Empowering Leadership, Psychological Empowerment and Employee Outcomes: Testing a Multi-level Mediating Model

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1 bs_bs_banner British Journal of Management, Vol. 26, (2015) DOI: / Research Note Empowering Leadership, Psychological Empowerment and Employee Outcomes: Testing a Multi-level Mediating Model Kai Hung Fong and Ed Snape 1 Tianda Group Limited, Level 24, CITIC Tower, No. 1 Tim Mei Avenue, Central, Hong Kong, and 1 Department of Management, Hong Kong Baptist University, Hong Kong Special Administrative Region, China Corresponding author esnape@hkbu.edu.hk This study examined the effects of empowering leadership on employees in a customer service organization, using data from 266 employees and their supervisors from 41 work teams in a division of a large Hong Kong telecommunications corporation. Empowering leadership had acceptable levels of within-group agreement and between-group variability, providing support for its analysis as a group-level construct. Testing a multi-level model in which psychological empowerment was hypothesized to mediate the relationship between both within-group and between-group empowering leadership and individual outcomes, empowering leadership was associated with psychological empowerment at both levels. There was evidence of significant mediation effects at both the individual and group levels. These findings underline the importance of analysing both within-group and between-group differences in empowering leadership and their effects on individual attitudes and behaviours. Scholars have suggested that leadership theory has been grounded in a bureaucratic framework, emphasizing top-down control (Uhl-Bien, Marion and McKelvey, 2007). However, organizations are moving away from hierarchical management, emphasizing instead the need to empower employees, requiring leaders concerned less with directing subordinates than with supporting and empowering them to perform (Arnold et al., 2000), and there is evidence that such empowerment is positively associated with employees attitudinal and behavioural outcomes (e.g. Avolio et al., 2004). Empowering leadership has been seen as a distinct type of leader behaviour (Arnold et al., 2000), providing support to subordinates through coaching, encouragement, training and emotional support, and information (Bandura, 1986). Employees are thus more likely to have a sense of meaning in their jobs, and to feel capable of implementing job activities on a self-managed basis. Studies of empowering leadership have been conducted mainly at the individual level of analysis (e.g. Ahearne, Mathieu and Rapp, 2005; Arnold et al., 2000). There is theoretical support for this in that a leader may empower individual employees to a greater or lesser degree, depending on individual characteristics (e.g. Yukl and Fu, 1999; Zhang and Bartol, 2010). However, it is increasingly being recognized that leadership may be analysed at the group level, with followers subject to the common effects of a shared leader (e.g. Feinberg, Ostroff and Burke, 2005). Studies have thus adopted either an individual- or group-level approach to empowering leadership (Srivastava, Bartol and Locke, 2006; Zhang and Bartol, 2010). However, it is important to address both the between- and within-group processes linking empowering leadership and outcomes at the same time. We address this, analysing effects at both levels. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.

