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The impacts of charismatic leadership style on team cohesiveness and overall performance during ERP implementation
INTERNATIONAL JOURNAL OF
PROJECT MANAGEMENT International Journal of Project Management 23 (2005) 173–180 www.elsevier.com/locate/ijproman
The impacts of charismatic leadership style on team cohesiveness and overall performance during ERP implementation Eric Wang a, Huey-Wen Chou a, James Jiang a
b,*
Department of Information Management, National Central University, No. 300, Jung-da Rd., Jung-li City, Taoyuan, 320 Taiwan, ROC b Department of Management Information Systems, University of Central Florida, Orlando, FL 32816, USA Received 11 June 2004; received in revised form 5 August 2004; accepted 24 September 2004
Abstract Though several key enterprise resource planning (ERP) implementation factors, including top management commitment and support, change management, and consultantsÕ support haven been broadly discussed in literature, other factors such as leadership style and team cohesiveness have recently received more attention in technical project implementation [Thite M. Leadership styles in information technology projects. International Journal of Project Management 2000:18;235–41; Jiang JJ, Klein G, Chenoun-Gee H. The relative influence of IS project implementation policies and project leadership on eventual outcomes. Project Management Journal 2001;32(3):49–55]. The charismatic leadership style has often been adopted by organizational leaders, primarily in Asian countries including Taiwan. The present study, based upon the team leadership theory proposed by Zaccaro, Rittman, and Marks [The sociology of religion [Transl. Ephraim Fischoff]. Boston: Beacon Press; 1963], serves as an initial step towards understanding the impacts of charismatic leadership style on ERP implementation. Three-hundred companies listed in the ‘‘Top 500 of The Largest Corporations in Taiwan 2001,’’ that have implemented ERP systems, were surveyed. The results confirm that leaders should demonstrate more charismatic behaviors to establish the ERP project team membersÕ cohesiveness and, thus, improve team performance. The positive relationship between team cohesiveness and overall team performance was also statistically supported. Implications on future study are discussed. Ó 2004 Elsevier Ltd and IPMA. All rights reserved. Keywords: Enterprise resource planning; Charismatic leadership; Project team performance; Cohesiveness
1. Introduction Many firms view standard ERP packages as a key to overcoming the problems of their legacy systems and to increasing global competitiveness [16]. ERP systems have been adopted by over 60% of Fortune 500 companies in the USA [31]. However, studies have indicated that the implementation of an ERP system could be an extensive, lengthy and costly process. For example, * Corresponding author. Tel.: +1 407 823 4864; fax: +1 407 823 2389. E-mail addresses: [email protected] (E. Wang), hwchou@ mgt.ncu.edu.tw (H.-W. Chou), [email protected] (J. Jiang).
0263-7863/$30.00 Ó 2004 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2004.09.003
the Standish Group reports that ERP implementation projects were, on average, 178% over budget, took 2.5 times as long as intended and delivered only 30% of the promised benefits [23]. Due to its complexity and scope, ERP implementation is handled by a cross-functional team, composed of members of diverse backgrounds and interests. As a result, the ERP leadersÕ effectiveness and the cohesiveness among ERP team members have become critical success factors for ERP implementation [14]. Unfortunately, it is generally recognized that technical employees lack the leadership skills necessary to effectively manage people [18]. In spite of its importance, little attention has been paid to the nature of IS project leadersÕ leadership styles [33].
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Leadership is critical to any group environment. Several studies have highlighted the essential leadership qualities and skills required by IS project managers to ensure success, such as the ability to manage people, stress, emotions, bureaucracy, and communication. Charismatic leadership behaviors are identified as among the most critical leadership behaviors in terms of satisfaction [33]. Weber [34] first introduced the term ‘‘charisma’’ and described it as a somewhat superhuman attribute, or ‘‘an endowment with the gift of divine grace.’’ According to Weber, a charismatic leader is viewed as a mystical, narcissistic, and personally magnetic saviour [5]. Attributed personality traits that others consider extraordinary define one characteristic of charisma [8]. Some researchers argue that charismatic leaders fuse each memberÕs personal goals with the team or organizational mission. Team members identify at a personal level with the purposes and goals of the collective as a whole and therefore feel more team commitment and cohesiveness, which improves subsequent performance. Group cohesiveness can be thought of as the degree to which members are attracted to the group and are more motivated to remain part of the group [29]. In spite of the lack of attention received in the IS literature, cohesiveness has long been identified as a factor exerting considerable influence over work group performance and is considered central to the study of group dynamics in other disciplines [36]. The purpose of this study is to examine the influence of project managersÕ charismatic leadership styles on project teamsÕ cohesiveness and thus the teamÕs overall performance during ERP implementation in Taiwan. More specifically, the study attempts to address the following questions: 1. Does the charisma leadership style have a positive influence on the ERP project teamÕs cohesiveness? 2. Does the charisma leadership style have a positive influence on the ERP project teamÕs performance? 3. Does team cohesiveness have a positive relationship with the ERP project teamÕs performance? This study makes a number of contributions. First, to our knowledge this is the first empirical study in the IS literature that examines the charisma leadership style and its impacts on the group cohesiveness and team performance in the context of ERP implementation. Second, this study identifies another critical success factor (i.e., project leaderÕs leadership style) for ERP implementation beyond the more well-known factors such as top management support, consultant competence, and the fit between the ERP system and business processes. Third, this study provides empirical evidence confirming the relationship between a project leaderÕs leadership style (i.e., charismatic leadership) and team cohesive-
ness. This is important, given that team cohesiveness is central to understanding group dynamics. Fourth, this study provides the first empirical evidence that leadership style has a significant impact on technology-oriented project implementation, which is an issue raised recently in the IS literature [33]. Finally, the proposed research model provides a framework for future studies that examine the impacts of other leadership styles (e.g., intellectual stimulation) on IT implementation project team performance.
