Final Thesis AD

SAINT MARY’S UNIVERSITY, SCHOOL OF GRADUATE STUDIES
DEPARTMENT OF BUSINESS ADMINISTRATION
THE EFFECT OF LEADERSHIP STYLE ON EMPLOYEE

PERFORMANCE: THE CASE OF CHINA GEO-ENGINEERING
CORPORATION GROUPS IN ADDIS ABABA
BY
LIDIYA ZERU
MARCH 2023
ADDIS ABABA
THE EFFECT OF LEADERSHIP STYLE ON EMPLOYEE PERFORMANCE:
THE CASE OF CHINA GEO-ENGINEERING CORPORATION GROUPS IN
ADDIS ABABA
BY
LIDIYA ZERU
SGS/0144/2013A
A THESIS SUBMITTED TO THE DEPARTMENT OF BUSINESS

ADMINISTRATION IN PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)
MARCH 2023
ADDIS ABABA
SAINT MARY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES
APPROVAL SHEET
THE EFFECT OF LEADERSHIP STYLE ON EMPLOYEE PERFORMANCE:

THE CASE OF CHINA GEO-ENGINEERING CORPORATION GROUPS IN
ADDIS ABABA
BY
LIDIYA ZERU
APPROVED BY BOARD OF EXAMINERS
----------------------------------- -----------------------------------
Dean, Graduate Studies Signature & Date
----------------------------------- -----------------------------------
Advisor Signature & Date
----------------------------------- -----------------------------------
External Examiner Signature & Date
----------------------------------- -----------------------------------
Internal Examiner Signature & Date
DECLARATION
I, the undersigned, declare that this thesis is my original work, prepared under the guidance of
Saleamlak M. (Ph.D). All sources of materials used for the thesis have been duly acknowledged. I
further confirm that the thesis has not been submitted either in part or in full to any other higher
learning institution for the purpose of earning any degree.
_____________________________ ____________________________
Name Signature
St. Mary’s University, Addis Ababa March 2023
i
ACKNOWLEDGEMENT
First and foremost, I would like to give my glory and praise to the Almighty GOD for his invaluable
care and support throughout the course of my life and helped me from the inception of my education
to its completion, and enabled me to achieve my career.
Next, I’m grateful to appreciate my advisor Saleamlak M. (Ph.D.) for his patience, motivation, and
valuable support while conducting this research. Especially, his valuable advice, guidance, and useful
criticisms throughout the course of preparing the preliminary study were very helpful.
I would also like to forward my deepest gratitude to my colleagues in CGC Groups (Addis-Africa
International Convention and Exhibition Center and Hansom Glass Plc) staff for their enthusiastic
and invaluable assistance in every little aspect. The management, all in all, who responded promptly
to all my inquiries deserve my earnest appreciation too.
I wish to express my sincere gratitude to my parents for their kind advice and support in the course
of all my journeys.
Finally, I wish to express my sincere gratitude to our classmates who made tremendous contributions
to this study, and who were around and supported me while needed.
ii
TABLE OF CONTENTS
DECLARATION ..........................................................................................................................i
ACKNOWLEDGEMENT .......................................................................................................... ii
TABLE OF CONTENTS........................................................................................................... iii
LIST OF TABLES ......................................................................................................................vi
LIST OF FIGURES .................................................................................................................. vii
ACRONYMS AND ABBREVIATIONS ................................................................................ viii
ABSTRACT................................................................................................................................ix
CHAPTER ONE .......................................................................................................................... 1
INTRODUCTION ....................................................................................................................... 1
1.1. Background of the Study .................................................................................................. 1
1.2. Organizational Background .............................................................................................. 3
1.3. Statement of the problem .................................................................................................. 3
1.4. Research Questions ........................................................................................................... 5
1.5. Objectives of the Study ..................................................................................................... 6
1.5.1. General Objective.......................................................................................................... 6
1.5.2. Specific Objectives........................................................................................................ 6
1.6. Significance of the Study .................................................................................................. 7
1.7. Scope of the Study ............................................................................................................ 7
1.8. Limitations of the Study ................................................................................................... 8
1.9. Definitions of Key Terms ................................................................................................. 8
1.10. Organization of the Study ............................................................................................. 9
CHAPTER TWO ....................................................................................................................... 10
REVIEW OF LITERATURE .................................................................................................... 10
2.1. Theoretical Literature...................................................................................................... 10
2.1.1. Concepts of Leadership ............................................................................................... 10
2.1.2. Styles of Leadership .................................................................................................... 11
2.1.2.1. Autocratic Leadership.............................................................................................. 11
2.1.2.2. Democratic Leadership ............................................................................................ 11
2.1.2.3. Transactional Leadership Style ............................................................................... 12
2.1.2.4. Transformational leadership Style ........................................................................... 12
2.1.2.5. Laissez – faire Style of Leadership.......................................................................... 13
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2.1.3. Related Theories of Leadership .................................................................................. 13
2.1.3.1. Trait Theory ............................................................................................................. 13
2.1.3.2. Behavioral Theory ................................................................................................... 14
2.1.3.3. Transactional Theory ............................................................................................... 14
2.1.3.4. Path–Goal Theory .................................................................................................... 14
2.1.3.5. Transformational Theory ......................................................................................... 15
2.1.4. The Concept of Employee Performance ..................................................................... 15
2.1.5. Organizational Culture ................................................................................................ 16
2.1.6. Relationship between Leadership Style and Employee Performance ......................... 18
2.1.7. Relationship between Leadership Style and Organizational Culture .......................... 19
2.1.8. Relationship between Organizational Culture and Employee Performance ............... 20
2.2. Empirical Review ........................................................................................................... 21
2.3. Conceptual Framework and Hypothesis ......................................................................... 25
CHAPTER THREE ................................................................................................................... 26
RESEARCH DESIGN AND METHODOLOGY ..................................................................... 26
3.1. Research Approach ......................................................................................................... 26
3.2. Research Design.............................................................................................................. 26
3.3. Population ....................................................................................................................... 27
3.4. Sample Size..................................................................................................................... 27
3.5. Sampling Technique ....................................................................................................... 28
3.6. Source of Data collection ................................................................................................ 28
3.7. Data Collection Instrument ............................................................................................. 28
3.8. Reliability Test ................................................................................................................ 29
3.9. Validity Result ................................................................................................................ 30
3.10. Data Collection Procedure .......................................................................................... 31
3.11. Method of Data Analysis and Presentation ................................................................. 31
3.12. Ethical Considerations ................................................................................................ 33
CHAPTER FOUR...................................................................................................................... 34
DATA ANALYSIS AND INTERPRETTION .......................................................................... 34
4.1. Response Rate ................................................................................................................. 34
4.2. General Information about the Respondents................................................................... 34
4.3. Descriptive Analyses of Study Variables ....................................................................... 37
iv
4.3.1. Autocratic Leadership ................................................................................................. 38
4.3.2. Democratic Leadership ............................................................................................... 38
4.3.3. Transactional Leadership ............................................................................................ 39
4.3.4. Transformational Leadership ...................................................................................... 40
4.3.5. Organizational Culture ................................................................................................ 41
4.3.6. Employee Performance ............................................................................................... 41
4.4. Inferential Statistics ........................................................................................................ 42
4.4.1. Correlational Test ........................................................................................................ 42
4.4.2. Assumption for Regression Model Test ...................................................................... 43
4.4.3. Regression Analysis .................................................................................................... 46
CHAPTER FIVE ....................................................................................................................... 55
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS................................................ 55
5.1. Summary of Major Findings ........................................................................................... 55
5.2. Conclusions ..................................................................................................................... 56
5.3. Recommendations ........................................................................................................... 57
References ...........................................................................................................................
Appendices ..........................................................................................................................
v
LIST OF TABLES
Table 1. Sample Proportion per Company/Stratum .......................................................................... 28
Table 2. Reliability Test Results....................................................................................................... 30
Table 3. Demographic Characteristics of Respondents ..................................................................... 35
Table 4. Description of Autocratic Leadership Style ........................................................................ 38
Table 5. Description of Democratic Leadership Style ..................................................................... 39
Table 6. Description of Transactional Leadership Style ................................................................... 39
Table 7. Description of Transformational Leadership Style ............................................................. 40
Table 8. Description of Respondents’ perception towards Organizational Culture .......................... 41
Table 9. Description of Respondents’ Perception towards Employee Performance ......................... 42
Table 10. Correlation Test Results .................................................................................................... 43
Table 11. Collinearity Assumption Test ............................................................................................ 44
Table 12. Model Summary ................................................................................................................ 47
Table 13. ANOVA Test ..................................................................................................................... 47
Table 14. Beta Coefficients ............................................................................................................... 47
Table 16. ANOVA Test ..................................................................................................................... 50
Table 19. ANOVA Test ..................................................................................................................... 51
Table 21. Aggregate Beta Coefficient for Sobel Test ....................................................................... 52
Table 16. Summary of the Research Hypothesis Test Result............................................................ 54
vi
LIST OF FIGURES
Figure 1. Conceptual Framework of the Study ................................................................................. 25
Figure 2. Origin of the Employees .................................................................................................... 37
Figure 3. Scattered plot for Homoscedasticity Test .......................................................................... 45
Figure 4. Linearity Test ..................................................................................................................... 45
Figure 5. Normality Test ................................................................................................................... 46
vii
ACRONYMS AND ABBREVIATIONS
AAICEC Addis-Africa International Convention and Exhibition Center
CGC China Geo-Engineering Corporation
JBC Job Satisfaction
LED Leadership Style
MNCs Multinational Companies
ORC Organizational Culture
viii
ABSTRACT
In the contemporary business world, organizations are operating in a stiff competitive environment
in which effective leadership plays crucial role for enhancement of employee performance to assure
their missions successfully. However, multinational companies are subjected to cultural variation in
a host country that needs to be considered to reconcile and harmonize the leadership policy of the
company. The objective of this study was, thus, to investigate the effect of leadership style on employee
performance mediated by organizational culture in the case of CGC Groups in Addis Ababa. A
quantitative research approach along with an explanatory research design was adopted. The survey
was conducted on employees working under the umbrella of CGC Groups. A sample of 241
respondents who were selected with stratified random sampling technique were participated in this
survey. Primary data were collected through a self-administered questionnaire. A multiple linear
regression inferential analysis was adopted to examine the relationship between leadership style,
organizational culture and employee performance, with the help of the SPSS 22.0 Software
application. The results of the findings revealed that leadership style had a positive and significant
effect on both employee performance and organizational culture. Specifically, autocratic leadership
showed the highest effect followed by transactional style. While transformational and democratic
styles were the least contributors. Moreover, the organizational culture played a mediating role on
the relationship between leadership style and employee performance. Based on the findings, it can
be concluded that different leadership styles had different effect on organizational culture (direct)
and employee performance (indirect effect). Moreover, autocratic leadership is more appropriate
style of leadership that significantly affects the employee performance in CGC Groups context. It is
advisable that managers at all levels need to be strict decision makers in dire situations like in time
of project failures.
Key words: Leadership Style, Employee Performance, Organizational Culture, Multinational

Companies.
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CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
Organizations, in this contemporary business world, are operating in a highly competitive

environment in which effective leadership plays crucial role for managing their missions successfully.
Organizations have functions that serve the community and is responsible for carrying out economic
development. It is necessary to have professional stewards and employees to exert their optimal
efforts to deliver outputs to the best interest of the organization in line with its vision, mission and
goals (Shirzad, 2014). In achieving a goal, the role of the leader is very important to run a plan
smoothly by facilitating cooperation between the leader and followers. Leadership is an influential
aspect that leads to change and tangible results that reflect the common goals. (Busro, 2018).
Therefore, the success of an organization in achieving its goals is largely determined by its
employees’ work performance.
Performance is the result achieved by a person according to prevailing standards, within a certain
period of time, with regard to work and behavior and actions (Suwatno, 2018). Wibowo (2016) states
that performance can be seen as a process or a result of work. In a sense, performance is a result of
the work achieved by a person in carrying out the tasks assigned to him and how much they can
contribute to the organization. Performance also means the results achieved by a person, both quantity
and quality in an organization in accordance with the responsibilities assigned to him. Employee
performance, thus, can be taken as staff's ability to perform certain skills as it can be determined to
what extent the staff carry out the tasks assigned to (Sinambela, 2016).
In this regard, leader's behavior is one of the most important factors that can affect employee
performance. Leadership is conceived as a process where one or more persons influence a group of
persons to move in a certain direction. Messick and Krammer (2004) argue that the degree to which
the individual exhibits leadership traits depend not only on his characteristics and personal abilities,
but also on the characteristics of the situation and environment in which he finds himself. Therefore,
an individual will support the organization if he believes that through it his personal objective and
goals could be met, if not, the person’s interest will decline. Leadership occurs when one group
member modifies the motivation or competence of others in the group. Nongo (2019) states that
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leadership entails an unequal distribution of power between leaders and group members. Group
members have power, but leaders usually have more powers.
Many organizations have failed due to ineffective leadership style of the management team. On such
situation, the employees are not well organized, controlled or coordinated emanated from ineffective
leadership style results in low productivity, high operating cost, uncooperative attitude of employees
etc. All these at the long run leads to the closure of the organisation. Some organizations are faced
with the problem of sourcing for competent leaders who have personality, knowledge, intelligence
and experience to lead. To Okorie (2020), leadership makes the difference between success and
failure, between profit and loss, between development and underdevelopment of any organization,
nation or enterprise. Arnold and Feldman (2019), state that leadership is an influential process that
affects the stakeholders, within and outside the organisation.
However, the problem of organizational culture is a reflection of leadership style and inseparable part
of the internal environment of an organization. The working culture of an organization is tuned by
the leadership style that the higher managements follow, and leaders are subjected to comply with the
culture to assure the attainment of its mission and goals of the organization (Okorie, 2020). That
means, a strong and good organizational culture can be a major factor that determines employee
performance through effective leadership in achieving the success of a firm which is characterized by
the core values of the firm that its members hold, agree on and practice. Fahmi (2016) argues that
leadership has a mediating role on the relationship between culture and performance.
Based on the above explanations, a strong corporate culture is a basis for better leadership that will
lead to improved employee performance. Among several factors that affect employee performance:
leadership style and organizational culture are the foci of this study for the reason that different
organizations have different culture and different leadership style. For instance, the leadership style
as well as the organizational culture of public institutes are different compared to private owned
business companies. Same token, in a given country, local companies would have different working
culture compared to foreign owned multinational companies. Therefore, the need for continuous
assessment on the effectiveness of leadership style and the nature of the working culture are
undeniable. The purpose of this study is, thus, to investigate the mediating role of organizational
culture on the relationship between leadership style and employee performance by taking China Geo-
Engineering Corporation Oversea Construction Group as a case.
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1.2. Organizational Background
China Geo-Engineering Corporation (CGC) was established in 1982 with the approval of the State
Council of the People’s Republic of China and was officially affiliated to the Ex-Ministry of Geology
and Mineral Resources of China. In May 2010, CGC was incorporated into China Energy
Conservation and Environmental Protection Group (CECEP) as a wholly owned subsidiary. As one
of the first few state-owned enterprises approved by the State Council to undertaking international
contracting projects, CGC was granted with the permission of international project contracting,
import and export of equipment, labor service export, and mineral resources reconnaissance and
development. CGC locates its head office in Beijing, the Capital of China. Now, it has 23 overseas
branches and offices in Asia and Africa with business activities covering over 50 countries and
regions. At home, CGC has more than 20 subsidiaries and affiliate companies (CGC Report, 2022).
Over the course of 20 years, the CGCOC Group Co., Ltd. (formerly known as CGC Overseas
Construction Group Co., Ltd.), is an international group co-funded by some large organizations in the
field of petrochemical, mineral exploration, engineering construction and investment funds. The
Group is mainly engaged in the following business such as engineering construction, trade and
leasing, investment and operation, as well as agency and consultancy in over 10 Africa countries.
Among them, it actively operating in Ethiopia from the year 2004, engaging in modern agriculture,
industrial investment, real estate, etc. Furthermore, the company is the sole owner of HANSOM glass
factory in Ethiopia. Established in 2008, named Ethiopia Hansom International Glass PLC. It is the
first glass manufacturer in Ethiopia and East Africa. Since personnel localization has always been the
goal pursued by the Group, Hansom for example, more than 60 percent of its 2,400 employees in
Ethiopia are locals (Dawit, 2022).
1.3. Statement of the problem
Many international companies expand their existing operations to different countries for exploiting
the untapped opportunities of the host country as well as creating better trade relationship with the
nation. As supported by China’s state government, CGC Groups have been known their business
success and organizational sustainability in different continents. However, they often inherit the
challenges of adapting to local working environment and business conditions (Tuleja, 2014). In this
regard, according to the area manager of CGC Groups in Ethiopia, the company is mainly suffered
from lack of growing businesses sales, declining employee morale and loss of staff’s appetite to stay
3
in the company aiming to achieve their best for as long as possible. Nachum (2020) also claimed that
the international employment rate of CGC Groups has escalated by 2.5% and continuing to grow,
while its staff attrition rate reaches 4.2% in developing countries. Such human resource management
issues of multinational companies arise from incompatibility of leadership with the cultural
orientation of staff. Brush (2019) claims that misalignment of leadership style with organizational
culture adversely affect the performance of the staff and the organization growth and stability at large.
In this context, the executives of the case company who are expats in most cases, practiced different
leadership styles. The managers of Asian origin apply more of autocratic leadership, while managers
from western countries use democratic leadership in different mega projects of the company adopt.
Nonetheless, few managers are in support of transformational leadership whereas laissez-faire is
hardly practiced (CGC Groups HR Report, 2019). According to Brush (2019), lack of consistency in
leadership resulted in poor organizational performance due to inconsistent organizational output. For
the fact that poor leadership drives employees to be uncertain of their company’s goals and objectives
for success and they have no idea how they fit into that picture, or what their level of importance is
toward making it happen. The core business problem of the case company was that expat business
leaders seeking to expand it internationally have some limitation or negligence for the significant role
of cultural difference in international business.
International leadership knowledge and experience of multinational companies in multicultural