2 Leadership and Empowerment 127 UNIT LEVEL Unit-level empowering leadership. Individual-level empowering leadership. Psychological empowerment. Employee attitudes and behaviours. INDIVIDUAL LEVEL Figure 1. Hypothesized research model Our contributions are as follows. First, we evaluate whether empowering leadership, represented by Arnold et al. s (2000) Empowering Leadership Questionnaire (ELQ), can be validated as a group-level construct. Although the ELQ was initially developed and validated at the individual level, the questionnaire items focus on the behaviour of the leader towards the respondent s work group as a whole. While others have analysed empowering leadership at the team level (Chen et al., 2011; Srivastava, Bartol and Locke, 2006), to the authors knowledge, we provide the first evaluation of the group properties of the ELQ using the full scale. If the ELQ can be conceptualized as a group-level construct, this makes it possible to analyse between-group differences in the consequences of empowering leadership. Second, we test a model in which psychological empowerment mediates the relationships between empowering leadership and employee work outcomes (see Figure 1). Chen et al. (2007) have shown the importance of taking a multi-level approach to the analysis of leadership and empowerment, but they analysed leadership climate and leader member exchange, rather than empowering leadership. Studies that have examined the process by which empowering leadership influences employee attitudes and behaviour have analysed it at the individual, team or cross (team to individual) level (Chen et al., 2011; Srivastava, Bartol and Locke, 2006; Zhang and Bartol, 2010). However, there is a theoretical basis for both between- and within-group effects, so it is important to estimate effects at both levels simultaneously, not least to avoid conflating the two (Zhang, Zyphur and Preacher, 2009), and to provide clearer insights into the nature of the mediation process. In doing so, our aim is not to resolve whether empowering leadership is to be conceptualized as either a group-level or an individual-level phenomenon, but to evaluate both. We therefore assess the effects of empowering leadership and psychological empowerment at both levels of analysis. Conceptual framework and hypotheses There is theory and evidence to suggest that empowering leadership behaviour may be regarded as either an individual-level or a grouplevel construct (Srivastava, Bartol and Locke, 2006; Zhang and Bartol, 2010). Therefore, we assess both the individual-level and group-level effects of empowering leadership on employees psychological empowerment, and on individuallevel attitudinal and behavioural outcomes, implying a multi-level mediating model. Empowering leadership and psychological empowerment Psychological empowerment is concerned with employees perceptions of their power to cope with events, situations and problems (Thomas and Velthouse, 1990), and has been defined as individuals experience of intrinsic motivation, based on cognitions about themselves in relation to their work role (Spreitzer, 1995). Feelings of empowerment are likely to be shaped by the organizational context, and in particular by management practices that delegate decision-making

3 128 K. H. Fong and E. Snape authority (Seibert, Wang and Courtright, 2011), and leadership behaviours aimed at empowering subordinates (Ahearne, Mathieu and Rapp, 2005; Arnold et al., 2000). Empowering leadership enhances individuals experience of intrinsic motivation relating to their cognitions of competence, self-determination, impact and meaning (Bowen and Lawler, 1992). Unlike broader concepts such as transformational leadership, empowering leadership is more clearly focused on empowerment, so that the association with empowerment is likely to be stronger. Questions remain about the appropriate level of analysis at which to assess empowering leadership. Zhang and Bartol (2010) argue that leaders differentiate between subordinates in the degree to which they empower them. Building on the insights of leader member exchange (LMX) theory, which suggests that leaders adjust their behaviour according to individual follower characteristics (Dansereau, Graen and Haga, 1975; Nielsen and Daniels, 2012), Wu, Tsui and Kinicki (2010) use the term differentiated leadership to refer to the extent to which a leader exhibits varying levels of individual-focused leadership behavior to individual group members (p. 90). This will directly influence the quality of individuals exchanges with the leader. Leader member exchange theory suggests that dyadic exchange relationships are formed based on personal relationships, compatibility and follower characteristics (Dansereau et al., 1975). Followers are divided into in-groups and out-groups (Sherony and