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Leadership behaviors, organizational culture and knowledge management practices

An empirical investigation
Hai Nam Nguyen and Sherif Mohamed
School of Engineering, Grifth University, Gold Coast, Australia
Abstract
Purpose The purpose of this study is to investigate the relationship between leadership behaviors and knowledge management (KM) practices. More specically, it aims to examine the inuence of transformational and transactional leadership behaviors on KM, and the moderating effect of organizational culture on this relationship, in the context of small-to-medium sized enterprises (SMEs) operating in Australia. Design/methodology/approach A total of four hypotheses were proposed for testing. It also provides is a succinct review of KM basics relevant to the study, the relationship between leadership and KM, and leadership and organizational culture. Findings The results suggest that both transformational and transactional leadership are positively related to KM practices. They also reveal that charismatic leadership and contingent reward leadership behaviors have greater inuence on all the dimensions of KM practices. Research limitations/implications A key limitation of this study is its cross-sectional nature. It is possible that at least certain aspects of leadership and organizational culture, and its impact on KM practices emerge with some kind of time lag. A longitudinal treatment of data might yield additional insights into the impact of leadership behaviors and organizational culture. This study was also unable to actually observe managers interacting with followers. Practical implications The results of the study are generally consistent with theoretical predictions based on extant research. Originality/value The results of this study provide compelling evidence in support of the moderating role of organizational culture on the relationship between transactional leadership and KM and will be of interest to those in the eld. Keywords Organizational culture, Knowledge management, Behaviour, Leadership, Competitive advantage, Australia Paper type Research paper

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Received 26 November 2009 Accepted 21 June 2010

Journal of Management Development Vol. 30 No. 2, 2011 pp. 206-221 q Emerald Group Publishing Limited 0262-1711 DOI 10.1108/02621711111105786

Introduction An increasing number of organizations are turning to knowledge management (KM) as a key to leverage their distinctive core competencies in their pursuit of competitive advantage (Bhatt, 2001). Organizations are interested in KM to boost the efciency of their processes, increase their productivity and quality of their services, and to achieve innovative solutions and products for, their customers. Consequently, the contributions of KM to the overall success of an organization have been widely acknowledged (Lang, 2001). Prior research studies have demonstrated that both organizational culture and leadership behaviors are widely held to be major barriers to creating and leveraging knowledge (Politis, 2004).

Carrillo et al. (2004) posited that effective KM depends not merely on IT platforms, but more broadly on the social ecology of an organization, and that IT is simply a facilitator. Effective KM, therefore, requires that attention be paid to the human and cultural aspects of business, particularly the experiences and tacit knowledge of employees (Nonaka and Konno, 1998). Accordingly, De Long and Fahey (2000) argued that to effectively implement KM systems, managers need to diagnose the t between their organization and KM objectives. Therefore, it is essential to articulate how organizational culture and leadership styles affect an organizations ability to create and apply knowledge. It is only then, that appropriate strategies can be designed to either adapt the organizational culture, or to try reshaping it in order to support KM objectives. The examination of the literature in the elds of organizational culture and leadership reveals that these two concepts have been independently linked to KM. Researchers have examined the links between leadership styles and KM (Sarin and Mcdermott, 2003), and also between organizational culture and KM (De Long and Fahey, 2000). The literature also alludes to the role of leaders in creating and maintaining particular types of organizational culture (Kavanagh and Ashkanasy, 2006, Schein, 2004). Equally, the literature on leadership suggests that the ability to understand and work within a certain culture is a prerequisite to leadership effectiveness (Bass and Avolio, 1993). This study, hence, empirically investigates the relationship between leadership behaviors and KM practices. More specically, it examines the inuence of transformational and transactional leadership behaviors on KM, and the moderating effect of organizational culture on this relationship, in the context of small-to-medium sized enterprises (SMEs) operating in Australia. For this purpose, four hypotheses were proposed for testing as described in the following three sections, which also provide a succinct review of KM basics relevant to the study, the relationship between leadership and KM, and leadership and organizational culture. KM basics As a preliminary consideration, it seems important to dene the term knowledge. While prima facie it is obvious, the reality is that knowledge is quite complex (Clarke and Rollo, 2001). Of central importance is the type of knowledge that organizations need to manage. Nonaka and Takeuchi (1995) make the distinction between two types of knowledge: explicit knowledge and tacit knowledge. Discussions of this concept are abundant in the KM literature (Bollinger and Smith, 2001). Explicit knowledge is dened as structured and codied knowledge. It is formal and systematic and is easily expressed in the production specications, scientic formulae or computer programs (Nonaka and Konno, 1998), thus it can be easily communicated and shared. Tacit knowledge, in contrast, is unconsciously understood and applied, difcult to articulate, and developed directly from experience, and action (Zack, 1999). Tacit knowledge is highly personal, hard to formalize, difcult to communicate or share with others. KM is jointly a goal and a process. As an outcome or goal, KM is entirely focused on sharing knowledge for the benets of the organization, as Bollinger and Smith (2001) concluded that the KM process is not much about control as it is about sharing, collaborating, and making best possible of a strategic resource. KM, therefore, is

