Leadership and Organizational Culture

Abstract

This chapter examines the nature of the relationship between leadership and organizational culture by initially delving into the mechanisms that leaders have at their disposal to formulate, reinforce, and change their organization's culture depending on its developmental stage. Besides the tools leaders can utilize to embed culture the research literature on the interconnections between organizational culture, transformational leadership, and leader-member exchange is thoroughly reviewed. The examination of the literature on various leadership styles and how they are theoretically and empirically associated with organizational culture shows that the nature of the relationship between leadership and organizational culture empirically investigated focuses on a) the interactive effect of leadership and culture on organizational outcomes, b) leadership as an antecedent of organizational culture. Finally, a stream of empirical research examines the mediating effect of culture orientations in the leadership-organizational outcomes link. In conclusion, the study of the interactive effect between leadership and culture demonstrates the complementary role of leadership in the organizational culture-outcomes link, as well as the moderator role of culture in the relation between leadership and other important organizational constructs, such as perceptions of justice. Leadership as an antecedent of culture and the mediating effect of culture in the leadership-organizational outcomes link explores culture as a process activated by leaders to influence various aspects of organizational behavior.

Full text

Xenikou, A. (forthcoming). Leadership and Organizational Culture. In C. Newton and R. Knight
(eds.), Handbook of Research Methods for Organizational Culture. Northampton, MA: Edward
Eldgar Publishing.
Leadership and Organizational Culture
Chapter Outline
Introduction
Developmental stages of organizations and the leadership-organizational culture link
Theories of leadership and organizational culture
Transformational leadership and organizational culture
Leader-member exchange and organizational culture
The nature of the relationship between leadership and organizational culture
The interactive effect of leadership and organizational culture on organizational outcomes
Leadership as an antecedent of organizational culture
The mediating effect of culture orientations in the leadership-organizational
outcomes link
Conclusions
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Introduction
An essential aspect of leadership is to influence the shared cognitions and behavioral
norms that organizational members hold, and therefore, effective leaders put a lot of effort into
culture formation, maintenance, and change. There are two different schools of thought with
regard to the connection between leadership and organizational culture. The functionalist
approach puts forward the proposition that leaders are key agents in the process of culture
management (Schein, 2010; Trice & Beyer, 1993). There are various mechanisms that leaders
can utilize in order to manage organizational culture, such as communicating a clear and
powerful vision, the allocation of resources and rewards, organizational design and systems, and
formal statements of an organization’s philosophy. On the other hand, the anthropological
approach conceptualizes culture as something the organization is rather than something the
organization has, treating culture as a root metaphor and not as a critical variable. In this
approach leaders are considered to be part of culture, and not in a position to manage the culture
of their organizations (Smircich, 1983; Hatch, 1993). Therefore, culture is not driven by
organizational leaders, and cultural management is impossible to accomplish.
Most of empirical research in the organizational culture literature takes a functionalist
approach demonstrating that a) organizational culture has a strong impact on key organizational
outcomes, such as performance, innovation, commitment to and identification with
organizations, and job satisfaction (Boyce, Nieminen, Gillespie, Ryan, & Denison, 2015;
Sorensen, 2002; Taylor, Levy, Boyacigiller, & Beechler, 2008 ; Abbott, White, & Charles, 2005;
Finegan, 2000; Vandenbergerghe & Peiro, 1999; Liu, Cai, Li, Shi, & Fang, 2013; Xenikou, 2014;
Berson, Oreg, & Dvir, 2008), and b) leadership and organizational culture jointly exert an
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influence on organizational phenomena (Lim, 1995; Xenikou & Simosi, 2006; Saros, Cooper, &
Santora, 2008; Lok, Westwood, & Crawford, 2005; Ogbonna & Harris, 2000). Specifically,
organizational culture, manifested in the shared assumptions, values, behavioral norms, and
practices that characterize an organization, affects the way organization members interpret
aspects of their work environment and create meaning in any given situation at work.
Organizational culture has been studied as a contextual variable that sets constraints and
boundary conditions for organizational phenomena to occur, that is, organizational members are
more sensitive and responsive to the presence and absence of stimuli and behaviors that are
indicators of their organization’s core values (Erdogan, Liden, & Kraimer, 2006).
