LEADERSHIP PARADIGMS

Avery’s (Reference Avery2004) classical, transactional, visionary, and organic leadership paradigms provided the conceptual framework, allowing for diverse kinds of leadership differentiated primarily by the extent to which (a) followers’ decisions, actions, and behaviors are determined and controlled by others rather than themselves and (b) a vision is required.

Under the classical leadership paradigm, a superior typically instructs a subordinate what to do, when and how. This paradigm is associated with hierarchical and bureaucratic structures where decisions are cascaded down a chain of command and reporting lines run bottom up. In some cases, the classical leader motivates via fear; in other cases, respect for the leader and a common purpose prevail. Since classical leadership disempowers followers, follower acceptance is likely to be highly context dependent, such as in service firms that are dominated by passionate and inspiring leaders, or where critical and risky decisions have to be made quickly by recognized experts. Under this frequently autocratic paradigm, negative relationships with performance are commonly reported (Chan, Huang, Snape, & Lam, Reference Chan, Huang, Snape and Lam2013; Chen, Eberly, Chiang, Farh, & Cheng, Reference Chen, Eberly, Chiang, Farh and Cheng2014). Classical leadership’s limitations in terms of enterprise adaptability, speed, firm-level innovativeness, and follower disempowerment (Whiting, Reference Whiting1964) led to the emergence of transactional leadership.

Under transactional leadership, instead of simply commanding others, leaders seek to motivate followers primarily through an exchange process. Followers’ actions are bounded by policies and procedures that govern what people do in return for certain negotiated outcomes. This contingent reward leadership is considered ‘reasonably effective’ in that it sets clear expectations and goals, and rewards followers for attaining goals (Avolio, Reference Avolio1999). The oversight and controlling function of the transactional paradigm, by definition, necessitates a somewhat hierarchical structure with specified work practices and clear lines of responsibility and accountability. Strict adherence to policies and procedures is required; for example, to control risk in the airline and healthcare industries. Research shows that transactional leadership’s effects are inconsistent, with contingent extrinsic rewards appearing effective for enhancing organizational performance in some meta-analyses (e.g., Judge & Piccolo, Reference Judge and Piccolo2004) but not in others (Lowe, Kroeck, & Sivasubramaniam, Reference Lowe, Kroeck and Sivasubramaniam1996).

Avery’s (Reference Avery2004) concept of visionary leadership is based on positive emotion and a shared vision, akin to ‘transformational’ leadership (Bass, Reference Bass1985). Visionary leadership permits high follower autonomy, and assumes followers are well trained and share the values and vision of the organization. Followers enjoy considerable freedom in how they achieve the vision, with a focus on teamwork and followers’ active contribution. Outcomes rather than inputs are monitored, managerial interventions occur mainly when expected outcomes are not achieved. Visionary leadership offers a positive organizational climate rich in intrinsic rewards, under which employees can work effectively. Bass’ (Reference Bass1985) original claim that transformational (visionary) leadership is more effective than transactional leadership was confirmed in a meta analysis (Wang et al., Reference Wang, Oh, Courtright and Colbert2011). Indeed, significant benefits from these kinds of emotion-based leadership have been reported on diverse measures: for financial performance (Idris & Ali, Reference Idris and Ali2008); job satisfaction (Emery & Barker, Reference Emery and Barker2007; Braun, Peus, Weisweiler, & Frey, Reference Braun, Peus, Weisweiler and Frey2013); staff tenure (Tse, Huang, & Lam, Reference Tse, Huang and Lam2013); and customer satisfaction (Chuang, Judge, & Liaw, Reference Chuang, Judge and Liaw2012); and on SME performance (Engelen, Gupta, Strenger, & Brettel, Reference Engelen, Gupta, Strenger and Brettel2015).

