Journal of Organizational Behavior J. Organiz. Behav. 31, 122–143 (2010)

Published online 28 July 2009 in Wiley InterScience

(www.interscience.wiley.com) DOI: 10.1002/job.636

Does participative leadership enhance work performance by inducing empowerment or trust? The differential effects on managerial and non-managerial subordinates

XU HUANG1*, JOYCE IUN2, AILI LIU3 AND YAPING GONG4

1The Hong Kong Polytechnic University, Hong Kong, PRC 2The Chinese University of Hong Kong, Hong Kong, PRC 3China Mobile, Beijing, PRC 4The Hong Kong University of Science and Technology, Hong Kong, PRC

Summary We examined whether participative leadership behavior is associated with improved work performance through a motivational process or an exchange-based process. Based on data collected from 527 employees from a Fortune 500 company, we found that the link between superiors’ participative leadership behaviors and subordinates’ task performance and organ- izational citizenship behavior toward organizations (OCBO) was mediated by psychological empowerment (motivational mediator) for managerial subordinates. Yet, for non-managerial subordinates such as supporting and front-line employees, the impact of participative leader- ship on task performance and OCBO was mediated by trust-in-supervisor (exchange-based mediator). Implications for theories and practices are discussed. Copyright # 2009 John Wiley & Sons, Ltd.

Introduction

Two theoretical models are widely used to explain the effect of the participative leadership behavior of

superiors on subordinates’ work performance. The motivational model holds that more opportunities

to participate in decision making provide subordinates with greater intrinsic rewards from work

(Conger & Kanungo, 1988; Thomas & Velthouse, 1990) and higher levels of psychological

empowerment (Spreitzer, 1995), which may result in improved work performance. The exchange- based model asserts that since participative leadership behavior sends a message that the superior has

confdence in, and concern and respect for the subordinates, such leadership behavior is likely to foster

higher levels of trust in the superior (Dirks & Ferrin, 2002, p. 614). As a result, the subordinates are

* Correspondence to: Xu Huang, Department of Management and Marketing, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, PRC. E-mail: [email protected]

Received 5 October 2007 Revised 13 May 2009

Copyright # 2009 John Wiley & Sons, Ltd. Accepted 26 May 2009

PARTICIPATIVE LEADERSHIP BEHAVIOR 123

likely to reciprocate their superiors as well as their organizations by exhibiting a higher level of work

performance (e.g., Cohen, 1992; Zallars & Tepper, 2003).

To date, the majority of studies have used the motivational and exchange-based models

interchangeably to explain the association between participative leadership behavior and work

behaviors (e.g., Mulki, Jaramillo, & Locander, 2006; Spreitzer, 2007). However, to the best of our

knowledge, no studies have compared the relative explanatory power of the two models. We contend

that such an investigation is necessary to prevent confusion as to why or how participative leadership

transmits its effects on organizational outcomes of interest. For example, in the empowerment

literature, participative leadership behavior has been predominantly treated as a source of intrinsic

motivation and psychological empowerment (Lee & Koh, 2001; Quinn & Spreitzer, 1997; Spreitzer,

1996). In the organizational justice literature; however, the same leadership behavior has often been

seen as a type of procedural justice, which fosters trustful exchanges between supervisors and

subordinates (Colquitt, Wesson, Porter, Conlon, & Ng, 2001; Pillai, Schriesheim, & Williams, 1999;

Tremblay & Roussel, 2001).

Understanding when to adopt the motivational or exchange-based model or both to explain the

effectiveness of participative leadership behavior is important for two reasons. First, research has

shown that employee job level may infuence perceptions of participative leadership behavior. For

example, past studies have suggested that while employees occupying higher level positions such as

managerial positions tend to attach more value to sense of control and autonomy, lower level employees

such as clerical staff and front-line employees tend to place more emphasis on the quality relationships

with colleagues and supervisors (e.g., Cohen, 1992; Kalleberg & Griffn, 1978; Ronen, Lingoes,

& Aranya, 1979; Ronen & Sadan, 1984) as well as the extent to which their superiors are trustworthy

(Kramer, 1995). Moreover, research on attribution theory and social information processing theory

suggests that due to their differences in work-related values and needs, managers and employees

may interpret the same organizational practice, and react to information related to such practice in

qualitatively different ways (Cha & Edmondson, 2006; Kelley, 1967; Kramer, 1995; Lord & Smith,

1983; Shetzer, 1993). Based on such views, it is possible that participative leadership behavior may be

linked to work performance through different mechanisms for subordinates at different hierarchical

levels. We therefore propose that participative leadership behavior may be more likely to trigger

motivational mechanisms for managerial subordinates (i.e., middle managers who have both superiors

and subordinates), yet exchange-based mechanisms for non-managerial subordinates (i.e., employees

who have supervisors, but no subordinates).