nations play a pivotal role in expanding abroad (Robert, 2016). As a universal activity, leadership is
fundamental for effective organizational and social functioning. The very nature of leadership is its
influencing process and its resultant outcomes which can be achieved by applying the right leadership
style compatible with the culture (attitude and values) of its staff. Such process is determined by the
leaders and follower characteristics, dispositions, behavior perceptions, attributions and the context
wherein the process of influencing occurs (Chen and Cheng, 2018). The moral purpose of leadership
is to create an empowered follower that leads to the attainment of the organizational goals that are
achieved through dedicated workforces (Hersey, 2017).
In order to persuade staff to seek the highest level of dedication, each leader can use a variety of
leadership styles, according to several academic studies (Oladipo, 2016; Bogler, 2015; Wolor, 2020).
These studies therefore highlight the significance of leadership approaches that motivate staff to work
freely toward the organization's defined goals and objectives. Understanding an employee's attitude
4
and values is crucial since people are driven to follow leaders who can inspire them to achieve or go
beyond the objectives set by the company. In agreement with this, Akpala (2018) said that a lack of
motivation, a discontent with one's job, and a bad attitude at work are some of the things that may
cause a fall in employee productivity, which may then cause a decline in business earnings. Therefore,
the basic question is how these companies are effective in leading and motivating their staff in multi-
cultural countries.
As a result, to address this research question, the student researcher made a concerted attempt to
pinpoint the mediating impact of the organization’s cultural orientation as well as the optimal
leadership paradigms that may inspire their staff to develop the skills and dedication necessary to
effectively escalate required performance at CGC Groups. Investigating the relationship among
leadership style, organizational culture and employee performance is believed to have a vital role in
understanding the influence of cultural difference on employees’ performance through implementing
the appropriate leadership to motivate and adhere the workforce to the best interest of the
organization.
The aim of this study was, thus, to investigate the effect of leadership on employee performance
mediated by cultural orientation of the staff by taking CGC Groups in Ethiopia as a case. This can be
achieved by examining the leadership strategies and practices used by multinational executives and
their local staffs to grow their companies through international expansion. The target population was
business executives of the case company that had a corporate head office in Addis Ababa. The output
of this study was expected to contribute to creating employment opportunities, which could improve
the citizen’s living standards. International companies’ growth in the country could lead to increased
profits results in improving the wellbeing of residents and the society at large.
1.4. Research Questions
To achieve the aim of this study, it needs to address the main research question which states “how
does the leadership styles of the management harmonize with the organizational culture variation to
indirectly affect the employee performance?”. Specifically,
1. What is the effect of leadership style on employee performance of CGC Groups in Addis
Ababa?
5
2. What is the influence of democratic leadership style on the employee performance of CGC
Groups in Addis Ababa?
3. What is the effect of transformational leadership style on the employee performance of CGC
4. What is the effect of transactional leadership style on the employee performance of CGC
5. What is the effect of leadership style on the organizational culture of CGC Groups in Addis
Ababa?
6. What is the mediating role of organizational culture on the relationship between leadership
practices and employee performance at CGC Groups in Addis Ababa?
1.5. Objectives of the Study

1.5.1. General Objective
The general objective of this study was to investigate the effect of leadership style on employee
performance in the case of China Geo-engineering Corporation Groups in Addis Ababa.
1.5.2. Specific Objectives

i. To examine the effect of autocratic leadership style on the employee performance of CGC
Groups in Addis Ababa.
ii. To analyze the influence of democratic leadership style on the employee performance of CGC
Groups in Addis Ababa.
iii. To examine the effect of transformational leadership style on the employee performance of
CGC Groups in Addis Ababa.
iv. To demonstrate the effect of transactional leadership style on the employee performance of
CGC Groups in Addis Ababa.
v. To analyze the effect of leadership style on organizational culture of CGC Groups.
vi. To examine the mediating role of organizational culture on the relationship between
leadership style and employee performance at CGC Groups in Addis Ababa.
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1.6. Significance of the Study
Findings from the study can help leaders as they learn the best type of leadership to use to achieve
the optimal levels of employee performance. As a result, leadership development programs should be
created, and training and seminars can be useful in raising awareness among managers and other
leaders. As a result, worker performance improves.
It is important to examine the strategies that experienced multinational executives used for expansion
plans to understand how the international business strategy, affect a company's long-term success and
growth, (Fung, 2014). Company leaders can improve their leadership skills to expand their operations
overseas by putting into practice successful business leadership strategies.
The results of this study may help in corporate practice by identifying successful leadership
philosophies that improve worker performance. There is a strong association between authoritarian,
democratic, transformational, and laissez-faire leadership styles.
Senior executives of Multinational Enterprises (MNEs) must be strategic in identifying and resolving
emerging cross-border cultural difficulties if they want to see positive international growth. Gaining
a deep understanding of successful company tactics could pave the way for the development of vital
global leadership abilities that will help to spur sustainable corporate growth. The study's findings
may provide insightful information on successful leadership tactics that might aid company
executives in accelerating their worldwide expansion and raising profitability. It may also serve as a
springboard for further study in the field.
1.7. Scope of the Study
The scope of this study was to investigate the effect of leadership style on employee performance
mediated by cultural orientation of the staff in the case of CGC Groups. Its geographical scope
focused on the head office and project site (Addis-Africa International Convention and Exhibition
Center construction project) which are located in Addis Ababa. Its conceptual scope is the effect of
leadership styles including transformational leadership, autocratic, democratic, and transactional,
level of employee performance and organizational cultural of staff. Explanatory research design along
with quantitative research approach was employed. Both descriptive and inferential statistics were
applied to carry out the analysis. This study is cross-sectional research which was conducted within
the period of September to November, 2022.
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1.8. Limitations of the Study
As an academic survey, this thesis has a number of limitations. Among the majors, it tried to overcome
the issue of limited use of variables and low sample which is prevalent in most previous studies. It
affected the generalizability of the results of the findings. Moreover, this study fails short of using
many other extraneous factors explaining employee’s performance score. For instance, the effect of
training and employee’s personality issue performance is missing in this study. Thus, future studies
should bridge such gap through the holistic use of all other confounding variables in an attempt to
explain the larger variation in employee performance.
Over time, certain internal and external factors may compel managers to change the leadership
approach they take with their employees. As an illustration, exposure to greater levels of education,
training, and potential new change processes that businesses may go through are some of the things
that encourage them to modify their current leadership style. Therefore, future research should focus
on longitudinal studies that try to investigate the degree to which employee performance responds to
such changes in such leadership style.
1.9. Definitions of Key Terms
This section includes the definitions of technical terms used throughout this study.
Multinational Companies: Multinational companies are entities that operate and generate profit in
more than two countries through their movement of capital, goods, and services abroad (Tutar,
Altinoz, and Cakiroglu, 2014).
Leadership Style: It is a way leader influencing subordinates expressed in the form of a pattern of
behavior or personality (Mohelska and Sokolova, 2015).
Organizational Culture: Organizational culture consists of the attitudes, values, behavior patterns,
and habits within an organization that defines the quality of the social climate (Mohelska and
Sokolova, 2015).
Cultural Orientation: Cultural orientation of an employee is the values and beliefs that determine the
attitude of an employee towards the working environment. (Tuleja, 2014).
Employee Performance: Employee performance is how your employees perform daily in your
business will have an impact on your business's success or failure. (Ashle, 2019).
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1.10. Organization of the Study
This study was organized into five chapters, the first chapter included introduction, background of
the study, research gap, research question, objectives, significance and scope of the study. The second
chapter deals with review of related literature in terms of theoretical, empirical and conceptual
framework. The third chapter comprises the research methodology while the fourth chapter dealt with
data analysis and interpretation. Finally, the fifth chapter holds the summary of the findings,
conclusions and recommendation.
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CHAPTER TWO
REVIEW OF LITERATURE
2.1. Theoretical Literature
2.1.1. Concepts of Leadership
The strong determination shown by a leader to ensure all individuals in a group are inspired and
encouraged to exert maximum effort to attain organizational set objectives and goals is known as
leadership (Northhouse, 2016). Tactics displayed by a leader as a means of providing direction,
planning, implementing and motivating the team are recognized as leadership responsibilities.
Consequently, what has been suggested above indicates that the key component of a successful
organization is leadership. Besides, leadership encompasses communicating and guiding team
members, empowering, encouraging and inspiring them to earnestly work towards accomplishing
organizational desired set goals.
For employees to provide their best for the success of an organization, it calls for leadership qualities
that strategically focusses and implements behavioural tactics that build employee commitment
(Chowdhury, 2014). Further indicated that it is widely agreed that effective leadership is not easy to
come by, it is a multifaceted and is known to be dependent on particular elements such as, difficulty
of tasks, extend at which the leader gives authority and the maturity and competence of employees.
However, Chen and Sriphorn (2016) added that complexity of leadership has been intensified by the
current pandemic. Hence, the need for leaders who are responsible, innovative and determined to
confront unanticipated devastating changes and pursue attaining positive effect in relation to
productivity.
The complexity and indefinability of the word leadership may be the reason which makes it difficult
to come up with a single definition for the concept. Lassey (2016) noted the complexity of the
phenomenon and proclaims that there could be no single meaning of leadership that may cover all
circumstances. To reconcile the discrepancies noted on definitions of leadership the Chemers (2017)
came up with an umbrella description which is acceptable to the majority of researchers and theorists.
He presents a definition that defines leadership as ‘‘a process of influence whereby, an individual can
solicit full support from subordinates to meet the set goals or defined duties’’. Similarly, Conger and
10
Kanungo, (2018) defined leadership as “people who create direction for team members and gain the
commitment of the members and finally motivate them to attain the intended outcome”.
However, considering all the above definitions of prior and current literature about leadership, the
provided meanings varied, but one common facet noted is that all leaders strive to influence
employees to meet targets, set goals and objectives of the organization which in turn enhance
productivity. Transformational, laissez-faire and transactional leadership styles are expounded in the
succeeding section.
2.1.2. Styles of Leadership

2.1.2.1. Autocratic Leadership
Autocratic leaders are known as authoritative leaders whose provide clear objectives for the
subordinates for what needs to be done, who should be done, when it should be done, and how it
should be done. Autocratic leadership is strongly focused on both instructions by the leader and
control of the subordinates. There is also a clear division between the leader and the members of the
organization. Autocratic leaders make decisions individually with little or no input from the rest of
the group who works in the organization.
Autocratic leadership is best practiced to situations where there is little time for group decision
making or where the leader is the most skilled members of the organization. The autocratic approach
can be a good one when the situation calls for rapid decisions and decisive actions. However, it tends
to create dysfunctional and even hostile environments, often pitting followers against the domineering
leader. This is a leadership style that motivates employees by engaging higher goals and good values
which can move employees to perform past desires and change both people and firms (Bass, 2015).
2.1.2.2. Democratic Leadership

Democratic leadership style is exhibited where the focus of power is more towards the team as a
whole, and where there is greater interaction within the team (Mullins, 2020). This leadership style
is suitable only in instances where the nature of the responsibility associated with the decision is such
that team members are willing to share with their leader, or on the other hand the leader is willing to
accept accountability for decisions, which he or she has not made individually.
According to Conger and Kanungo (2018), in democratic leadership style, decision making is shared
between leader and the group. In democratic leadership style authority is decentralized and free flow
of communication by encouraging subordinates. When the leader is forced to decide alone, he/she
11
explained the reason to the group. The leader allows a climate of general controls and supervision.
According to view of (Okenwa, 2020) democratic leadership style also known as participative or
supportive leadership style involves some kind of joint action between leaders and co-workers. In
essence, the leader consults with subordinates on proposed actions and decisions and encourages
participation from them. He also welcomes ideas and criticism from the group he is leading.
2.1.2.3. Transactional Leadership Style

