy, openness, and
communication (Rosete & Ciarrochi, 2005). Empathy has also been regarded as a powerful tool in
developing leadership skills that are instrumental in the development of trustworthy and motivated
employees (Undung & Guzman, 2009). Thus, empathy strengthens leader-employee relationships and
eliminates shortcomings or mistakes.
There has been great concern regarding leadership effectiveness due to changes in market growth and rapid
globalization (Bailie, 2011). Organizations aim to improve their performance in world markets by
strengthening leadership effectiveness (Noubar, Che Rose, Kumar, & Salleh, 2011; Ventakesh, 2006).
Intelligence, passion, innovation, and confidence are not the only skills effective leaders need (DeFelice,
2011). Empathy skills, in particular, have the potential to improve leadership effectiveness, and thereby
help businesses compete more effectively in the global economy (McCuddy & Cavin, 2008). In the past
few years, dramatic improvements have been seen within Malaysian society and the success of business
organizations in Malaysia has greatly improved. Much of this improvement is due to Malaysian business
initiatives to enhance leadership effectiveness behaviors and gain a better understanding of other cultures
through empathy (Noubar et al., 2011).
The purpose for including Malaysia in the research was to compare differences in the impact of empathy on
the leadership effectiveness of United States and Malaysian business leaders. This comparison will broaden
and enhance understanding of empathic leadership, test its robustness across different business, social and
cultural systems, assist leaders in employing empathy effectively in global organizations, and contribute to
better understanding and more productive relationship between American and Asian business leaders.
Additionally, the United States and Malaysia are two countries that have diverse ethnicities (Shipper,
Kincaid, Rotondo, & Hoffman, 2003).
There is little information on or understanding of the differential impacts of empathy on leadership
effectiveness between the United States and Malaysia. What is important in Malaysia may not be viewed as
important in American business culture. Given the historical background and cultural differences between
the United States and Malaysia, it is expected that the impact of empathy on leadership effectiveness differs
significantly between these two countries (Noubar et al., 2011; Peppas, Peppas, & Jin, 2001).
The purpose of the present study is to extend the literature with an empirical investigation of the impact of
empathy on leadership effectiveness in the United States and to explore the impact of empathy on
leadership effectiveness in Malaysia. The research questions determined the level of empathy among
American and Malaysian business leaders and what constructs of empathy (empathic concern and
perspective taking) have the greatest impact on leadership effectiveness. Additionally, the following
hypotheses were tested:
H1. There is no difference in the level of empathy between American and Malaysian business leaders.
H2. There is no effect of empathy on leadership effectiveness among American and Malaysian business
leaders.
H3. There is no difference in the attributes of empathy that effect leadership effectiveness among
American and Malaysian business leaders.
H4. The country of the business leader does not influence the effect of empathy on leadership
effectiveness among American and Malaysian business leaders.
3. Method
The conceptual model is shown in Figure 1. The model measures two subscales of the IRI model, empathic
concern and perspective taking (Davis, 1980, 1983; Davis & Matthews, 1996). Empathic concern refers to
feelings of concern and compassion for others (Davis, 1983) and perspective taking refers to the tendency
for employees to create useful ideas for organizations (Grant & Berry, 2011). Leadership effectiveness is
measured by two subscales, behavioral characteristics and organizational performance. The behavioral
characteristics include five behaviors that improve leadership effectiveness: motivation, openness,
communication, trust, and adaptability (McCallum & O’Connell, 2009). Organizational performance is
measured by profit and loss statements and organizational growth in sales. Finally, the effects of empathy
on leadership effectiveness among American and Malaysian business leaders are moderated by the country
The Impact of Empathy on Leadership Effectiveness among Business Leaders in the United States and
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86 Vol. 2, No.3 (September 2013)
of the business leaders (United States or Malaysia). In this model, empathy functions as the independent
variable, leadership effectiveness as the dependent variable, and country of business leader functions as the
moderating variable.