In the relatively new organic paradigm, leadership is distributed among the members. Here, leadership is relational rather than leader-centerd, emerging from the interactions and communications between participants in a given context (Drath, Reference Drath2001). Decision-making is shared; people enjoy considerable autonomy, typically without designated leaders exerting power to control others. Employee commitment is based on the values and vision shared by members; and a consensual approach is taken to project initiation, implementation, and evaluation (Raelin, Reference Raelin2003). Organic forms of leadership can generate high levels of performance, according to a meta-analysis examining shared leadership and team performance (Nicolaides et al., Reference Nicolaides, LaPort, Chen, Tomassetti, Weis, Zaccaro and Cortina2014). This may be partly because of the trust that develops, since trust has been empirically related to performance improvement (Drescher, Korsgaard, Welpe, Picot, & Wigand, Reference Drescher, Korsgaard, Welpe, Picot and Wigand2014). However, the paradigm has its critics. Cope, Kempster, and Parry (Reference Cope, Kempster and Parry2011) query whether a leader’s ceding power under distributed leadership benefits small business, and Corrigan (Reference Corrigan2013) regards the literature on distributed leadership as ‘conflicted’ and more about rhetoric than reality. Empirical results are mixed with some studies associating shared leadership with more effective performance (e.g., Perry, Pearce, & Sims, Reference Perry, Pearce and Sims1999; Pearce & Sims, Reference Pearce, Manz and Sims2002; Pearce, Manz, & Sims, Reference Pearce and Sims2009; Nicolaides et al., Reference Nicolaides, LaPort, Chen, Tomassetti, Weis, Zaccaro and Cortina2014) and others not (Neubert, Reference Neubert1999).

It is evident from the above that a key differentiator between the classical and transactional leadership paradigms on the one hand and the transformational and organic paradigms on the other is the use of a shared vision. The classical and transactional paradigms do not require managers to have or share a vision for the firm, whereas under visionary and organic leadership, vision plays a central role. Given the significant impact that a shared vision has on firm performance (Jing, Avery, & Bergsteiner, Reference Jing, Avery and Bergsteiner2014a), classical/transactional, and visionary/organic were treated as two sets of strongly related pairs.

SMALL BUSINESS FOCUS

Small professional service firms from the same industry constitute the unit of study, namely, retail pharmacies. Pharmacies are expected to make significant contributions to many economies, particularly given advances in healthcare and aging populations. However, little is known about the effects of leadership on performance in this sector. Currently, Australian retail pharmacies are underperforming, with profits in 2011 averaging 2.5% compared with the Australian industry average of 4.5%; and IBISWorld (2014) predicts only 1.1% annual growth in pharmacy revenue during 2015–2020. Pharmacies were chosen because their highly educated workforce was excepted to offer opportunities to uncover visionary and organic leadership paradigms in addition to the more common classical and transactional environments.

Leadership behaviors may influence small and large enterprises differently. First, smaller firms represent a simpler and more integrated social system with fewer hierarchical levels (Baum, Locke, & Kirkpatrick, Reference Baum, Locke and Kirkpatrick1998), and less physical distance between employees and managers could lower psychological distance, according to Antonakis and Atwater (Reference Antonakis and Atwater2002). Second, the effects of vision, trust/distrust, and organizational climate may operate differently in small businesses where managers can impact staff directly (e.g., Wiesner & Innes, Reference Wiesner and Innes2010), although Jing, Avery, and Bergsteiner (Reference Jing, Avery and Bergsteiner2011, Reference Jing, Avery and Bergsteiner2014a, Reference Jing, Avery and Bergsteiner2014b) reported no differences on these dimensions. Third, Miles and Petty (Reference Miles and Petty1977) found that initiating structure is more effective in smaller firms, although the effectiveness of leader consideration is independent of firm size. Fourth, on the negative side, staff in small businesses has been found to experience more abusive leadership (Eesley & Meglich, Reference Eesley and Meglich2013), with fewer options to disengage from an aversive manager or culture apart from resigning, thereby generating additional recruitment costs for the business. Similarly, managers may choose to leave more readily in small firms if they perceive fewer opportunities for internal promotion or for avoiding undesirable situations. This makes manager and staff tenure rates in small firms also of considerable interest.

MEASURES

Figure 1 depicts the research framework. The measures are explained next.