Green, 2002), with the favoured in-group benefitting from the leader s attention, which helps them create meaning from their work experience and relate this to the overall goals of the group (Nielsen and Daniels, 2012). In-group members have a more positive exchange with their leaders, are likely to enjoy the leader s respect and trust, and be afforded greater autonomy (Graen and Uhl-Bien, 1995). This suggests that empowering leadership behaviours may be seen as part of the leader s input into a positive exchange, differentiated based on in-group membership. Consistent with this, Yukl and Fu (1999) found that managers delegated more to subordinates they saw as being competent, sharing their task objectives, having a favourable exchange relationship and longer dyad tenure, and who were themselves supervisors. Apart from this differentiated individual-level perspective, empowering leadership has also been conceptualized at the group level (Srivastava, Bartol and Locke, 2006), the suggestion being that leader behaviour may be perceived more or less in common by subordinates, as an ambient stimulus. Individual subordinates may assess their leader based not only on how the leader behaves towards them personally, but also on the leader s behaviour towards the group. Such grouplevel empowering leadership may explain variance in employee outcomes over and above that explained by individual-level empowering leadership, since followers of an empowering leader will be influenced not only by the dyadic relationship with the leader, but also by the dynamics of being a member of an empowered group. Social influence theory suggests that members of a group tend to develop similar perceptions and attitudes, owing to their regular interaction and sharing of experiences and information (Salancik and Pfeffer, 1978), and this may lead to the development of norms and habits concerning behaviours (Hausknecht, Hiller and Vance, 2008). Individuals may thus be influenced by the way in which their co-workers respond to an empowering leader, giving rise to a group-level effect. Consistent with a group-level perspective, Arnold et al. s (2000) ELQ has a group focus, in terms of the definitions of sub-dimensions and in the wording of specific items. Items either specifically refer to my work group as the focus of the leader s behaviour (e.g. Encourages work group members to express ideas/suggestions ) and/or describe behaviour that is general rather than aimed at one person (e.g. Leads by example ). This is true of all five sub-dimensions: leading by example (e.g. Sets high standards for performance by his/her own behaviour ), participative decision-making (e.g. Listens to my work group s ideas and suggestions ), coaching (e.g. Helps my work group see areas in which we need more training ), informing (e.g. Explains rules and expectations to my work group ), and showing concern/interacting with the team (e.g. Cares about work-group members personal problems ). This suggests that all five dimensions reflect a group-focus, although while the referent is the work group, it is still possible that followers see things differently based on the leader s interaction with them individually. Chen et al. (2011) analysed empowering leadership behaviours at the team level, finding empirical support for aggregation of followers ratings,

4 Leadership and Empowerment 129 using Kirkman and Rosen s (1999) scale, with the team leader as the referent. Similarly, Srivastava, Bartol and Locke (2006) examined the team-level mechanisms linking empowering leadership and team performance, providing empirical support for aggregating subordinates ratings for their supervisor and analysing the effect of this grouplevel rating on team performance. Using 15 (out of 38) items from the ELQ, they found high withingroup consistency of subordinate ratings for a particular supervisor, as well as a between-group mean square that was significantly greater than the within-group mean square. In contrast, Zhang and Bartol (2010) found that between-group variance was not significantly greater than within-group variance, supporting the analysis of empowering leadership behaviours as an individual-level phenomenon. However, they used Ahearne, Mathieu and Rapp s (2005) measure of leadership empowerment behaviour, which consists of items that focus on individual supervisor subordinate interaction (e.g. My manager helps me understand how my objectives and goals relate to that of the company ). This contrasts with the ELQ, which focuses on the subordinate s impression of the supervisor s behaviour towards the work group in general (e.g. Encourages work group members to express ideas/suggestions ). This paper adopts the Arnold et al. (2000) ELQ, so that we anticipate group-level properties and effects for empowering leadership. Unlike