The predictor variable in this study is empathy, a multidimensional construct comprised of empathic
concern (concern for others) and perspective taking (create useful ideas). Empathy, defined as the skill of
sensing other people’s emotions, allows for understanding beyond someone’s apparent surface behavior by
putting oneself in another’s shoes and taking an active interest in their concerns (Goleman, 2000; Mencl &
May, 2009) is measured by the 14-item self-report instrument, Interpersonal Reactivity Index (IRI) (Davis,
1980). Each of the 14 items is scored along a 5-point Likert scale (describes me poorly, describes me fairly,
describes me well, describes me very well, describes me excellent). This study measures separate scores for
empathic concern and perspective taking.
The dependent variable in this study is leadership effectiveness, a multidimensional construct composed of
behavioral and organizational performance dimensions (Freeman, 2011). The behavioral dimension
consists of five characteristics of the business leader that improve leadership effectiveness: motivation,
openness, communication, trust, and adaptability (McCallum & O’Connell, 2009). These characteristics are
measured by responses to 15 questions scored along the same 5-point Likert scale as the empathy items.
The organizational performance dimensions consist of two categorical items that measure the
organization’s profitability and organizational growth in sales for the years 2009, 2010, and 2011.
Leadership effectiveness applies to a leader who motivates a person or a group of people to accomplish
more than they would have otherwise accomplished (Abujarad, 2011). Therefore, in order to measure
leadership effectiveness, the study uses five behavioral characteristics and organizational growth in sales
and profits. The moderator variable is the country where the business leader works: the United States or
Malaysia.
3.1 Participants
Participants for the study were American and Malaysian business leaders who work for a publicly listed
organization in one of the following leadership positions: assistant head of department, head of department,
treasurer, director, COO, CFO, CEO, vice president, and president. The sample of American business
leaders were drawn from organizations listed on The New York Stock Exchange, Fortune 1000, Fortune
500, NASDAQ 100 Companies, and Fortune 100 Best Companies to Work For, and Malaysian business
leaders were drawn from the Bursa Malaysia (Malaysia Stock Exchange) and Bank Negara Malaysia
(Central Bank of Malaysia). The sample was recruited through e-mail invitations. A total of 216 business
leaders responded to an online survey using Survey Monkey, 112 were American business leaders and 104
were Malaysian business leaders.
The sample was predominately male (75.4%) in the age range of 40-49 (40.3%) with 73 (33.8%) as head of
department. See Table 1 for the complete distribution of demographic characteristics. Approval to conduct
research with human participants was obtained from The Lawrence Technological University Institutional
Review Board (IRB).
3.2 Measurements
The survey was delivered online and comprised of 40 items that measured demographics characterics of the
leader (5 items), organizational performance (6 items), Davis (1980) Interpersonal Reactivity Index (IRI)
subscales for empahtic concern (7 items) and perspective taking (7 items). Additionally, leadership
effectiveness (15 items) was measured by two subscales, behavioral characteristics and organizational
performance. The behavioral characteristics include five behaviors that improve leadership effectiveness:
motivation, openness, communication, trust, and adaptability (McCallum & O’Connell, 2009).
3.3 Data analysis
The psychometric properties of the empathy and leadership effectiveness constructs were evaluated for
reliability and validity as a precursor to hypothesis testing. Evaluation of psychometric properties involves
tests of the internal consistency of each construct using Cronbach’s coefficient alpha test of internal
consistency (Cronbach, 1951), and tests of the construct validity of each construct using confirmatory
factor analysis (Jöreskog & Sörbom, 1993). Cronbach’s alpha and CFA were determined using Minitab and
Mplus, respectively.
As an index of the reliability of the measurement scales, Cronbach’s alpha tested the inter-correlations
among the items that comprised the empathy and leadership effectiveness scales. Cronbach’s alpha can
W. A. Rahman & P. A. Castelli
International Journal of Economics Business and Management Studies 87
range from 0.0 to 1.0; values 0.7 indicate acceptable reliability and values < 0.5 indicate poor reliability
of scales with six or more items (Hinkin, 1998). Since the leadership effectiveness scale contained
subscales with less than six items, a correction to alpha was made using the Spearman-Brown prophecy
formula to adjust alpha values for these scales:
xx
xx
xx
12
where
xx
= corrected reliability and
xx
= current reliability (Charter, 2003). If necessary, the empathy and leadership effectiveness scales
may be modified to improve alpha by deleting items.