Transactional leadership Theory- emphasizes achievement of meeting a desired objective. Rewarding
staff when objectives are met is projected to result in higher performance levels (Bass, 2015).
Predetermined goals are well set and the directions are made clear so that staffs aspire to succeed in
achieving the target (House and Aditya, 2017). Transactional leaders are excellent at maintaining the
organization's effectiveness by keeping their attention on the present.
Transformational leadership Theory - emphasizes that a leader can only be effective if he can
transform or alter the perceptions, actions, and expectations of his followers and guide them toward
a common objective. It helps in motivating & inspiring followers to produce outstanding results while
also letting leaders grow themselves. In a transformational leadership, the follower is motivated to go
further and achieve more because they respect, adore, and believe in the leader (Bass, 2015).
2.1.2.4. Transformational leadership Style

Transformational leaders are characterized by enthusiasm, energy and passion. They aim at
transforming subordinates’ capabilities, skills, beliefs and values. Transformational leaders always
make an effort to ensure that followers are motivated through influencing their assumptions and
attitudes towards work. Caciope (2017) asserts that leaders who apply transformational style motivate
and encourage subordinates to accomplish more than their expectations through communicating a
clear convincing vision to them. Transformational leaders are known to be trustworthy and honest;
they ensure that the vision of the organization is shared; goals are clearly set and well communicated
to employees (Bass, 2015). In this manner, employees get inspired to willingly offer their services
beyond set limits.
Apart from working towards skill and capability enhancement of followers, transformational style is
characterized by leaders who align employees’ goals with organizational goals. Moreover, Cho and
Dansereau (2019) advocated that leader who apply transformational attributes instigate team spirit,
intellectual development, enthusiasm and confidence among subordinates. In so doing, subordinates
12
are prompted to remain focused on accomplishing organizational set goals together with their
collective wellbeing. Nevertheless, Wood postulates that under the pressure of Covid-19, leaders need
to intensify knowledge on how to build and employ effective styles of leadership that can enhance
performance. In light of the above, it shows that outdated practices and attributes pre Covid-19 should
be improved.
2.1.2.5. Laissez – faire Style of Leadership

Under the laissez-faire style of leadership, power and authority are left to subordinates to do all they
please. They are the ones to determine organizational objectives and goals. Managers will not provide
any kind of assistance or direction; employees are left to freely make a decision (Richard et al., 2009).
This means leaders stand aloof, do not interfere with subordinates. For that reason, some scholars call
such leadership style a destructive style whilst others perceive this style to be a no-leadership style
(Okenwa, 2020; Bass, 2015). Not only the decision-making responsibility is left to the subordinates,
but also leaders tend to neglect other issues such as care of the employee’s needs, failure of leaders
to provide feedback and some delays are experienced when quick decisions are needed (Bass, 2015).
In addition, Goodnight (2021) postulates that the laissez-faire leadership style happens when leaders
lack control over their subordinates. This situation denotes that employee are left with the freedom to
do what they desire to do at the time they want to do it without any restriction from management. He
also suggested that when all power to decide to work-related issues is given to subordinates, in some
certain situations and industry this style can provide a positive impact on staff output. Furthermore,
he mentioned that when freedom to make the decision is allowed to group members like professors,
doctors’, engineers’, etc. laissez-faire leadership style can be recognized to be the best style.
2.1.3. Related Theories of Leadership

2.1.3.1. Trait Theory
Early leadership studies assumed that leaders are born, not made. Researchers wanted to identify a
set of characteristics or traits that distinguished leaders from followers, or effective leaders from
ineffective leaders. Leadership trait theories attempt to explain distinctive characteristics accounting
for leadership effectiveness. The list of traits was to be used as a prerequisite for promoting candidates
to leadership positions. Only candidates possessing all the identified traits would be given leadership
positions. Hundreds of trait studies were conducted during the 1930s and 1940s to discover a list of
qualities. However, no one has come up with a universal list of traits that all successful leaders
13
possess, or traits that will guarantee leadership success. On the positive side, although there is no list
of traits that guarantees leadership successes, traits that are related to leadership success have been
identified (Dansereau, 2019).
2.1.3.2. Behavioral Theory

In the late 1940s, researchers began to explore the idea that how a person acts determines that person’s
leadership effectiveness. Instead of searching for traits, these researchers examined behaviors and
their impact on measures of effectiveness such as production and satisfaction of followers. The
preponderance of theory and research along these lines has depended on the idea that leaders must
cope with two separate but interrelated aspects of their situations: they must accomplish the task, and
they must do so through the efforts of those they lead. Thus, even though a variety of different terms
have been used to identify these two facts of leadership, all can be understood as relating to tasks and
people. Leadership behavior can be studied by analyzing what leaders do in relation to accomplishing
the task and to maintaining the effort of people doing the task (Mullins, 2020).
2.1.3.3. Transactional Theory

Transactional leadership theory is a type of contingent-reward leadership that had active and positive
exchange between leaders and subordinates whereby workers were rewarded or recognized for
fulfilling agreed upon objectives of the organization “From the leader of the organization, these
rewards might indicate gratitude for value increases, bonuses and work accomplishment. For good
work, positive support could be exchanged, merit pay for promotions, increased performance and
cooperation for collegiality. The leaders could instead focus on errors, avoid responses and delay
decisions. This attitude is stated as the “management-by-exception” and could be categorized as
passive or active transactions. The difference between these two types of transactions is predicated
on the timing of the leaders‟ involvement. In the active form, the leader continuously monitors
performance and attempts to intervene proactively (Igboeli, 2015).
2.1.3.4. Path–Goal Theory

Another contingency approach to leadership is called the path–goal theory. According to the path–
goal theory, the leader’s responsibility is to increase followers’ motivation and clarify the path to
attain personal and organizational goals. This model includes two sets of contingencies: leader
behavior and the use of rewards to meet subordinates’ needs. In the Fiedler theory the assumption
14
would be to switch leaders as situations change, but the path–goal theory suggests that leaders can
switch their behaviors to match the situation (Daft, 2018)
2.1.3.5. Transformational Theory

The transformational leaders raise the motivation and morality of both the follower and the leader.
The transformational leaders are considered by their capability to identify the need for change, gain
the agreement and commitment of others, create a vision that guides change and embed the change
(MacGregor, 2013). These types of leaders treat subordinates individually and pursue to develop their
consciousness, morals and skills by providing significance to their work and challenge. These leaders
produce an appearance of convincing and encouraged vision of the future. They are “visionary leaders
who seek to appeal to their followers‟ better nature and move them toward higher and more universal
needs this approach views leadership Effectiveness as dependent upon a match between leadership
style and the situation. It also focuses on the degree to which the situation gives control and influence
to the leaders. The primary thrust was that the qualities of leaders differentiate in various situations
and so was those qualities were perhaps appropriate to a particular task and interpersonal context.
(Yukl, 2016).
2.1.4. The Concept of Employee Performance

Performance is associated with quantity of output, quality of output, timeliness of output, presence/
attendance on the job, efficiency of the work completed and effectiveness of work completed (Mathis,
2019). Employee Performance is the successful completion of tasks by a selected individual or
individuals, as set and measured by a supervisor or organization, to predefined acceptable standards
while efficiently and effectively utilizing available resource within a changing environment.
Amos (2014) states that the effective management of employee performance is critical to the
execution of strategy and organizational achieving its strategic objectives. Performance cannot be left
in anticipation that it will develop naturally, despite the employee`s natural desire to perform and be
rewarded for it. This desire needs to be accommodated, facilitated and cultivated (Amos, 2014). In
return for this performance, organization extend themselves in various forms of acknowledgement.
Employee performance has become a topical issue in today`s business environment, so that
organization go to great lengths to appraise and manage it (Armstrong and Baron, 2018). Furthermore,
authors agree with the belief that performance is ultimately an individual phenomenon with
15
environmental factors influencing performance primarily through their effect on individual
determinants of performance ability and motivation.
Suwatno (2018) argue that performance is the result achieved by a person according to prevailing
standards, within a certain period of time, with regard to work and behavior and actions. in a sense,
performance is a result of the work achieved by a person in carrying out the tasks assigned to him and
how much they can contribute to the organization. Performance also means the results achieved by a
person, both quantity and quality in a firm in accordance with the responsibilities assigned to him.
Many factors affect the performance of individual workers including abilities, motivation, support
received, the existence of the work they do, rewards or incentives, their relationship with the
organization and many other factors. Organization or company, its performance depends more on the
performance of individual workforce. There are many ways to think about the type of performance
that workers need for an organization to be successful, including by considering three elements,
namely productivity, quality and service. Wibowo (2016) states that performance can be seen as a
process or a result of work. Performance is the process of how work takes place to achieve work
results. In an organization there are three types of performance, namely operation performance,
administrative performance, and strategic performance.
Generally, Leader’s group or organization is evaluated with regards to the goal attainment and task
completion as desired. Objectively, employee’s performance is measured through profit margins,
market share, increase in production, decrease in cost, return on investment etc. Subjectively, change
in employee’s behavior, learning and development capability, employee commitment, enhancement
in skills and competencies etc. are measured as leadership effectiveness proofs (Bass, 2015).
Similarly, organizational effectiveness is another resultant of employee performance as well as
leadership effectiveness.
2.1.5. Organizational Culture

Organizational culture is a term used to describe the shared experiences people in a particular
organization experience from their social environment. All organizations have a culture, although
certain organizations can easily identify and have more (i.e., stronger) influence on both personnel
and customers than others. Organizational culture is built on deeply held beliefs about how the
organization should run or operate (Armstrong and Baron, 2018).
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In connection with the description above in an organization, the problem of organizational culture is
an inseparable part of the internal environment of the organization because the cultural diversity that
exists in an organization is as much as the number of individuals in the organization. Organizational
culture, in general, is also influenced by the internal organization. Organizational culture in scientific
disciplines is still relatively new, even though organizational culture has existed since the mid-20th
century. Goodnight (2021) states that organizational culture is often defined as a set of value systems
recognized and created by all its members. Based on the experts' opinions above, it can be formulated
that organizational culture is a problem-solving tool (solution) that can consistently work well for a
particular group or institution in dealing with external and internal problems so that it can be
interpreted or taught. To its members, both new and old as a method of perception, thinking, and
feeling about these problems.
In addition to characteristics, there are important factors to consider before establishing an

international presence. Cultural environment is considered as a factor that influences the method in
which an executive implements an international project. It is one of the most significant elements for
both local and international businesses (Mathis, 2019). Although some project leaders from diverse
cultures may operate identical projects, their management practices may completely differ.
As most multinational firms have workforces with diverse geographic, religious, and language
backgrounds, business leaders should consider the cultural environment in their management
processes. Tutar (2014) asserted that international business leaders should consider the different
facets of culture in management strategies to gain a competitive advantage in a transnational market.
Yukl (2016) postulated that culture determines nonverbal behavior that embodies distinct thought,
feeling, or the status of the person communicating.
Cultural language is another element to consider for a global expansion. Suchan (2014) asserted that
considering the cultural language was a key approach to understanding how individuals think,
coordinate, and interact. Tuleja (2014) referred to language as one of the fundamental principles
directed towards understanding people’s beliefs and behaviors. This is typical in the Middle East
where language, religion, social and political institutions, and individual identity have a close
connection. A cross-cultural communication, market orientation, government regulation, and
competitive advantage played an influential role in internationalization processes. The consideration
17
of cultural differences and work processes in a foreign environment may prepare executives to better
function in an international work setting.
2.1.6. Relationship between Leadership Style and Employee Performance

Leadership is one of the most dynamic effects during individual and organization interaction. The
ability of management to execute collaborated effort depends on leadership capability. Although the
various leadership approaches indicates that the research into leadership has gone through the period
of Skepticism, recent interest has focused on the importance of the leadership role to the success of
organization. A relationship between leadership style performances has been reported in both
leadership and management literature. Several studies found a positive relationship between two
variables. Fiedler (2016), one of the most respected researchers on leadership, has provided a recent
treatise on the importance of leadership by arguing that the effectiveness of a leader is major
determinant of the success or failure of a group, organization, or even an entire country.
Many researchers such as Lee and Chuang (2019) explain that excellent leader not only inspire
subordinates’ potential to enhance efficiency but also meet their requirement in the process of
achieving organizational goals. Tutar (2014) explains leadership as use of leading strategy to offer
inspiring motive and enhance staff potential for growth and development. Several reasons indicate
that there should be a relationship between leadership style and employee performance. Good leaders
understand the importance of employee in achieving the goals of the organization and that motivating
employees is paramount importance in achieving these goals.
To have an effective organization the people within the organization need to be inspired to invest
themselves in the organization mission: the employees need to be stimulated so that they can be
effective: hence effective organization require effective leadership. Fiedler (2016) indicated effective
organizations require leadership and that organizational performance will suffer in direct proportion
to neglect of this. To have an effective of organization, there must be effective and stimulating
relations between people involved in the organization. Hence from the finding of many studies it
generally accepted that the effectiveness of any set of people is largely dependent on the quality of
leadership.
Leadership problems and their relation to employee performance in the company are an important
part of improving employee performance. This is based on the opinion expressed by Fahmi (2016)
that a leader has a major influence in encouraging employee performance improvement. Improving
18
the quality of the performance of subordinates chooses to influence the creation of work quality in
accordance with expectations. The path goal theory quoted from Bass (2015) states that leaders
become effective, because of the positive effect they provide in motivating followers, increasing
performance and job satisfaction. Furthermore, the maturity of subordinates in determining leadership
effectiveness will affect employee performance. Research conducted by Nasri (2018), the findings
show that leadership style affects employee performance.
2.1.7. Relationship between Leadership Style and Organizational Culture