2. Background and research hypotheses The term ‘‘team’’ may be defined as ‘‘a social system of three or more people, which are embedded in an organization, whose members perceive themselves as such and are perceived as members by others, and who collaborate on a common task (teamwork) [1,11].’’ According to Katzenbach and SmithÕs [19] definition, teamwork represents ‘‘a set of values that encourages listening, responding constructively to views expressed by others, providing support and recognizing the achievement of others.’’ In this study, the term ERP project team refers to a small group in which individuals work together outside of traditional hierarchical lines of authority on a temporary basis on ERP implementation projects to reach some predetermined standards such as quality, within time and budget constraints. Effective team performance derives from several fundamental characteristics [35]. First, team members need to successfully integrate their individual actions. Team processes become a critical determinant of team performance. Second, teams are increasingly required to perform in complex and dynamic environments. These performance requirements heighten the need for member coordination and cohesion. Team leadership represents a third characteristic of effective team performance [28]. Kotter [22] noted that providing leadership means influencing others to take responsibility for identifying, developing, retaining, and motivating talented professionals on the team. The most popular leadership style classification contrasts transactional and transformational leadership styles. The transactional leadership style represents traditional views on leadership, which focus on the contractual relationship between the leader and his/her subordinates in terms of expected performance in return for certain rewards [33]. The leader– follower relationship is reduced to the simple exchange of a certain quality of work for an adequate price. It is believed that such a cost-benefit exchange process will only lead to as expected outcomes and subordinate performance. On the other hand, the transformational leader, who strongly motivates followers to perform beyond their expectations, increases the followersÕ sense
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of the importance and value of tasks, and stimulates members to look beyond their own interests and direct themselves to the interests of the team, organization or larger community [26]. Although there is no single leadership style applicable to all project situations, some IS researchers [7,33] recommend behavioral charisma for enhanced leadership effectiveness. For example, Cheung et al.Õs [7] empirical survey conducted in Hong Kong indicated that the charismatic leadership style has the most impact on team member satisfaction. Interestingly, the charismatic leadership style is often the most dominant style in Asian countries [7]. Contemporary thought suggests that charismatic leadership results in a strong internalization of the leaderÕs values and goals by the followers, moral commitment to these values, and a tendency for followers to transcend their own self-interests for the sake of the collective [17]. Meanwhile, Kayworth and Leidner [20] discovered that highly effective team leaders act in a mentoring role and exhibit a high degree of understanding (empathy) toward other team members. Other researchers [19] suggest that making the team members enthusiastic about the project, developing trust, building confidence and commitment, and acting as a role model are the critical behaviors for effective team leadership. In short, the literature suggests that the charismatic leadership style is an effective behavior style for project managers. Meanwhile, cohesion is viewed as the single strongest predictor of group behavior. The definition of group cohesiveness for this study is the extent to which group members feel a part of the group and desire to remain in the group. According to Levin and Moreland [24], groups can be made more successful by strengthening their cohesion. Highly cohesive groups are better able to force members to comply with group positions [4,32]. Group cohesiveness also results in uniformity of group members [25], and makes the group more effective. Cohesion is one of the important facets of teamwork quality. There are several factors, including leadership style [35], that influence the will of team members to remain on the team and work to each other. If there is no desire for members to work together and to commit with each other, it will be impossible to maintain the team and for members to perform their jobs well. Past studies focus on measuring team performance in terms of whether the team meets predetermined quality, time and cost objectives [10,15], or in terms of team membersÕ work satisfaction [15]. Hackman [12] proposed a three-dimensional model of group performance, which provides a comprehensive framework for the understanding of group performance. This framework considers the groupÕs contribution to: (1) its embedded organization; (2) to itself, and (3) to its composite mem-
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bers. For the first dimension a groupÕs performance is measured by the degree that the group meets quantity, quality, and timeliness standards. The second dimension focuses on the degree to which the process of carrying out the work enhances the capability of members to work together interdependently in the future. Finally, the third dimension measures the group performance as the degree to which the group experience contributes to the growth and personal well-being of team members. 2.1. Research model Fig. 1 depicts this studyÕs research framework. Three constructs are included in the research framework; the charismatic leadership style that the ERP project leader exhibits, the cohesiveness of the project team, and overall team performance. The proposed model suggests that charismatic leadership will have a positive influence on the project teamÕs cohesiveness and the project teamÕs overall performance. Furthermore, we argue that the degree of team cohesiveness has a positive relationship with project teamÕs overall performance. Support for these arguments is provided in this section. Charismatic leaders excite and transform previously dispirited followers into active followers by heightening motivation and instilling a sense of purpose [6]. The leader is idealized and becomes the model of behaviour that engenders followersÕ commitment [30]. Charismatic leadership is often positively related to the effectiveness of the leader. For example, charismatic leaders have been shown to receive higher performance evaluations [5] and have been rated by superiors as top performers [13]. Based upon Zaccaro, Rittman, and MarksÕ [35] proposed team leadership theory, leaderÕs functions (behaviors) will influence team motivational processes. In particular, leadersÕ planning and goal setting and motivation of team members can enhance team cohesiveness. Although there is no empirical evidence found in the IS literature, studies in other disciplines (such as management) show that charismatic leadership is positively related to team membersÕ efforts and commitment to the team [21]. Based upon team leadership theory and the empirical findings discussed above, we, therefore, propose the following hypothesis:
Cohesiveness
Project Team Performance
Charismatic Leadership
Fig. 1. Research model.
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H1: The charismatic leadership style will positively influence the extent of team cohesiveness during ERP implementation. Team leadership theories specify leadership as a central driver of team processes and team performance. Many studies examine leadership style effectiveness resulting from charisma, although most organizations are primarily interested in project team member effectiveness. After all, the goal of effective leadership is increased positive results from subordinates and the resulting effects on organizational outcomes. Some empirical studies show the link between charismatic leadership and team performance, both in the US and abroad [3]. In the IS literature, Thite [33] also argued that transformational (or charismatic) leadership can increase teamsÕ overall performance. Based upon the team leadership theory and the empirical findings, we propose the following hypothesis: H2: The charismatic leadership style will positively influence the overall project team performance during ERP project implementation. The relationship between group cohesiveness and group performance has been well studied. Two recent meta-analytic studies conclude that there is a positive relationship between group cohesion and group performance [9,27]. Although some researchers argue that other variables (e.g. work environment) may moderate the relationship between team cohesiveness and performance, team development theorists, in general, agree that cohesiveness is central to the study of group dynamics and performance [36]. Unfortunately, the IS literature offers no empirical evidence of the relationship between IT project team cohesiveness and team performance. Based upon the above discussion, we propose the following hypothesis: H3: There is a positive relationship between extent of the team cohesiveness and project teamÕs overall performance.