After the reliability of the two study constructs was determined using Cronbach’s alpha, their construct
validity was evaluated using CFA. CFA is a structural equation modeling technique that tests the
covariance structure of a proposed confirmatory model against the covariance structure found in the
obtained data. Construct validity of the proposed model is deemed acceptable if the two covariance
structures are considered to be equivalent (i.e., the obtained data fit the proposed model). Three indices of
model fit were used to evaluate the CFA results: Comparative Fit Index (CFI), Root Mean Square Error of
Approximation (RMSEA), and the ratio of chi-square 2) to the degrees of freedom (df). Specifically, CFI
.90, RMSEA < .08, and χ2/df ratio < 2 to 1 satisfy the measurement criteria for acceptable construct
validity (Bentler, 2007). Hypothesis testing of Ho1 was conducted using independent samples t test to
compare the between-group level of empathy (i.e., American business leaders vs. Malaysian business
leaders).
4. Findings and discussion
Empathy and leadership effectiveness were evaluated using Cronbach’s alpha test of reliability and a
confirmatory factor analysis test of construct validity. First, empathy was evaluated to test if the variable
was reliably and validly measured by the 14-items proposed by IRI. As shown in Table 2, the full 14-item
empathy scale was found to have strong internal consistency reliability (α = .852). Acceptable internal
consistency reliability was found in the two empathy factors: Empathic Concern (α = .760) and Perspective
Taking (α = .725).
Next, the psychometric properties of the dependent variable, leadership effectiveness, were evaluated to
test if the variable was reliably and validly measured by the 21 items that measured seven dimensions of
leadership effectiveness - motivation, openness, communication, trust, adaptability, profit-loss, and
organizational growth.
Table 3 shows that the full 21-item leadership effectiveness scale has strong internal consistency reliability
= 0.928). Additionally, using the criteria suggested by Hinkin (1998) that acceptable internal
consistency reliability occurs in scales with alphas > .5, all seven leadership effectiveness factors
demonstrated acceptable reliability: Motivation = 0.891), Openness (α = 0.782), Communication (α =
0.864), Trust (α = 0.888), Adaptability (α = 0.917), Profit and loss (α = 0.720), and Organizational Growth
(α = .795).
ANOVA tests found that the level of empathy (mean score), was significantly higher for American than
Malaysian business leaders as it was for both empathic concern and perspective taking (Table 4). Those in
the youngest age group 18-29 also had statistically significantly higher levels of empathy, empathic
concern, and perspective taking than the other age cohorts. The impacts of empathy on leadership
effectiveness and on its two sub-constructs; behavior and organizational performance were also statistically
significantly greater for American business leaders.
As shown in Table 5, all p values for the difference in mean empathy, empathic concern, and perspective
taking scores were less than .05, (0.95% level of significance). The mean Empathy score was 3.38 for the
U.S. and 2.88 for Malaysia. The result clearly shows that U.S business leaders have higher levels of
empathy, empathic concern, and perspective taking compared to Malaysian business leaders. Accordingly,
when empathy levels were low or medium, there did not appear to be any difference in the impact of
empathy on leadership effectiveness for the United States or Malaysian business leaders (Table 6). In
contrast, when empathy levels were high, there appeared to be a significantly higher impact of empathy on
leadership effectiveness for the United States business leaders. Specifically, when empathy levels were
high, the mean leadership effectiveness scores in United States and Malaysian business leaders were 3.42
and 3.14, respectively.
Results of an independent samples t-test found this difference in leadership effectiveness scores significant
(t = 3.09, df = 48, p = .003). In contrast, there was no significant difference in leadership effectiveness
between the United States and Malaysian business leaders when empathy was low or medium (p > .05).
The Impact of Empathy on Leadership Effectiveness among Business Leaders in the United States and
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Therefore, the study found that country of the business leader does influence the effect of empathy on
leadership effectiveness among American and Malaysian business leaders.
This study reinforces past literature (Atwater & Waldman, 2008; Choi, 2006; Feng et al., 2004; Goleman,
2000) concerning the relationship between empathy and leadership effectiveness and confirms that
empathy has a significant impact on leadership effectiveness. The results of this study are consistent with
prior research on empathy and leadership (Gardner & Stough, 2002; Rosete & Ciarrochi, 2005) that there is
a strong relationship between empathy and leadership effectiveness. The study also explored the impact of
empathy’s attributes on leadership effectiveness by measuring the impact of empathic concern and
perspective taking on behavioral characteristics associated with effective leadership and organizational
performance.