Even though sharedness of cultural elements is a feature of any definition of
organizational culture (Ostroff, Kinicki, & Tamkins, 2003), individual employees, and different
groups in the organization, may substantially differ in their perceptions of their organization’s
culture. Indeed the differentiation theoretical approach to the study of organizational culture has
put emphasis on the diversity in the internalization and enactment of organizational assumptions,
values, and behavioral tendencies by various groups within organizations. Newcomers, for
instance, are likely to have a less accurate perception of organizational values, practices, and
behavioral norms compared to employees who have been employed by the organization for
longer periods of time. Therefore, working with organizational culture at different levels of
analysis, that is, the organization, the group, and the individual employee is imperative to unravel
the relation between leadership and culture.
Developmental stages of organizations and the Leadership-Organizational
Culture link
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Schein (2010) has argued for the importance of the developmental stages organizations go
through for understanding the relation between leadership and organizational culture. In the
founding stage, organizational culture is the creation of the organization’s founder or founding
team who, along with their successors, shape a culture of shared assumptions and beliefs to
successfully deal with issues of internal integration and external adaptation. In the early growth
stage of organizations, founders and leadership teams initiate the culture formation process by
teaching their assumptions and values to the new group. The articulation and reinforcement of
the leaders’ values occur through the use of a number of primary and secondary mechanisms that
leaders, as founders, have at their disposal. A way for leaders to create culture is by charisma that
entails communicating their assumptions and values in an attractive, clear, and vivid manner.
Other primary mechanisms that can be used by leaders to create culture involve:
what leaders pay attention to, measure, and control on a regular basis
how leaders react to critical incidents and organizational crises
the allocation of scarce resources
deliberate role modelling, teaching, and coaching
observed criteria for allocating rewards and status
observed criteria by which leaders recruit, select, promote, retire, and excommunicate
members
There are also secondary mechanisms that founders can use to articulate and reinforce their
values and assumptions. For example, founders have the capacity to a) shape the design and
structure of their organizations, and b) build systems and procedures that reflect their basic value
priorities. The secondary mechanisms are considered to be effective only given that they are
consistent with the primary mechanisms, whereas in mature organizations secondary
mechanisms become primary in embedding the core values that characterize a specific
organization.
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As the organization matures its structures, procedures, and practices become well-
formulated and stable; the organization undergoes a process of differentiation, and the units,
divisions and departments that emerge may facilitate the creation of various subcultures.
Differentiation within organizational settings does also occur in terms of many other factors,
such as hierarchical levels, organizational tenure, functional lines, occupations, and
demographics. At this stage organizational culture defines leadership more than leadership
determines culture, that is, culture is a salient contextual variable that has an impact on the
emergence and effectiveness of leadership. In mature organizations leaders have the
responsibility to coordinate and integrate organizational subcultures for organizations to function
smoothly.
With regard to the different tools leaders have at their disposal to change their
organization’s culture, Schein has proposed that these tools and opportunities for culture change
also depend on the developmental stage an organization goes through. Specifically, in the early
growing stage, an external crisis of survival may trigger the culture change process in order to
deal with problems of successful external adaptation. Another mechanism that founders can use
to achieve culture change is bringing about evolution through the promotion of insiders whose
values and objectives are better adapted to environmental demands. In mature organizations,
leaders can possibly change organizational culture by systematically promoting employees from
selected subcultures, who reinforce the leader’s value priorities and behavioral norms; this
mechanism is an extension of the promotion of insiders taking place in the founding stage.
Finally, in the last stage of organizational development, that is, maturity and possible decay, a
tool for organizational change is coercive persuasion, which involves the dissemination of
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information to employees about organizational ineffectiveness, while making it very hard for
them to resign.
The seminal work of Schein (2010) on leadership and organizational culture has greatly
contributed to our understanding of organizational life taking a culture perspective. Additional
future research, however, is needed to clarify how leaders influence culture and vice versa,
especially research focusing on the effects of Schein’s culture-embedding mechanisms
(Schneider, Ehrhart, & Macey, 2013).
Theories of leadership and organizational culture
In the following two sections the research literature on the relation between
organizational culture and a) transformational/ charismatic leadership and b) leader-member
exchange (LMX) is reviewed. Among the theoretical approaches to organizational leadership
which put emphasis on the leader’s context or situational factors, the transformational/
charismatic leadership and LMX theories are the research streams that have primarily
investigated the interplay between leadership and organizational culture.
