The role of transactional leadership in the social performance of the maquiladora industry.
| Autor | Solis, Maribel Mendoza |
1 Introduction
Leadership has become vital in business management due to the increasingly complex and uncertain scenarios, competitive markets, and the difficulty of adapting quickly. In response, companies need to develop sustainable strategies in order to survive financially and socially (Van Vugt & Smith, 2019). In conclusion, the leadership style exercised by a company's management is crucial to maintain and improve the company's performance.
Specifically, the transactional leadership style has proven to have a positive influence on organizations because it focuses on meeting established goals and improving quantitative performance (Martin, 2017). This leadership prioritizes supervision and control over subordinates in their work assignments and provides rewards or punishments depending on the results obtained (Aga, 2016), it focuses on implementing strategies to improve the hierarchical structure (Iscan et al., 2014), and it inspires followers through their interests and needs (Arokiasamy et al., 2015).
According to Aga (2016), transactional leadership produces desirable results when the company is relatively stable. This type of leader has more conservative and reactive behaviors than proactive and innovative ones, so he works to maintain the existing system, composed of three dimensions: contingent reward, passive management by exception, and active management by exception (Martin, 2017).
Transactional leadership has been studied in different areas such as politics, administration, and education, where practical and experimental studies have been conducted; however, most articles study the influence of transactional leadership on production processes and organizational performance and focus on intermediate factors such as innovation, entrepreneurship, culture, flexibility, and project success. For example, Iscan et al. (2014) conducted a study in small and medium-sized Turkish companies that analyzed the effect of transactional and transformational leadership on organizational performance and innovation using the multifactor leadership questionnaire (MLQ) by Bass and Avolio (1997). Gemeda and Lee (2020) conducted a study in Ethiopia and South Korea involving 438 information and communication technology (ICT) professionals, assessing leadership styles, work engagement, task performance, and employee innovation behavior. They concluded that transactional leadership is positively related to work engagement, task performance, and innovation behavior in both countries, except for the relationship between transactional leadership and work engagement in Ethiopia.
To understand the importance and evolution of transactional leadership from an academic point of view, Figure 1 illustrates the number of articles found in the Scopus databases in recent years using the following search equation (solid line): TITLE-ABS-KEY("transactional leadership") OR TITLE-ABS-KEY("Transactional Leadership") OR TITLE-ABS-KEY("TRANSACTIONAL LEADERSHIP"), where an exponential regression curve has been fitted to represent the growth over time and evolution (dotted line), indicating the scientific and academic interest in this research area.
One of the most studied areas of transactional leadership is in industry, but few studies have been conducted in the Mexican manufacturing sector. For example, in Ciudad Juarez (Mexico), the maquiladora factory is the primary source of employment; there are currently 24 industrial parks with 329 maquiladoras and 83 warehouses (Manufacturing, Maquiladora and Service Export Industry, 2021). The maquiladora industry represents 65% of total employment in Ciudad Juarez, accounting for 298,950 out of the 459,631 jobs registered in the nine productive sectors. A maquiladora is defined as a foreign subsidiary located in Mexico that takes advantage of the region's strategic location and proximity to the United States of America as a major consumer, skilled human resources, and trade agreements to obtain preferential tariffs. Mexican maquiladoras are worldclass, so management leadership in these organizations is essential to maintain and improve the impact of these companies in the marketplace.
According to Sargent and Matthews (1997), the maquiladora offers countries the opportunity to achieve industrialization and economic growth by providing workers with specific skills and knowledge in innovative practices such as total quality management (TQM), just-in-time (JIT), integrated manufacturing, lean manufacturing, among others. However, the same operational performance has not been achieved among different maquiladoras in the same industrial sector. For example, Howell et al. (2003) report that regional differences and the organizational affiliation of Mexican leaders are significant moderators of performance, because they have the same level of influence on workers when compared to their U.S. counterparts, but obtain different benefits.
Jun et al. (2006) attribute these leadership differences to cultural aspects and human resource problems such as absenteeism, turnover, and lack of loyalty, suggesting that managers can improve performance through employee satisfaction, training systems, empowerment, and compensation.