Culture is socially learned and transmitted by members; it provides the rules for behavior within
organizations (Yang, 2007). The definition of organizational culture is of the belief that can guide
staff in knowing what to do and what not to do, including practices, values, and assumptions about
their work (Staniland, 1985). The core values of an organization begin with its leadership, which will
then evolve to a leadership style. Subordinates will be led by these values and the behavior of leaders,
such that the behavior of both parties should become increasingly in line. When strong unified
behavior, values and beliefs have been developed, a strong organizational culture emerges. Leaders
have to appreciate their function in maintaining an organization’s culture. This would in return ensure
consistent behavior between members of the organization, reducing conflicts and creating a healthy
working environment for employees (Christine, 2006). Many commentators note that the
performance of an organization is dependent on the conscious alignment of employee values with the
espoused values of company strategy. This clearly indicates that organizational culture and leadership
are linked. The following is a review of the literature on this issue.
One way of uncovering the relationship between culture and leadership is to examine how culture has
been conceptualized in organizational theory. Smircich (1983) identifies two approaches to the study
of the cultural phenomenon in organizations: culture as an organizational variable, then culture seen
as something which can be manipulated. Thus, the nature, direction, and impact of such manipulation
are dependent on the skills and abilities of the leader. The majority of the literature which extols the
virtues of transformational leadership demonstrates widespread support for this view. In contrast, if
culture is seen as an integral part of the organization, then the thinking, feeling, and responses of
leaders are moulded by the culture (Bass and Avolio, 2013).
Schein (2015) observes that organizational culture and leadership are intertwined. He illustrates this
inter-connection by looking at the relationship between leadership and culture in the context of the
19
organizational life cycle. Thus, during the process of organizational formation, the founder of a
company creates an organization which reflects their values and beliefs. In this sense, the founder
creates and shapes the cultural traits of their organization. However, as the organization develops and
time passes, the created culture of the firm exerts an influence on the leader and shapes the actions
and style of the leader. Through this dynamic ongoing process, the leader creates and is in turn shaped
by the organizational culture. In summarizing the consensus of opinion on the links between
organizational culture and leadership, Bass and Avolio (2013) mirror the argument of Schein (2015)
by suggesting that the relationship between the two concepts represents an ongoing interplay in which
the leader shapes the culture and is in turn shaped by the resulting culture.
Bass (1985) demonstrates the relationship between leadership and culture by examining the impact
of different styles of leadership on culture. He argues that transactional leaders tend to operate within
the confines and limits of the existing culture, while transformational leaders frequently work towards
changing the organizational culture in line with their vision. Similarly, Brown (1992) observes that
good leaders need to develop the skills that enable them to alter aspects of their culture in order to
improve their organizational performance.
While there is no shortage of claims that leadership and culture are linked in the literature (Bass and
Avolio, 2013; Schein, 2015), there have been very few empirical examinations of the nature and
performance implications of this link. One exception is a recent study of organizational change in the
United States federal civil service. Hennessey concludes that leadership played a major role in
nurturing the appropriate organizational culture which helped to improve the implementation of
specific government reforms. Hennessey further argues that ‘the most effective leaders foster,
support, and sustain organizational cultures that facilitate the type of management reform envisioned
by “reinventing government” and the attendant increases in effectiveness and efficiency’ (1998).
2.1.8. Relationship between Organizational Culture and Employee

Performance
A strong and good organizational culture can be a major factor in achieving the success of an
organization. Organizational culture is no longer seen as a legacy from the past, but must also be
engineered and positioned as a strategic tool to achieve company goals and as a strong
competitiveness. Organizational culture affects job satisfaction (Robbins and Coulter, 2016). High
job satisfaction is an indicator of management effectiveness as well, which means that the
organizational culture has been well managed. A strong culture is characterized by the core values of
20
the organization that its members hold and agree on and practice. Therefore, a strong corporate culture
will lead to employee performance. According to Salahuddin (2018), proving that organizational
culture has a significant effect on employee performance.
Culture has an important meaning in the organization, because organizational culture is closely
related to the contribution of work and affects the achievement of performance. According to Sopiah
and Sangadji (2018) that organizational culture has a very dominant influence on the success or failure
of the organization in building employee performance. Another opinion, as expressed by Wibowo
(2016), states that an organization is usually formed to achieve a certain goal through the performance
of all human resources in the organization. However, the performance of human resources is largely
determined by environmental conditions, both internal and external to the organization, including
organizational culture. Therefore, the ability of human resources to create an organization with a
culture that is able to drive performance is a necessity.
2.2. Empirical Review

The Effect of Leadership Style on Employee Performance
Despite the clear view on the role of effective leadership in enhancing employee performance, there
is no universal consensus on the effect that different leadership styles have on employee’s
performance as empirical studies reveal contrasting figure (Chan, 2010). Empirical evidence shows
the suitability of a given leadership style to the success of employees and organizations varies across
countries and sectors of business (Basit, 2017). This study thus summarized the result from previous
empirical literatures on the related issues from global to regional and Ethiopia.
The study by Raja (2015) was an important contribution to the existing empirical studies in
investigating the effect of leadership styles on employee performance in public and private sector of
India. The analysis result was generated from the sample 199 respondents: 43 middle level managers
and 156 subordinates. Using 95 percent confidence interval, the study established negative
relationship between laissez-faire style and employee performance. He added, staff supervised by
laissez-fare leader underperform and their firms were unable to meet their intended objectives.
Another study was conducted in hotel industry by Basit (2017) entitled ‘The Influence of Leadership
Styles on Performance of Employees.’ The analysis result showed, autocratic style is the most
frequently used style by managers and have positive effect on employee performance. The study
added, autocratic style greatly helped employees to achieve the expected outcome and thus employees
21
were in favor of this leadership style. Moreover, the study recommended managers to practice
autocratic style in order to boost the performance of their employees and meet the standard required
by the organizations.
The study by Sakiru, (2013) tried to analyze the relationship between employee performance,
leadership styles and emotional intelligence in Malaysia from the sample of 180 respondents. The
study used instruments like Multifactor Leadership Questionnaire and parastatal performance
evaluation process. After checking consistency of questionnaires using Cronbach’s alpha coefficient,
the result from multiple linear regression analysis concluded employee performance to significantly
associate with emotional intelligent and leadership style.
Nuhu (2018) in his study made in Kampala District Council in Uganda showed transactional, laissez-
faire and autocratic style to be among the frequently used leadership style. According to this study,
autocratic styles negatively affected the performance of employees while laissezfaire style was
positively affected employee performance though to a lesser extent. Thus, the finding highlighted the
relative importance of using transactional style in order to enhance the desired performance of
employees used to accomplish the intended objectives of the companies in the district council.
The study made by Gimuguni (2014) in Mbale local government of Uganda indicated autocratic,
laissez-faire and democratic were positively correlated with employee performance. The finding also
revealed autocratic styles of leadership have influenced employees to perform their duties while
Laissez-faire leadership caused employees delay in meeting deadlines. Despite the domination of
autocratic and laissez faire style, the study recommended local government to integrate and use the
three leadership styles.
In Ethiopia, empirical studies on the effect of leadership style on employee performance are not only
scarce but also emphasize largely on banking sector. For instance, the study by Rao (2015) on banking
sector found transformational leadership style explains the larger variation in performance than
transactional leadership style and thus recommend leaders to emphasize more on the dimensions of
transformational leadership style.
Nuhu (2018) on the other hand highlighted the better role of transactional style on employee
performance. He added, employees with laissez-faire leader were unable to meet the desired output
and poorly perform. Finally, he recommended the management to use transactional style than other
22
style which enables their employees to meet the desired outputs. Based on these explanations, the
following hypothesis is proposed:
H1. Leadership style has positive and significant effect on employee performance.
The Effect of Leadership Style on Organizational Culture
Laissez-Faire leadership styles and organizational culture. For instance: Dariush. (2014) contends
study on the assessment of impact of the leadership style on organizational culture in MAPSA
Company. In conducting the study quantitative survey method was used to gather all relevant
information with descriptive methodology, confirmatory fact analysis and structural equation
modeling (SEM) and a two-step approach were employed using SPSS 19. The result of the study
indicates that, an effective leader could demonstrate both transformational and transactional
leadership style, and a transformational leadership has a positive effect on organizational culture and
transactional leadership was found to have less positive effect on culture. In contrast laissez-fair
leadership was found to have a negative effect on organizational culture.
A work entitled “The Impact of Leadership Styles on Organizational Culture” by Tahir (2017) aimed
to study the impacts of leadership style on organizational culture among manufacturing organization
Kochalli, Turkey, context. The study employed descriptive analysis to investigate the impact of the
leadership style on organizational culture. Survey design was used to collect data. The result showed
that transactional leadership style did not have any influence on the current organizational culture.
Andrews (2013) aimed to investigate the impact of leadership style on organizational culture and firm
effectiveness in 311 organizations with a total sample population of 2,662. The data analyzed were
collected through the use of 2 standards and previously validated questionnaire. A descriptive method
was engaged to the study. The finding from the study indicates that leadership skills of managers and
supervisors are critical factor in creation and reinforcement of cultural norms. Furthermore, cultural
norms seem to positively impact organizational effectiveness.
Nogo (2015) conducted research on the effect of leadership styles on organizational culture in small
scale enterprise. The analysis has shown that transformational leadership style exerts positive but in
significant effect on organizational culture. On the other hand, each behavior of transactional
leadership style considered in the study has significant positive effect on organizational culture. And
the study concludes that transactional leadership is more appropriate in inducing culture in small scale
23
enterprises than transformational leadership style. Based on these explanations, the following
hypothesis is proposed:
H2. Leadership style has positive and significant effect on organizational culture.
The Mediating Role of Organizational Culture
In a survey conducted by Bono and Judge (2020) as to whether the followers of leaders exhibit higher
performance in service and manufacturing organizations of different nation. In highly democratic
countries such as The Netherlands and Australia, transformational leader behaviors are highly
correlated with participation in decision making. This implies that transformational leaders may need
to be more participative to be effective in highly democratic societies. In contrast, in high power
distance societies, transformational leadership may take a more command form.
Judge (2017) conducted a meta-analysis of 87 studies measuring transformational, transactional, and

laissez faire leadership in different cultural orientation. From the study, the results reveal that the
level of significance of transformational was positive but weak then transactional leadership with
respect to employee performance, as Pakistan is a country where power distance and uncertainty is
high, and thus transactional leadership is more suited in order to achieve targets.
The study conducted about the effect of leadership styles on performance of Public and Private Sector
Organizations in Pakistan by Pittaway (2015) showed that both leadership styles have positive impact
on employee performance. The results provided evidences of public organizations in a bureaucratic
nation where one-man show rules and autocratic leadership follows, so employees assume themselves
that their leader will be strict and follow rules and regulation. Accordingly, most of the private
organizations prefer to motivate their employees by using transactional rewards such as promotion,
bonuses and punishments etc.
Thus, due to variability and differences in application of different leadership styles, the optimal
combination of transformational, autocratic, democratic and laissez-faire styles is crucial. After all,
in the present research, the latent construct of culture is a function of the positive impact of leadership
style and employee performance. Hence the following propositions are proven accordingly:
H3. – Organizational culture has a mediating role on the relationship between leadership style and
employee performance.
24
2.3. Conceptual Framework and Hypothesis
2.3.1. Conceptual Framework
As discussed in the reviews, there is substantial empirical research that supports the argument that
leadership style plays a vital role in influencing employee performance. Meantime, effectivity of
leadership styles on employee performance depends on the cultural orientation of the staff in the
organization. In this regard, the study would try to explore the four leadership styles namely
autocratic, democratic, transactional and transformational that used to be practiced and how employee
performance is affected along with the mediating role of organizational culture between them.
Referring Figure 1, the conceptual framework diagram illustrates the relationship among the three
variables – independent (leadership style), dependent (employee performance), and mediating
variable (Organizational culture). The boxes represent these three study variables, while the arrows
indicate the direct relationship of leadership style with employee performance and organizational
culture. Whereas, organizational culture has indirect relationship with employee performance.
Independent Variables Mediator Variable Dependent Variable
Organizational Culture
Autocratic
Democratic
Leadership Style Employee Performance
Transactional
Transformational (Source: Khalid, R. 2014)
Figure 1. Conceptual Framework of the Study
2.3.2. Hypothesis
In line with the specific objectives, the following research hypotheses were proposed and tested:
H1. – Autocratic leadership style has positive and significant effect on employee performance.
H2. – Democratic leadership style has positive and significant effect on employee performance.
H3. – Transactional leadership style has positive and significant effect on employee performance.
H4. – Transformational leadership style has positive and significant effect on employee performance.
H5. – Leadership style has positive and significant effect on organizational culture.
H6. – Organizational cultural has a mediating role on between leadership style and staff performance.
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CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1. Research Approach
According to Creswell (2009), there are three approaches of research; quantitative, qualitative and
mixed. The following discussions briefly presents the basic features of these research approaches.
Quantitative research is a means for testing objective theories by examining the relationship among
variables. On the other hand, qualitative research approach is a means for exploring and
understanding the meaning individuals or groups ascribe to a social or human problem with intent of
developing a theory or pattern inductively. Mixed approach uses the combination of both quantitative
and qualitative approaches. Since the purpose of this study was to investigate the effect of leadership
style on employee performance mediated by organizational culture, it infers the relationship among
the four dimensions of leadership style and their influences on employee performance and the
mediating role of organizational culture. The research approach adopted for this study was, thus, the
quantitative research approach. Grenner (2018) posit that quantitative research is the best approach
to use when testing a theory or explanation. Thus, applying quantitative research approach is
considered to be appropriate.
3.2. Research Design

Based on purpose, research design is classified into three main categories such as descriptive,
exploratory, and explanatory research (Saunders, Lewis and Thornhill, 2014). The goal of exploratory
research is to discover ideas and insights; descriptive research is usually concerned with describing a
population concerning important variables. Explanatory research is used to establish cause-and-effect
relationships between variables. It is a causal analysis concerned with the study of how one or more
variables affect changes in another variable. It is thus a study of functional relationships existing
between two or more variables. This study, thus, adopted explanatory research design for the reason
that it aimed to examine the relationship among leadership style, organizational culture and employee
performance. For the reason that explanatory research design is used to establish cause-and-effect
relationships between variables. It is thus a study of functional relationships existing between two or
more variables (Kothari, 2014).
26
3.3. Population
According to Hair (2010), target population is said to be a specified group of people or object for
which questions can be asked or observed made to develop required data structures and information.
Therefore, for this study, the target population targeted employees of CGC Groups in Addis Ababa.
The company currently has been engaged in the first phase of Addis-Africa International Convention
and Exhibition Center and Hansom (AAICEC) construction project, and owned and managed
Hansom Glass Factors in Addis Ababa. Having employees from both project-based and factory-based
organizations are believed to demand different leadership style, organizational culture and employee
performance. Therefore, according to CGC Groups HR Report (2022), the permanent (both
management and operational level) employees are targeted as a study variable. In this case, there are
a total of 2,460 active employees, of which 1,185 are permanent staff (Ref. Table 1. Distribution of
Managerial and Non-management Staff).
3.4. Sample Size

Sample size refers to the total number of units that were chosen for analysis in the research
investigation. It is also determined by the type of investigation and the intended application of the
results (Kumar, 2016). As mentioned above, the sampling frame constitutes a total of 1,185
permanent staff under CGC Groups and Hansom Glass Factory. Determining sample size is very
important issue because too large samples are uneconomical while too small samples may lead to
inaccurate results. When the population size is known, the sample size is calculated based on
Yamane’s (1967) formula for proportionality of sample for known population. Since the exact
number of study population was known, Yamane’s proportionate sample size determination for
known population was applied to determine the sample size. The formula is:
N 1,185
n = (1+(𝑁𝑁𝑁𝑁 2) = (1+(1,185∗0.052) = 299
Where: N – The total Population; n = Calculated sample size; and e – marginal error. Therefore, a
sample size of 299 staff/ respondents were entitled to participate in this survey. The distribution is
depicted as below.
27
Table 1. Sample Proportion per Company/Stratum
Company Stratum Population Proportion Sample Size Sample Size

Management 206 0.174 299 52
CGC Groups
Non-Management 577 0.487 299 146
Management 119 0.100 299 30
Hanson Glass
Non-Management 283 0.239 299 71
Total 1,185 100% 299