Transformational/charismatic leadership and organizational culture
Organizational founders and their teams often exhibit transformational/charismatic
leadership qualities in their efforts to shape their organization’s policies, behavioral norms, and
values that dominate its culture. The personality and the core values of the founders are reflected
in the organization as it develops. The set of values the founders articulate and reinforce, their
personal assumptions and vision of the future, become embedded in the emerging organizational
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culture. But it is also quite common that the transformational leader who firmly establishes and
improves the organization’s culture is far removed in time from the founding team.
During the past 30 years or so transformational leadership theory (Avolio, Bass, & Jung,
1999; Bass, 1985; Bass & Riggio, 2006; Walumbwa, Avolio, & Zhu, 2008) has stimulated an
intense empirical investigation of how transformational and transactional leadership styles are
related to performance (Walumbwa et al., 2008; Wang, Oh, Courtright, & Colbert, 2011),
organizational commitment and identification (Avolio, Zhu, Koh, & Bhatia, 2004; Bycio,
Hackett, & Allen, 1995; Dvir, Eden, Avolio, & Shamir, 2002; Simosi & Xenikou, 2010;
Walumbwa, Wang, Lawer, & Shi, 2004; Xenikou, 2017), employee satisfaction (Bycio et al.,
1995), leader effectiveness (Judge & Piccolo, 2004; Lowe, Kroeck, & Sivasubramaniam, 1996),
and organizational citizenship behaviors (Podsakoff, MacKenzie, Paine, & Bachrach, 2000).
Bass and his colleagues have argued for the complementary relation between the two leadership
styles as leaders typically exhibit a variety of patterns of transformational and transactional
leadership; most leaders do both but in different amounts (Box 1).
Box 1 about here
For organizations to maintain or gain a sustainable advantage, their culture has to work in
concert with a mixture of both transformational and transactional leadership patterns (Bass,
1999). Transformational leadership aims at changing or improving at least some dimensions of
culture, whereas transactional leadership works primarily within the culture as it exists. Bass and
Avolio (1993) have put forward the idea that transformational/transactional leadership and
organizational culture are so well interconnected that it is possible to describe an ideal
transactional and an ideal transformational organizational culture. The prototypical
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transformational culture promotes creative change and growth by exhibiting a sense of vision
and purpose, while the prototypical transactional culture promotes a metaphor of the organization
as a ‘marketplace’ where performance indicators matter.
Empirical research on transformational/charismatic leadership and organizational culture
has provided evidence for the associations between specific cultural dimensions and
transformational/charismatic leadership (Box 2). Specifically, Block (2003) in examining the
leadership-culture connection found that employees who rated their immediate supervisor high in
transformational leadership were more likely to perceive the culture of their organization as
involving, integrating, adaptive, and mission-oriented. In similar lines, Sarros et al. (2002)
demonstrated that transformational leadership style best predicted cultures with an emphasis on
supportiveness, whereas a mixture of transformational and transactional leadership styles best
predicted cultures with an emphasis on rewards.
Box 2 about here
Moreover, the relevant research literature has focused on how transformational and
transactional leadership styles and culture dimensions have a joint effect on focal organizational
outcomes, such as, performance, innovation, and commitment/identification. In a study of 32
business units of a large financial organization Xenikou and Simosi (2006) showed that
transformational leadership style and a humanistic culture orientation had an indirect positive
effect on business unit performance via an achievement culture orientation. In other words,
transformational leadership was shown to work in concert with participative, collaborative,
supportive, and self-actualizing organizational cultures to bring about a culture focus on task and
goal achievement, which, in turn, led to high performance of business units.
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With regard to the transformational leadership-culture effects on innovation, Sarros el al.
(2008) investigated the relationships between transformational leadership, organizational culture,
and climate for innovation in a sample of managers and senior executives working for private
sector organizations. Their findings showed that a competitive and performance oriented culture
was strongly related to climate for innovation, and it also mediated the link between three of the
six transformational leadership factors, namely, vision articulation, provision of individual
support, and high performance expectations, and climate for organizational innovation.
Additionally, the study of Jung, Chow, and Wu (2003) in a large number of corporations showed
that transformational leadership was positively associated with organizational innovation, and
this link was mediated by a culture where members are encouraged to openly discuss and
implement innovative suggestions and ideas. Finally, Elenkov and Manev (2005) examined the
influence of transformational leadership in top and middle management on innovation, and found
evidence that the link between transformational leadership and innovation was mediated by
performance-oriented and competitive organizational cultures.