3. Research method 3.1. Sampling Three hundred companies listed in the ‘‘Top 500 of the largest corporations in Taiwan 2001’’ that had implemented ERP systems were sent a questionnaire. Any key person, except the leader, of the ERP project teams in each company was asked to fill out and send back the questionnaire. Before the questionnaire was delivered to the respondents, each company was approached at least two times to locate the key respondent. Background information on the research theme was provided to the respondent. Among the 300 companies surveyed, 106 returned the questionnaire, which makes a response rate of 35.3%. Given that the data were col-
Table 1 Background information on ERP systems Characteristics
Categories
Responses
Percentage
Number of modules
1–5 6–10 >10
38 62 3
46.6 50.5 2.9
ERP system vendor type
Domestic vendor
16 6 6 2 36 11 14 2 1 9
15.6 5.8 5.8 1.9 35.0 10.7 13.6 1.9 1.0 8.7
Foreign vendor
DSC IE Proyoung Fast Others SAP Oracle JDE Baan Others
lected in Taiwan, detailed demographic information is provided below. Among the 106 respondent companies, more than half had implemented more than seven ERP system modules. About 21.4% of respondent companies have fully implemented the ERP systems. About 63.7% of the implemented ERP systems came from local vendors in Taiwan, such as DSC (15.6%), IE (5.8%), ProYoung (5.8%), with the rest coming from foreign vendors, such as SAP (10.7%), Oracle (13.6%) (see Table 1). More than half (52.4%) of the ERP implementation project teams have more than 10 people in implementing ERP systems. The majority of respondents (77.5%) report that they have been with their current company form more than three years. A minority (41.2%) of the ERP project leaders had no experience in ERP implementation. Very experienced leaders were relatively rare (14.4%). Fifty-six of the 103 respondents companies assigned the information department manager to be the ERP project team leader (see Table 2). The respondent companies represent various industries, such as electronic product (21.4%), information products (11.7%), iron and steel (10.7%), other various manufacturing (16.5%) and service industries (10.7%). About 21.6% of respondentsÕ companies have more than one thousand employees, while 52% of respondents companies have more than 350 employees. About 35% of them have an information department with more than ten employees. About 63.6% of respondentsÕ companies have capital in excess of 500 million NT dollars. Finally, the companies, on average, have been in existence for more than 20 years (see Table 3). 3.2. Measures 3.2.1. Charisma leadership style The questionnaire developed by Cheung et al. [7] and based on BassÕs [5] Multifactor Leadership Questionnaire, was adapted to measure charismatic leadership
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5 = always) to indicate the frequency of aforementioned behaviors.
Table 2 Background information on ERP teams
Characteristics
Categories
Responses
Percentage
Size of ERP implementation team
<5 6–10 11–20 >20
19 35 25 24
18.4 34.0 24.3 23.3
Average tenure of team members
1–3 3–5 5–7 7–9 >9 N/A
23 31 21 16 11 1
22.4 30.1 20.4 15.5 10.7 1.0
LeaderÕs experience on ERP implementation (from 1 = no experience to 7 = very experienced)
1 2 3 4 5 6 7 N/A
40 3 7 6 19 8 14 6
38.8 2.9 6.8 5.8 18.4 7.8 13.6 5.8
LeaderÕs affiliation
Information Production Accounting/finance Human resource Marketing Others N/A
56 4 11 2 1 28 1
54.4 3.9 10.7 1.9 1.0 27.2 1.0
Table 3 Background information on respondent companies Characteristics
Categories
Responses
Percentage
Industry type
Electronic product Information product Iron and steel Others
22 12 11 58
21.4 11.7 10.7 56.3
Total number of employees
<100 101–300 301–500 501–1000 >1000
18 31 19 13 22
17.6 30.1 18.4 12.6 21.4
Number of employee in information department
<10 11–50 >50
72 24 7
69.9 23.3 6.7
style. The wording of some items was refined to reflect the ERP project team context. A five-point response scale was used (from 1 = never to 5 = always) to measure the frequency of the charismatic leadership behaviors. 3.2.2. Cohesiveness Items used in this study to measure team cohesiveness were developed by Hoegl and Gemuenden [15]. All items were on a five-point Likert scale (from 1 = never to
3.2.3. Team performance Questions from Gemuenden and Lechler [10] and Hoegl and Gemuenden [15] were employed to measure team performance. Four items were used to measure team effectiveness and three items were used to measure team efficiency. Each question was measured on a five-point Likert scale (from 1 = strongly disagree to 5 = strongly agree). A confirmatory factor analysis (CFA) was conducted to examine the validity of the constructs used in this study. When conducting a CFA, if the model provides a reasonably good approximation to reality, it should provide a good fit to the data. The CFA for the measurement model resulted in a Root Mean Square Residual of 0.05 (60.10 is recommended), a v2/Degree of Freedom ratio of 2.31 (60.3 is recommended), a Comparative Fit Index of 0.90 (P0.90 recommended), and a Non-normed Fit Index of 0.90 (P0.90 recommended). The measurement model was adequate for the data set. Convergent validity can be assessed through t-tests on the factor loadings, such that the loadings are greater than twice their standard error [2]. The t-tests for the loadings of each variable are in Table 4. The constructs demonstrate high convergent validity since all t-values are significant at the 0.05 levels. In addition, the reliability of each construct is examined by the Cronbach avalue. The Cronbach a-values exceeded the recommend level of 0.70. Discriminant validity is assessed by the confidence interval test [2]. A confidence interval test involves calculating a confidence interval of plus or minus two standard errors around the correlation between factors, and determining whether this interval includes 1.0 (or 1.0). If the interval (for each pair of constructs) does not include 1.0, the discriminant validity is demonstrated. The results of the confidence interval tests support the discriminant validity of the constructs in this study.
4. Data analsysis and results A path analysis with structural equation modeling was conducted to test the hypotheses. The theorized model in Fig. 1 fit the data reasonably well, with a Root Mean Square Residual of 0.04, a v2/Degree of Freedom Fit of 1.83, a Comparative Fit Index of 0.92, and a Nonnormed Fit Index of 0.90. Table 5 shows the results of the structural equation model analysis. Hypotheses H1, H2, and H3 were all supported with path coefficients of 0.44, 0.48, and 0.37, respectively. The t-statistics for these three hypotheses all exceeded significance at the 0.05 level, indicating these relationships hold statistical significance.