Second, a more thorough understanding of the mechanisms by which participative leadership

infuences performance will help practitioners better designing training and development programs

aimed at enhancing participative management. Participative leadership has often been regarded as a

way to empower employees by practicing managers. When participative leadership can effectively

improve the work performance of lower-level employees, managers may assume that empowerment

works, which may cause misunderstanding of the needs of these non-managerial subordinates. As

proposed in this paper, for non-managerial subordinates, participative leadership may infuence work

performance through generating high levels of trust in their immediate supervisors rather than inducing

psychological empowerment. Thus, a lack of understanding of the mechanisms of how participative

leadership infuences performance may cause misinterpretation of the function as well as the usage of

participative leadership in practice, providing no reliable guidance for practitioners to develop

appropriate training and intervention practices that help managers to exercise participative

management for different levels of employees.

Therefore, the purpose of the current study is twofold: (1) to examine the relative mediating roles of

psychological empowerment (motivational mediator) and trust-in-supervisor (exchange-based

mediator) in the link between participative leadership behavior and work behaviors; (2) to investigate

Copyright # 2009 John Wiley & Sons, Ltd. J. Organiz. Behav. 31, 122–143 (2010)

DOI: 10.1002/job

124 X. HUANG ET AL.

whether the mechanisms by which participative leadership has its effects on performance outcomes

would be different for managerial versus non-managerial subordinates.

Two explanatory models of participative leadership

The idea that the participative style of management is likely to enhance the performance of

subordinates was suggested by Barnard (1938) over half a century ago, and has been expanded and

developed subsequently by many researchers. Two theoretical models underlie the effects of

participative leadership behavior of superiors on subordinates’ work performance: the motivational

model and the exchange-based model.

Motivational model The motivational model posits that increasing the degree in which subordinates participate in decision

making may increase performance through enhanced motivation (Sashkin, 1976). Prior research

suggests that the participative behavior of superiors plays a vital role in providing subordinates with

experience of intrinsic motivation, feelings of self-worth, and a sense of self-determination (Deci,

Connell, & Ryan, 1989). This type of leadership behavior tends to foster the feeling of ‘‘psychological

ownership’’ of subordinates (Sashkin, 1976), increase subordinates’ feelings of self-effcacy and

control, and reduce their sense of powerlessness (Arnold, Arad, Rhoades, & Drasgow, 2000). Similarly,

some authors have suggested that participative leadership behavior is likely to induce the feeling of

empowerment among subordinates (Ahearne, Mathieu, & Rapp, 2005; Leach, Wall, & Jackson, 2003).

The feeling of empowerment or psychological empowerment has been conceptualized as a form of intrinsic

motivation to perform tasks, manifested in four cognitive dimensions: meaning, impact, competence, and

self-determination (Conger & Kanungo, 1988; Spreitzer, 1995; Thomas & Velthouse, 1990).

Accumulating empirical evidence shows that participative leadership behavior is associated with

increased work outcomes through induced intrinsic motivation and psychological empowerment. For

instance, the results of a meta-analysis conducted by Eby, Freeman, Rush, and Lance (1999) revealed

that intrinsic motivation mediates the link between the participative management behavior of

supervisors and the organizational commitment of employees. Moreover, Koberg, Boss, Senjem, and

Goodman (1999) found that, among other factors, leader approachability (the participative style of

management) was positively related to psychological empowerment, which led to increased self-rated

productivity. Some studies also demonstrated that psychological empowerment could mediate the link

between participative climates and work attitudes and performance (Careless, 2004; Seibert, Silver, &

Randolph, 2004; Sparrowe, 1994). Recently, Ahearne et al. (2005) has shown that participative

leadership behavior helped to increase salespersons’ self-effcacy, which in turn, was associated with

their sales performance and their customers’ service satisfaction.

Furthermore, participative leadership may also induce extra-role work behaviors such as

organizational citizenship behaviors (OCBs) through its effect on psychological empowerment.