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primarily about making tacit knowledge more accessible since it account for the majority of an organizations collective knowledge (Clarke and Rollo, 2001). Leadership and KM Due to the role leaders play, they have an enormous impact on KM practices within their organizations. Leaders create the conditions that allow (or otherwise) participants to exercise and cultivate their knowledge manipulation skills, to contribute their own individual knowledge resources to the organizations pool of knowledge, and to have easy access to relevant knowledge (Crawford, 2005; Politis, 2002). It is inferred that leaders must attach a high value of knowledge, encourage questioning and experimentation through staff empowerment, building trust, and facilitating experiential learning on knowledge (Castiglione, 2006). Importantly, Politis (2002) suggests that the role of leadership is increasingly changing from information and knowledge gate-keeping to knowledge creation and knowledge sharing for all employees. The challenge for most leaders is to develop capacity in others by creating a climate in which acquiring and sharing knowledge is encouraged or even demanded. Bukowitz and Williams (1999) echoed the same sentiment when suggesting that, in a knowledge organization, leaders are no longer the source of knowledge and are no longer perched at the top of organization, but rather in the center. Consequently, KM processes cannot be managed in the traditional sense of management which centers on controlling the ow of information (Nonaka et al., 2000). In the light of these arguments, the two components of the leadership approach (transactional and transformational leadership) have been adopted in this study. The transactional leadership process builds upon exchange: the leader offers rewards (or threatens punishments) for the performance of desired behaviors and the completion of certain tasks (Bass and Avolio, 1997). This type of leadership may result in followers compliance, but is unlikely to generate enthusiasm for and a commitment to task objectives. Transformational leadership lies in the leaders ability to inspire trust, loyalty, and admiration in followers, who then subordinate their individual interests to the interests of the group (Bass, 2000). Unlike transactional leadership, transformational leadership focuses on intangible qualities such as vision, shared values, and ideas in order to build relationships, give larger meaning to separate activities, and provide common grounds in order to enlist followers in the change process. Lams (2002) research found that transformational leadership can actually affect the process and achievement of an organizations learning. Indeed, transformational leadership has positive effect on encouraging and emphasizing teamwork spirit and involvement. By motivating followers to question assumptions, be inquisitive, take intelligent risks and come up with creative observations, transformational leaders encourage individuals to break through learning boundaries and to share their learning experiences both within and across departments (Vera and Crossan, 2004). Transactional leadership, on the other hand, can improve the efciency of learning organization by emphasizing existing values and routines and focusing on increasing efciency in current practices, which enable transactional leaders to foster rule-based ways of doing things (Bass, 1995). Transactional leaders also provide organizational members with formal systems and training programs that disseminate existing learning to guide future actions and decisions (Vera and Crossan, 2004). These arguments lead to the following two research hypotheses:

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Within an organization: H1. Transformational leadership behaviors are positively correlated with the type and frequency of KM practices. H2. Transactional leadership behaviors are positively correlated with the type and frequency of KM practices. Leadership and organizational culture The literature review highlights that both transformational and transactional leaderships have a statistically signicant effect on KM implementation. The major gap in the literature, however, is the lack of attention given to the impact of organizational culture on the relationship between leadership and KM (Block, 2003; Chang and Lee, 2007). Schein (2004) reveals that organizational culture consists of two layers of concepts, namely, visible and invisible characteristics. The visible layer means external buildings, clothing, behavior modes, regulations, stories, myths, languages and rites. The invisible layer means common values, norms, faith and assumptions of business organization members. Organizational culture, in addition to the capability to integrate daily activities of employees to reach the planned goals, can also help organizations adapt well to the external environment for rapid and appropriate responses. After examining the concepts of organizational culture and leadership closely, Schein (2004) concludes that organizational culture and leadership are two sides of the same coin; neither can be really understood by itself. During the process of organization formation, the founder of a company creates an organization, which reects their values and beliefs. In this sense, the founder creates and shapes the cultural traits of their organizations. In contrast, the cultural context conditions our actions, beliefs, and widely held values. Just as the leadership process is not divorced from the broader situational context in which the leadership takes place (Northouse, 2001), unless the culture is supportive of leaders, leadership based on common values is impossible. Thus, culture determines a large part of what leaders do and how they do it. Furthermore, according to Bass (1985), transactional leaders work within their organizational cultures and maintain consistent rules, procedures, and norms. On the other hand, Bass (1985) noted that transformational leaders frequently change their organizational culture with a new vision and revision of its shared assumptions, values and norms. In a transformational culture, there is generally a sense of purpose and a feeling of family. Assumptions, values and norms do not preclude individuals from pursuing their own goals and rewards. Superiors feel a personal obligation to help new members assimilate into the culture. Leaders and followers share mutual interests and a sense of shared fates and interdependence (Bass and Avolio, 1993). This review of literature provides ample support for the notion that the relationships between transformational/transactional leadership on KM are contingent upon various types of organizational culture. This study, hence, proposes the following additional hypotheses: H3. Organizational culture moderates the relationship between transformational leadership and KM practices. H4. Organizational culture moderates the relationship between transactional leadership and KM practices.

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Methodology Research design A conceptual model comprising four constructs was developed (as shown in Figure 1): (1) transformational leadership; (2) transactional leadership; (3) organizational culture; and (4) KM practices. The model and its related four hypotheses were empirically examined using a questionnaire-based survey targeting SMEs operating in Australia. The rationale for selecting SMEs was two-fold. First, one of the main characteristics of SMEs is that management structures are often minimal, and decision-making is centralized at the owner/manager level. Hence, the leaders personality and behaviors would be expected to have a signicant inuence on supporting organizational KM practices. Second, individual SMEs are more likely to have a single organizational culture. Thus, culture and cultural t are more profound in SMEs than in large organizations where several cultures may be present. Research instruments Using pre-tested constructs and measures allow for the validity and reliability of the data collected. For the construct of KM practices, a 17-items assessment questionnaire developed by Becerra-Fernandez and Sabherwal (2001) was used to allow participants to indicate how frequently each of the identied KM processes and tools is used within their respective organization. For the measurement of leadership styles, the study uses the Multifactor Leadership Questionnaire (MLQ-5X) developed by Bass and Avolio (1997). It represents one of the few measures available that attempts to assess the full range of leadership behaviors using a multifactor model (Antonakis et al., 2003). The survey contains 36 items identifying transformational and transactional leadership behaviors. Finally, Denisons Organizational Cultural Survey (DOCS), adapted from Fey and Denison (2003), is selected to measure the organizational culture. This 36-item questionnaire asked employees to describe main aspects of their organization using a ve-point Likert rating system scale ranging from strongly disagree valued as 1 to strongly agree valued as 5.