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Table 4 Measurement model – confirmatory factor analysis results Construct indicators
Standardized loadings
t-Value
Charismatic leadership CL1 makes the team members enthusiastic about the project CL2 is a model for me to follow CL3 makes me feel good to working with him CL4 makes me feel proud to be associated with him CL5 as a member of the project team member, I have complete faith with him CL6 readily trust his judgement to overcome any obstacle
0.68 0.79 0.78 0.87 0.91 0.88
7.64* 9.42* 9.30* 10.94* 11.80* 11.21*
Cohesiveness C1 it was important to the members of our team to be part of this project C2 the team members strongly attached to this project C3 the members of our team felt proud to be part of the team C4 every team member felt responsible for maintaining and protecting the team
0.88 0.93 0.91 0.85
11.20* 12.33* 11.75* 10.62*
Project team performance PT1 going by the results, this project can be regarded as successful PT2 from the companyÕs perspective, all project goals were achieved PT3 the project results was of high quality PT4 the product proved to be stable in operation PT5 from the companyÕs perspective one could be satisfied with how the project progressed PT6 the project was within schedule PT7 the project was within budget
0.83 0.67 0.83 0.72 0.76 0.64 0.52
9.98* 7.36* 9.92* 8.06* 8.76* 6.91* 5.38*
Alpha 0.93
0.94
0.88
RMSEA: 0.04 (60.10 recommended); BentlerÕs CFI: 0.93 (P0.90 recommended); v2/DF ratio: 1.80 (<3 recommended); Bollen (1988) NNFI: 0.91 (P0.90 recommended). * Significant at p-value <.05 level. Table 5 Summary of hypotheses tests Hypothesis
Coefficient
t-Value
H1: charismatic leadership ! cohesiveness H2: charismatic leadership ! project team performance H3: cohesiveness ! project team performance
0.44 0.48 0.37
4.47* 5.01* 4.20*
*
Significant at p-value <.05 level.
5. Discussion and conclusions ERP implementation projects often require intensive cross-functional coordination and cooperation. As a result, ERP project success is heavily dependent on human factors such as project leadersÕ and team membersÕ efforts and commitments. Jiang et al. [18] and Thite [33] found that project leadership is an important factor to the successful delivery of an information system. Specifically, the charismatic leadership style of ISD project managers has been argued as an effective management behavior for fusing team membersÕ personal goals with team missions and, thus, establishing the groupÕs cohesion [7]. Zaccaro et al. [35] also argued that the charismatic leadership style has direct effects on team task cohesiveness and subsequent performance. Nevertheless, there is a paucity of empirical studies on the impact and role of charismatic leadership style in ERP implementation. The present study serves as an initial step to explore the impacts of charismatic leadership style on team cohesiveness and, thus, team performance in the context of IT implementation.
The results indicate that the ERP project leaderÕs charismatic leadership style significantly influences the level of team cohesiveness, which, in turn, affects the overall project team performance. This result is consistent with Cheung et al.Õs [7] findings that charismatic behavior has a significant influence on project team membersÕ behaviors and efforts. The result also confirmed with ThiteÕs [33] study that charismatic leadership style can have significant effects on project performance. Given that the culture studied in Cheung et al. [7] and this study is similar, confirmation of the earlier study provides evidence of the external validity of the findings of this study. To further examine the generalizability of this finding, two additional demographical variables (i.e., project managersÕ experience and industry type) were included as control variables. The results did not change significantly. Interestingly, while industry type did not have a significant influence on project outcomes, the project managersÕ experience had a significant, positive impact. This result indicates that, regardless of the leadership style adopted by the managers, the project managersÕ experience has a positive influence on the final project outcomes.
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The present study provides several important implications for business managers interested in the implementation of ERP systems. First, a qualified leader is critical to ERP project team performance. In addition to the ERP project team leadersÕ technical proficiency, top management should place more emphasis on the project leadersÕ leadership style. Second, the results specifically indicate that there are potential benefits from considering the ‘‘charismatic leadership model’’ when selecting and training ISD project managers. Finally, today a considerable amount of IS project work is contracted out to independent ISD contractors who have little or no organizational loyalty. In addition, there is a growing trend to perform ISD through global virtual teams where members come from different parts of the world, which affords few opportunities to interact face-to-face, yet face challenging group tasks. Given the importance of project leadership, organizations must understand the impacts of various different leadership styles in such dynamic situations. As pointed out previously, the impact of ISD project managersÕ leadership styles on project team performance is just beginning to receive attention from IS researchers. This study provides the first empirical evidence of the importance of ISD project managersÕ ability to instill a strong sense of purpose, beliefs and values in team members. This has a positive influence on team membersÕ cohesiveness, which, in turn, impacts team performance. More research is needed to investigate how charismatic leadership behavior brings about higher team performance. Currently, most studies examine the impact of charisma on team leader effectiveness, while project team performance may be of greater interest to many organizations. To the best of our knowledge, this is the first empirical study in the IS literature that examines the relationship between charismatic leadership and project team performance. Understanding how far-reaching and long-lasting the effects of charismatic leadership are is also an area for future research. One can be deemed an effective charismatic leader, but given todayÕs wider spans of control and increased emphasis on self-management, future project teamÕs performance may drop if the effects of charisma fail to be robust and long-lasting. In this study, group cohesiveness was identified as a mediator between charismatic leadership behavior and project team performance. Other variables needed to be identified that may impact the effect of charismatic leadership on project teams. This is an area of research that should be examined further. Another interesting future research direction is the relationship between project managersÕ experience and their leadership styles (and their interactions) on the IS project development and implementation. A major limitation of this study should be noted. The data examined in this study were collected in Taiwan and, due to culture differences, the results of this
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study may not hold in other countries. Several factors mitigate this limitation. First, detailed demographic information about the organizations were provided allowing readers to better interpret the findings. Second, the proposed research model was supported by strong theoretical arguments. Finally, the results are consistent with previous studies conducted in other countries. Arguably, without ‘‘hard evidence’’ to the contrary, we expect the results of this study to hold during IS implementation projects in other countries (especially, in Asia). Certainly, future research that replicates this study with different samples would not only enhance the external validity of this study but could also provide additional insights of our understanding on project managersÕ leadership styles.
Acknowledgement This research is supported by the MOE Program for Promoting Academic Excellence of Universities under the Grant No. 91-H-FA07-1-4.