Research on the impact of empathy on leadership effectiveness among business leaders in the U.S. and
Malaysia had not previously been conducted. Thus, this study has expanded the existing research on
empathy and leadership outcomes by comparing the impact between two different countries. Specifically,
U.S. business leaders showed higher level of empathy compared with Malaysian business leaders, and
when empathy levels were high, there was a greater impact on the leadership effectiveness of the United
States business leaders.
The study assists business leaders from both the U.S. and Malaysia understand how empathy may impact
their leadership effectiveness and improve organizational performance by listening to employees, by
collaborating with them, and by motivating them to achieve their highest performance. This research
reinforces the role of empathy as a must-have skill for competing in today’s global market economy and
today’s growing multinational organizations by providing necessary training or workshops to leaders. The
findings of this study showed that as the empathic skills a business leader has grows, so do his/her
leadership effectiveness and organizational performance.
Coming from a collectivist society, it was expected that Malaysian leaders would have higher empathy.
Surprisingly, in this study, American leaders showed a higher level of empathy compared to Malaysian
leaders, even though the U.S. is known as an individualistic society. The finding that business leaders from
Malaysia reported lower empathy than U.S. business leaders may be related to another characteristic of the
Malaysian culture besides collectivism, which is that Malaysia is considered a high power culture country
(Shipper et al., 2003). Accordingly, Malaysians, and people from Asian countries such as Hong Kong, tend
to believe that power and authority are the norms, and thus, open communication and expression is not
supported (Hofstede & Hofstede, 2005).
Hofstede and Hofstede (2005) note that in a high power culture country, leaders from the top expect
compliance and respect from those below and the Malaysian accept power and authority more than in the
U.S., where cultural differences have been found to have certain impacts on the previous research of
empathy (Jogulu & Wood, 2008). Malaysia is culturally focused on the communal well-being. Thereby, in
Malaysian culture, employees often avoid direct confrontation with their superiors and they value group
harmony and loyalty (Hofstede & Hofstede, 2005). Thus, Malaysian business leaders do not need to exert
high empathy to maintain good relationships among employees (Jogulu & Wood, 2008). This may have
contributed to the result of the study where Malaysian business leaders were found to have lower self-
reported empathy compared to United States business leaders. In contrast, since the U.S. is a lower power
culture, American leaders are willing to take greater risks in openly expressing opinions and dissent,
thereby emphasizing the potential for greater opportunities to express empathy and empathic concern
(Shipper et al., 2003).
4.1 Implications
The results from this study are highly pertinent to business leaders in the U.S. and Malaysia, and are
especially pertinent for multinational organizations in responding to the demands of the global market. In
response to a highly competitive global market, the study findings show that empathy improves leadership
effectiveness which can lead to improved organizational performance.
In term of rapid globalization and current market demands, all business leaders should take the initiative to
acquire empathy skills to achieve high levels of leadership effectiveness This supports the study findings in
which business leaders with low empathy skills had a lower mean leadership effectiveness score, whereas
business leaders with higher empathy skills had a higher mean leadership effectiveness score. It appears
that empathy skills provide leaders with the ability to observe and listen to others and obtain new insights
and perspectives of current working environments, thus allowing them to develop a deeper understanding
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International Journal of Economics Business and Management Studies 89
of current situations which may lead to positive outcomes. Empathy also helps leaders generate new ideas
and be more innovative by being adaptable and open-minded about new social environments and new
changes (Sengupta, Mohr, & Slater, 2006).
4.2 Recommendations for organizations
The Interpersonal Reactivity Index (IRI) and the leadership survey can serve as tools to measure empathic
skills and leadership effectiveness, respectively, among business leaders in organizations from across the
global economy. For example, the IRI and the leadership survey could be sent to business leaders and their
employees to obtain valuable feedback on empathy skills, and thus prepare the leaders and employees for
necessary coaching, seminars, and training in acquiring empathic skills.