(Source: CGC Group HR Database, 2022)
3.5. Sampling Technique

There are two known sampling techniques; probability sampling and non-probability sampling. The
non-probability sampling is a method in which sampling units are taken purposely by the researcher
whereas under probability sampling each sample unit in the target population has an equal chance to
be included in the sample (Bryman and Bell, 2013). The former is subjective and depends on the
judgment or the justification of the researcher while the latter is all about random (equal chance) of
being selection. In the course of selecting a sample of 299 respondents out of the targeted study
population, the student researcher used a probability sampling technique called stratified random
sampling techniques. Since the subjects in the two companies were stratified in management and non-
management staff and their numbers were exactly known, application of stratified random sampling
was appropriate. As the entire list of the targeted staff were readily available, the probability sampling
technique is practical.
3.6. Source of Data collection

The source of data for this study was largely dominated by primary data. According to Kothari (2014),
the primary data are those which are collected a fresh and for the first time, and thus happen to be
original in character. Data that have been observed, experienced or recorded close to the event are the
nearest one can get to the truth, and are called primary. The data used for the analysis of this research
were collected from the primary source - individual staff of CGC Groups. No secondary data were
used for analysis.
3.7. Data Collection Instrument

There are different primary data collection instruments. Among them, self-administered questionnaire
was used to collect the primary data in order to obtain opportunity to probe or ask questions, control
the respondent response through designing the questions well properly, increase the reliability and
28
credibility of the research data, and makes a judgment of what most people think through asking the
sample respondent. This questionnaire was adopted from the questionnaire developed by Khalid
(2014). It has two parts, of which the first part comprises general information about the respondents;
second part includes the study variables:
 Leadership style - measured by four dimensions namely autocratic (5 statements), democratic

(5), transactional (5) and transformational (5) leadership styles
 Organizational Culture - measured by managing change (1), achieving goals (2), coordinating
teamwork (1), and building a strong culture (1).
 Employee performance - subjectively measured by change in employee’s behavior (1),
learning and development capability (2), employee commitment (3), enhancement in skills
(1) and competencies (1).
The variables are attitudinal and were measured using a Likert scale with five response categories
(strongly disagree (), disagree (2), neutral (3), agree (4), and strongly agree (5). The Likert scale
method was preferred to make questions interesting to respondents and thereby enhance their
cooperation, ultimately to ensure maximum response rate (Robson, 2012).
Preliminary draft of the questionnaire was pre-tested to improve upon the clarity of the question items
and pretested for reliability of the adopted measuring scale with 5-point Likert scale. The reliability
test of Khalid’s (2014) data collection instrument was found reliable the fact that the results scored
above the threshold (Cronbach’s Alpha > .70) as illustrated in Table 2 below.
3.8. Reliability Test

To evaluate the research instruments, reliability is one of the major criteria. Reliability estimates the
consistency of the measurement or simply, the degree to which an instrument measures the same way
each time it is used under the same conditions with the same subjects. Reliability is essentially about
consistency. That is, if something is measured many times and the result is always the same, then we
can say that the measurement instrument is reliable (John, 2017).
Application of internal reliability refers to the multiple-indicator variables. If a variable is internally

reliable, it is coherent. I.e., all the constituent indicators are measuring the same thing (Bryman and
Bell, 2013). Cronbach’s Alpha is a commonly used test of internal consistency. It essentially
calculates the average of all the possible split-half reliability coefficients. Alpha coefficient ranges in
value from 0 (denoting no internal reliability) to 1 (perfect internal reliability). Higher results (>.07)
29
are typically employed as a rule of thumb to denote an acceptable level of internal consistency. In
this study, Cronbach’s alpha test is used to test the internal reliability of the study variables in part II
of the questionnaire with multi point formatted questionnaires or scales (that is, rating scale: 1=
strongly disagreed, 2 = disagreed, 3 = neutral, 4 = agree and 5 = strongly agreed).
Table 2. Reliability Test Results

Measurement Number of items Cronbach's alpha
Autocratic Leadership 5 .723
Democratic Leadership 5 .835
Transactional Leadership 5 .749
Transformational Leadership 5 .789
Organizational Culture 5 .873
Employee Performance 5 .722
Reliability of all items 30 .802
Source: Own Survey, 2022
In this study, as shown on Table 2. The leadership style, organizational culture and employee
performance were measured separately and their reliability test (Cronbach’s alpha) values were
determined. Regarding leadership styles, specific Cronbach’s alpha equals to autocratic = .723,
democratic = .835, transactional = .749, transformational = .789. organizational culture = .873, and
employee performance = .722 Similarly, the overall Cronbach’s alpha was found to be .802. This
indicates the stability and suitability of the results for this study, i.e., all questions were in an
acceptable level of internal reliability.
3.9. Validity Result

Validity refers to the extent to which data collection method or methods accurately measure what
they are intended to measure (Sounders, 2010). Different steps were taken to ensure the validity of
the study. Data were collected from the reliable sources, from respondent who have experiences in
the field. Survey questions were made based on literature review and frame of reference to ensure
result validity. In selecting a relevant measure for an outcome variable, it is critical that logical
inferences can be made from the operation upon which the measure is based to the theoretical
constructs relevant to the study. In this context, the aforementioned validity tests were also checked
to ensure the quality of the research design. The student researcher had established the questionnaire
in its final version, after highlighting some previous studies related the subject of this study. Then it
30
was subjected to be reviewed by some specialist in scientific research. Their comments and
recommendations were taken into consideration to modify the questionnaire to have its final shape.
3.10. Data Collection Procedure

The survey was conducted in person for the fulfillment of academic requirement. It is a data collection
method in which participants are asked to respond to a set of questions. A survey questionnaire was
an appropriate tool for a quantitative study when the research goal was to characterize the occurrence
of an event or the effects of a given input because it allowed for the collection of a large amount of
data (Yin, 2013). As a result, the survey questionnaire is thought to be critical for this study.
A total sample of 299 questionnaires were distributed to the staff of CGC Groups who were working
for AAICEC project and Hanson Glass Factory in Addis Ababa. First, the public relation and HR
managers were asked for their permission to conduct the survey during the working hours of the
companies. Once the permission was granted, then contacted the HR managers to assign a coordinator
to help or guide the student researcher on how and when to contact the staff so as to not disturb their
operation. Then, the targeted respondents were briefed the purpose of the study clearly by the student
researcher, and then asked for their consent to fill the survey.
After having their full consent, then the questionnaires were distributed for volunteer respondents as
per their random draw, and they filled and returned the questionnaires back to the student researcher
accordingly. The questionnaire was translated from English to Amharic because some of the
respondents had the language barrier.
3.11. Method of Data Analysis and Presentation

Regarding the model specification, in this study:
 Leadership style is an independent variable.

 Organizational Culture is a mediating variable, and
 Employee performance is a dependent variable.
Empirical model applied in this study was, thus, a multi-regression analysis model for investigating
individual effect of each independent variable on both dependent and mediating variables, and the
role of mediator variable on the relationship between the dependent and independent variables. To do
so, three relationships were formulated among the study variables to address the objectives of the
study. The relationships are formulated as:
31
- The effect of leadership style on employee performance
𝐸𝐸𝐸𝐸𝐸𝐸 = 𝑓𝑓(𝐿𝐿𝐿𝐿𝐿𝐿) = 𝛽𝛽0 + 𝛽𝛽1 𝐴𝐴𝐴𝐴𝐴𝐴 + 𝛽𝛽2 𝐷𝐷𝐷𝐷𝐷𝐷 + 𝛽𝛽3 𝑇𝑇𝑇𝑇𝑇𝑇 + 𝛽𝛽4 𝑇𝑇𝑇𝑇𝑇𝑇 + 𝑒𝑒
- The effect of leadership style on Organizational culture
ORC = 𝛽𝛽0 + 𝛽𝛽1 𝑓𝑓(𝐿𝐿𝐿𝐿𝐿𝐿) = 𝛽𝛽0 + 𝛽𝛽1 𝐴𝐴𝐴𝐴𝐴𝐴 + 𝛽𝛽2 𝐷𝐷𝐷𝐷𝐷𝐷 + 𝛽𝛽3 𝑇𝑇𝑇𝑇𝑇𝑇 + 𝛽𝛽4 𝑇𝑇𝑇𝑇𝑇𝑇 + 𝑒𝑒
- The mediating role of organizational culture on the relationship between leadership style and
employee performance.
𝐸𝐸𝐸𝐸𝐸𝐸 = 𝛽𝛽0 + 𝛽𝛽1 𝐽𝐽𝐽𝐽𝐽𝐽 + 𝛽𝛽2 𝐿𝐿𝐿𝐿𝐿𝐿 + 𝑒𝑒

Where:
EMP – Employee Performance; LED – Overall Leadership Style; AUT – Autocratic; DEM –
Democratic; TRX – Transactional; TRS – Transformational Leadership Style; ORC – Organizational
Culture.
Before conducting the multiple regression analysis, regression assumption tests (multi-collinearity,
homoscedasticity, linearity and normality) were carried out; and correlation test was also conducted
to quantitatively describe the strength of the association between the variables. According to hair
(2016) the Pearson correlation coefficient measures the degree of linear association between two
categorical variables. It varies from -1.00 to +1.00, with 0 representing absolutely no association b/n
the two variables.
Regression analysis is a statistical method to deal with the formulation of mathematical model
depicting relationship amongst variables which can be used for the purpose of prediction of the value
of dependent variable, given the value of the independent (Kothari, 2014). The basic aim was to see
the extent to which the service mix practice affects the overall customer satisfaction in terms of
coefficient of determination (r2 value), the regression coefficient (beta coefficient) and the p-values
(ANOVA Test) for the significance of each relationship.
Both descriptive and inferential statistics were used to analyze the quantitative data gained through
structured questionnaire. All the variables were coded and entered into the SPSS 21.0 to analyze data
obtained through questionnaires.
32
Descriptive statistics was used to describe the usefulness of the data set while the inferential analysis
for examining the relationships between the variables. In order to describe the data, preliminary
descriptive statistics such as frequency, percentages, and mean scores were computed.
Inferential Statistics - Multiple regression analysis was performed using the leadership style
dimensions as independent variable; organizational culture as a mediator variable; and the employee
performance as dependent variable. The basic aim was to see the extent to which the leadership styles
that the management follows at CGC Groups in Addis Ababa affect their employee performance; and
how the organizational culture modifies the relationship between the leadership style and employee
performance in terms of coefficient of determination (R2 value), the regression coefficient (Beta
coefficient) and the P-values for the significance of each relationship.
3.12. Ethical Considerations

It is important to consider ethical principles when conducting business research. Ethical issues are
categorized into four different types: harm to participants, lack of informed consent, invasion of
privacy, and deception (Bryman and Bell, 2013). In this study, there are descriptive questions about
the respondent’s age and gender but this information was not enough to identify the person. The
second ethical principle considered was the lack of informed consent. Both the managements as well
as the study participants were asked for their willingness. The third ethical principle concerns the
invasion of privacy. In this study, the respondent has the opportunity to skip a question if it is judged
sensitive. Furthermore, this study was not of a sensitive nature which enhances the respondents’
willingness to answer. The fourth ethical principle referred to deception which occurs if respondents
were led to believe that research is about something else than what it is. After considering these ethical
principles and fully living up to the requirements, then classified as ethical.
33
CHAPTER FOUR
DATA ANALYSIS AND INTERPRETTION
4.1. Response Rate
After distributing 299 questionnaires to the targeted employees, a total of 263(88.0%) questionnaires
were collected. The response rate accounted for 88.0% of the total distributed questionnaires. Further
screened the collected questionnaires for missing data and other inconsistency that counted a total of
22(7.4%), then found 241(80.6%) valid and usable questionnaires for statistical analysis. Then,
collected responses were encoded in to SPSS 22.0 and went through coding as well as error correction
to make them suitable for proposed technique of data analysis. Once the preparation was completed,
the required analyses were carried out and the results are presented as below.
4.2. General Information about the Respondents
The first part of the questionnaire consists of the demographic characteristics of the respondents. This
part of the questionnaire requested a limited amount of information related to personal and
demographic status of the study participants. Accordingly, the following variables about the
respondents were summarized and described in the subsequent tables. These variables include;
gender, age, education, department, position and work experience of the respondents.
Referring Table 3, the results revealed that male respondents constituted slightly higher percentage
127(52.7%) than their female counterparts 114(47.3%). The number of male and female employees
were almost the same. The number of male and female employees were almost the same. It implies
the majority of the respondents were male staff. With the scope and sample size of this study, it would
be premature to make conclusive statements about what this gender disparity means, other than the
sampling diversity. Possibly future endeavors with a gender-specific focus could investigate this
venue from a gender-related perspective.
In terms of age, 116(48.1%) was found to be within the age range of 18-31 years followed by
88(36.8%) within 31-40 years. Whereas those respondents whose age fallen within 41-50 years and
51-60 years old belonged to 31(12.9%) and 6(2.5%) respectively. This implies that the company had
about 85% of adult employees less than 40 years old. This implies that the company had about 85%
of adult employees less than 40 years old. This can be taken as a positive indication that CGC Groups
employed employees from all age groups, from adolescents to the elderly.
34
Table 3. Demographic Characteristics of Respondents
Category N (%)
Sex
Male 127 52.7%
Female 114 47.3%
Total 241 100.0%
Age
18 – 30 years 116 48.1%
31 – 40 years 88 36.5%
41 – 50 years 31 12.9%
51 – 60 years 6 2.50%
Total 241 100.0%
Education
Highschool 5 2.1%
Diploma 11 4.6%
First Degree 177 73.4%
Masters & Above 48 19.9%
Total 241 100.0%
Department
Logistics & Supply 37 15.4%
Operation and Supporting Staff 113 46.9%
Sales & Marketing 23 9.5%
HR & Admin 18 7.5%
Engineering Staffs 50 20.7%
Total 241 100.0%
Position
Manager (M)* 35 14.5%
Supervisor (M) 69 28.6%
Senior (NM)** 102 42.3%
Junior (NM) 24 10.0%
Others (NM) 11 4.6%
Total 241 100.0%
Service Year
1 – 5 years 131 54.4%
6 - 10 Years 83 34.4%
Above 10 Years 27 11.2%
Total 241 100.0%
* Managerial **Non-Managerial Source: Own Survey, 2022
35
Regarding the educational background of the respondents, the majority 177(73.4%) has first degree
holders, followed by 48(19.9%) masters and above. The rest 11(4.6%) and 5(2.1%) were diploma and
high school certified. This indicates that the respondents are well educated and very capable to
understand the contents of the questionnaire which helps to get reliable or credible data.
The respondents from operation plus other supporting departments constituted 113(46.9%), while
50(20.7%) from engineering. The rest 37(15.4%), 23(9.5%) and 18(7.5%) were from logistics &
Supply, Sales & Marketing, and HR & Admin departments respectively. This implies that the
majority of the respondents were from operation department. Since both companies (construction and
factor) are labour intensive and most of their workforce are operational levels. But staff from every
department was participated which can be taken as a good opportunity to have more and detail
information regarding the leadership practices, the organizational culture and the employee
performance in the company.
Regarding their positions, junior, senior and supervisory level staffs accounted for 102(42.3%),
69(28.6%) and 35(14.5%) respectively. Managerial and other level staffs represented the rest
24(10.0%) and 11(4.6%) respectively. This has an implication that majority of the respondent’s stay
in the company was relatively low (relatively few numbers of years).
It was also found that more than half, 131(54.4%) of the respondents have 1-5 years of service while
83(34.4%) from 6-10 years and the rest 27(11.2%) have served for more than 10 years. Majority of
the respondents had less service in the company which reconcile with junior staff are more in number.
As far as their origin is concerned, figure 2 illustrates that 156(64.7%) of the respondents were locals
(Ethiopians), 49(20.3%) Chinese, 27(11.2%) Philippines, and the rest 9(3.7%) were Indian. This
indicates that about 85(35.2%) are expats while the rest are local staffs. Having about one third of the
workforce from different cultural orientation can be taken as a good opportunity to have respondents
with different organizational culture.
36
27(11.2%)
Origin
9(3.7%)
Locals
Chinese
Philippines
156(64.7%) Indians
49(20.3%)
Figure 2. Origin of the Employees
Overall demographic characteristics of the respondents shows that balanced ratio of gender
distribution, well educated young junior and senior staff at operational level with low service year in
the company. Besides, despite one third were expats, the majority of the respondents were local.
4.3. Descriptive Analyses of Study Variables
The study variables constitute leadership styles, organizational culture and employee performance.
To attain the objectives, a total of 20 questions were grouped into the four dimensions of leadership
styles namely autocratic, democratic, transactional and transformational leadership. For
organizational culture and employee performance variables, 5- and 5- questions were assigned
respectively based on the respondents’ perception. Thus, a total of 30 questions were entertained to
carry out these analyses.
To compare the respondents’ perception towards the variables, descriptive statistics of mean and
standard deviation were used. The mean indicates to what extent the sample group averagely agrees
or disagrees with the different statements. The scale is set in such a way that respondents strongly
disagreed if the mean scored value is in the range of 1.00 – 1.80; disagreed within 1.81 – 2.60; neither
agreed nor disagreed within 2.61 - 3.40; agreed if it is in the range of 3.41 – 4.20; while strongly
agreed when it falls within 4.21 – 5.00. In addition, standard deviation shows the variability of an
observed response. The summary of each dimension is presented below.
37
4.3.1. Autocratic Leadership
Table 4. Description of Autocratic Leadership Style