OCB is defned as ‘‘individual behavior that is discretionary, not directly or explicitly recognized by

the formal reward system, and in the aggregate promotes the effcient and effective functioning of the

organization’’ (Organ, Podsakoff, & MacKenzie, 2006, p. 3). One of the major explanatory frameworks

employed by researchers to identify the causes of citizenship behaviors is the motivational model

(Bateman & Organ, 1983; Organ, 1977; Smith, Organ, & Near, 1983). When employees engage in

intrinsically motivating tasks, they may ‘‘fnd the performance of job-related activities to be more

rewarding, and as a result, they are motivated to expend greater effort to achieve their task objectives

(Organ et al., 2006, p. 110)’’. Indeed, empirical OCB research has garnered some highly consistent

results, showing that intrinsically motivating tasks are more conducive to citizenship behaviors

Copyright # 2009 John Wiley & Sons, Ltd. J. Organiz. Behav. 31, 122–143 (2010)

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PARTICIPATIVE LEADERSHIP BEHAVIOR 125

(Blakely, Andrews, & Fuller, 2003; Cardon, Lawrence, & Bentler, 2004; Farh, Podsakoff, & Organ,

1990; Van Dyne, Graham, & Dienesch, 1994). In a similar vein, Organ et al. (2006) argued that it is

plausible that participative leadership behaviors may induce feelings of meaningfulness, as well as

sense of ownership and responsibility for work outcomes. As a result, employees will be willing to do

whatever it takes to make the organization successful.

Although researchers have proposed various dimensions of OCBs (Farh et al., 1990; Organ, 1988),

one of the most widely used conceptualizations of the dimensionality of OCBs is the distinction

between OCBs directed toward the organization (OCBO) and OCBs directed toward individuals

(OCBI) (Lee & Allen, 2002; Williams & Anderson, 1991). As different OCBs may have unique

antecedents, employees can purposefully direct their OCBs with the intent to beneft particular parties

(Brief & Motwidlo, 1986; McNeely & Meglino, 1994). For instance, it has been shown that OCBO is

more cognitive driven, while OCBI is more affective driven (Lee & Allen, 2002). Moreover, empirical

studies have generally supported that OCBO rather than OCBI is more likely to be infuenced by

organizational environmental factors such as procedural justice and leaders’ behaviors such as

interactional justice (Skarlicki & Latham, 1996, 1997; Williams & Anderson, 1991). Furthermore,

research has suggested that, in China, where we collected our data, leader-relevant commitment tends

to direct Chinese employees extra-efforts toward the organization (Chen, Tsui, & Farh, 2002; Cheng,

Jiang, & Riley, 2003). This is because, in a relation-based society such as China, leaders tend to

have more salient and direct infuences on the extent to which employees respond to their organization

(Chen et al., 2002).

It has been suggested that research should specify and identify clearly the benefciaries or targets of

OCBs in order to facilitate more precise theory building (Ilies, Nahrgang, & Morgeson, 2007; Kamdar

& Van Dyne, 2007; Lavelle, Rupp, & Brockner, 2007; Wong, Law, & Huang, 2008). As the literature

seems to show that positive interactions with supervisors are likely to direct subordinates’ citizenship

behaviors toward the organization rather than their co-workers, in the current study, we focus on how

participative leadership behaviors are associated with OCBO. Taken together, the motivational model

predicts a mediating role of psychological empowerment in the link between participative leadership

behavior and task performance and OCBO of subordinates.

Exchange-based model The exchange-based model for explaining the positive association between participative leadership

behavior and work performance focuses on the reciprocal relationship between superiors and

subordinates. Based on social exchange theory (Blau, 1964), the advocates of the exchange-based

model maintain that when employees are treated well by their superiors, they are more likely to

reciprocate by showing high levels of work performance or even by putting extra effort to contribute to

their organizations (Blau, 1964; Moorman, 1991; Organ, 1988).

The degree of employees’ trust in their immediate supervisors has often been used to indicate the

quality of the reciprocal exchange relationship between supervisors and subordinates (Lavelle et al.,

2007; Lewicki, Wiethoff, & Tomlinson, 2005; Moorman & Byrne, 2005; Zallars & Tepper, 2003).