Figure 1. Conceptual model and hypotheses

Data collection Using of key informants in organization has been a popular method for data collection in many business research contexts (Huber, 1991). Usually, these respondents are the senior ranks of organizations, residing at middle and executive levels. Those informants have good knowledge of organizational members and a holistic view of the organization as a whole (Gilley and Maycunich, 2000). Surveys were mailed to 1,000 middle managers of Australians SMEs. Within one month, 157 completed and usable questionnaires were returned, accounting for a response rate of 15.7 percent. Data were obtained from different managerial levels within a wide range of SMEs (in terms of size and industry). In addition, obtained data reected various organizational units of different sizes and functional backgrounds. In this way, the inuence of confounding and background variables was randomized and cancelled out, thus increasing the validity of the empirical ndings (Harkness et al., 2003). Data analysis Characteristic of the sample Number of the employees in respondents companies as follow: 30 (19.1 percent) less than 25 employees, 25 (15.9 percent) between 25-50 employees, 34 (21.7 percent) between 51-100 employees, 16 (10.2 percent) between 101-200 employees, and 52 (33.1 percent) between 201-500 employees. Regarding the number of years respondents have been working with their current organization; 73 (46.5 percent) reported between 1-5 years, 31 (19.7 percent) between 6-10 years, 40 (25.5 percent) between 11-20 years, and 13 (8.3 percent) over 21 years. Whilst, the majority of respondents for this study were at senior and middle management level, accounting for 32.5 percent and 44.9 percent respectively; 21.7 percent of respondents were at line management level. The demographic summary also reported 69.4 percent of the respondents mainly working as team leader and 30.6 percent working as team member. Assessing measurement scale Although all measured variables scales were derived from previous published research, assessments of reliability and validity were deemed necessary since these variables had not been extensively operationalized within the Australian context. Given that each of the model constructs were measured by an independent scale, the reliability of each scale was assessed using internal consistency and inter-total correlations. Exploratory factor analysis (EFA) was then conducted to rene and uncover the appropriate factor structures to establish the best possible dimensionality, reliability and validity of measurement scales, based on the data collected. The VARIMAX method for orthogonal rotation under the components factor model was chosen to give a clear separation of the factors. The 157 cases met the acceptable sample size for undertaking EFA (Hair et al., 2006). Strength of the inter-correlations among variables within each construct was supported by the inspection of the correlation matrix, with evidence of coefcients greater than 0.30. As Table I presents, values of the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy were greater than 0.50. Bartletts tests of sphericity were large and signicant at the 0.005 level. The factorability was hence upheld for all factor analysis scenarios (Hair et al., 2006). With the sample of 157, a factor loading of

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Construct Transformational leadership behaviors (TF) TF1: Attributed charisma TF2: Individualized consideration Transactional leadership behaviors (TA) TA1: Contingent reward TA2: Management-by-exception (Active) TA3: Management-by-exception (Passive) TA4: Laissez-faire Organizational culture (OC) OC1: Adaptability OC2: Mission OC3: Hierarchy Knowledge management practices (KM) KM1: Knowledge exchange KM2: Knowledge socialization KM3: Knowledge internalization

KMO 0.908 0.813

Reliability 0.917 0.799

Cumulative variance (%) 50 68

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0.935

0.968

55

0.859

0.862

53

Table I. Factor analyses results

Note: KMO: Kaiser-Meyer-Olkin measure of sampling adequacy

0.50 and above was considered signicant at the 0.05 level to obtain power level of 80 percent (Hair et al., 2006), thus variables having a factor loading of less than 0.50 were eliminated. The cumulative percentages of total variance extracted by the successive factors were all greater than 50 percent, hence considered a satisfactory solution (Tabachnick and Fidell, 2007). The reliability coefcients of all scales were above the minimum reliability level of 0.70, indicating satisfactory internal consistency. The foregoing conrms that the results of CFA as presented in Table I comprise reliable and valid items for operationally dening the research constructs. Relationship identication Multiple regression analysis is a multivariate statistical technique that allows prediction of a single dependent variable from more than one independent variable, and also the determination of inuential independent variables (Hair et al., 2006). Multiple regression analysis was, hence, performed to test the rst two hypotheses; where the dependent variable KM was considered to be a single variable and transformational (TF) and transactional leadership behaviors (TA) were independent variables. Table II summarizes the regression results for testing H1 and H2, which indicate that both TF and TA are positively related to KM, R 2 values are 0.165 and 0.087 respectively. The more detailed picture on these relationships between leadership and KM was revealed by the ndings of the regression analyses at the factor level, and the results are presented in Table III and Table IV. The results indicate that, within
Table II. Regression analysis of KM practices on transformational and transactional leadership behaviors

Independent variables Transformational leadership (TF) Transactional leadership (TA)