Figure 1

Conceptual framework

Leadership paradigms were assessed using a self-completion questionnaire on staff perceptions of leadership. Collecting data on staff perceptions is important given research showing that employees’ motivation and commitment are only affected by the leadership that they notice and not by a manager’s intended leadership style (Jacobsen & Bøgh Andersen, Reference Jacobsen and Bøgh Andersen2015). The measures of leadership paradigms were based on nine of 13 characteristics that distinguish Avery’s (Reference Avery2004: 39) four leadership paradigms: decision making, range of staff power, power distance, key player(s) in the organization, source of staff commitment, staff responsibility, emphasis on management versus leadership in the organization, diversity of views, and control in the organization. The remaining four characteristics were considered irrelevant to the simple operations typical of small businesses.

In total, 20 questions were used to collect self-reported data from staff about their store manager’s leadership style, and each of the four leadership paradigms was measured by five items. Items 8.1, 8.9, 8.11, 8.14, and Q8.16 measured the classical leadership paradigm (sample items: ‘My Store Manager has all the say’ and ‘My Store Manager plans, organizes, and monitors everything in this store.’); Items 8.2, 8.5, 8.12, 8.17, and 8.18 measured the transactional leadership paradigm (sample items: ‘I do not have much power here.’ and ‘Agreements between management and me govern what I do around here.’); Items 8.3, 8.6, 8.7, 8.13, and 8.19 measured the visionary leadership paradigm (sample items: ‘My Store Manager’s vision of the future governs what I do around here.’ and ‘I am held accountable for achieving my Store Manager’s vision.’), and Items 8.4, 8.8, 8.10, 8.15, and 8.20 measured the organic leadership paradigm (sample items: ‘Staff tend to have all the say in this store.’ and ‘My Store Manager is concerned about helping me to lead and organize myself.’).

Six performance measures were adopted with the rationale that assessing multidimensional performance outcomes provides a more systemic estimate of the relationship between leadership and firm performance (De Hoogh et al., Reference De Hoogh, Den Hartog, Koopman, Berg, Van Den Berg, Van der Weide and Wilderom2004; Evaschitzky, Wangenheim, & Wünderlich, Reference Evaschitzky, Wangenheim and Wünderlich2012). The measures are:

1. 1. Staff satisfaction has been linked to many positive outcomes in the service sector, including customer satisfaction and financial outcomes (Evanschitzky, Sharma, & Prykop, Reference Evanschitzky, Sharma and Prykop2012); job performance (Judge, Thoresen, Bono, & Patton, Reference Judge, Bono, Ilies and Gerhardt2001); and enhanced performance in small firms where managers and followers share a vision (Baum, Locke, & Kirkpatrick, Reference Baum, Locke and Kirkpatrick1998; Kantabutra & Avery, Reference Kantabutra and Avery2009), which as noted above is essential to visionary and organic leadership. Following Kantabutra and Avery (Reference Kantabutra and Avery2006), we measured staff satisfaction both as employees’ overall stated job satisfaction and specifically on pay, policies, and advancement opportunities. Measures were adapted from Slavittet, Stamps, Piedmont, and Hasse’s (Reference Slavitt, Stamps, Piedmont and Hasse1986) Index of Work Satisfaction (IWS) Questionnaire, which had been tested for reliability and validity.

2. 2. Customer satisfaction predicts performance (Anderson, Fornell, & Mazvancheryl, Reference Anderson, Fornell and Mazvancheryl2004), including in service cultures (Schneider & Bowen, Reference Schneider and Bowen1985). We assessed each customer’s overall satisfaction with the firm’s service, together with specific aspects of satisfaction, as Evanschitzky, Iyer, and Caemmerer (Reference Evanschitzky, Iyer and Caemmerer2008) recommended, using Kantabutra and Avery’s (Reference Kantabutra and Avery2006) measures derived from Hackl, Scharitzer, and Zuba (Reference Hackl, Scharitzer and Zuba2000).

3. 3. Financial performance was necessarily assessed indirectly given the difficulty of obtaining objective financial reports from small businesses (e.g., Perera & Baker, Reference Perera and Baker2007; Sian & Roberts, Reference Sian and Roberts2009). Following indications that indirect measures and self-reports can be reliable (De Hoogh et al., Reference De Hoogh, Den Hartog, Koopman, Berg, Van Den Berg, Van der Weide and Wilderom2004), financial performance was derived from manager reports of comparative increases and decreases in net profits, sales turnover, and controllable business costs.