N Mean Std.
Decisions are always made by managers for subordinates. 241 3.28 1.615
Managers are determined to push projects forward to get results 241 4.27 1.237
My duties are limited by the managements. 241 3.33 1.588
Managements set high standards expecting others to do the same 241 3.90 1.481
Often, performance requirements are designed as per the leaders needs 241 3.93 1.671
Average Autocratic 241 3.74 1.136
Referring the results in Table 4, the respondents were strongly agreed with the idea that managers are
always decision makers for their respective subordinates (Mean = 4.27, Std. 1.237). However, they
agreed that supervisors/managers set high standards expecting others to do the same (Mean = 3.90,
Std. 1.481), and often, performance requirements are designed per the leaders needs (Mean = 3.93,
Std. 1.671). But they showed their neutral stand on the idea that decisions are always made by
managers (Mean = 3.28, Std. 1.615), and staff duties are limited by the managements (Mean = 3.33,
Std. 1.588). Overall, the autocratic leadership style of the managements was perceived positive (Mean
= 3.74, 1.136). But they had different stands in this regard as the standard deviation is above the
threshold value (Std. = 1.000). This implies that some managers applied autocratic leadership. Taking
the decision-making position, pushing tasks to be done, limiting staff activities, setting high standards
and performance output requirement as per the manager’s interest affect the perception of the
respondents. Meaning, following autocratic leadership influence their organizational performance.
4.3.2. Democratic Leadership
Results of the findings in Table 5 show that the respondents expressed their agreement that they didn’t
mind if they spent their time on discussion as long as every angle is considered (Mean = 3.93, Std.
.977). Meanwhile, they slightly agreed with the staff’s encouragement to demonstrate their innovative
ideas (Mean = 3.63, Std. 1.374), and managers insist teammates to abide by formal decision if follow
proper procedures (Mean = 3.56, Std. 1.298). Nonetheless, they disagreed on staff’s accomplishment
is best as everyone is involved in making decisions (Mean = 2.36, Std. 1.235), and are encouraged to
involve in managerial decision making (Mean = 2.55, Std. 1.554).
38
Table 5. Description of Democratic Leadership Style
N Mean Std.
Staff works best as everyone is involved in taking decisions 241 2.36 1.235
Staff are encouraged to involve in managerial decision making 241 2.55 1.554
I don’t mind how long discussions last, so long as we consider every angle 241 3.93 .977
Managers insist teammates to abide by formal decision if follow proper procedures 241 3.56 1.298
Staff are encouraged to demonstrate their innovative ideas 241 3.63 1.374
Average Democratic 241 3.21 1.115
Overall, staff perception towards democratic leadership style of the managers was found neutral
(Mean = 3.21, Std. 1.115) implying it doesn’t mean that they were neither agreed nor disagreed
regarding the democratic leadership practices but they had different stands in this regard as the Std.
is higher than the threshold (Std. 1.000). Some acknowledged its influence while others not. This
indicates that managers/supervisors were less determined to include all team members in decision,
and teams couldn’t be effective unless all members have an opportunity to participate fully.
4.3.3. Transactional Leadership
Table 6. Description of Transactional Leadership Style

N Mean Std.
I am constantly reminded of what I would receive if I do what is expected. 241 4.41 .873
When mistakes are made disciplinary action is instituted. 241 4.55 .765
My supervisor pays close attention to anomalies that may arise. 241 4.22 .601
I get rewarded for exceptional performance. 241 4.63 .911
My supervisor closely checks for nonconformity. 241 4.41 .882
Average Transactional 241 4.44 .806
As shown on the table 6, most of the respondents strongly agreed that staff are constantly reminded
about their incentives (Mean = 4.41, Std. .873), took disciplinary action against wrong doings (Mean
= 4.55, Std. 765), and supervisor paid close attention to anomalies that might arise (Mean = 4.22, Std.
.601). Similarly, they also strongly believed staff get rewarded for exceptional performance (Mean =
4.63, Std. .911), and supervisor closely checks for nonconformity (Mean = 4.41, Std. .882). Overall,
the transactional leadership style of the managers/supervisors of the case company was perceived
39
strong as the mean value scored 4.44 with Std. .806. This implies that the majority of the respondents
acknowledged to a great extent, and admitted that the managers interchange benefits and rewards to
subordinates provided the assigned task is completed, and the agreed-upon targets are fulfilled
successfully. With this type of style there is a condition to be fulfilled, that is, individual needs and
aspirations are fulfilled provided the leader’s expectations and requirements are met satisfactorily.
4.3.4. Transformational Leadership
Table 7. Description of Transformational Leadership Style

N Mean Std.
I believe that the management shared the organizational mission. 241 2.42 1.814
I always meet set targets as clearly communicated. 241 2.54 1.798
I am always motivated to work more than expected 241 2.28 1.805
I diligently execute duties as I trusted my manager/supervisor. 241 2.96 1.822
My manager is always tries to enhance my capability to accomplish the best. 241 3.02 1.720
Average Transformational 241 2.64 1.792
Referring the results in Table 7, the majority of the respondents disagreed that the managers shared
the organization mission to their subordinates (Mean = 2.42, Std. 1.814), clearly communicated set
targets (Mean = 2.54, Std. 1.798), and motivate staff to work more than expected (Mean = 2.28, Std.
.1.805). Nonetheless, they had neutral stand regarding the staff diligently execute duties as they
trusted their manager/supervisor (Mean = 2.69, Std. 1.822), and always managers try to enhance their
subordinates’ capability to accomplish the best (Mean = 3.02, 1.720). The average mean value of the
transformational leadership (Mean = 2.90, Std. 1.728) shows that the respondents perceived the
transformational leadership style of the managements were very weak. This implies that leaders are
failed to make an effort to ensure followers are motivated through influencing their assumptions and
attitudes towards work. That means, the managers were unable to motivate and encourage their
subordinates to accomplish more through communicating a clear convincing vision to them.
40
4.3.5. Organizational Culture
Table 8. Description of Respondents’ perception towards Organizational Culture
N Mean Std.
Employees are flexible and adaptable when changes are necessary 241 4.25 1.485
Staff have clearly defined goals that relate to the organizational mission/goals 241 4.24 1.297
Staff believe in working collaboratively over completion 241 3.48 1.547
The company is always looking for new ways to better serve customers 241 3.63 1.576
The managements make business decisions are most often made on the basis of 241
3.50 1.409
facts, not just perceptions or assumptions.
Average Transformational 241 3.82 1.463
As far as the respondents’ perception towards the organizational culture in Table 8, majority of the
respondents strongly agreed with the idea that employees are flexible/adaptable when changes are
necessary (Mean = 4.25, Std. 1.485), and staff have clearly defined goals that relate to the
organizational mission/goals (Mean = 4.24, Std. 1.297). Meanwhile, they slightly agreed that the staff
believe in working collaboratively over completion (Mean = 3.48, Std. 1.547), the company is always
looking for new ways to better serve customers (Mean = 3.63, Std. 1.576), and the managements
make business decisions are most often made on the basis of facts, not just perceptions or assumptions
(Mean = 3.50, Std. 1.409). However, since all the standard deviations were found above the threshold
value (Std. = 1.000). The grand average mean value scored 3.82 with Std. 1.463 shows that the
perception of the majority regarding the organizational culture of the companies are strong. That
implies that the companies set clear business objectives and are flexible to adopt changes to achieve
their missions and goals. organizational culture could be a strategic asset for the organization in that
it increases the adaptability of and fit between a firm and its environment as acknowledged by the
respondents.
4.3.6. Employee Performance
As far as the employee performance is concerned, the results in Table 9 showed response from the
participants regarding their job performance. The majority of the respondents strongly agreed that the
respondents were always punctual in delivering the required output (Mean = 4.33, Std. 1.015), and
understood the vision/mission of the organization very well (Mean, 4.31, Std. 1.046). Nonetheless,
41
they slightly agreed the staff could manage change in their job very well whenever the situation
demands (Mean = 3.43, Std. 1.202), mutual understanding can lead to a viable solution in organization
(Mean = 3.55, Std. 1.307), and often motivated to deliver quality work (Mean = 3.57, Std. 1.318).
Table 9. Description of Respondents’ Perception towards Employee Performance

N Mean Std.
I am always punctual in delivering the required output. 241 4.33 1.015
I understand the vision/mission of the organization very well 241 4.31 1.046
I am always motivated to deliver quality work 241 3.57 1.318
I could manage change in my job very well whenever the situation demands. 241 3.43 1.202
I believe that mutual understanding can lead to a viable solution in organization. 241 3.55 1.307
Average Employee Performance 241 3.84 1.178
Overall, the respondent’s perception towards employee performance was found strong and positive
as the average mean scored 3.84 with Std. 1.178. this implies that, efforts to be punctual in delivering
duties, having clear vision, managing changes, and mutual understanding affect their perception
towards their performance despite there is a room for further improvement if more efforts are exerted.
4.4. Inferential Statistics
To addressed the objectives of the study, the inferential statistics encompassed correlational test,
assumption for the regression model test, and regression analysis of the collected data. The
correlational test was meant for checking the strength and direction of the relationship among the
variables. Assumption tests for multiple linear regression model were for the fitness of collected data
to the model specified. It included multivariate normality, multicollinearity, linearity, and
homoscedasticity tests. Finally, multiple linear regression analysis was the final output of the data
analysis which referred to the model summary, ANOVA test and beta coefficient.
4.4.1. Correlational Test
To determine the relationship between leadership styles, organizational culture and employee
performance, Pearson correlation was first investigated. The five dimensions of leadership styles were
taken as independent variables, organizational culture as mediator variable, and employee
performance was used as a dependent variable in this study. As per the guide line suggested by Field
42
(2005), the strength of the relationship 0.10 to 0.29 shows week relationship; 0.30 to 0.49 is moderate;
0.5 and above shows strong relation b/n variables.
Table 10. Correlation Test Results

AUT DEM TRX TRS ORC EMP
Autocratic (AUT) 1
Democratic (DEM) .566** 1
Transactional (TRX) .391** .624** 1
Transformational (TRS) .279** .388** .141* 1
Organizational Culture (JBC) .313** .320** .453** .309** 1
Employee Performance (EMP) .644** .401** .627** .122** .409** 1
** Correlation Significant at P<.05%
The result in Table 10 shows that, except performance appraisal (positive and moderate relationship,
r = .338, p< .05), the four dimensions of leadership style dimensions had positive relations with
employee performance. Specifically, autocratic (r = .644, p< .05) and transactional (r = .627, p< .05)
had relatively the strongest relationship. However, democratic readership showed moderate
relationship (r = .401, p< .05) while transformational leadership had weak relationship with
employee performance. This implies that the improvement or alignment of appropriate leadership
style increases the employee performance. That means, A positive correlation coefficient indicates
that increases in the leadership style would correspond to an increase in the employee performance
thus implying a direct relationship between the variables.
Regarding the relationship between leadership style and organizational culture, autocratic (r = .513,
p< .05) and transactional (r = .553, p< .05) had strong relationship whereas, democratic (r = .320,
p< .05) and transformational leadership (r = .309, p< .05) showed moderate relationship with
organizational culture. Similarly, organizational culture had also positive and moderate relationship
with employee performance (r = .409, p< .05). This also indicates the more the organizational culture
aligns with employee values and beliefs, the more employee performance improved implying that
employee performance had a direct association with leadership style and organizational culture.
4.4.2. Assumption for Regression Model Test
Linear regression (Ordinary Least Square) is an analysis that assesses whether one or more predictive
variables explain the dependent (criterion) variable. The assumption tests are the underlying
assumptions that the accuracy of a specified model to predict the outcome variable with minimum
43
possible error induced. For a given multiple regression model, to take it as credible model, it shouldn’t
violate the following assumptions. These assumptions are Multicollinearity (highly relatedness of
predictor variables), Normality (symmetric distribution of data based on given mean and variation),
and Homoscedasticity (uniform/ random distribution of error terms).
Multicollinearity - Multicollinearity refers to the situation in which the independent/predictor

variables are highly correlated. Tolerance and variance inflation factors (VIF) values for each
predictor are means of checking for violation of collinearity assumption. Tolerance value below 0.1
and VIF above 10% indicate a multicollinearity problem.
Table 11. Collinearity Assumption Test