There is also a stream of empirical research on the transformational leadership-culture
impact on organizational identification and commitment. Xenikou (2017) examined
transformational/transactional leadership styles and culture as antecedent factors of
organizational identification, and found evidence that transformational leadership was more
strongly related to cognitive identification via the perception of innovation culture, whereas
transactional leadership style was more strongly related to affective identification via goal
cultural orientation. Similarly, in a cross-sectional study (Simosi & Xenikou, 2010) demonstrated
that the culture orientations, achievement, support, affiliation, and self-actualization served as
mediators in the relationship between leader behavior (i.e., transformational leadership,
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transactional contingent reward) and affective/normative commitment. Finally, Xenikou (2014)
showed that, organizational support values, as an indicator of culture, were positively associated
with both cognitive and affective dimensions of identification with the organization. The findings
also showed that there was an interaction between charismatic leadership and support values;
specifically, the positive effect of charismatic leadership on affective identification was mitigated
when employees thought of their organization as a place where support was valued.
In sum, a question that has recently received some attention in relevant research involves
the association between specific dimensions of organizational culture and
transformational/transactional leadership styles. Adaptive and innovative cultures with an
emphasis on supportiveness and goal achievement have been repeatedly shown to be related to
transformational leadership, and to mediate the effect of transformational leadership on
organizational performance, innovation, employee commitment to and identification with the
employing organization. There is also some empirical evidence of the role competitive cultures
may play in the leadership-organizational outcomes link, but it rather involves inter-
organizational rather that intra-organizational competition.
Leader-member exchange and organizational culture
Another line of research that emphasizes the interplay between leadership and
organizational culture has been conducted within the leader-member exchange (LMX) theoretical
framework of leadership. LMX theory concentrates on the interactions between leaders and
subordinates, and states that leaders develop different relationships and act differently towards
their subordinates. Subordinates fall into one of two groups, that is, the in-group characterized by
high-quality relationship with the leader and the out-group characterized by low-quality
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relationship with the leader (Graen & Uhl-Bien, 1995). Several studies have examined the role of
organizational culture as an antecedent factor or a moderator variable in the link between LMX
and various work outcomes, such as organizational identification, perceptions of interactional
and distributive justice, and job and career satisfaction.
In a multi-level study of high school teachers Erdogan et al. (2006) investigated the role
of the value systems in Turkish schools, measured at the organizational-level of analysis, as a
moderator of the link between perceptions of interactional and distributive justice and teachers’
report of LMX relationships with their immediate supervisors, namely, each school’s principal.
The results indicated that organizational cultures putting emphasis on team orientation were
related to higher levels of LMX quality. Moreover, in schools where respect for people was
valued the relation between interactional justice and LMX quality was stronger. On similar lines,
for schools with a culture high in aggressiveness, the relation between distributive justice and
LMX quality was stronger indicating that members try to outperform each other and focus on
tangible resources. On the other hand, when organizational culture was characterized by a high
team orientation, the teachers’ evaluations of LMX quality were not based on justice perceptions.
Therefore, organizational culture was found to moderate the relationship between justice
perceptions and LMX quality in the case of cultures that promote respect for people and
aggressiveness, but not in the case of cultures that cultivate team orientation. In other words,
organizational culture was found to influence the type of justice perceptions that become relevant
for LMX quality.
The moderating role of organizational culture in the link between LMX quality and
organizational identification was examined by Liu et al. (2013). These authors investigated
whether employees’ perceptions of collectivism-oriented Human Resource Management (C-
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HRM) moderated the relation between LMX quality and organizational identification. C-HRM
was operationalized at the individual level of analysis and defined as a set of organizational
practices that emphasize maintaining harmonious relationships with co-workers, and pursuing
collective interests, goals, and objectives. The empirical findings showed that C-HRM moderated
the positive relationship between LMX quality and organizational identification. Specifically, the
relationship between LMX quality and organizational identification was stronger when C-HRM
was high than when it was low.
Another study that investigated the link between perceptions of organizational culture and
LMX quality was carried out by Joo (2010) with a diverse sample of employees from various
industry sectors. The results pointed out that the perception of an organizational learning culture
described as a working environment that encourages participation, dialogue, and team learning,
and more importantly where leaders model and support learning is positively associated with
high quality LMX relationships.
In a multi-level study of the relationship between work-family culture and LMX
relationships Major, Fletcher, Davis, and Germano (2008) defined work-family culture as the
shared assumptions, beliefs, and values an organization cultivates with regard to the importance
of work-family integration, operationalizing culture at the organizational-level of analysis. Their
findings showed that work-family culture was positively associated with LMX relationships,
indicating that organizations that value the integration of work and family lives tend to have high
quality LMX relationships characterized by mutual trust, support, and understanding.