4. 4. Productivity was based on data officially tracked and reported by Australian pharmacies (Iyer & Doucette, Reference Iyer and Doucette2003), whereby managers stated the number of prescriptions filled daily.

5. 5. Staff tenure affects performance and has been related to leadership (Cowden, Cummings, & Profetto-McGrath, Reference Cowden, Cummings and Profetto-McGrath2011; El-Nahas, Abd-El-Salam, & Shawky, Reference El-Nahas, Abd-El-Salam and Shawky2013; Tse, Huang, & Lam, Reference Tse, Huang and Lam2013), possibly working through the mediating effects of organizational commitment or employee work attitudes (Aarons & Sawitzky, Reference Aarons and Sawitzky2006). In assessing tenure, staff were asked to state the length of their tenure (in years).

6. 6. Manager tenure remains largely unexplored despite some suggestions of an important link between leadership, manager tenure, and firm performance (Bycio, Hackett, & Allen, Reference Bycio, Hackett and Allen1985). We assessed tenure by the number of years managers said they had been at their pharmacy.

HYPOTHESES

Previous research leads to expectations that the above leadership paradigms will have differing direct effects on the performance measures, with the visionary and organic paradigms predicted to outperform classical/transactional leadership on all measures. In formulating the hypotheses below, we combined the classical with the transactional paradigm and the visionary with the organic paradigm based on similarities in follower involvement within the two sets of paradigms, particularly in decision making, focus on process versus outcomes, and reliance on a shared vision. Given the paucity of research into organic leadership (Cope, Kempster, & Parry, Reference Cope, Kempster and Parry2011), this paradigm was tested separately against all measures.

Overall, we predicted that the classical and transactional paradigms would underperform in pharmacies compared with the emotion-based paradigms. Most studies report negative relationships with performance for the classical paradigm (Chan et al., Reference Chan, Huang, Snape and Lam2013, Reference Chen, Eberly, Chiang, Farh and Cheng2014), and results for transactional leadership are variable as discussed above. One reason is that classical and transactional followers have very little autonomy or involvement in decision-making, and typically operate in highly prescriptive environments. This is problematic with highly educated pharmacy managers and employees where training reduces the need for constant leader direction and close monitoring. The small size of pharmacy stores and the lack of urgency in most situations allow for consultation, discussion, and collegial behaviors that recognize the important role that employees play. Thus, the classical/transactional paradigms are likely to be viewed as relatively unattractive by pharmacy staff, and so would undermine performance and reduce staff and manager tenure.

By contrast, employees under the visionary and organic paradigms enjoy far greater autonomy, are part of the decision-making process, and their performance is evaluated on desired outcomes and a shared vision, rather than compliance with instructions, procedures, and processes. For highly trained employees, the autonomy offered by the visionary and organic paradigms, the intrinsic rewards these paradigms typically offer, the opportunity for consensual and collegial (and in the case of organic, collective) decision-making, and the focus on outcomes rather than process are likely to generate strong commitment to organizational goals, and high levels of job satisfaction and engagement, thereby boosting organizational performance (Mehra, Smith, Dixon, & Robertson, Reference Mehra, Smith, Dixon and Robertson2006). Therefore, Hypothesis 1 was generated.

Hypothesis 1a financial performance, Hypothesis 1b staff satisfaction, and Hypothesis 1c customer satisfaction.

In an extensive review, Denis, Langley, and Sergi (Reference Denis, Langley and Sergi2012) concluded that shared leadership will generate higher performance in small firms/teams, than leadership by formally appointed leaders or team members. Therefore, Hypothesis 2 plus Hypothesis 3 concerning organic leadership were generated:

Hypothesis 2a financial performance, Hypothesis 2b staff satisfaction, and Hypothesis 2c customer satisfaction.