R 0.406 0.294

R2 0.165 0.087

F 30.193 14.714

ANOVA Sig. 0.000 0.000

B 0.346 0.320

Beta

Coefcients t Sig. 5.495 3.386 0.000 0.000

0.404 0.294

leadership behaviors, charisma and contingent reward are signicant contributors to KM, especially with knowledge socialization (SO) and knowledge exchange (EX). To test the third hypothesis, and to determine whether organizational culture (OC) moderates the relationship between TF and KM, a moderated regression analysis was utilized. According to Arnold (1982), moderated regression analysis provides the most straightforward method for testing hypotheses in which an interaction term is applied. Accordingly, a hierarchical regression analysis with KM practices as the dependent variable was performed. The main effects of TF and TA were entered rst, followed by the interaction terms of OC. The procedure eliminated the main effect of leadership prior to examining the interaction effect (Stone and Hollenbeck, 1989). Additionally, in order to minimize multicollinearity, the independent variables (IVs) were centered, and the interaction terms were formed by multiplying together two centered terms (Hair et al., 2006; Cronbach, 1987). The evidence of moderation is present when the interaction terms account for signicant residual variance in the dependent variable (Becerra-Fernandez and Sabherwal, 2001). Hence, the change in R 2 and the F-statistic are examined for each step. Throughout the analyses, attention was also paid to the standardized coefcient to see if the F-statistic for that hierarchical step was signicant. As presented in Table V, when the interaction terms (TF HI, TF AD, and TF MI) were introduced in Step 2, no signicant increases in R 2 were found, thus indicating that none of these dimensions of OC appears to moderate the effect of TF on KM practices within an organization. Therefore, H3 was not supported. Nonetheless, H4 was partially supported. As shown in Table VI, in the moderated regression of TA on KM, the interaction terms of hierarchy (HI) and mission (MI) culture were signicant. The results were indicated by the statistically signicant increase in the R 2 values when the interaction terms were introduced. However, AD (adaptability) did not moderate the relationship between TA and KM. To interpret the effect of the interaction term, and according to Aiken and Wests (1991) recommendation, the value of interaction variable was chosen to be one standard deviation below the mean, at the mean, and one standard deviation above the mean. Simple regression lines were then generated, by substituting these values into the moderated regression with the interaction terms. As result of this computation, three simple regression equations were produced (Figures 2 and 3), where the inuence of HI and MI on the relationship between TA and KM was revealed. The statistical signicance of the slopes of these simple regression equations were also analyzed and established (Aiken and West, 1991). The simple regression equations detailed in
Predictor Unstandardized coefcient/standardized coefcient b (t statistic) CH IC R 0.048/0.062 (0.600) 0.278/0.305 (3.185) * 0.315/0.291 (2.864) * 0.135/0.183 (1.756) 0.155/0.179 (1.864) 0.037/0.036 (0.351) 0.229 0.444 0.315

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Criterion IN SO EX

R2 0.052 0.197 0.099

Adj. R 2 0.040 0.187 0.088

F 4.259 18.897 8.506

Notes: *Signicant at the 0.005 level; CH: Attributed charisma; IC: Individual consideration; IN: Internalization; SO: Socialization; EX: Exchange

Table III. Regression model of the relationships between TF and KM factors

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Criterion

IN SO EX 2 0.109/-0.162 (22.026) 2 0.020/-0.025 (20.348) 2 0.053/-0.057 (20.741) 2 0.03/-0.042 (20.414) 0.025/0.031 (0.328) 2 0.053/-0.053 (20.544)

Notes: *Signicant at the 0.05 level; * *Signicant at the 0.005 level CR: Contingent reward; MBEA: Management-by-exception active; MBEP: Management-by-exception passive; LF: Laissez faire; IN: Internalization; SO: Socialization; EX: Exchange

Table IV. Regression model of the relationships between TA and KM factors Predictors Unstandardized coefcient B/standardized coefcient b (t statistic) MBEA MBEP LF 0.076/0.101 0.032/0.036 0.102/0.096 0.989 0.387 0.988 R 0.297 0.486 0.408 R2 0.088 0.237 0.166 Adj. R 2 0.064 0.216 0.144 F 3.667 11.773 7.568

CR

0.156/0.217 (2.521) * 0.387/0.457 (5.811) * * 0.384/0.38 (4.626) * *

Step 1 TF Independent TF Interaction effect TF HI TF AD TF MI Equation DR 2 R2 DF F Beta 0.404 t 5.495 * * TF HI Beta t 0.416 0.041 5.403 * * 0.532 20.53 0.002 0.165 0.283 15.168 * * 0.003 0.166 0.520 15.310 * * TF AD Beta t 0.398