Srivastava, Bartol and Locke (2006), we use all 38 items so that, to our knowledge, we provide the first evaluation of the group properties of the full ELQ scale. However, we are mindful of suggestions that leaders may treat individual subordinates differently, leaving open the possibility of within-group differences in employee perceptions of empowering leadership behaviour. Previous studies have examined the process by which empowering leadership may influence attitudes and behaviour, conducted at the individual, team or cross (team to individual) levels (Chen et al., 2011; Srivastava, Bartol and Locke, 2006; Zhang and Bartol, 2010). Since empowering leadership is aimed specifically at empowering individual employees (Ahearne, Mathieu and Rapp, 2005; Arnold et al., 2000), our focus is on individual psychological empowerment as a mediator in the association with employee attitudinal and performance outcomes. However, Zhang, Zyphur and Preacher s (2009) analysis suggests that modelling group or individual-level empowering leadership as an antecedent of individual outcomes, with an individual-level mediator, risks conflating within-group and between-group mediation effects. They recommend procedures to differentiate the between-group and within-group effects. We explain this below, but the key point is that, having identified the potential for effects at both the group and individual levels, it is essential to estimate both simultaneously. In taking this approach, we are not necessarily expecting to resolve whether empowering leadership and the empowerment of subordinates is to be conceptualized as either a group-level or an individual-level phenomenon. Instead, we anticipate that there may be effects at both levels, and we aim to provide a clear assessment of their relative importance. In addition to conducting an aggregation analysis on the ELQ to assess the degree of between-group and within-group variance, we test the following hypotheses about the association between empowering leadership and individual employees psychological empowerment: H1: Both (a) individual-level and (b) grouplevel empowering leadership behaviour will be positively related to psychological empowerment. Empowerment and employee outcomes Empowering leadership is a motivating leadership style that is likely to be associated with employee performance (Ahearne, Mathieu and Rapp, 2005; Arnold et al., 2000). Analysed at the individual level, it has been shown to be positively associated with job performance (Ahearne, Mathieu and Rapp, 2005) and employee creativity (Zhang and Bartol, 2010), and for team-level empowering leadership there is evidence of a positive association with team performance (Srivastava, Bartol and Locke, 2006), and a cross-level association with individual innovative and teamwork behaviours and turnover intentions, with psychological empowerment and affective commitment mediating some of these associations (Chen et al., 2011). Empowerment theorists view psychological empowerment as a mechanism through which contextual factors such as leadership influence employee attitudes and behaviours (Maynard, Gilson and Mathieu, 2012; Spreitzer, 1995, 1996; Spreitzer, Kizilos and Nason, 1997). The argu-

5 130 K. H. Fong and E. Snape ment is that empowered employees experience meaningfulness in their work and feelings of selfefficacy and competence (Spreitzer, 1995), are intrinsically motivated and actively oriented towards their work (Spreitzer, 1995), and so are likely to perform well. At the individual level, empowerment has been found to mediate between transformational leadership and organizational commitment (Avolio et al., 2004), while Bogler and Somech (2005) found that empowerment mediated the relationship between teachers participative decision-making and organizational citizenship behaviour. The literature suggests that psychological empowerment and intrinsic motivation mediate the relationship between leadership and performance outcomes at the individual (Ahearne, Mathieu and Rapp, 2005; Zhang and Bartol, 2010) and group levels (Srivastava, Bartol and Locke, 2006). One study evaluated leadership and empowerment effects at individual and team levels, with psychological empowerment mediating the relationship between leader member exchange and individual performance, and team empowerment mediating the relationship between team climate and team performance (Chen et al., 2007). We suggest that individual psychological empowerment will mediate the relationship between empowering leadership behaviour and employee outcomes. As we have seen, there is some evidence to support this (Chen et al., 2011). While we conceptualize psychological empowerment as an individual-level construct, we anticipate between-group as well as within-group variance, and we assess mediation at both levels. While