Losing staff can involve extra recruiting costs, loss of expertise, and additional pressures placed on remaining staff to do more, implying an advantage for firms that retain their staff. However, despite its significance to a business, the effects of staff tenure on performance are not clear. Two meta-analyses revealed a negative relationship between staff turnover and firm performance (Hancock, Allen, Bosco, McDaniel, & Pierce, Reference Hancock, Allen, Bosco, McDaniel and Pierce2013; Park & Shaw, Reference Park and Shaw2013). Hancock et al. (Reference Hancock, Allen, Bosco, McDaniel and Pierce2013) did not find that staff turnover was any worse in small firms, whereas Park and Shaw (Reference Park and Shaw2013) did. Little information is available about manager tenure, however longer-tenure CEOs have been associated with higher performance in SMEs (Ling et al., Reference Ling, Simsek, Lubatkin and Veiga2008). As discussed above, high-knowledge pharmacy workers may not appreciate being unable to contribute fully under the classical and transactional leadership paradigms. Furthermore, research shows that both staff and managers stay longer under a shared vision and in positive, trusting environments (Jing, Avery, & Bergsteiner, Reference Jing, Avery and Bergsteiner2011, Reference Jing, Avery and Bergsteiner2014a, Reference Jing, Avery and Bergsteiner2014b), all of which are essential characteristics of visionary and organic leadership. These considerations suggest that under visionary/organic leadership, both employees and managers will stay longer, as presented in Hypothesis 4.

Given that Ng and Feldman (Reference Ng and Feldman2010) and others report that although generally positive, the strength of the relationship with performance decreases as organizational tenure increases, a further hypothesis was generated:

Hypothesis 4e staff tenure is correlated with performance.

METHOD

The unit of analysis was the individual level. We collected data from various sources (i.e., managers, employees, and customer) to reduce common-method biases (Podsakoff, MacKenzie, Lee, & Podsakoff, Reference Podsakoff, MacKenzie, Lee and Podsakoff2003) and improve methodological rigor in testing the causality of our research model (Wright, Gardner, Moynihan, & Allen, Reference Wright, Gardner, Moynihan and Allen2005). Managers, employees, and customers were surveyed face-to-face in 100 pharmacies in Sydney city and suburbs, chosen systematically from the phone listing. Full-time managers stationed at the pharmacy daily constituted the pharmacy managers; employees working under those managers (pharmacists, pharmacy assistants, and salespersons not classified as the manager) constituted staff respondents. To qualify, staff had to be employed by the store in an operational position, work under the manager interviewed, and be on duty when the researcher visited. Customers were purchasers of a product or service during the manager’s period of duty. One manager, up to three members of their staff, and three buying customers were surveyed per pharmacy. Separate questionnaires, with closed items measured via 5-point Likert scales, were used for each stakeholder group. Researchers ensured that managers were out of hearing range when staff and customers were surveyed.

After approaching 131 pharmacies, 100 stores participated (response rate 76.3%). As a consequence, structural equation modeling (SEM) could be applied (see Boomsma, Reference Boomsma1982, who suggests that samples sizes of around 100 are large enough to apply SEM). The 580 completed questionnaires came from 100 managers, 217 staff members, and 263 customers. Males comprised 48% of managers and 14.3% of staff. Managers were aged 20–29 (42%), 30–39 (26%), and 32% 40+ years. Staff were mostly female (86%); 66.8% aged 20–29 years and 13% over 40 years. In total, 27% of managers had managed that pharmacy for under 1 year, and 53.5% of staff had worked in there for 1–2 years.

ANALYSIS AND RESULTS

Structural equation modeling was used to test Hypothesis 1a–1c and Hypothesis 2a–2c. Five steps were followed using AMOS 22.0 (Holmes-Smith, Coote, & Cunningham, Reference Holmes-Smith, Coote and Cunningham2006) synthesized from Kline (Reference Kline1998). SEM factor loadings or standardized regression weights of all constructs were above 0.50, suggesting that these variables reflect the underlying trait of the construct. The variable reliability of all constructs was above 0.60 (see Table 1), indicating reasonably good measurement of the four leadership paradigms and financial performance, staff satisfaction, and customer satisfaction, providing evidence of internal consistency reliability. Goodness-of-fit indices also showed that the model fitted the data well within acceptable criteria levels (Holmes-Smith, Coote, & Cunningham, Reference Holmes-Smith, Coote and Cunningham2006).