Step 2 TF MI Beta t 0.411 5.347 * *

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5.283 * * 20.721

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0.025 0.328 0.001 0.164 0.107 15.063 * * Table V. Result of multiple regression analysis of transformational leadership and KM practices with the moderating effect of organizational culture

0.163 30.193 * *

Notes: *Signicant at 0.05 level; * *signicant at 0.01 level; TF: Transformational leadership behaviors; HI: Hierarchy; AD: Adaptability; MI: Mission

Step 1 TA Independent Beta T TA HI Beta t TA AD Beta t

Step 2 TA MI Beta t

TA 0.294 3.836 * * 0.269 3.487 * * 0.271 3.487 * * 0.261 3.378 * * Interaction effect TA HI 2 0.147 21.904 * TA AD 2 0.126 21.624 20.171 2 2.211 * TA MI Equation DR 2 0.021 0.015 0.028 R2 0.087 0.108 0.102 0.115 DF 3.624 * 2.639 4.888 * F 14.714 * * 9.293 * * 8.754 * * 9.985 * * Notes: *Signicant at 0.05 level; * *signicant at 0.01 level; TA: Transactional leadership behaviors; HI: Hierarchy; AD: Adaptability; MI: Mission

Table VI. Result of multiple regression analysis of transactional leadership and KM practices with the moderating effect of organizational culture

Figures 1 and 2 both indicated a signicant ( p , 0.05) positive regression of KM on TA at all levels of HI and MI. The equations indicate that the lower the HI or MI level, the steeper the slope. This suggests that HI and MI have negative moderating effects on TAs contribution to KM, thus suggesting that the stronger hierarchical, goal-oriented and competitive the culture, the weaker the positive relationship between transactional leadership behaviors and KM practices. Discussion The results of this study suggest that both transformational and transactional leadership are positively related to KM practices. These results received support from Politiss (2001) and Crawfords (2005) recent contentions that the aforesaid leadership behaviors are positively related to knowledge acquisition attributes and KM inventory. The obtained results of this study, however, further reveal that charismatic leadership

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Figure 2. Regression of KM on TA on different levels of HI

Figure 3. Regression of KM on TA on different levels of MI

and contingent reward leadership behaviors have greater inuence on all the dimensions of KM practices. These ndings are certainly parallel with prior research in the eld of KM and organizational innovation (Chang and Lee, 2007; Lam, 2002). These studies generally suggest that charismatic leadership and contingent reward behaviors contribute to the creation of organizational knowledge and a managerial mindset that promote the ow of knowledge through organization. Interestingly, the contribution of contingent reward leadership, on all dimensions of KM practices, seems to be slightly stronger than the effect of charisma attributed behaviors (as presented in Tables V and VI). These ndings was somewhat unexpected because the classical theoretical arguments presented in the literature clearly indicate that charismatic leadership is a much more effective type of leadership in various settings and with different leadership outcomes (Lam, 2002; Bryant, 2003). Few explanations may be offered herein to explain this difference. First, as knowledge has often been perceived as a source of power, people tend to have feelings of ownership and often hoard knowledge (Andreas, 2005). This adds to competition