Therefore, it is observed that leadership impacts the attitudes of subordinates. Suong (2020) researched companies from Vietnam and indicates that the social impact is very high, especially in the motivation to produce quality products and generate productivity indices, while a similar study is reported by Pula et al. (2020) in companies in Kosovo. However, in leadership characterized by abuse and authoritarianism, the associated effects on productivity are impaired due to a lack of employee organizational commitment and a poor sense of belonging (Ronen & Donia, 2020).
Also, Bastari et al. (2020) conducted a study in Indonesia and indicated that the leader can unite employees and change beliefs and attitudes towards the company's objectives, create trust, and demonstrate a capacity for democratic decision-making, which leads to high motivation and morale. This trust in the leader, defined by Ouakouak et al. (2020) as ethical leadership, is linked to the emotional leadership they exert on employees and their intention to resign from the company.
There are few studies on leadership applied to the maquiladora industry, and no evidence has been found of recent studies that report its effect on social performance (SP) obtained. This paper analyzes the effect of transactional leadership on SP within the Mexican maquiladora industry, understanding SP as the result (positive or negative) of employees' interactions in a company in achieving its objectives (Arfaoui et al., 2020). This research will allow leaders in the maquiladora industry to identify the best approaches to manage their subordinates to achieve their motivation, morale, training, commitment, and skills development.
The paper is divided into six sections. The first includes an introduction to the study; the second shows a literature review of transactional leadership; the third illustrates the methodology and includes the design, application, data collection, data validation, and the structural equation model to relate transactional leadership and social performance; the fourth shows the results; the fifth discusses the results; and, finally, the sixth provides the conclusions, with the limitations and suggestions for future research.
2 Literature review and hypotheses
2.1 Contingent reward (CR)
CR is the first dimension of transactional leadership and is based on transactions or exchange of resources with followers (Martin, 2017), which can be material or psychological (Aga, 2016). It comprises the description of the work to be performed, where incentives are used to influence the worker (Wahab et al., 2016). The leader clarifies the established objectives, indicates the expected levels of performance, gives recognition when goals are met, and sets the rewards to the subjects for their efforts (Ding et al., 2019). This dimension is composed of four factors: resource sharing (CR1), reward system (CR2), fulfillment of obligations (CR3), and personal recognition (CR4) (Liphadzi et al., 2015). For a definition of these items, see Supplementary Data (Appendix_E._DEFINITIONS_ITEMS_ALL).
2.2 Passive management by exception (PME)
PME is the second dimension of transactional leadership and is based on not intervening and letting problems arise and only attending to them when they are serious (Aga, 2016). Therefore, it is the most careless leadership style and can become liberal (Arokiasamy et al., 2015) because it avoids establishing agreements and specifying expectations or goals (Bass et al., 2003). Various studies have found that PME does not favor the achievement of objectives (Birasnav & Bienstock, 2019).
Usually, a leader who uses PME harms a group's safe work environment and does not show interest in employees (Flatau-Harrison, Griffin, & Gagne, 2020). The factors in this dimension are: passive corrections (PME1), self-interest (PME2), keeping the system working/ not taking risks (PME3), maintaining traditional ideas/ not innovating (PME4), promoting established rules/ not inspiring (PME5), commitment to realism/no vision (PME6), job instability (PME7), resistance to change (PME8), moldable ethics (PME9), and less concern for employees (PME10) (Flatau-Harrison et al., 2020). See Supplementary Data (Appendix_E._DEFINITIONS_ ITEMS_ALL) for their definitions.
PME is positively related to CR because when workers have the established standards, they understand the responsibilities, obligations, and benefits (Mattson Molnar et al., 2019) that they may have in the company's performance (Calic & Buyukakinci, 2019), which are established in the employment contract, and therefore the leader will only have to act when it is essential (Aga, 2016). Therefore, the following hypothesis can be established.
[H.sub.1]. Contingent reward has...
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