The incorporation of empathy training in leadership effectiveness programs may be significantly beneficial
for business leaders in the U.S. and Malaysia since cultural differences play a prominent role in the
relationship between empathy and leadership effectiveness. Thus, empathy could help organizations in
recruiting and selecting leaders for different cultural contexts, especially those organizations in which
cultural diversity and cross-cultural assignments are prominent. Empathy has been correlated with
leadership effectiveness in previous research (Atwater & Waldman, 2008; Choi, 2006; Feng et al., 2004;
Goleman, 2000) and reinforced in this study. Thus, empathy should be incorporated into companies’
training agendas for business leaders who work in multinational organizations.
The study findings suggest that organizations should provide empathic coaching so that leaders have the
ability to understand social awareness. Leaders may then become more involved with their employees,
producing better interactions which may allow employees to become more innovative and feel appreciated
because their voices are heard. Additionally, leaders may be able to help employees meet organizational
goals, and make ethical and just decisions. By providing coaching to leaders, organizations attempt to help
business leaders instill trust, and inspire teams in the organization to negotiate better (Prati et al., 2003).
Global market demands are calling for leaders who are equipped with technological savvy and empathy
skills. This is important so that business leaders have the ability to lead and respond effectively to many of
the issues pertaining to business: legal, social, cultural, economic, and geographical differences. One of the
findings from this study is that the higher the levels of empathy business leaders have, the higher their
leadership effectiveness. Thus, global organizations need leaders who have empathy skills. The
development of empathy skills should be one of the main goals of an organization. Furthermore, global
leaders who want to advance their careers should strive to demonstrate empathy skills that will help the
organization remain competitive in the global market (Noubar et al., 2011; Ventakesh, 2006). Figure 2
presents a model that illustrates the important role empathy has on leadership effectiveness.
4.3 Recommendations for business leaders
Empathy is important because empathic business leaders will understand and be more aware of their
surroundings than business leaders without empathy skills (Slote, 2011). Findings from the study suggest
the following recommendations should be utilized by business leaders for improving empathy skills and
leadership effectiveness:
1. Study results suggest business leaders should increase their empathic concern and perspective
taking skills. Leaders could develop these skills through active listening and showing true concern
for their employees. Empathic concern helps leaders understand what others are thinking.
Developing empathic concern helps business leaders increase social interactions and have greater
empathy (Hodges, Kiel, Kramer, Veach & Villanueva, 2010). Leaders should develop their
perspective taking skills, which will help motivate employees to better understand and deal with
negotiation issues. Leaders should also reinforce social bonds by encouraging social interactions
and by utilizing self-reflection so that they can see more of themselves in others, and potentially
reduce prejudice, and stereotyping (Galinsky, Ku & Wang, 2005). Enhancing perspective taking
skills will help leaders understand the thoughts and feelings of others (Goleman, 1995).
2. The results suggest that business leaders should acquire empathy skills so they have the
appropriate skills to listen, motivate, participate, and communicate with others to understand and
improve their employees (Undung & Guzman, 2009). The ability to understand others is pivotal
for leaders so that they are better equipped to earn their trust, adapt to changing situations, and are
able to collaborate with more effectively with other leaders to achieve organizational goals.
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3. Business leaders should be provided with cross-cultural education through training and seminars
to help them become more aware of the impact of country on leadership effectiveness. Cross-
cultural education will help leaders to interact better with people from different backgrounds and
beliefs, and help them develop social awareness, win-win relationships, and better outcomes for
others and themselves (Condon, Thompson, & Dove, 2010). Through cross-cultural education,
leaders may acquire skills that will help them learn about a particular host culture when they are
traveling abroad to avoid conflicts related to gaps in culture. Leaders should seek to develop a
deeper understanding of cultural issues that are likely to be influential in the diverse workforce of
a global organization (Jogulu & Wood, 2008).
4. Results of the study regarding leadership effectiveness suggest that leaders should identify critical
situations that require a leadership role, identify when to assume leadership (Skinner & Spurgeon,
2005), and when to make management decisions. To improve leadership effectiveness, leaders
should also take leadership training and other steps to ensure success. Finally, recommendations
for improving leadership effectiveness include identifying areas of improvement by preparing
short-term and long-term goals, and by using surveys, observations, and focus groups to facilitate
shared understanding.
4.4 Limitations and recommendations for future research
There are limitations to this research concerning the sample, the variables, and the methodology.