Finally, Erdogan, Kraimer, and Liden (2004) examined work value congruence defined as
the correlation between teachers’ personal values and schools’ organizational values. They found
that LMX quality served as a moderator of the relationship between value congruence and career
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satisfaction supporting the compensatory role of leadership. Specifically, value congruence was
related to career satisfaction in the case of low, rather than high, LMX quality. Therefore, high
LMX quality seems to provide employees with the affective and resource-based support to deal
with the potential negative effects of low value congruence.
To sum up, previous research examining the association between organizational culture
and LMX relationships has pointed out that supportive and organizational learning cultures tend
to coexist with high quality relationships between leaders and their subordinates. Organizational
cultures were also shown to set constraints in the relationship between perceptions of justice and
LMX quality indicating that culture drives attention to stimuli informative of its content; in other
words, in cultures with an emphasis on respect for people, perceptions of procedural justice were
related to high LMX, while in competitive cultures, perceptions of distributive justice were
associated with high LMX quality.
The nature of the relationship between leadership and organizational culture
Leadership and organizational culture are in a constant interplay and the examination of
the nature of their relationship is of primary importance for understanding their joint effects on
organizational phenomena (Bass & Avolio, 1993; Berson et al., 2008; Hartnell, Ou, & Kinicki,
2011; Hartnell, Kinicki, Schurer-Lambert, Fugate, & Doyle-Corner, 2016; Ogbonna & Harris,
2000; Sarros et al., 2008; Schein, 2010; Trice & Beyer, 1993; Waldman & Yammarino, 1999;
Xenikou & Furnham, 2013; Xenikou & Simosi, 2006). There is a stream of culture research that
investigates the interactive effect between organizational culture and leadership, and empirically
tests the moderator role of culture or leadership in how the two constructs relate with key
organizational outcomes. The bulk, however, of empirical studies that examine how leaders and
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organizational cultures work in concert to affect organizational outcomes consider leadership as a
hypothetical antecedent of organizational culture. The vast majority of these studies have
obtained cross-sectional data ruling out inferences about causal relationships. In this line of
research there is a considerable number of studies that investigate the mediating effect of
organizational culture in the connection between leadership and focal organizational outcomes,
such as performance, innovation, and commitment/identification.
The interactive effect of leadership and organizational culture on
organizational outcomes
The fit or interactional effect between leadership and organizational culture was studied
with CEOs and their TMTs of corporations in the high technology sector by Hartnell et al.
(2016). Their aim was to examine the point of congruence between leadership and culture
specified in terms of similarity or dissimilarity in the task and relationships metathemes. They
focused on the interaction between leadership and culture while refraining from identifying a
primary determinant as in traditional applications of moderation. The findings demonstrated that
the dissimilarity of values between CEOs, rated by their TMT, and organizational cultures,
assessed by both CEOs and TMT, was associated with enhanced organizational performance.
Therefore, organizational performance improves when levels of corresponding leadership and
culture dimensions (i.e., task and relationships) are dissimilar such that leadership is high when
culture is low or leadership is low when culture is high. In other words, leadership that aligns and
reinforces the current culture may generate redundant resources and unnecessary guidance that
fails to enhance performance.
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In this line of thinking Schneider (1987) argues that excess homogeneity and myopic
perspectives may result from high consistency in environmental cues within organizations,
eventually leading to negative organizational outcomes. The ‘right amount’ of leadership
behavior, therefore, might be necessary to enhance organizational performance depending on a
given organization’s existing culture.
An important question to be addressed in future research is whether the positive effect of
dissimilarities and the negative effect of similarities between leadership and culture reported by
Hartnell et al. (2016) generalize across levels within organizations. Leaders higher in the
organizational hierarchy have more power and greater impact than middle and lower-level
managers. Senior management has the means and responsibility for culture management by
formulating strategic goals and implementing strategic plans. Moreover, front-line employees
may require more informational consistency from their immediate supervisors to channel their
attention and effort to existing organizational rules, procedures, and goals. Therefore, the positive
effect of incongruence between leadership and culture on organizational performance needs to be
further tested taking into account the differences across levels of leadership within organizational
settings.
The compensatory role of leadership has been demonstrated in two other studies that
have investigated the interactive effect of leadership and organizational culture. Erdogan et al.