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PROJECT MANAGEMENT International Journal of Project Management 23 (2005) 173–180 www.elsevier.com/locate/ijproman
The impacts of charismatic leadership style on team cohesiveness and overall performance during ERP implementation Eric Wang a, Huey-Wen Chou a, James Jiang a
b,*
Department of Information Management, National Central University, No. 300, Jung-da Rd., Jung-li City, Taoyuan, 320 Taiwan, ROC b Department of Management Information Systems, University of Central Florida, Orlando, FL 32816, USA Received 11 June 2004; received in revised form 5 August 2004; accepted 24 September 2004
Abstract Though several key enterprise resource planning (ERP) implementation factors, including top management commitment and support, change management, and consultantsÕ support haven been broadly discussed in literature, other factors such as leadership style and team cohesiveness have recently received more attention in technical project implementation [Thite M. Leadership styles in information technology projects. International Journal of Project Management 2000:18;235–41; Jiang JJ, Klein G, Chenoun-Gee H. The relative influence of IS project implementation policies and project leadership on eventual outcomes. Project Management Journal 2001;32(3):49–55]. The charismatic leadership style has often been adopted by organizational leaders, primarily in Asian countries including Taiwan. The present study, based upon the team leadership theory proposed by Zaccaro, Rittman, and Marks [The sociology of religion [Transl. Ephraim Fischoff]. Boston: Beacon Press; 1963], serves as an initial step towards understanding the impacts of charismatic leadership style on ERP implementation. Three-hundred companies listed in the ‘‘Top 500 of The Largest Corporations in Taiwan 2001,’’ that have implemented ERP systems, were surveyed. The results confirm that leaders should demonstrate more charismatic behaviors to establish the ERP project team membersÕ cohesiveness and, thus, improve team performance. The positive relationship between team cohesiveness and overall team performance was also statistically supported. Implications on future study are discussed. Ó 2004 Elsevier Ltd and IPMA. All rights reserved. Keywords: Enterprise resource planning; Charismatic leadership; Project team performance; Cohesiveness
1. Introduction Many firms view standard ERP packages as a key to overcoming the problems of their legacy systems and to increasing global competitiveness [16]. ERP systems have been adopted by over 60% of Fortune 500 companies in the USA [31]. However, studies have indicated that the implementation of an ERP system could be an extensive, lengthy and costly process. For example, * Corresponding author. Tel.: +1 407 823 4864; fax: +1 407 823 2389. E-mail addresses: [email protected] (E. Wang), hwchou@ mgt.ncu.edu.tw (H.-W. Chou), [email protected] (J. Jiang).
0263-7863/$30.00 Ó 2004 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2004.09.003
the Standish Group reports that ERP implementation projects were, on average, 178% over budget, took 2.5 times as long as intended and delivered only 30% of the promised benefits [23]. Due to its complexity and scope, ERP implementation is handled by a cross-functional team, composed of members of diverse backgrounds and interests. As a result, the ERP leadersÕ effectiveness and the cohesiveness among ERP team members have become critical success factors for ERP implementation [14]. Unfortunately, it is generally recognized that technical employees lack the leadership skills necessary to effectively manage people [18]. In spite of its importance, little attention has been paid to the nature of IS project leadersÕ leadership styles [33].
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Leadership is critical to any group environment. Several studies have highlighted the essential leadership qualities and skills required by IS project managers to ensure success, such as the ability to manage people, stress, emotions, bureaucracy, and communication. Charismatic leadership behaviors are identified as among the most critical leadership behaviors in terms of satisfaction [33]. Weber [34] first introduced the term ‘‘charisma’’ and described it as a somewhat superhuman attribute, or ‘‘an endowment with the gift of divine grace.’’ According to Weber, a charismatic leader is viewed as a mystical, narcissistic, and personally magnetic saviour [5]. Attributed personality traits that others consider extraordinary define one characteristic of charisma [8]. Some researchers argue that charismatic leaders fuse each memberÕs personal goals with the team or organizational mission. Team members identify at a personal level with the purposes and goals of the collective as a whole and therefore feel more team commitment and cohesiveness, which improves subsequent performance. Group cohesiveness can be thought of as the degree to which members are attracted to the group and are more motivated to remain part of the group [29]. In spite of the lack of attention received in the IS literature, cohesiveness has long been identified as a factor exerting considerable influence over work group performance and is considered central to the study of group dynamics in other disciplines [36]. The purpose of this study is to examine the influence of project managersÕ charismatic leadership styles on project teamsÕ cohesiveness and thus the teamÕs overall performance during ERP implementation in Taiwan. More specifically, the study attempts to address the following questions: 1. Does the charisma leadership style have a positive influence on the ERP project teamÕs cohesiveness? 2. Does the charisma leadership style have a positive influence on the ERP project teamÕs performance? 3. Does team cohesiveness have a positive relationship with the ERP project teamÕs performance? This study makes a number of contributions. First, to our knowledge this is the first empirical study in the IS literature that examines the charisma leadership style and its impacts on the group cohesiveness and team performance in the context of ERP implementation. Second, this study identifies another critical success factor (i.e., project leaderÕs leadership style) for ERP implementation beyond the more well-known factors such as top management support, consultant competence, and the fit between the ERP system and business processes. Third, this study provides empirical evidence confirming the relationship between a project leaderÕs leadership style (i.e., charismatic leadership) and team cohesive-
ness. This is important, given that team cohesiveness is central to understanding group dynamics. Fourth, this study provides the first empirical evidence that leadership style has a significant impact on technology-oriented project implementation, which is an issue raised recently in the IS literature [33]. Finally, the proposed research model provides a framework for future studies that examine the impacts of other leadership styles (e.g., intellectual stimulation) on IT implementation project team performance.