Rousseau, Sitkin, Burt, and Camerer (1998, p. 395) defned trust as ‘‘a psychological state comprising

the intention to accept vulnerability based upon positive expectations of the intentions or behavior of

another.’’ The extent to which subordinates are willing to be susceptible to the actions of their superiors

is dependent on how their superiors behave. Participative leadership behavior could make employees

feel that their superiors treat them with fairness (e.g., Jung & Avolio, 2000; Pillai et al., 1999),

consideration (Dirks & Ferrin, 2002), respect and dignity (Bijlsma & van de Bunt, 2003), which are

conducive to a high level of trust in supervisor.

With a high level of trust in supervisor, the employee is more likely to make effort to accomplish

work tasks and exhibit citizenship behaviors. The exchange-based model has long been used to

Copyright # 2009 John Wiley & Sons, Ltd. J. Organiz. Behav. 31, 122–143 (2010)

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126 X. HUANG ET AL.

explicate the causes of citizenship behaviors, and that trust-in-supervisor has been identifed as a major

antecedent of OCB (Organ et al., 2006). Organ et al. (2006, p. 73) acknowledged that it is possible that,

in a trustful exchange relationship, employees can reciprocate their supervisors’ fair treatment in forms

of citizenship behaviors as well as task productivity. Indeed, results of the meta-analysis conducted by

Dirks and Ferrin (2002) clearly demonstrated that trust in leadership was positively related to both

employees’ task performance and OCBs. Moreover, past research has documented that trust in

management is an important mediator of the link between transformational leadership (Jung & Avolio,

2000; Pillai et al., 1999), quality leader–member relationships (e.g., Brower, Schoorman, & Tan, 2000),

and participative decision making (Brashear, Manolis, & Brooks, 2005) on one hand, and task

performance and OCBs, on the other. More importantly, research has suggested that the social

exchange between subordinates and supervisors is likely to spill over to organizationally

directed citizenship (Rupp & Cropanzan, 2002), especially when employees see their organizationally

directed behaviors as what a ‘‘good’’ employee should do. Moreover, there is evidence that, for

Chinese employees, supervisory exchange predicts OCBO rather than OCBI, perhaps because Chinese

employees tend to treat their supervisors as representatives of organization. (Chen et al., 2002; Cheng

et al., 2003). Taken together, the above mentioned studies suggest an exchange-based model, which

predicts that participative leadership behavior has an impact on subordinates’ task performance and

OCBO by inducing trust-in-supervisor.

As mentioned earlier, the motivational model and the exchange-based model have been used

interchangeably in the literature. No prior research has been made to examine the relative strength of

the two models in explicating the mechanisms through which participative leadership infuences work

behaviors of subordinates. In the following section, we propose that participative leadership behavior is

associated with task performance and OCBO through inducing either psychological empowerment

or trust-in-supervisor, depending on whether the subordinates are occupants of managerial or non-

managerial positions.

The differential effects of participative leadership on managerial and non-managerial subordinates

In his recent work, Johns (2006) stressed that organizational researchers should try to systematically

examine the role of context in empirical studies to facilitate theory development and the understanding

of underlying processes of organizational behavior. He identifed four task contexts that may shape the

meanings and infuence work behaviors, namely environmental uncertainty, degree of autonomy,

accountability, and resource availability.

Uncertainty is an important shaper of meaning. When employees have to deal with uncertain

environment, a variety of meanings can be attached to situational stimuli, making interpretations of the

situation more discretionary. Autonomy refers to freedom of action that an individual, team, or

organization has. And it is a key factor providing either constraints or opportunities for human agents in

theories of motivation (Deci & Ryan, 1985). Accountability ‘‘is the requirement to defend or justify an

action or decision to some interested audience’’ (Johns, 2006, p. 394); and is the central concern of

studies on how the members’ role in organization affects the interpretation of the meaning attached to

their behaviors. Finally, the availability of resources such as money, time, and information may

also infuence employees’ attitudes and subsequent reactions toward organizational practices.

Compared to lower level employees, managers may face more uncertainty at work, need more

autonomy to accomplish their tasks, take more responsibilities, and have more resources to use and to

manage (e.g., Holden & Roberts, 2004; McConville & Holden, 1999).