(2004) found that high LMX quality compensated for the negative relation between value
incongruence- the gap between school values and teachers’ personal values - and teachers’ career
satisfaction. Moreover, charismatic leadership, as attributed by subordinates, was found to
compensate for the lack of organizational support in enhancing employees’ affective
identification with their organization (Xenikou, 2014).
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Finally, Erdogan et al. (2006) demonstrated how organizational culture directs attention
and enhances cognitive elaboration of contextual stimuli that are informative of an organization’s
culture. These researchers found evidence that specific dimensions of culture, namely, respect for
people and aggressiveness, moderate the relation between employees’ perceptions of justice and
LMX quality. In cultures with an emphasis on respect for people, the social context makes
perceptions of procedural justice predictors of the quality of the leader-subordinate relationship,
whereas in cultures with an emphasis on aggressiveness the work environment makes
perceptions of distributive justice predictors of LMX quality (Box 3).
Box 3 about here
Besides the fruitful findings of research on the interaction between leadership and culture
there is also great value in the investigation of leadership as an antecedent variable in the
leadership-culture link. This latter line of research provides insights in the mechanisms that
leaders have at their disposal in order to influence a) their subordinate perceptions of their
organization’s culture, and b) organization culture as a group- and organizational-level variable.
Leadership as an antecedent of organizational culture
The personal values of top executives and how they relate to organizational performance
were studied by Berson et al. (2008). Their findings provided empirical support for the
hypothesis that the process through which top executives’ dispositions relate to organizational
outcomes involves different dimensions of organizational culture. Specifically, they found that
CEOs’ personal values were indirectly related to corporate performance (sales growth, efficiency,
and employee satisfaction) via organizational culture. CEOs’ personal values of self-direction,
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benevolence, and security were related to innovative, supportive, and bureaucratic cultures,
respectively. Moreover, innovative, supportive, and bureaucratic culture orientations were
associated with sales growth, employee satisfaction, and organizational efficiency.
In another study of top-level and middle management Tsui, Zhang, Wang, Xin, and Wu
(2006) found that leadership substantially contributed to organizational culture. Their findings
highlighted that cultural values were developed over time through member interactions and
institutional processes or created in a short period of time as a result of the deliberate actions of
leaders. Therefore, Tsui et al. (2006) put emphasis on the process by which leaders shape culture
rather than the impact of leader’s attributes on culture development. Overall, they concluded that
culture cannot be sustained without systems and procedures that guide employees’ behavior.
Finally, Sarros et al. (2002) and Block (2003), in examining leadership as a hypothetical
antecedent of culture, showed that organization members who rated their immediate supervisor
high in transformational leadership were more likely to perceive the culture of their organization
as supportive, integrative, adaptive, and mission-oriented. Moreover, Sarros et al. found that a
mixture of transformational and transactional leadership styles best predicted cultures with an
emphasis on rewards (Box 4).
Box 4 about here
The mediating effect of culture orientations in the leadership-
organizational outcomes link
In the stream of research that examines leadership as an antecedent of organizational
culture there is, more recently, a substantial number of empirical studies that investigate how
different culture orientations jointly serve as mediators in the link between leadership styles and
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organizational outcomes, such as performance, employees’ commitment, organizational
identification, and innovation (Chong et al., 2018; Elenkov & Manev, 2005; Lok, Westwood, &
Crawford, 2005; Ogbonna & Harris, 2000; Sarros et al., 2008; Simosi & Xenikou, 2010;
Xenikou, 2017; Xenikou & Simosi, 2006).
In a sample of nurses working at hospital settings Lok et al found evidence for the
mediating role of innovative and supportive subcultures in the relation between consideration
leadership and commitment. In similar lines, Simosi and Xenikou (2010) showed that
achievement, support, affiliation, and self-actualization served as mediators in the link between
leadership style (i.e., transformational leadership, transactional contingent reward) and
affective/normative commitment.
Moreover, Orgbonna and Harris (2000) demonstrated that supportive and participative
leadership were positively associated with performance via innovative and competitive
organizational cultures. In a study examining the business unit performance of a large financial
organization Xenikou and Simosi (2006) found that transformational leadership and humanistic
culture orientation had a positive indirect effect on business unit performance through culture
that puts emphasis on achievement.