2. Background and research hypotheses The term ‘‘team’’ may be defined as ‘‘a social system of three or more people, which are embedded in an organization, whose members perceive themselves as such and are perceived as members by others, and who collaborate on a common task (teamwork) [1,11].’’ According to Katzenbach and SmithÕs [19] definition, teamwork represents ‘‘a set of values that encourages listening, responding constructively to views expressed by others, providing support and recognizing the achievement of others.’’ In this study, the term ERP project team refers to a small group in which individuals work together outside of traditional hierarchical lines of authority on a temporary basis on ERP implementation projects to reach some predetermined standards such as quality, within time and budget constraints. Effective team performance derives from several fundamental characteristics [35]. First, team members need to successfully integrate their individual actions. Team processes become a critical determinant of team performance. Second, teams are increasingly required to perform in complex and dynamic environments. These performance requirements heighten the need for member coordination and cohesion. Team leadership represents a third characteristic of effective team performance [28]. Kotter [22] noted that providing leadership means influencing others to take responsibility for identifying, developing, retaining, and motivating talented professionals on the team. The most popular leadership style classification contrasts transactional and transformational leadership styles. The transactional leadership style represents traditional views on leadership, which focus on the contractual relationship between the leader and his/her subordinates in terms of expected performance in return for certain rewards [33]. The leader– follower relationship is reduced to the simple exchange of a certain quality of work for an adequate price. It is believed that such a cost-benefit exchange process will only lead to as expected outcomes and subordinate performance. On the other hand, the transformational leader, who strongly motivates followers to perform beyond their expectations, increases the followersÕ sense
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of the importance and value of tasks, and stimulates members to look beyond their own interests and direct themselves to the interests of the team, organization or larger community [26]. Although there is no single leadership style applicable to all project situations, some IS researchers [7,33] recommend behavioral charisma for enhanced leadership effectiveness. For example, Cheung et al.Õs [7] empirical survey conducted in Hong Kong indicated that the charismatic leadership style has the most impact on team member satisfaction. Interestingly, the charismatic leadership style is often the most dominant style in Asian countries [7]. Contemporary thought suggests that charismatic leadership results in a strong internalization of the leaderÕs values and goals by the followers, moral commitment to these values, and a tendency for followers to transcend their own self-interests for the sake of the collective [17]. Meanwhile, Kayworth and Leidner [20] discovered that highly effective team leaders act in a mentoring role and exhibit a high degree of understanding (empathy) toward other team members. Other researchers [19] suggest that making the team members enthusiastic about the project, developing trust, building confidence and commitment, and acting as a role model are the critical behaviors for effective team leadership. In short, the literature suggests that the charismatic leadership style is an effective behavior style for project managers. Meanwhile, cohesion is viewed as the single strongest predictor of group behavior. The definition of group cohesiveness for this study is the extent to which group members feel a part of the group and desire to remain in the group. According to Levin and Moreland [24], groups can be made more successful by strengthening their cohesion. Highly cohesive groups are better able to force members to comply with group positions [4,32]. Group cohesiveness also results in uniformity of group members [25], and makes the group more effective. Cohesion is one of the important facets of teamwork quality. There are several factors, including leadership style [35], that influence the will of team members to remain on the team and work to each other. If there is no desire for members to work together and to commit with each other, it will be impossible to maintain the team and for members to perform their jobs well. Past studies focus on measuring team performance in terms of whether the team meets predetermined quality, time and cost objectives [10,15], or in terms of team membersÕ work satisfaction [15]. Hackman [12] proposed a three-dimensional model of group performance, which provides a comprehensive framework for the understanding of group performance. This framework considers the groupÕs contribution to: (1) its embedded organization; (2) to itself, and (3) to its composite mem-
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bers. For the first dimension a groupÕs performance is measured by the degree that the group meets quantity, quality, and timeliness standards. The second dimension focuses on the degree to which the process of carrying out the work enhances the capability of members to work together interdependently in the future. Finally, the third dimension measures the group performance as the degree to which the group experience contributes to the growth and personal well-being of team members. 2.1. Research model Fig. 1 depicts this studyÕs research framework. Three constructs are included in the research framework; the charismatic leadership style that the ERP project leader exhibits, the cohesiveness of the project team, and overall team performance. The proposed model suggests that charismatic leadership will have a positive influence on the project teamÕs cohesiveness and the project teamÕs overall performance. Furthermore, we argue that the degree of team cohesiveness has a positive relationship with project teamÕs overall performance. Support for these arguments is provided in this section. Charismatic leaders excite and transform previously dispirited followers into active followers by heightening motivation and instilling a sense of purpose [6]. The leader is idealized and becomes the model of behaviour that engenders followersÕ commitment [30]. Charismatic leadership is often positively related to the effectiveness of the leader. For example, charismatic leaders have been shown to receive higher performance evaluations [5] and have been rated by superiors as top performers [13]. Based upon Zaccaro, Rittman, and MarksÕ [35] proposed team leadership theory, leaderÕs functions (behaviors) will influence team motivational processes. In particular, leadersÕ planning and goal setting and motivation of team members can enhance team cohesiveness. Although there is no empirical evidence found in the IS literature, studies in other disciplines (such as management) show that charismatic leadership is positively related to team membersÕ efforts and commitment to the team [21]. Based upon team leadership theory and the empirical findings discussed above, we, therefore, propose the following hypothesis:
Cohesiveness
Project Team Performance
Charismatic Leadership
Fig. 1. Research model.
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H1: The charismatic leadership style will positively influence the extent of team cohesiveness during ERP implementation. Team leadership theories specify leadership as a central driver of team processes and team performance. Many studies examine leadership style effectiveness resulting from charisma, although most organizations are primarily interested in project team member effectiveness. After all, the goal of effective leadership is increased positive results from subordinates and the resulting effects on organizational outcomes. Some empirical studies show the link between charismatic leadership and team performance, both in the US and abroad [3]. In the IS literature, Thite [33] also argued that transformational (or charismatic) leadership can increase teamsÕ overall performance. Based upon the team leadership theory and the empirical findings, we propose the following hypothesis: H2: The charismatic leadership style will positively influence the overall project team performance during ERP project implementation. The relationship between group cohesiveness and group performance has been well studied. Two recent meta-analytic studies conclude that there is a positive relationship between group cohesion and group performance [9,27]. Although some researchers argue that other variables (e.g. work environment) may moderate the relationship between team cohesiveness and performance, team development theorists, in general, agree that cohesiveness is central to the study of group dynamics and performance [36]. Unfortunately, the IS literature offers no empirical evidence of the relationship between IT project team cohesiveness and team performance. Based upon the above discussion, we propose the following hypothesis: H3: There is a positive relationship between extent of the team cohesiveness and project teamÕs overall performance.