Concerning the sample, this study is limited by the variability of the participants in terms of the
organization where they worked and their position in the organization. The respondents were recruited
from large, publicly traded companies, and the sample may therefore be limited to a narrow of range of
positions within each represented organization, and may also be underrepresented by smaller, private
companies and non-business organizations.
Second, this study may be limited by its methodology. For example, the study may be limited by the use of
an English survey for both the American and the Malaysian participants. While Malaysia business leaders
are typically proficient in English, subtle cultural differences may exist among the sample related to
interpreting the intent of the survey items that ask the participants to rate their empathy and leadership
effectiveness.
Third, the methodology may also be limited by the use of self-report measures since the self-report data in
this study may be subject to social biases e.g., participants may overestimate their level of empathy
(Loewenstein, 2005).
There are significant opportunities in extending the study based on the existing research of empathy and
leadership effectiveness. For example, it would be useful to extend the study by including smaller
organizations, private, and non-business organizations. The study may also provide valuable insights if
lower positions of business leadership are included in the sample, such as managers, team leaders,
supervisors, and other positions as these leaders may collectively work more closely with most of the
employees in the organizations, unlike CEOs and Presidents of companies.
Future research should extend the study to investigate the outcomes in the percentage of male and female
business leaders and also to investigate the extent of outcomes based on different positions of business
leaders in the United States and Malaysia. Future research should also expand the study to investigate the
relationship between empathy and leadership effectiveness in other countries. In this study, the evaluations
of business leaders were based on self report. The comparisons between self report and employee rating
should be included in future research to provide a deeper and more accurate understanding about the impact
of empathy on leadership effectiveness between these two cultures.
Empathy and leadership effectiveness is critical to the success of organizations around the world, especially
in multinational organizations. While this study provides new insights and valuable findings in
understanding the impact of empathy on leadership effectiveness between two countries, future research
should expand the countries represented in the study, and include additional demographic factors to probe
further these impacts on the relationships between empathy and leadership effectiveness.
Conclusion
This study supports previous research and provides significant evidence that high levels of empathy skills
are pivotal to achieve leadership effectiveness (Gardner & Stough, 2002; Rosete & Ciarrochi, 2005;
Shipper et al., 2003). This study presented results from the first empirical investigation to our knowledge of
W. A. Rahman & P. A. Castelli
International Journal of Economics Business and Management Studies 91
the impact of empathy on leadership effectiveness among American and Malaysian business leaders. The
study expands the growing body of knowledge on how empathy positively impacts leadership effectiveness
and organizational performance.
The information from this study can be used to enhance empathy skills among business leaders, and to
improve leadership effectiveness as well as organizational performance. The study expands the growing
body of knowledge about leadership effectiveness and provides new understandings in how business
leaders and organizations could improve their organizational performance by utilizing empathy as a tool to
foster better teamwork and improve productivity. The study confirms the positive impact of empathy on
leadership effectiveness. Business organizations should provide training on empathy and educate their
leaders on how to acquire and effectively use empathy as an important business skill.
The study showed that United States business leaders have higher empathy skills compared to Malaysian
business leaders, and this may be due in part to the fact that the United States is an individualistic and a low
power distance culture in contrast to Malaysia that is a collectivist and a high power distance culture. The
study also showed that higher empathy skills lead to higher leadership effectiveness as well as to higher
organizational performance, which reaffirms previous hypotheses on its effectiveness and usefulness as an
organizational tool.
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Figure(s) & Table(s)
Figure 1: Conceptual model of the research
The Impact of Empathy on Leadership Effectiveness among Business Leaders in the United States and
Malaysia
94 Vol. 2, No.3 (September 2013)
Figure 2: A model of empathy and leadership effectiveness
Table 1: Characteristics of sample by gender, age, and position
Characteristic
%
Sample
100.0
Country
U.S.
51.9
Malaysia
48.1
Gender
Male
75.4**
Female
24.6
Age
18-29
3.2**
30-39
19.4
40-49
40.3
50-59
24.1
60-69
13.0
>70
0.0
Position
Other
0.9**
Assistant Head of Department
10.7
Head of Department
33.8
Treasurer
2.8
Vice President
12.0
COO
6.5
CFO
6.0
Director
14.8
W. A. Rahman & P. A. Castelli
International Journal of Economics Business and Management Studies 95
CEO
9.3
President
3.2
Note. Sample frequency is expressed as % of all participants, N = 216.