The study of Sarros et al. (2008) on transformational leadership, organizational culture,
and climate for innovation in a sample of managers and senior executives from the private sector
showed that competitive and performance oriented culture mediated the link between three of the
six transformational leadership factors, that is, vision articulation, provision of individual
support, and high performance expectations, and climate for organizational innovation. Similarly,
Jung et al. (2003) showed that the link between transformational leadership and innovation was
mediated by a culture where members openly discuss and implement innovative suggestions and
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ideas. Another study by Elenkov and Manev (2005) provided evidence that the link between
transformational leadership and innovation was mediated by performance-oriented and
competitive organizational cultures.
Chong et al. (2018) studied the mediating role of leadership and influence strategies in
the link between organizational culture and work outcomes (i.e., commitment, satisfaction, and
performance) as well as the mediating role of organizational culture in the relation between
leadership styles and work outcomes. Their findings showed that there is little evidence of the
mediating role of leadership in the link between organizational culture and work outcomes. They
studied three leadership styles, namely, detail, support, and change leadership, and found that
only change leadership mediated the effect of innovative culture on work outcomes. Moreover,
the findings with regard to the mediating effect of organizational culture in the link between
leadership and work outcomes showed a similar pattern.
Finally, Xenikou (2017) investigated leadership styles and culture orientations as
antecedent factors of cognitive and affective organizational identification using both cross-
sectional and experimental designs. The findings supported the mediating effect of organizational
culture in the link between leadership styles and identification. Specifically, when controlling for
the effect of transactional contingent reward, transformational leadership was more strongly
related to cognitive identification-perceived similarities between organizational members- via
innovation culture. On the other hand, when controlling for the effect of transformational
leadership, transactional contingent reward was more strongly related to affective identification-
emotional attachment to organization- via goal culture. Thus, transformational style led
subordinates to focus on their similarities with their fellow co-workers through the process of an
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innovative culture, while transactional style led their subordinates to become emotionally
attached to the organization via the experience of a goal culture (Box 5).
Box 5 about here
The mediating effect of organizational culture in the link between leadership styles and
focal organizational outcomes has been empirically supported in numerous studies. In this line of
research both leadership and organizational culture are treated as antecedent factors of
organizational outcomes, while at the same time leadership impact on outcomes is at least partly
channeled via subordinates perceptions of their organization’s culture. Research on the mediating
effect of culture has examined and provided evidence for the joint effect of numerous
organizational culture dimensions, and leadership styles on organizational performance,
innovation, employee commitment, and identification with the organization, whereas research on
the interactive effect between leadership and culture has examined the combined effects of
leadership and culture on outcomes testing for one culture dimension at the time. This issue is of
particular importance because the coexistence of apparently competing organizational values and
beliefs, such as cooperation and individual development, has been systematically emphasized for
effective organizational functioning (Quinn, 1988; Miron, Erez, & Naveh, 2004; Hartnell et al.,
2011; Hartnell et al., 2016; Van Muijen et al., 1999; Xenikou & Furnham, 2013).
Conclusions
The study of organizations as cultures holding value beliefs, behavioral norms, and
practices with regard to how they treat their members and make the most of the challenges set by
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external environment has offered a lot in understanding the complexities of organizational
behavior, including leadership and performance.
Founders and their teams play a profound role in the creation of their organization’s
culture as they are often characterized by strong beliefs about the choices they have to make for
their organization to successfully adapt to its environment and thrive. Founders and other leaders
have at their disposal numerous mechanisms to communicate, establish, and reinforce their
values and basic assumptions, such as role modelling, coaching, or the allocation of rewards and
status. Different tools have also been identified that leaders can utilize in order to create
opportunities for cultural change, as for instance, the promotion of insiders from selected
subcultures, the infusion of outsiders, technological seduction, or organizational development.
The diverse mechanisms leaders can set in action to manage their organization’s culture
need to be further studied in future research. Besides research on the tools of culture
management, it is important to investigate the incongruence (dissimilarity) perspective in culture
management that has already provided some empirical evidence on the positive effect of the
dissimilarity in terms of culture content (i.e., task and relationships dimensions) between
leadership and organizational culture on organizational performance. The incongruence approach
to culture management argues for the complementary role of leadership to cultivate and enhance
aspects of an organization’s culture that have been disregarded or overlooked. For long the
organizational culture literature has showed that apparently competing organizational values and
practices tend to coexist and work in concert for an organization to run efficiently. It has
systematically, for example, being demonstrated that collaboration and cooperation has to be
equally promoted with an emphasis put on self-actualization and individual development for
organizations to have high performance and promote their employees’ well-being. Moreover, the
21

incongruence approach to culture management reflecting on the complementary role of the
leader needs to be tested across levels of hierarchy within organizational settings because front-
line managers might have to provide more consistent guidance to their subordinates compared to
senior management.