among people interested in reward and recognition. With contingent reward leadership behaviors, employees are motivated and directed to achieve expected standard of performance in exchange for the promised reward which may include satisfactory performance, pay increases, praise and recognitions, better work assignment and the like (Yukl, 2006), thus improving the efciency of organizational learning or knowledge creation. Second, it is also possible that the nature of organizational context in this study requires more contingent reward leadership than in other previous studies. The effectiveness of leadership may vary across different context (Bass, 1985). Vera and Crossan (2004) contend that while transformational leaders foster individual and group learning in a context of change, transactional leaders do so within a context of stability. Given that the surveyed organizations might emphasize more on efciency, safety and continuity rather than experimentation, risk taking and punctuated change, hence the kind of conventional behaviors specied by contingent reward leadership might be relatively more effective. Although, the literature highlights impact of organizational culture on the effectiveness of leadership (Block, 2003; Bass and Avolio, 1993), the results of the present study did not nd that is the case with transformational leadership and KM practices. Several factors may help to explain this nding. It is possible that transformational leaders can create or change the culture to support KM, instead of having direct inuence on KM practices. This explanation is in agreement with Jung et al.s (2003) contention that transformational leadership can directly and indirectly enhance organizational innovation by creating a supportive organizational culture. Consistent with this viewpoint, Lim (1995) proposed that culture might be the lter through which leadership inuence organizational performance. At the same time, secondary cultural embedding mechanisms such as organizational structure, existing systems and procedures, and the physical arrangement of works space were not considered in this study. It is noted in the reviewed literature that KM may be hindered by organizational culture that is highly formalized and heavily dependent on standard operating procedures, rules, and regulation (De Long and Fahey, 2000; Schein, 2004). Additionally, Lams (2002) study found that transformational leadership effectiveness is highly dependent on the contextual factors such as organizational structure, formal arrangement of works and the degree of power sharing. Hence, it is plausible that the insignicant moderating role of organizational culture on the effectiveness of transformational leadership behaviors for KM could be explained as due to the overlook of these secondary cultural inuences. Results of this study, however, demonstrated that the relationship between transactional leadership and KM practices was moderated by hierarchy and mission organizational culture. The moderating effect is less clear with the adaptability culture; it did not make any signicant change in the variance. Moreover, the negative beta values indicate that the higher scores in organizational culture were associated with lower contributions of transactional leadership to KM practices, with the exception of adaptability culture. These results provide compelling evidence in support of the moderating role of organizational culture on the relationship between transactional leadership and KM.

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The above results extend the ndings of Basss (1985) and Howell and Avolios (1993) studies by revealing the negative impact of hierarchy and mission culture on leadership. These ndings, however, are contrary with Burns and Stalkers (1961) proposition that highly centralized, formalized, and standardized organizational culture are favored by transactional leadership. Nevertheless, a study by Bass and Avolio (1993) found that a strong organizational culture, with values and internal guides for more autonomy at lower level, can prevent the leader from increasing his/her personal inuence on followers. Consistent with this viewpoint, Kwantes and Boglarsky (2007) posited that aspects of organizational culture, that encourage controlling and competitive behaviors, could negatively affect transactional leadership effectiveness. Implications for managerial practices There are several important implications from this research for SMEs. The study ndings suggest that both transformational and transactional leadership behaviors are essential to KM practices. The creation of a successful KM system, however, depends on how well leaders can balance transactional and transformational behaviors, authoritarian and participative systems, and task and relationship orientation. Leaders who choose transactional behaviors will work within current culture and follow existing norms, values, and procedures. In this sense, transactional leadership behaviors reinforce current KM practices. Transformational leadership behaviors, in contrast, allow top executives to adapt the organizational culture and realign it with the new vision, when needed. Furthermore, the ndings indicated that charisma and contingent reward are the most effective leadership behaviors for KM practices. Leaders should, therefore, focus on developing these leadership behaviors, depending upon the situation. They should build respect and trust based on working with individuals, on setting up and determining agreements in order to achieve specic goals, on clarifying expectations, and on providing rewards for the successful completion of tasks. Importantly, Bass (1985) established that transformational and transactional leadership behaviors can be learned through training programs. This holds an important message for management. Individuals can develop transformational and transactional leadership behaviors, and as it is argued here, these behaviors can have positive impact on KM. This study also highlighted the moderating role of organizational culture. The results indicated that the effectiveness of leadership behaviors were contingent upon the type of organizational culture. Hence, these ndings suggest that leaders should use this mechanism effectively in order to establish the forms of thinking and the levels of motivation and behaviors that are important for the organization. When KM is in focus, leaders must devote time and attention to knowledge activities and issues, and they can do so through every-day behaviors that send a clear message, something that particularly important. Limitations and directions for future research One of the key limitations is the cross-sectional nature of the study. It is possible that at least certain aspects of leadership and organizational culture, and its impact on KM practices emerge with some kind of time lag. A longitudinal treatment of data might yield additional insights into the impact of leadership behaviors and organizational

culture. This study was also unable to actually observe managers interacting with followers. Critics recommend using observational data to supplement survey measures of transformational and transactional leadership (Howell and Avolio, 1993). It was agreed that such strategies serve to enhance understanding of complex forms of leadership in several different context (Bass and Avolio, 1990). Nevertheless, it is important to note that the results of the study are generally consistent with theoretical predictions based on extant research.
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