N Mean Std. Tolerance VIF
Autocratic 241 3.74 1.136 .717 1.395

Democratic 241 3.21 1.115 .545 1.835
Transactional 241 4.44 0.806 .484 2.066
Transformational 241 2.64 1.792 .730 1.370
Organizational Culture 241 3.82 1.463 .763 1.311
Employee Performance 241 3.84 1.178 .708 1.412
Valid 241
a. Dependent Variable: ORP
In this study, the results in Table 11 showed that the collinearity statistics analysis of variance
inflation factors (VIF) value ranges from 1.311 to 2.066 and Tolerance value ranging with 0.484 to
0.763 indicated that there was no collinearity problem. This could be taken as a confirmation that
there were no multi-collinearity problems to proceed for regression analysis. That means When
independent variables are highly related (r > .80 in most cases), there is “overlap” or sharing of
predictive power or they would have been basically measuring the same thing or they both convey
essentially the same information (Robert, 2016).
Homoscedasticity – Testing for Homoscedasticity lies with an assumption in regression analysis

that the residuals at each level of the predictor variable(s) have similar variances. Using the plots of
ZRESID against ZPRED, the distribution is checked whether the graph looks like a random array of
44
dots evenly dispersed around zero. This is to mean that at each point along any predictor variable,
the spread of residuals should be fairly constant.
Figure 3. Scattered plot for Homoscedasticity Test
In Figure 3, it shows that each of the predictor variable against the standard residual values. The plot
depicts that how the points are randomly and evenly dispersed throughout the plot. And, these
patterns are indicatives of a situation in which the assumption of homoscedasticity have been met.
Linearity Test – In this case, linearity test refers to the linear relationship between the dependent,
mediator and dependent variables.
Figure 4. Linearity Test
The graphical presentation in Figure 4 showed that the data are normally distributed as the observed
values (the dots on the chart) felt exactly along the straight line (meaning that the observed values are
the same as one would expect to get from a normally distributed data set). Any deviation of the dots
from the line represents a deviation from normality. So, the Q-Q plot of the all the variables
45
considered in this study looked like a straight line with a wiggly snake wrapped around it then it
showed linear relationship among the variables with little deviation from linearity.
Normality Test - To check that a distribution of scores is normal, it needs to look at the values of
Kurtosis and Skewness. The values of skewness and kurtosis should be zero in a normal distribution.
Positive values of skewness indicate a pile-up of scores on the left of the distribution, whereas
negative value indicates a flat distribution. The further the value is from zero, the more likely it is that
the data are not normally distributed. Both of which have an associated standard error. However, the
actual value of skewness and kurtosis are not, by themselves, informative. Instead, it needs to take
the value and convert it to a z-score. The z-score is simply a standardize score from a distribution that
has Mean of 0 and standard deviation of 1.0.
Descriptive Statistics
N Skewness Kurtosis
Stat Stat Std. Err Stat Std. Err
Autocratic 241 -.467 .157 -.745 .312
Democratic 241 -.391 .157 -1.134 .312
Transactional 241 -.204 .157 -1.179 .312
Transformational 241 -.311 .157 -1.303 .312
Org. Culture 241 -.621 .157 -.308 .312
Emp. Performance 241 .103 .157 -.708 .312
Valid N (listwise) 241
Figure 5. Normality Test
As presented in Figure 5, except employee performance dimension, all the leadership style
dimensions’ z-scores skewed to the right side but was found within acceptable range (skewness within
-2.0 to 2.0; and Kurtosis within -2.0 to 2.0). Therefore, it is pretty clear then that the numeracy scores
are negatively skewed, indicating a pile-up of scores on the right of the distribution.
4.4.3. Regression Analysis
A mediation analysis was conducted using Baron and Kenny (2016) approach. In the first step, the
effect of the independent variables on the dependent variable, without the mediator was examined.
The second step examined the influence of the independent variable on the mediator variable. Finally,
the last step was taken to investigate the influence of the combination of the independent variable and
the dependent variable, with a mediator.
46
 The Effect of Leadership Style on Employee Performance
Table 12. Model Summary

Model Summary b
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .756a .571 .570 .59353
a. Predictors: (Constant), LED
b. Dependent Variable: EMP
The R=.756 indicates the linear combination of the independent variables (Autocratic, democratic,
transactional, transformational) strongly predicted dependent variable (employee performance), i.e.,
strong correlation between predictors and observed variables. Likewise, the value (R2 = .571)
indicated that, the leadership style variables explain 57.1% variance in the employee performance
and the remaining 42.9% is explained by extraneous variables, which have not been included in the
regression model.
Table 13. ANOVA Test

ANOVA a
Model Sum of Squares df Mean Square F Sig.
Regression 112.205 1 112.205 318.513 .000b
1 Residual 84.194 239 .352
Total 196.399 240
a. Dependent Variable: EMP
b. Predictors: (Constant), AUT, DEM, TRX, TRS
Regarding the ANOVA Test, Table 13, the significance level/ the p-value for all variables were
statistically significant (p< .05), meaning that leadership style has a significant predictor of employee
performance.
Table 14. Beta Coefficients

Coefficients a
Model Unstandardized Coefficients Standardized Coefficients t Sig.
B Std. Error Beta
(Constant) 0.574 0.155 3.703 .000
Autocratic 0.309 0.053 0.308 5.830 .000
1 Democratic 0.113 0.037 0.142 3.054 .002
Transactional 0.26 0.042 0.205 6.190 .000
Transformation 0.108 0.028 0.205 3.857 .000
47
Accordingly, the finding revealed that hypothesis 1 (H1), which states ‘leadership style has positive
significant effect on the employee performance’ is supported by the data collected on this survey as
the autocratic (p-value < 0.05; β= .309); democratic (p-value < 0.05; β=0.113); transactional (p-value
< 0.05; β=0.260); and transformational (p-value < 0.05; β=0.108), hence, the first alternative
hypothesis for the effect of leadership style on employee performance are confirmed. Therefore, the
regression equation for this study derived as:
𝐸𝐸𝐸𝐸𝐸𝐸 = .574 + .309 𝐴𝐴𝐴𝐴𝐴𝐴 + .113 𝐷𝐷𝐷𝐷𝐷𝐷 + .260 𝑇𝑇𝑇𝑇𝑇𝑇 + .108 𝑇𝑇𝑇𝑇𝑇𝑇 + 𝑒𝑒
This indicates that autocratic leadership had relatively the highest positive and significant effect on
employee performance (B = .309, p< .05). The finding by this thesis and many other studies reveals
the positive effect of autocratic leadership style on the performance of employees. The descriptive
analysis also shows the majority of employees in CGC Groups were young and educated with less
exposure to multinational companies who need manager’s close involvement or strict supervision. In
support of this argument, Basit (2017) indicated autocratic style can best suit for employees which
have been working in international organizations to easily discharge their responsibilities without any
discrepancies. Sougui (2016) also stands in favor of it stating employees with bureaucratic leader
have leadership barrier and can execute their job under supervision. Gimuguni (2014) on the other
hand indicated staff supervised by autocratic leader were unable to exercise their innovative skill in
achieving their duties.
The effect of democratic leadership style is less consistent with significant positive effect on
performance. Next to transformational leadership, the standardized coefficient of beta indicates the
less sensitivity democratic style to employee performance as compared to other styles of leadership
(β=.113). This is because employee’s interaction with their peers and supervisors couldn’t paves the
ways for the transfer of skill and knowledge to the larger extent which would have been resulted in
increased performance. The result from this and many other studies is found against the positive effect
of democratic style on employee performance (Iqbal, 2015; Liviu, 2019). In addition, in support of
Iqbal (2015), the finding by Ojokuku (2015) showed the increased practice of democratic style have
the power to build strong synergy between employees and their management and thus recommended
to use democratic leadership style in order to boost their performance.
In this case, preceded by autocratic leadership style, the transactional leadership style also had the
highest positive significant effect on employee performance as B= .260, p< .05. In this regard,
48
majority of respondents agreed that most of their leaders execute transactional attributes. This finding
is also in line with the study of Nasri (2018). They concluded that transactional leadership style is a
sort of reward and management by exception. In the case of active management by exception, the
leader looks for rules and procedures, strictly follows the mentioned process and takes corrective
action before or when these occur. Achua (2019) argues that passive management by exception are
reactive leaders and take action after the event has occurred, acts in response not proactively.
On the other hand, the transformational leadership had the least effect on employee performance (B=
.108, p< .05). This entails that leaders didn’t motivate, encourage and raise followers’ spirits inspiring
them substantially to perform at the best of their abilities for the sake of organization success (Lussier,
2017). On the other hand, employees are left to make decisions and implement as they see fit.
Therefore, this shows that the team leaders and supervisors who execute transformational styles
couldn’t influence them to gain the intended performance. This view is contrary to Bass (2015) who
opined that transformational are effective approaches for attaining the organization's desired
performance. Current study results revealed that transformational leadership style influences
employee performance less than autocratic and transactional styles. This signifies that, the company
managers exhibit less influential transformational leadership attributes that has less impact on
employees to intensify performance.
 The Effect of Leadership Style on Organizational Culture

Model Summary b
1 .448a .201 .198 .88679

a. Predictors: (Constant), AUT, DEM, TRX, TRS
b. Dependent Variable: ORC
The R=.448a indicates the linear combination of the independent variables (leadership style)
moderately predicted mediating variable (organizational culture) i.e., moderate correlation between
predictors and mediator variable. Similarly, the value (R2=.226) indicated that, the leadership style
explains 22.6% variance in the organizational culture; and the remaining 76.4% is explained by
extraneous variables, which have not been included in the regression model.
49
ANOVA a
Regression 47.299 1 47.299 60.147 .000b
1 Residual 187.949 239 .786
Total 235.248 240
a. Dependent Variable: ORC
b. Predictors: (Constant), AUT, DEM, TRX, TRS
The p-value for all variables were statistically significant at p<.05, meaning that all the leadership
style elements (Autocratic, democratic, transactional, transformational) have a significant predictor
of mediator organizational culture.

Coefficients a
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 2.123 0.529 4.013 .000
Autocratic 0.237 0.101 0.231 2.198 .000
1 Democratic 0.118 0.064 0.142 1.844 .000

Transactional 0.165 0.047 0.171 3.511 .000
Transformation 0.088 0.032 0.094 2.750 .000
Accordingly, the finding revealed that the second hypothesis which states ‘leadership style has
positive significant effect on organizational culture’ is supported as the leadership style (p-value <
0.05; β=0.508); hence, the second hypothesis (H2) is also supported. Therefore, the regression
equation for this study derived as:
𝑂𝑂𝑂𝑂𝑂𝑂 = 2.123 + .508 𝐿𝐿𝐿𝐿𝐿𝐿
The results of data analysis in this study also indicate that organizational culture had an influence on
employee performance, the reason is because in the implementation of the organizational culture that
has been applied so far at the CGC Groups companies has been as expected. Despite there are still
factors which needs to be improved in terms of aligning company’s vision/mission with individual
staff’s attitudes, increasing encouragement for every employee to always innovate in creating new
methods of completing work so that they can improve their work performance, besides that, an
50
approach is needed to contact staff to pay attention to the details of their work to be done. The theory
of organizational culture (Basit, 2018) states that culture is a shared system and values in an
organization and becomes a reference for how employees do work to achieve organizational goals.
Same token, Fiedler (2018) concludes that organizational culture has a dominant influence on the
success or failure of the organization in building employee performance.
 The Mediating Role of Organizational Culture

Model Summary b
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .763a .582 .579 .58701
a. Predictors: (Constant), ORC, LED

b. Dependent Variable: Employee Performance
As shown in Table 14, the R=.763 indicates the linear combination of the independent variables
(Autocratic, democratic, transactional, transformational) and mediating variable (organizational
culture) strongly predicted the dependent variable (Employee performance), i.e., strong correlation
between predictors (LED and ORC) and dependent variable (Employee Performance). Similarly, the
value (R2 = .582) indicated that, the leadership style and organizational culture together explain 58.2%
variance in the organizational culture and the remaining 41.8% is explained by extraneous variables,
which have not been included in the regression model.

ANOVA a
Model Sum of Squares Df Mean Square F Sig.
Regression 114.388 2 57.194 165.982 .000b
1 Residual 82.010 238 .345
Total 196.399 240
a. Predictors: (Constant), ORC, LED
The p-value for all variables were statistically significant at p<.05, meaning that the leadership style
and organizational culture together have a significant predictor of organizational performance. This
implies that the model predictive power is not happened by chance. (Ref. Table -19.)
51
Coefficients a
B Std. Error Beta

(Constant) 0.718 0.175 4.097 .000
Leadership Style 0.727 0.048 0.703 15.001 .000
Autocratic 0.237 0.101 0.231 2.198 .000
1 Democratic 0.118 0.064 0.142 1.844 .000
Transactional 0.165 0.047 0.171 3.511 .000
Transformation 0.088 0.032 0.094 2.750 .000
Job Culture 0.108 0.043 0.118 2.517 .012

a. Dependent Variable: Employee Performance
Similarly, the result of beta value indicated that the organizational culture (p-value < .05; β= .108)
and leadership style (p-value < .05; β= .727) have a positive effect on employee performance.
Therefore, the regression equation for this study derived as:
𝐸𝐸𝐸𝐸𝐸𝐸 = .718 + .727 𝐿𝐿𝐿𝐿𝐿𝐿 + .108 ORC

 Examining the Mediating Effect of Organizational culture
The Sobel test is utilized to examine the hypothesis in which the relationship between the independent
(X) and dependent (Y) variables is mediated / affected by a third variable (M); that is; X and Y have
an indirect relationship. In other words, Sobel test examines whether the inclusion of a mediator (M)
in the regression analysis considerably reduces the effect of the independent variable (X) on the
dependent variable (Y) (Preacher 2020).
Table 21. Aggregate Beta Coefficient for Sobel Test

Coefficients a
B Std. Error Beta

(Constant) .718 .175 4.097 .000
1 Leadership Style .727 .048 .703 15.001 .000
Org. Culture .108 .043 .118 2.517 .012
52
Where:
 Independent Variable – Leadership style