** p < .01 Chi-square test for equality of distribution.
Table 2: Psychometric properties of empathy items
Items
Grand
Mean1
SD
Comp.
Mean2
SD
Original
Alpha
Factor4
Empathy Full Scale (14 items)
3.14
.66
43.98
9.23
.852
Empathic Concern (7 items)
2.94
.74
20.53
5.18
.760
.972
Have tender, concerned feelings
3.60
1.06
.706
Does not feel sorry for others
2.07
1.18
.111ns
Feel protective of victims
3.53
1.07
.705
Other’s misfortunes are not disturbing
2.20
1.25
.133 ns
Feel no pity for those treated unfairly
2.09
1.37
.220
Touched by what I see happen
3.64
1.05
.814
Describe myself as a soft-hearted person
3.45
1.09
.739
Perspective Taking (7 items)
3.33
.67
23.34
4.67
.725
.889
Difficult to see another’s perspective
2.30
1.17
.043 ns
See both sides of argument before decide
3.70
.93
.697
Seeing the world through another’s eyes
3.69
.92
.786
Doesn’t listen to arguments of others
2.89
1.37
.137ns
I believe there are two sides of situations
3.85
.90
.778
Always try to put myself in their shoes
3.38
1.14
.669
Before criticize I try to feel their feelings
3.42
1.13
.750
Notes: Psychometric properties were evaluated in empathy data from N = 216 business leaders from the
United States and Malaysia. Tests of model fit for confirmatory factor analysis (CFA): χ2 = 198.814, df =
64, p < .001; RMSEA (90% CI) = .099 (.083-.114); CFI = .912. 1Grand mean is the normalized composite
mean of 14 items where each item is measured on a 5-point Likert scale, 1 = Describes me poorly, 5 =
Describes me excellent. 2Composite mean is calculated on 14 items. 3Cronbach’s alpha reliability measure
of internal consistency. 4Factor loading scores from CFA significant at p < .05 unless otherwise noted as
non-significant (ns).
Table 3: Psychometric properties of leadership effectiveness items
Items
Grand
Mean1
SD
Comp.
Mean2
SD
Original
Alpha
Adjusted
Alpha3
Factor4
Leadership Effectiveness (21 items)
3.01
.50
63.11
10.51
.928
n/a
n/a
Behavioral Characteristics (15 items)
3.86
.68
57.85
10.18
.945
n/a
n/a
Motivation (3 items)
3.97
.73
11.90
2.18
.804
.891
1.046
Take risks and make good decisions
3.84
.88
.765
Make decision to give good impact
3.98
.86
.727
Participate and improve the team
4.05
.86
.775
Openness (3 items)
3.74
.74
11.21
2.21
.642
.782
1.034
It’s leadership when employees failed
3.16
1.14
.432
Leadership enhance effectiveness
4.01
.87
.645
Willing to learn to be a better leader
4.03
.86
.721
The Impact of Empathy on Leadership Effectiveness among Business Leaders in the United States and
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96 Vol. 2, No.3 (September 2013)
Communication (3 items)
3.94
.73
11.82
2.19
.760
.864
.995
Approach employees when have issues
3.83
.88
.711
Help others to reach their success
4.02
.88
.652
Assign tasks and communicate often
3.98
.89
.706
Trust (3 items)
3.83
.76
11.48
2.27
.799
.888
1.008
My employees see me for issues
3.72
.91
.686
Easily establish relationships with others
3.87
.87
.792
Trust others to take risks
3.90
.91
.778
Adaptability (3 items)
3.74
.78
11.21
2.33
.846
.917
1.016
I can easily access morale in any groups
3.60
.90
.767
Aware of current situations and trends
3.80
.85
.827
I adapt easily with my surrounding
3.77
.91
.754
Organizational Performance (6 items)
.87
.23
5.20
1.38
.766
n/a
n/a
Profit and Loss Statement (3 items)
.87
.24
2.62
.73
.562
.720
.627
2011
0.85
.36
.507
2010
0.92
.28
.766
2009
0.86
.35
.299
Organizational Growth (3 items)
.86
.26
2.59
.80
.660
.795
1.025
2011
0.84
.37
.515
2010
0.90
.31
.905
2009
0.84
.36
.471
Notes: Psychometric properties conducted on Leadership Effectiveness data from N = 216 business leaders.