The coexistence and activation of apparently diverse cultural forces within organizational
settings has for long being acknowledged as a key element for organizational efficiency. Leaders
have the power to balance apparently competing demands set on organizations, such as a focus
put on task or relationships by utilizing numerous culture embedding mechanisms.
22

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Box 1. Description of transformational and transactional leadership styles
Transformational leaders
are charismatic in the sense that they are seen by their subordinates as self-
confident, competent, energetic, and optimistic about the future
provide subordinates with intellectual stimulation to think about problems or
to do things in novel ways
reframe the situation and give creative insight to deal with environmental
challenges.
offer individual consideration for each of their subordinates showing interest
in followers’ needs, ambitions, and individual growth
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Transactional leaders
recognize existing needs and desires in subordinates, and fulfil those needs
and desires on the basis of the performance evaluation
exchange effort for rewards and promises of rewards
clarify task and role requirements for subordinates and offers direction
give subordinates sufficient confidence to exert the required effort
criticize negative work behaviors and punishes unreasonably low performance
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Box 2. Research that empirically supports the positive relationships between specific dimensions
of organizational culture and transformational leadership (TFL)
Empirical Studies Dimensions of organizational culture
positively associated with TFL, and grouped in terms of
content similarity
Block (2003)
Sarros et al. (2002)
Xenikou & Simosi
(2006)
Sarros et al. (2008)
Jung et al. (2003)
Elenkov & Manev
(2005)
Xenikou (2017)
Simosi & Xenikou
(2010)
Xenikou (2014)
Support Innovation Goal Competition
Involvement
Integration
Supportiveness
Humanistic
Humanistic
Affiliative
Self-actualizing
Support
Adaptation
Learning-
oriented
Innovation
Mission
Rewards
Achievement
Performance-
oriented
Performance-
oriented
Goal
Achievement
Competitive
Competitive
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Box 3. The interactive effects in leadership and organizational culture research on focal
organizational outcomes
Empirical studies Main variable (1) Main variable (2) Focal outcomes
Hartnell et al. (2016)
Erdogan et al.
(2006)
Erdogan et al.
(2004)
Xenikou (2014)
Task leadership
Relationships
leadership
Perceptions of
procedural/distributive
justice
Value congruence
Charismatic leadership
Task culture
Relationship culture
Culture of respect
for people
Aggressive culture
LMX quality
Support culture
Organizational
performance
LMX quality
Career satisfaction
Cognitive/affective
identification
32

Box 4. Empirical research treating leadership as a hypothetical antecedent of organizational
culture
Empirical studies Leadership styles Culture dimensions Focal outcomes
Berson et al. (2008)
Block (2003)
Sarros et al. (2002)
Leader’s personal
values:
Self-direction
Benevolence
Security
Transformational
leadership
Transformational/
Transactional
leadership
Innovative culture
Supportive culture
Bureaucratic culture
Involving culture
Integrative culture
Adaptive culture
Mission-oriented
culture
Supportive culture
Reward-oriented
culture
Organizational
performance
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Box 5. The joint mediating effect of organizational culture dimensions in the link between
leadership and focal organizational outcomes
Empirical studies Leadership styles Organizational culture
Dimensions
Focal outcomes
Chong et al. (2018)
Lok et al. (2005)
Ogbonna & Harris
(2000)
Sarros et al. (2008)
Elenkov & Manev
(2005)
Xenikou (2017)
Simosi & Xenikou
(2010)
Xenikou & Simosi
(2006)
Detail leadership
Support leadership
Change leadership
Consideration
leadership
Supportive
leadership
Participative
leadership
Transformational
leadership
Transformational
leadership
Transformational
leadership/
Transactional
contingent reward
Transformational
leadership/
Contingent reward
Transformational
leadership
Detail culture
Team culture
Innovation culture
Innovative culture
Supportive culture
Innovative culture
Competitive culture
Performance-oriented
culture
Competitive culture
Performance-oriented
culture
Competitive culture
Innovative culture
Goal culture
Humanistic culture
Achievement culture
Affiliative culture
Self-actualizing
culture
Achievement culture
Humanistic culture
Adaptive culture
Organizational
commitment
Employee satisfaction
Organizational
Performance
Commitment
Organizational
performance
Climate for innovation
Innovation
Cognitive/affective
identification
Affective/normative
commitment
Business unit
performance
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