3. Research method 3.1. Sampling Three hundred companies listed in the ‘‘Top 500 of the largest corporations in Taiwan 2001’’ that had implemented ERP systems were sent a questionnaire. Any key person, except the leader, of the ERP project teams in each company was asked to fill out and send back the questionnaire. Before the questionnaire was delivered to the respondents, each company was approached at least two times to locate the key respondent. Background information on the research theme was provided to the respondent. Among the 300 companies surveyed, 106 returned the questionnaire, which makes a response rate of 35.3%. Given that the data were col-
Table 1 Background information on ERP systems Characteristics
Categories
Responses
Percentage
Number of modules
1–5 6–10 >10
38 62 3
46.6 50.5 2.9
ERP system vendor type
Domestic vendor
16 6 6 2 36 11 14 2 1 9
15.6 5.8 5.8 1.9 35.0 10.7 13.6 1.9 1.0 8.7
Foreign vendor
DSC IE Proyoung Fast Others SAP Oracle JDE Baan Others
lected in Taiwan, detailed demographic information is provided below. Among the 106 respondent companies, more than half had implemented more than seven ERP system modules. About 21.4% of respondent companies have fully implemented the ERP systems. About 63.7% of the implemented ERP systems came from local vendors in Taiwan, such as DSC (15.6%), IE (5.8%), ProYoung (5.8%), with the rest coming from foreign vendors, such as SAP (10.7%), Oracle (13.6%) (see Table 1). More than half (52.4%) of the ERP implementation project teams have more than 10 people in implementing ERP systems. The majority of respondents (77.5%) report that they have been with their current company form more than three years. A minority (41.2%) of the ERP project leaders had no experience in ERP implementation. Very experienced leaders were relatively rare (14.4%). Fifty-six of the 103 respondents companies assigned the information department manager to be the ERP project team leader (see Table 2). The respondent companies represent various industries, such as electronic product (21.4%), information products (11.7%), iron and steel (10.7%), other various manufacturing (16.5%) and service industries (10.7%). About 21.6% of respondentsÕ companies have more than one thousand employees, while 52% of respondents companies have more than 350 employees. About 35% of them have an information department with more than ten employees. About 63.6% of respondentsÕ companies have capital in excess of 500 million NT dollars. Finally, the companies, on average, have been in existence for more than 20 years (see Table 3). 3.2. Measures 3.2.1. Charisma leadership style The questionnaire developed by Cheung et al. [7] and based on BassÕs [5] Multifactor Leadership Questionnaire, was adapted to measure charismatic leadership
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5 = always) to indicate the frequency of aforementioned behaviors.
Table 2 Background information on ERP teams
Characteristics
Categories
Responses
Percentage
Size of ERP implementation team
<5 6–10 11–20 >20
19 35 25 24
18.4 34.0 24.3 23.3
Average tenure of team members
1–3 3–5 5–7 7–9 >9 N/A
23 31 21 16 11 1
22.4 30.1 20.4 15.5 10.7 1.0
LeaderÕs experience on ERP implementation (from 1 = no experience to 7 = very experienced)
1 2 3 4 5 6 7 N/A
40 3 7 6 19 8 14 6
38.8 2.9 6.8 5.8 18.4 7.8 13.6 5.8
LeaderÕs affiliation
Information Production Accounting/finance Human resource Marketing Others N/A
56 4 11 2 1 28 1
54.4 3.9 10.7 1.9 1.0 27.2 1.0
Table 3 Background information on respondent companies Characteristics
Categories
Responses
Percentage
Industry type
Electronic product Information product Iron and steel Others
22 12 11 58
21.4 11.7 10.7 56.3
Total number of employees
<100 101–300 301–500 501–1000 >1000
18 31 19 13 22
17.6 30.1 18.4 12.6 21.4
Number of employee in information department
<10 11–50 >50
72 24 7
69.9 23.3 6.7
style. The wording of some items was refined to reflect the ERP project team context. A five-point response scale was used (from 1 = never to 5 = always) to measure the frequency of the charismatic leadership behaviors. 3.2.2. Cohesiveness Items used in this study to measure team cohesiveness were developed by Hoegl and Gemuenden [15]. All items were on a five-point Likert scale (from 1 = never to
3.2.3. Team performance Questions from Gemuenden and Lechler [10] and Hoegl and Gemuenden [15] were employed to measure team performance. Four items were used to measure team effectiveness and three items were used to measure team efficiency. Each question was measured on a five-point Likert scale (from 1 = strongly disagree to 5 = strongly agree). A confirmatory factor analysis (CFA) was conducted to examine the validity of the constructs used in this study. When conducting a CFA, if the model provides a reasonably good approximation to reality, it should provide a good fit to the data. The CFA for the measurement model resulted in a Root Mean Square Residual of 0.05 (60.10 is recommended), a v2/Degree of Freedom ratio of 2.31 (60.3 is recommended), a Comparative Fit Index of 0.90 (P0.90 recommended), and a Non-normed Fit Index of 0.90 (P0.90 recommended). The measurement model was adequate for the data set. Convergent validity can be assessed through t-tests on the factor loadings, such that the loadings are greater than twice their standard error [2]. The t-tests for the loadings of each variable are in Table 4. The constructs demonstrate high convergent validity since all t-values are significant at the 0.05 levels. In addition, the reliability of each construct is examined by the Cronbach avalue. The Cronbach a-values exceeded the recommend level of 0.70. Discriminant validity is assessed by the confidence interval test [2]. A confidence interval test involves calculating a confidence interval of plus or minus two standard errors around the correlation between factors, and determining whether this interval includes 1.0 (or 1.0). If the interval (for each pair of constructs) does not include 1.0, the discriminant validity is demonstrated. The results of the confidence interval tests support the discriminant validity of the constructs in this study.
4. Data analsysis and results A path analysis with structural equation modeling was conducted to test the hypotheses. The theorized model in Fig. 1 fit the data reasonably well, with a Root Mean Square Residual of 0.04, a v2/Degree of Freedom Fit of 1.83, a Comparative Fit Index of 0.92, and a Nonnormed Fit Index of 0.90. Table 5 shows the results of the structural equation model analysis. Hypotheses H1, H2, and H3 were all supported with path coefficients of 0.44, 0.48, and 0.37, respectively. The t-statistics for these three hypotheses all exceeded significance at the 0.05 level, indicating these relationships hold statistical significance.