Table 1

Reliability of the study variables

Reliability checks yielded consistent results (Malhotra, Hall, Shaw, & Oppenheim, Reference Malhotra, Hall, Shaw and Oppenheim2002). SEM and confirmatory factor analysis showed that all scales satisfied the assumption of unidimensionality, and all Cronbach’s α (Gerbing & Anderson, Reference Gerbing and Anderson1988) values exceeded 0.60 (Malhotra et al., Reference Malhotra, Hall, Shaw and Oppenheim2002). All squared multiple correlations exceeded 0.30, indicating good item reliability. Table 2 summarizes the descriptive statistics and intercorrelations of the variables. The above suggests the adequacy of these models for use in this analysis.

Table 2

Correlations and descriptive statistics of the study variables

CL=classical leadership; CUS=customer satisfaction; FIN=financial performance; OG=organic leadership; STF=staff satisfaction; TA=transactional leadership; VS=visionary leadership.**p<.01.

In testing Hypothesis 1a–1c, several goodness-of-fit indices were used to assess the overall SEM model fit (Jöreskog & Sörbom, Reference Jöreskog and Sörbom1993): χ² goodness-of-fit, goodness-of-fit index, comparative fit index, Tucker–Lewis index, and root-mean-square error of approximation with confidence intervals. For goodness-of-fit index, comparative fit index, and Tucker–Lewis index, values of 0.95 or above indicate a model with acceptable fit and for root-mean-square error of approximation, values of 0.05 or less indicate a well-fitting model (Hu & Bentler, Reference Hu and Bentler1999). The measurement model fits the present data well: χ² (2)=2.413 (p=.159), goodness-of-fit index=0.95, comparative fit index=0.98, Tucker–Lewis index=0.98 and root-mean-square error of approximation=0.038.

Figure 2 shows the structural effects model for the leadership paradigms and financial performance, staff satisfaction, and customer satisfaction. Table 3 shows the model fit summary for Hypothesis 1a–1c and Hypothesis 2a–2c. Regression coefficients for the paradigms were statistically significant (p=.05) for each measure. Table 4 shows significant positive relationships between the visionary paradigm and financial performance, staff satisfaction, and customer satisfaction (p<.05; critical ration>1.96), and between the organic paradigm and these three performance measures (p<.05; critical ration>1.96). However, no relationships with the three measures were significant for either the classical or transactional paradigms. Therefore, Hypothesis 1a–1c are supported.

Figure 2

Structural model of effects of leadership paradigms on organizational performance Note: The figures are β-weights derived from the structural equation modeling calculations

Table 3

Model fit summary for Hypothesis 1a–1c and Hypothesis 2a–2c

CFI=comparative fit index; CMIN=chi-square; GFI=goodness-of-fit index; RFI=relative fit index; RMSEA=root-mean-square error of approximation; TLI=Tucker–Lewis index.

Table 4

Regression weight for Hypothesis 1a–1c and Hypothesis 2a–2c

Notes: The regression weights display unstandardized regression coefficients; t-value in the ‘CR’ (critical ration) column.

One-way analysis of variance shows that organic leadership ( $\overline{{\rm x}} $ =3.35) is associated with significantly higher financial performance than the classical ( $\overline{{\rm x}} $ =2.25), transactional ( $\overline{{\rm x}} $ =2.48), and visionary ( $\overline{{\rm x}} $ =3.16) paradigms (F _df=3=42.60). In addition, the organic paradigm ( $\overline{{\rm x}} $ =3.37) yielded significantly higher means for staff satisfaction than classical ( $\overline{{\rm x}} $ =2.26), transactional ( $\overline{{\rm x}} $ =2.48), and visionary ( $\overline{{\rm x}} $ =3.16) leadership (F _df=4=43.21). Furthermore, the organic paradigm ( $\overline{{\rm x}} $ =3.48) is associated with significantly higher customer satisfaction than classical ( $\overline{{\rm x}} $ =2.26), transactional ( $\overline{{\rm x}} $ =2.56), and visionary ( $\overline{{\rm x}} $ =3.35) leadership (F _df=5=81.61). Thus, Hypothesis 2a–Hypothesis 2c are supported.