Tests of model fit for confirmatory factor analysis (CFA): χ2 = 328.714, df = 172, p < .001; RMSEA (90%
CI) = .069 (.058-.080); CFI = .938. 1Grand mean is the normalized composite mean of 15 items where
each item is measured on a 5-point Likert scale, 1 = Describes me poorly, 5 = Describes me excellent.
2Composite mean is calculated on 15 items. 3Cronbach’s alpha reliability measure of internal consistency.
Alphas for constructs with less than six items were adjusted for a 6-item construct according to the
Spearman-Brown prophecy formula:
xx
xx
xx
12
where
xx
= predicted reliability and
xx
= current
reliability. 4Factor loading scores from CFA significant at p < .05 unless otherwise noted as non-significant
(ns).
Table 4: Descriptive statistics of leadership effectivenes
Demographic
Leadership
Effectiveness
Behavioral
Characteristics
Organizational
Performance
Characteristic
M
SD
M
SD
M
SD
Sample
3.01
.50
3.86
.68
.87
.23
Country
U.S.
3.12**
.53
3.97*
.74
0.92**
.20
Malaysia
2.86
.44
3.74
.59
0.81
.25
Gender
Male
3.01
.51
3.87
.70
0.87
.22
Female
2.98
.48
3.80
.63
0.87
.26
Age
18-29
3.04
.46
3.89
.62
0.93
.13
W. A. Rahman & P. A. Castelli
International Journal of Economics Business and Management Studies 97
30-39
2.89
.47
3.72
.62
0.82
.26
40-49
3.00
.46
3.86
.63
0.87
.23
50-59
3.01
.53
3.85
.72
0.86
.22
60-69
3.15
.60
4.05
.83
0.93
.21
Position
Other
3.02
1.11
4.07
1.32
0.42
.59
Assistant Head
2.85
.38
3.59
.53
0.92
.16
Head
2.87
.46
3.68
.62
0.83
.26
Treasurer
3.14
.60
4.00
.84
1.00
.00
Vice President
3.19
.48
4.11
.66
0.91
.18
COO
3.12
.56
4.03
.71
0.86
.28
CFO
3.06
.66
3.93
.86
0.90
.20
Director
3.15
.47
4.06
.66
0.92
.16
CEO
2.98
.49
3.85
.67
0.82
.22
President
3.10
.60
4.02
.82
0.81
.38
Note. Data are mean and standard deviation (SD) Leadership Effectiveness scores, Behavioral
Characteristics scores, and Organizational Performance scores across each demographic variable.
* p < .05 ** p < .01 Significant difference between scores within demographic characteristic according to
ANOVA.
Table 5: Results of independent samples t-tests of empathy scores between US and Malaysian business
leaders
U.S.
Malaysia
Mean
SD
Mean
SD
t-Stat
Df
p
Empathy
3.38
.72
2.88
.47
5.87**
179
.000
Empathic Concern
3.18
.80
2.67
.57
5.38**
191
.000
Perspective Taking
3.57
.72
3.08
.50
5.81**
191
.000
**p < .01 t-test of difference between U.S. and Malaysian business leaders on empathy, empathic
concern, and perspective taking scores.
Table 6: Results of independent samples t-tests of leadership effectiveness between U.S. and Malaysian
business leaders when empathy was low, medium or high
LE: U.S.
LE: Malaysia
Mean
SD
Mean
SD
t-Stat
df
p
Empathy: Low
2.66
.32
2.70
.47
0.39
46
.697
Empathy: Medium
2.92
.49
3.02
.32
1.00
42
.321
Empathy: High
3.42
.44
3.14
.28
3.09**
48
.003
**p < .01 t-test of difference between U.S. and Malaysian business leaders on leadership
effectiveness (LE) scores.
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... Regular and timely evaluation of the board performance is critical to ensure that they are not only serving their interests but the shareholders interest at large. Due to greater need for accountability by shareholders, government entities and general public, the management boards have to evaluate their performance so that it aligns with the organization's performance (Rahman & Castelli, 2013). Previous study has several literature gaps that are filled by this study. ...
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