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PARTICIPATIVE LEADERSHIP BEHAVIOR 127

Specifcally, Wall, Cordery, and Clegg (2002) have proposed that because the work processes of

managerial jobs are less routine and that the outcomes are less predictable, the occupants would need

more autonomy and discretion. Compared to lower level employees, middle managers have a more

pressing need to be empowered in order to function effectively (Kanter, 2004). In a similar vein,

Kramer (1995) contended that since individuals in lower-status positions in an organization are

relatively powerless and routinely confront vulnerabilities, the trustworthiness of superiors plays a

central role for individuals in positions of low power or status when they deal with their hierarchical

relations in general and assess their leaders’ behaviors in particular. In fact, early empirical studies on

intrinsic rewards have revealed that intrinsic rewards, such as task autonomy, task involvement, and

task signifcance, tend to have greater impact on the work satisfaction of managers than on that of lower

level employees (Kraut & Ronen, 1975; Locke, 1976). In contrast, lower level employees tend to focus

more on social rewards such as social exchange quality with co-workers and supervisors than higher

level employees (Kalleberg & Griffn, 1978; Ronen et al., 1979; Ronen & Sadan, 1984). Moreover,

Sashkin and Williams (1990) reported that while middle managers expressed stronger needs for

autonomy and infuence, non-supervisory staff tended to pay more attention to relational aspects of work.

Given that the task contexts of managerial and non-managerial employees may direct their attention

to and lead them to focus on different needs, they may interpret the same practice differently based on

their needs. The literature of attribution theory has long suggested that different people may interpret

and explain the same organizational practice or behavior differently according to their individual needs

and work experience (Hong, Chiu, Dweck, Lin, & Wan, 1999; Kelley, 1967). This is because

individuals may develop schemas or cognitive maps based on their past experience, and will probably

use these schemas to simplify complex stimuli, to channel their perceptions, and to guide their reactions

toward these stimuli (De Nisi, Cafferty, & Meglino, 1984; Kiesler & Sproull, 1982; Weick, 1979).

People tend to unconsciously develop ‘‘causal schemas’’—their preconceptions about cause-and-

effect relationships—based on their past experience, values, and needs (Ferrin & Dirks, 2003). They

may use these schemas to guide the assessment and the processing of information cues of participative

management (Shetzer, 1993). Managers and employees with different functional experience may

activate different causal-schemas when receiving the same stimuli and thus, are apt to selectively

process related information (Beyer, Chattopadhyay, George, Glick, Ogilvie, & Pugliese, 1997). For

instance, prior empirical studies have demonstrated that lower-level employees may perceive monetary

rewards primarily as extrinsic rewards, whereas high-level employees tend to see them as both intrinsic

rewards and extrinsic rewards (Kalleberg & Griffn, 1978; Ronen et al., 1979; Ronen & Sadan, 1984).

Taking the above discussion together, it is plausible to postulate that managerial subordinates and

non-managerial subordinates differ considerably in how they process the information cues regarding

the participative leadership behavior of their superiors. Managerial subordinates and non-managerial

subordinates are likely to see participative leadership behavior in different lights because each group

may activate different causal-schemas when assessing and interpreting the information cues pertaining

to participative leadership (cf. Balogun, 2003; Foster-Fishman, Salem, Chibnall, Legler, & Yapchai,

1998). Managerial subordinates may perceive such behavior as a way to empower subordinates, and

thus, are more likely to experience psychological empowerment; yet non-managerial subordinates may

perceive such behavior in terms of respect and fair treatment, and thus, are more likely to generate

higher levels of trust-in-supervisor. Hence, we expect:

Hypothesis 1a: Participative leadership behavior of superiors is more strongly related to

psychological empowerment than to trust-in-supervisor for managerial subordinates.

Hypothesis 1b: Participative leadership behavior of superiors is more strongly related to trust-in-

supervisor than to psychological empowerment for non-managerial subordinates.

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128 X. HUANG ET AL.

Furthermore, the difference in interpretations of organizational practices among employees may

well induce different attitudinal outcomes as well as subsequent reactions (Dienesch & Liden, 1986;

Green & Mitchell, 1979; Kelley, 1973). Since managerial subordinates may attach more value to

empowerment (which puts them ‘‘in charge’’) while non-managerial subordinates may value the

trustworthiness of their superiors more, the responses of managerial subordinates and non-managerial

subordinates toward the experience of psychological empowerment and trust-in-supervisor may not be

the same. To be precise, managerial subordinates are more likely to exhibit high levels of task

performance and to make extra contributions to the organization when they experience psychological

empowerment than when they experience trust in their superiors. Meanwhile, non-managerial <

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