In support of Hypothesis 3a and Hypothesis 3b, analysis of variance showed that the visionary ( $\overline{{\rm x}} $ =229.74) and organic ( $\overline{{\rm x}} $ =268.33) paradigms are associated with significantly higher prescription processing than the classical ( $\overline{{\rm x}} $ =106.43) and transactional ( $\overline{{\rm x}} $ =95.22) paradigms (F _df=3=18.64). Furthermore, the organic ( $\overline{{\rm x}} $ =268.33) paradigm yielded significantly higher productivity than the classical ( $\overline{{\rm x}} $ =106.43), transactional ( $\overline{{\rm x}} $ =95.22), and visionary ( $\overline{{\rm x}} $ =229.74) paradigms (F _df=3=18.64).

Analysis of variance tests of Hypothesis 4a and Hypothesis 4b about staff and manager tenure were significant. Staff tenure under the visionary ( $\overline{{\rm x}} $ =2.42) and organic ( $\overline{{\rm x}} $ =3.85) paradigms is higher than under classical ( $\overline{{\rm x}} $ =1.60) and transactional ( $\overline{{\rm x}} $ =1.67), supporting Hypothesis 4a (F _df=3=67.38). Similarly, manager tenure is longer under visionary ( $\overline{{\rm x}} $ =3.47) and organic ( $\overline{{\rm x}} $ =4.17) than under classical ( $\overline{{\rm x}} $ =2.24) and transactional ( $\overline{{\rm x}} $ =2.23) leadership, supporting Hypothesis 4b (F _df=3=9.13). Hypothesis 4c and Hypothesis 4d relating to organic leadership were also significant under analysis of variance. For the organic paradigm ( $\overline{{\rm x}} $ =3.85), staff tenure is significantly higher than for classical ( $\overline{{\rm x}} $ =1.60), transactional ( $\overline{{\rm x}} $ =1.67), and visionary ( $\overline{{\rm x}} $ =2.42) leadership (F _df=3=67.38). Similarly, the organic paradigm ( $\overline{{\rm x}} $ =4.17) is associated with significantly higher manager tenure than classical ( $\overline{{\rm x}} $ =2.24), transactional ( $\overline{{\rm x}} $ =2.23), and visionary ( $\overline{{\rm x}} $ =3.47) leadership (F _df=3=9.13). Furthermore, Hypothesis 4e was supported with significant Pearson’s correlations between staff tenure and all performance measures: financial (0.723), staff satisfaction (0.623), customer satisfaction (0.657), and productivity (0.914) at p<.05.

LIMITATIONS AND FURTHER RESEARCH

This paper provides new insights into the effects of four leadership paradigms on six performance measures in small service settings, but the findings should be viewed in the light of some limitations. First, although analysis revealed no significant method bias, financial and prescription data would be better derived from objective records than from manager reports, but objective data remain difficult to obtain in small businesses. Given the relatively small number of pharmacies adopting the organic paradigm, this study should be replicated with a greater number of instances of organic leadership. Moreover, in view of Engelen, Flatten, Thalmann, and Brettel’s (Reference Engelen, Flatten, Thalmann and Brettel2013) findings on adhocracies and cross-cultural influences on small business management, and that all organizations participating in this study were based in one large city in Australia, future researchers could extend the findings by including cross-cultural and city/rural components to enhance the generalizability of the results, as well as replicating the study in other industries (e.g., banking, manufacturing, and education). Scholars might conduct cross-cultural research to explore whether visionary and organic leadership paradigms are still effective in other cultural contexts and whether leaders within other industries display somewhat different leadership behaviors and then influence organizational performance differently. Researchers may also choose to conduct wider research investigating industry differences in the leadership-performance relationship. Furthermore, from a methodological point of view, future research might conduct longitudinal studies or in-depth case studies to explore how managers’ leadership behaviors influence organizational performance over time. Finally, future researchers could usefully adopt a phenomenological approach to obtain a deeper understanding of the effects of leadership on small firm performance, the essential components of the leadership paradigms, and the factors shaping the relationship between leadership and performance in a small firm. Notwithstanding these limitations, we hope that our findings motivate and inspire researchers to further explore the importance and distinctiveness of the leadership paradigms and, as such, enable the development of a novel theory of the different leadership paradigms and their effects on various organizational performance measures.