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Table 4 Measurement model – confirmatory factor analysis results Construct indicators
Standardized loadings
t-Value
Charismatic leadership CL1 makes the team members enthusiastic about the project CL2 is a model for me to follow CL3 makes me feel good to working with him CL4 makes me feel proud to be associated with him CL5 as a member of the project team member, I have complete faith with him CL6 readily trust his judgement to overcome any obstacle
0.68 0.79 0.78 0.87 0.91 0.88
7.64* 9.42* 9.30* 10.94* 11.80* 11.21*
Cohesiveness C1 it was important to the members of our team to be part of this project C2 the team members strongly attached to this project C3 the members of our team felt proud to be part of the team C4 every team member felt responsible for maintaining and protecting the team
0.88 0.93 0.91 0.85
11.20* 12.33* 11.75* 10.62*
Project team performance PT1 going by the results, this project can be regarded as successful PT2 from the companyÕs perspective, all project goals were achieved PT3 the project results was of high quality PT4 the product proved to be stable in operation PT5 from the companyÕs perspective one could be satisfied with how the project progressed PT6 the project was within schedule PT7 the project was within budget
0.83 0.67 0.83 0.72 0.76 0.64 0.52
9.98* 7.36* 9.92* 8.06* 8.76* 6.91* 5.38*
Alpha 0.93
0.94
0.88
RMSEA: 0.04 (60.10 recommended); BentlerÕs CFI: 0.93 (P0.90 recommended); v2/DF ratio: 1.80 (<3 recommended); Bollen (1988) NNFI: 0.91 (P0.90 recommended). * Significant at p-value <.05 level. Table 5 Summary of hypotheses tests Hypothesis
Coefficient
t-Value
H1: charismatic leadership ! cohesiveness H2: charismatic leadership ! project team performance H3: cohesiveness ! project team performance
0.44 0.48 0.37
4.47* 5.01* 4.20*
*
Significant at p-value <.05 level.
5. Discussion and conclusions ERP implementation projects often require intensive cross-functional coordination and cooperation. As a result, ERP project success is heavily dependent on human factors such as project leadersÕ and team membersÕ efforts and commitments. Jiang et al. [18] and Thite [33] found that project leadership is an important factor to the successful delivery of an information system. Specifically, the charismatic leadership style of ISD project managers has been argued as an effective management behavior for fusing team membersÕ personal goals with team missions and, thus, establishing the groupÕs cohesion [7]. Zaccaro et al. [35] also argued that the charismatic leadership style has direct effects on team task cohesiveness and subsequent performance. Nevertheless, there is a paucity of empirical studies on the impact and role of charismatic leadership style in ERP implementation. The present study serves as an initial step to explore the impacts of charismatic leadership style on team cohesiveness and, thus, team performance in the context of IT implementation.
The results indicate that the ERP project leaderÕs charismatic leadership style significantly influences the level of team cohesiveness, which, in turn, affects the overall project team performance. This result is consistent with Cheung et al.Õs [7] findings that charismatic behavior has a significant influence on project team membersÕ behaviors and efforts. The result also confirmed with ThiteÕs [33] study that charismatic leadership style can have significant effects on project performance. Given that the culture studied in Cheung et al. [7] and this study is similar, confirmation of the earlier study provides evidence of the external validity of the findings of this study. To further examine the generalizability of this finding, two additional demographical variables (i.e., project managersÕ experience and industry type) were included as control variables. The results did not change significantly. Interestingly, while industry type did not have a significant influence on project outcomes, the project managersÕ experience had a significant, positive impact. This result indicates that, regardless of the leadership style adopted by the managers, the project managersÕ experience has a positive influence on the final project outcomes.
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The present study provides several important implications for business managers interested in the implementation of ERP systems. First, a qualified leader is critical to ERP project team performance. In addition to the ERP project team leadersÕ technical proficiency, top management should place more emphasis on the project leadersÕ leadership style. Second, the results specifically indicate that there are potential benefits from considering the ‘‘charismatic leadership model’’ when selecting and training ISD project managers. Finally, today a considerable amount of IS project work is contracted out to independent ISD contractors who have little or no organizational loyalty. In addition, there is a growing trend to perform ISD through global virtual teams where members come from different parts of the world, which affords few opportunities to interact face-to-face, yet face challenging group tasks. Given the importance of project leadership, organizations must understand the impacts of various different leadership styles in such dynamic situations. As pointed out previously, the impact of ISD project managersÕ leadership styles on project team performance is just beginning to receive attention from IS researchers. This study provides the first empirical evidence of the importance of ISD project managersÕ ability to instill a strong sense of purpose, beliefs and values in team members. This has a positive influence on team membersÕ cohesiveness, which, in turn, impacts team performance. More research is needed to investigate how charismatic leadership behavior brings about higher team performance. Currently, most studies examine the impact of charisma on team leader effectiveness, while project team performance may be of greater interest to many organizations. To the best of our knowledge, this is the first empirical study in the IS literature that examines the relationship between charismatic leadership and project team performance. Understanding how far-reaching and long-lasting the effects of charismatic leadership are is also an area for future research. One can be deemed an effective charismatic leader, but given todayÕs wider spans of control and increased emphasis on self-management, future project teamÕs performance may drop if the effects of charisma fail to be robust and long-lasting. In this study, group cohesiveness was identified as a mediator between charismatic leadership behavior and project team performance. Other variables needed to be identified that may impact the effect of charismatic leadership on project teams. This is an area of research that should be examined further. Another interesting future research direction is the relationship between project managersÕ experience and their leadership styles (and their interactions) on the IS project development and implementation. A major limitation of this study should be noted. The data examined in this study were collected in Taiwan and, due to culture differences, the results of this
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study may not hold in other countries. Several factors mitigate this limitation. First, detailed demographic information about the organizations were provided allowing readers to better interpret the findings. Second, the proposed research model was supported by strong theoretical arguments. Finally, the results are consistent with previous studies conducted in other countries. Arguably, without ‘‘hard evidence’’ to the contrary, we expect the results of this study to hold during IS implementation projects in other countries (especially, in Asia). Certainly, future research that replicates this study with different samples would not only enhance the external validity of this study but could also provide additional insights of our understanding on project managersÕ leadership styles.
Acknowledgement This research is supported by the MOE Program for Promoting Academic Excellence of Universities under the Grant No. 91-H-FA07-1-4.
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