– Standard Error (Sa = .048);
– B-coefficient (A = .727);
 Organizational culture
– Standard Error (Sb = .043)
– B-coefficient (B = .108)
Sobel Test Calculation – It helps to evaluate a mediator variable significantly carries the influence
of an independent variable to a dependent variable; i.e., whether the indirect effect of the independent
variable on the dependent variable through the mediator variable is significant. The formula is:
𝑺𝑺𝑺𝑺𝑺𝑺 = �(𝐵𝐵2 𝑠𝑠𝑎𝑎2 ) + (𝐴𝐴2 𝑠𝑠𝑏𝑏 2 ) + (𝑠𝑠𝑠𝑠2 𝑠𝑠𝑠𝑠2 )
𝑺𝑺𝑺𝑺𝑺𝑺 = �(0.108)2 (0.048)2 + (0.727)2 (0.043)2 + (0.048)2 (0.043)2
𝑺𝑺𝑺𝑺𝑺𝑺 =. 𝟎𝟎𝟎𝟎𝟎𝟎𝟎𝟎
𝒂𝒂𝒂𝒂
𝒁𝒁 =
𝐬𝐬𝐬𝐬𝐬𝐬
0.727 𝑥𝑥 0.108
𝒁𝒁 = = 𝟐𝟐. 𝟒𝟒𝟒𝟒𝟒𝟒
0.0316
Since the result of Z value is 2.485 which is greater than the standard value of 1.96, thus it can be
concluded that organizational culture can be a significant mediator between leadership style and
employee performance in the case of CGC Groups. Hence, the third hypothesis which states that
‘organizational culture has a mediating role on the relationship between leadership style and
employee Performance’ is also supported.
Finally, the organizational culture showed a mediating role on the relationship between leadership
styles and employee performance as the Sobel test scored Z= 2.485 which is greater than the standard
value of 1.96. This finding is also in support of Euwema (2017). He explains that transformational
leadership in a given MNC might be autocratic/directive or democratic/participative. Leaders can be
intellectually motivating to their followers when they authoritatively direct the followers' attention to
a hidden conjecture in their thinking. Avolio (2018) also conclude that leaders could also be
intellectually motivating when they ask whether their group would be ready to look together for
53
hidden assumptions of the organization. Thus, it can be concluded that organizational culture can be
a significant mediator between leadership style and staff performance in the case of CGC Groups.
Table 22. Summary of the Research Hypothesis Test Result
Alternate Hypothesis Result
H1 Autocratic leadership style has a positive significant effect on employee performance Supported
H2 Democratic leadership style has a positive significant effect on employee performance Supported
H3 Transactional leadership style has a positive significant effect on emp. performance Supported
H4 Transformational leadership style has positive significant effect on emp. performance Supported
H5 Leadership style has a positive and significant effect on organizational culture Supported
H6 Organizational culture has a mediating role on the relationship between leadership Supported
style and employee performance
Source: SPSS output, 2022
54
CHAPTER FIVE
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1. Summary of Major Findings
Based on the data analyses of chapter four, major findings of the results are summarized as:
 All the four leadership styles had positive and significant relationship with employee
performance and organizational culture. Specifically,
o Autocratic (r = 6.44) leadership styles had strongest relationship with employee
performance; while transformational style had the least (r = .122).
o All the four leadership styles had moderate relationship with organizational culture scoring
a Pearson correlation coefficient “R-Value” of .313, .320, .453, and .309 respectively.
 The model summaries regarding the relationship between leadership style, employee
performance, and organizational culture:
o Leadership style variables explain 57.1% variance in the employee performance as
goodness-of-fit was found R2 = .571;
o The leadership style also explains 22.6% variance in the organizational culture;
o Similarly, the value R2 = .582 indicated that, the leadership styles and organizational culture
together explain 58.2% variance in the employee performance.
 The results of the regression analyses illustrate leadership styles had positive and statistically
significant effect on employee performance. Specifically:
o Autocratic style is the first strongest predictor or has the most significant effect on the
employee performance of CGC Groups companies because it has the highest Beta coefficient
result (β = .309; p<.05);
o The second strongest predictor of employee performance is transactional style as the beta
scored β = .260; p<.05.
o Whereas, democratic style showed the least effect (β = .113; p<.05) on employee
performance, preceded by transformational style (β = .108; p<.05).
 The organizational culture had the mediating role between leadership style and employee
performance in the context of CGC Groups as the Z-value was found above 5% of the threshold
value (Z = 1.96).
55
5.2. Conclusions
The conclusions are drawn by way of answering the research questions and hypothesis previously
presented. The results of the findings revealed that different leadership strategies have different effect
on employee performance as multinational companies are subjected to different cultural orientation
of the host country. In this case, autocratic leadership style is more effective in enhancing employee
performances of the case company, CGC Groups in Ethiopian context. Since almost one third of the
leaders in CGC Groups are Chinese and Philippines, they preferred to their staff (local - Ethiopians)
to strictly comply with their rules and regulations while performing their duties and responsibilities.
Employees who are under strict supervision and control by autocratic leader could easily be a barrier
to exercise their innovative skill in accomplishing their duties. Such leaders are more productive in
firms operating in developing economies where staff have less exposure to international companies.
In this regard, staff are inspired or more motivated by incentives and rewards. Leaders are expected
to reward or punish their subordinates according to their achievements of the expected. That means,
such management by exception helps the company to achieve its goals. Thus, transactional leadership
style has also the strong contribution to the employee performance. Leaders who follow transactional
leadership style characterized by providing a sort of reward to motivate them to adhere to the
management’s expectation aka “management by exception”. It is a passive management style which
reactive leaders react and take action after the event has occurred, acts in response not proactively.
Transformational leadership style influences employee performance less than autocratic and
transactional styles. This signifies that, the company managers exhibit less influential
transformational leadership attributes that has less impact on employees to intensify performance.
However, transformational and democratic styles are the best preferred in developed countries to
motivate and enhance the staff’s performance. This has an implication that, in different cultural
context, the leadership style as a strategic human resource management should be tuned to align the
individual staff values and beliefs along with the organization mission/vision so as to generate the
best out of it. It can be concluded that the leadership styles that the case companies follow in Ethiopian
context had positive and significant effect on employee performance. More staff performance would
be enhanced by applying autocratic and transactional styles over democratic and transformation
leadership.
56
5.3. Recommendations
For the identified research gaps, the following recommendations are suggested in light of the major
findings and conclusions. The recommendations are:
 The managements are advised to practice autocratic style when in situations when executing
absolute control is necessary, like during project failure, over on a routine basis. This can be
achieved through encouraging supervisors and immediate team leaders to make the difficult
decisions and to communicate and execute a strategy with an unwavering focus.
 It would be better if management in the companies effectively engage all supervisors at

different levels to adopt a high employee engagement by promoting team participation in
decision making.
 It is recommendable that top management should ensure all team leaders or supervisors get
some training and seminars to make sure they understand traits and the benefit of transactional
leadership style to both employees and the organization.
 To enhance the influence of the transformational leadership on the performance of the

employees, the management need to create an inspiring vision of the future and motivate their
staff to rely on their leaders and deliver the vision.
 Culture effects leadership style but managers less emphasis the importance of individual
employees' needs. Thus, the leaders in the case companies are advised to consider the
individual values and beliefs in connection with the organization’s mission and goals. This
can be achieved through implementing effective organizational culture which enables staff to
comply with long-term orientation of the companies.
 For this study, only two companies under a single organization, that is, CGC Groups
Construction Company and Hansom Glass factor are participated. Therefore, as a matter of
reducing the possibility of cultural biases, upcoming researchers may consider the inclusion
of several other construction and manufacturing organizations. Besides, forthcoming
researchers can work with a much bigger sample size involving different industries other than
construction and manufacturing industries hospitality services.
57
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Appendices
Appendix I. Survey Questionnaire
ST. MARY UNIVERSITY

SCHOOL OF GRADUATE STUDIES
Survey Questionnaire
Questionnaire to be filled by Social Media Users
Dear participant,
My name is Lidiya Zeru. I am currently a prospective graduate of the master of business administration at St.
Mary’s University in Addis Ababa, Ethiopia. I am conducting my research entitled “The effect of leadership
style on employee performance mediated by organizational culture in the case of CGC Groups in Addis
Ababa.” The purpose of this questionnaire is to investigate the influence of different leadership styles on the
performance of employee performance along with the mediating or the facilitation of organizational culture
for the betterment of staff output through strategic leadership.
Your valuable feedback that the researcher is going to use to determine the current practices of management
for the enhancement of their organizational performance along with their alignment and integration of
individual staff’s value and beliefs in line with business goals. As a result, the student researcher will
recommend valuable suggestions for the improvement of leadership styles and organizational culture for the
enhancement of the employee performance. The study is purely for academic purposes and thus does not affect
you in any case. Your genuine, frank, timely response is vital for the success of the study. Therefore, I kindly
request you to respond to each question carefully and oblige.
Note: - No need of writing your name. Where alternative answers are given, encircle your choice and put “x”
mark where necessary; and please return the completed questionnaire in time.
Thank you in advance for your cooperation and timely response.

Lidiya Zeru
Mobile: 0952646464
e-mail: wegezergaw7@gmail.com
Many thanks for your kind cooperation in advance!!
65
General Information
Your Participation is Voluntary
Do not write your name on the Questionnaire
I. Demographic Profile of Respondents
Direction: The following statements are about your personal information. Please write the necessary
information on the blank space provided and, in the optional items, indicate your answer by putting
a tick mark (x) in the box.
Part - I: General Information
1. Sex Male Female
2. Age (Years) 21 – 30 31 – 40 41 – 50 51 – 60
3. Education High School Diploma Degree Masters +

Other, please specify ...................
4. Department Operation & Supporting Sales & Marketing HR & Admin
Logistics & Supply Engineering
5. Position Manager Supervisor Senior (> 3 years) Junior
6. Service year 1- 5 6 - 10 Above 10
7. Origin Local Chinese Philippines Indian
Part – II Leadership Style, Organizational Culture, and Employee Performance:
Kindly rate the following statements below as to the extent to which you agreed or disagreed with the
statements described under each attribute based on your perception. Using the scale of 1 up to 5, tick
in the appropriate box as to the extent of your agreement or disagreement with the statements given.
Where: Scale 1= strongly disagreed; 2= disagreed; 3= Neither agreed nor disagreed; 4= agreed; 5=
strongly agreed.
66
1. Leadership Style Likert Scale
1.1 Autocratic 1 2 3 4 5
Decisions are always made by managers for subordinates.
Managers are determined to push projects forward to get results
My duties are limited by the managements.
Managements set high standards expecting others to do the same
Often, performance requirements are designed as per the leaders needs
1.2 Democratic 1 2 3 4 5
Staff works best as everyone is involved in taking decisions
Staff are encouraged to involve in managerial decision making
I don’t mind how long discussions last, so long as we consider every angle
Managers insist teammates to abide by formal decision if follow proper procedures
Staff are encouraged to demonstrate their innovative ideas
1.3 Transactional 1 2 3 4 5
I am constantly reminded of what I would receive if I do what is expected.
When mistakes are made disciplinary action is instituted.
My supervisor pays close attention to anomalies that may arise.
I get rewarded for exceptional performance.
My supervisor closely checks for nonconformity.
1.4 Transformational 1 2 3 4 5
I believe that the management shared the organizational mission.
I always meet set targets as clearly communicated.
I am always motivated to work more than expected
I diligently execute duties as I trusted my manager/supervisor.
My manager is always tries to enhance my capability to accomplish the best.
2. Organizational Culture 1 2 3 4 5
Employees are flexible and adaptable when changes are necessary
Staff have clearly defined goals that relate to the organizational mission/goals
Staff believe in working collaboratively over completion
The company is always looking for new ways to better serve customers
The managements make business decisions are most often made on the basis of
facts, not just perceptions or assumptions.
3. Employee Performance 1 2 3 4 5
I am always punctual in delivering the required output.
I understand the vision/mission of the organization very well
67
I am always motivated to deliver quality work
I could manage change in my job very well whenever the situation demands.
I believe that mutual understanding can lead to a viable solution in organization.
Many Thanks for Your Valued Time!!!
Appendix – II. SPSS Outputs
68
Table -1A
Model Summaryb
1 .756a .571 .570 .59353

Table -1B
ANOVAa
Regression 112.205 1 112.205 318.513 .000b
1 Residual 84.194 239 .352
Total 196.399 240

b. Predictors: (Constant), LED
Table – 1C
Coefficients a
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) .574 .155 3.693 .000
Autocratic .113 .037 .142 3.102 .002
1 Democratic .409 .053 .408 7.682 .000

Transactional .160 .042 .205 3.786 .000
Transformational .128 .028 .205 4.497 .000
a. Dependent Variable: JBC
Table -2A
Model Summaryb
Model R R Square Adjusted R Std. Error of the

Square Estimate
1 .448a .201 .198 .88679

b. Dependent Variable: JBC
Table -2B
69
ANOVAa
Regression 47.299 1 47.299 60.147 .000b
1 Residual 187.949 239 .786
Total 235.248 240

b. Predictors: (Constant), LED
Table -3A
Model Summaryb
Model R R Square Adjusted R Std. Error of the

Square Estimate
1 .763a .582 .579 .58701
a. Predictors: (Constant), JBC, LED

b. Dependent Variable: EMP
Table -3B
ANOVAa
Regression 114.388 2 57.194 165.982 .000b
1 Residual 82.010 238 .345
Total 196.399 240

b. Predictors: (Constant), JBC, LED
Table I. Aggregate Beta Coefficient

Coefficients a
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .947 .152 6.249 .000
1
Leadership Style .782 .044 .756 17.847 .000
70
Table II. Aggregate Beta Coefficient
Coefficients a
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 2.123 .226 9.376 .000
1
Leadership Style .508 .065 .448 7.755 .000
71

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SAINT MARY’S UNIVERSITY, SCHOOL OF GRADUATE STUDIES

DEPARTMENT OF BUSINESS ADMINISTRATION

THE EFFECT OF LEADERSHIP STYLE ON EMPLOYEE

A THESIS SUBMITTED TO THE DEPARTMENT OF BUSINESS

SCHOOL OF GRADUATE STUDIES

THE EFFECT OF LEADERSHIP STYLE ON EMPLOYEE PERFORMANCE:

APPROVED BY BOARD OF EXAMINERS

St. Mary’s University, Addis Ababa March 2023

CGC China Geo-Engineering Corporation

JBC Job Satisfaction

LED Leadership Style

MNCs Multinational Companies

ORC Organizational Culture

Key words: Leadership Style, Employee Performance, Organizational Culture, Multinational

1.1. Background of the Study

Organizations, in this contemporary business world, are operating in a highly competitive

1.3. Statement of the problem

International leadership knowledge and experience of multinational companies in multicultural

1.4. Research Questions

1.5. Objectives of the Study

1.5.2. Specific Objectives

v. To analyze the effect of leadership style on organizational culture of CGC Groups.

1.7. Scope of the Study

1.9. Definitions of Key Terms

2.1.2. Styles of Leadership

2.1.2.2. Democratic Leadership

2.1.2.3. Transactional Leadership Style

2.1.2.4. Transformational leadership Style

2.1.2.5. Laissez – faire Style of Leadership

2.1.3. Related Theories of Leadership

2.1.3.2. Behavioral Theory

2.1.3.3. Transactional Theory

2.1.3.4. Path–Goal Theory

2.1.3.5. Transformational Theory

2.1.4. The Concept of Employee Performance

2.1.5. Organizational Culture

In addition to characteristics, there are important factors to consider before establishing an

2.1.6. Relationship between Leadership Style and Employee Performance

2.1.7. Relationship between Leadership Style and Organizational Culture

2.1.8. Relationship between Organizational Culture and Employee

2.2. Empirical Review

The Effect of Leadership Style on Organizational Culture

The Mediating Role of Organizational Culture

Judge (2017) conducted a meta-analysis of 87 studies measuring transformational, transactional, and

Independent Variables Mediator Variable Dependent Variable

Transformational (Source: Khalid, R. 2014)

Figure 1. Conceptual Framework of the Study

3.2. Research Design

3.4. Sample Size

Company Stratum Population Proportion Sample Size Sample Size

Total 1,185 100% 299

3.5. Sampling Technique

3.6. Source of Data collection

3.7. Data Collection Instrument

 Leadership style - measured by four dimensions namely autocratic (5 statements), democratic

3.8. Reliability Test

Application of internal reliability refers to the multiple-indicator variables. If a variable is internally

Table 2. Reliability Test Results

3.9. Validity Result