this involves aggregating psychological empowerment to the group level, using the group mean to estimate between-group effects, in doing this we are simply recognizing the possibility of between-group variance, reflecting differences in the empowering leadership behaviours of different group leaders. In assessing the individual outcomes of empowering leadership, we include both job attitudes and behaviours, specifically job satisfaction and organizational commitment, and in-role (IRB) and organizational citizenship behaviours (OCB). The literature has looked at both attitudes and behaviours as consequences of leadership (e.g. Bass and Riggio, 2006), and work on psychological empowerment shows a positive association with attitudes such as job satisfaction and organizational commitment (Hui, Au and Fock, 2004; Kirkman and Rosen, 1999). In considering OCB, we distinguish between individually focused organizational citizenship behaviour (OCBI) and organization-focused organizational citizenship behaviour (OCBO). The former may benefit specific individuals, through interpersonal altruism, the latter benefitting the organization as a whole, by showing high levels of conscientiousness over and above job requirements (Williams and Anderson, 1991). We hypothesize as follows: H2: Psychological empowerment mediates the relationships between (a) individual-level and (b) group-level empowering leadership, on the one hand, and (i) job satisfaction, (ii) organizational commitment, (iii) IRB, (iv) OCBI and (v) OCBO, on the other. Method Sample and data collection Data were collected from 302 employees and their supervisors in a call centre of a Hong Kong telecommunications corporation. There were no formal policies aimed specifically at encouraging employee empowerment. Employees completed surveys assessing their supervisors empowering leadership behaviours, and their own psychological empowerment, organizational commitment and job satisfaction. Supervisors rated the IRB and citizenship behaviours of subordinates. Surveys were administered at scheduled times during work hours. All were briefed on the research prior to completing the questionnaire, and were assured that responses would be treated in confidence. Respondents completed the questionnaires individually and returned them directly to the researcher. The questionnaire was administered in Chinese, the English-language original having been translated into Chinese by the first author and back-translated into English by a professional translator, with the translation then checked for accuracy. Some employees did not respond owing to absence, and 23 questionnaires were dropped because of incomplete data. The final sample included 266 employees from 41 work teams, an effective response rate of 88%. Teams were the employees primary work units, with a single supervisor who provided the ratings for IRB and

6 Leadership and Empowerment 131 OCB and was the target for employee ratings of the supervisor s leadership. The average group size was 6.5; 32% of employees worked in the Hong Kong Special Administrative Region and the rest in Guangzhou in the People s Republic of China; 95% were customer service staff; over 50% were aged 25 or below, with over 98% aged 45 or below; 75% had been with the organization for two years or less; and 59% were female. Measurement A 7-point Likert response format was used for all items (1 strongly disagree to 7 strongly agree ). Scales were calculated as the mean of individual items. Empowering leadership behaviours. Empowering leadership behaviours were operationalized with the ELQ (Arnold et al., 2000), with 38 items assessing the sub-dimensions of Leading By Example, Participative Decision-Making, Coaching, Informing and Showing Concern/Interacting with the Team. We replicated Arnold et al. s (2000) procedure for assessing the dimensionality of the ELQ, finding support for the five-factor model (details are available from the first author). However, as in previous studies (Arnold et al., 2000; Srivastava, Bartol and Locke, 2006), the correlations between the sub-dimensions were high, and a confirmatory factor analysis suggested a single second-order factor with an acceptable fit (χ 2 = , df = 165, CFI = 0.96, RMSEA = 0.07). The fit of the hypothesized model was comparable to the original US-based customer service sample (Arnold et al., 2000). Alpha for the full scale was Psychological empowerment. Spreitzer s (1995) 12-item psychological empowerment scale was used, with four subscales: meaning, competence, self-determination and impact. The four-factor model showed a marginal fit (χ 2 = , df = 48, CFI = 0.88, RMSEA = 0.11), but superior to a single-factor model (χ 2 = , df = 54, CFI = 0.57, RMSEA = 0.19; Δχ 2 = , Δdf = 6, p < 0.01). Consistent with Spreitzer (1995, 1996), Spreitzer, Janasz and Quinn (1999) and recent studies (Avolio et al., 2004; Seibert, Silver and Randolph, 2004), responses were averaged to form an overall psychological empowerment score. Reliability for this overall scale was This is relatively low (e.g. compared with Seibert, Silver and Randolph s (2004) 0.88), and might be expected to result in an underestimation of correlations with other constructs. In spite of this, significant findings emerged for psychological empowerment (see below), although we cannot rule out the possibility that these are somewhat understated. Discriminant validity of ELQ and PE. To establish the discriminant validity of empowering leadership and psychological empowerment, we compared an unconstrained model with one in which the correlation between the two secondorder constructs was constrained to one. The unconstrained two-second-order-factor model produced an acceptable fit (χ 2 = , df = 455, CFI = 0.93, RMSEA = 0.06). The change in chisquare test between this and the constrained model was significant (Δχ 2 = , Δdf = 1, p < 0.01), suggesting that the unconstrained model provided a significantly better fit. Empowering leadership and psychological empowerment were moderately correlated (r = 0.41, p < 0.01), but the correlation was significantly less than one. Job satisfaction. We used a three-item scale based on Cammann et al. s (1983) job satisfaction scale: I am satisfied with my job, I am satisfied with my pay and I am satisfied with the recognition I receive for a job well done. Alpha was Organizational commitment. Affective organizational commitment was measured with four items from Meyer and Allen (1997): I would be happy to spend the rest of my career with this organization ; I do not feel a strong sense of belonging to my organization (reverse coded); I do not feel part of the family at my organization (reverse coded); and This organization has a great deal of personal meaning to me. Alpha was Employee behaviours. In-role and citizenship behaviours were assessed by supervisors. Four items from Williams and Anderson (1991) were used to measure IRBs: Adequately completes assigned duties ; Perform tasks that are expected of him/her ; Meets formal performance requirements of the job ; and Fails to perform essential duties. Alpha was OCBI was measured with four altruism items from Podsakoff et al. (1990): Helps others who have been absent ; Help others

7 132 K. H. Fong and E. Snape who have heavy workloads ; Willingly helps others who have work related problems ; and Is always ready to lend a helping hand to those around him/her. Alpha was OCBO was measured using four conscientiousness items from the same source: Attendance at work is above the norm ; Does not take extra breaks ; Obeys company rules and regulations even when no one is watching ; and Is one of my most conscientious employees, with an alpha of Measurement model. Fit indexes for the measurement model for all employee-rated constructs was marginally acceptable (χ 2 = , df = 687, CFI = 0.89, RMSEA = 0.07), as was that for the supervisor-rated constructs (χ 2 = , df = 51, CFI = 0.95, RMSEA = 0.10). The three supervisor-rated constructs (IRB, OCBI and OCBO) were highly correlated (all > 0.7 in the CFA), so we also estimated a single-factor model. This provided an inferior fit (χ 2 = , df = 54, CFI = 0.79, RMSEA = 0.20; Δχ 2 = , Δdf = 3, p < 0.01), providing evidence of discriminant validity despite the high correlations. Control variables. Initially, we decided to control for gender (1 = male, 2 = female), age (1 = 25 or below, up to 5 = 56 or above), organizational tenure (from 0 = Less than 1 year, 1 = 1 year, 2 = 2 years and up to 11 = Greater than 10 years ), education level (from 1 = Secondary school or below up to 5 = Doctoral degree), job level (1 = managerial and 2 = non-managerial), job nature (1 = customer service and 2 = other) and work location (1 = Hong Kong and 2 = Guangzhou). However, in general, the association between demographic characteristics and our hypothesized outcomes has been weak or inconsistent (e.g. Podsakoff et al., 2000, pp ; Meyer and Allen, 1997, pp ). Consistent with this, our initial analyses showed these to be generally non-significant, and including them did not affect the conclusions. In the interests of parsimony and clarity, the control variables have been omitted from the analyses reported below. Analysis Employees worked in teams, with a unique supervisor. We assume that leadership is to some degree a group-level phenomenon, representing a referent-shift consensus model (Chan, 1998), with subordinates evaluating the supervisor s behaviour towards the group. This is suggested by the ELQ items (e.g. Helps my work group see areas in which we need more training ). To assess the group-level properties of empowering leadership, we examined within-group agreement (rwg), intraclass correlation (ICC(1)) and reliability of the mean (ICC(2)). Because of the nested structure of the data, we used hierarchical liner modelling (HLM) to test the hypotheses. Given the focus on both individuallevel and group-level empowering leadership, we group-mean centred the individual-level independent variables (empowering leadership and psychological empowerment) and included their group means at level 2. This allows us to estimate separate level 1 and level 2 mediating effects for level 1 outcomes (MacKinnon, 2008), and avoids conflating the two (Zhang, Zyphur and Preacher, 2009). Results Table 1 shows the descriptive statistics, reliabilities and correlations. The reliabilities were acceptable. As a prelude to testing the hypotheses, we assessed whether there was significant variance in empowering leadership at the between-group level. An ANOVA indicated significant betweengroup variance (F = 4.61, p < 0.001), with an ICC(1) of 0.36 suggesting that over a third of variance was between-group, and an ICC(2) of 0.78, suggesting that the mean was a reliable indicator of between-group differences. Furthermore, there was evidence of considerable within-group agreement in employee ratings of their leader s behaviour, with a median rwg of These findings are supportive of aggregating employee ratings of their leader s behaviour. Hypotheses 1a and 1b suggested that individual- and group-level empowering leadership would be positively associated with psychological empowerment. We tested this using HLM (Table 2). A null model with no predictors suggested significant between-group variance in psychological empowerment (τ 00 = 0.09, p < 0.001). The ICC suggested that 16% of variance in psychological empowerment was between groups. Along with the tests for empowering leadership,

8 Leadership and Empowerment 133 Table 1. Means, standard deviations and correlations a Variable Mean Standard deviation Mean Standard deviation 1. Psych empowerment (0.69) 0.52** 0.52** 0.34* 0.44* 0.36* Empowering leadership ** (0.94) 0.32* 0.34* 0.31* Job satisfaction ** 0.27** (0.77) 0.65** Org commitment ** 0.21** 0.65** (0.75) IRB ** 0.18** (0.90) 0.82** 0.79** OCBI ** ** (0.83) 0.62** OCBO * 0.14* ** 0.63** (0.87) Note: a Group means, standard deviations, and correlations (n = 41) are above the diagonal; individual-level means, standard deviations and correlations (n = 266) are below the diagonal. Individual-level Cronbach alphas in parentheses. *p < 0.05; **p < Table 2. Hierarchical linear modelling results for psychological empowerment a Variable Null model Model 1 Level 1 Intercept 4.95*** (0.09***) 3.49*** (0.07***) Empowering 0.32*** (0.04 ) leadership Level 2 (group means) Empowering 0.30*** leadership Within-group residual variance ICC 0.16 R 2 within-group 0.17 R 2 between-group 0.20 Model deviance Note: a Employees n = 266, Groups n = 41. Entries are estimates of the fixed effects (γs). Estimates of the random variance components (τs) are in parentheses. The analysis was repeated with individual-level control variables, but the pattern of results did not differ substantially from those reported here. p < 0.1; *p < 0.05; **p < 0.01; ***p < this justified estimating how group-level empowering leadership influences empowerment. There was within-group variance in empowering leadership and psychological empowerment, so that within-group analysis was also viable. Model 1 evaluated between- and within-group effects, adding group-mean centred individuallevel empowering leadership at level 1 and the group mean of empowering leadership at level 2. The results in Table 2 show a positive association between level 1 empowering leadership and psychological empowerment (γ 10 = 0.32, p < 0.001), explaining 17% of the within-group variance. Hypothesis 1a was supported. Group-level empowering leadership also had a significant relationship to empowerment (γ 01 = 0.30, p < 0.001), accounting for 20% of between-group variance, supportive of Hypothesis 1b. The association between empowering leadership and psychological empowerment was thus evident at both levels. Hypotheses 2a and 2b suggested that psychological empowerment would mediate the effects of individual-level (2a) and group-level (2b) empowering leadership. In assessing mediation, four conditions must be satisfied (Baron and Kenny, 1986). First, the initial variable, empowering leadership, must be significantly associated with the mediator, psychological empowerment. This was met at both level 1 and level 2, as shown by the findings for Hypothesis 1. Second, the initial variable must be associated with the outcome. Third, there must be significant relationships between the mediator and outcome. Finally, the effect of the initial variable on the outcome must be reduced (to zero for full mediation) when the mediator is entered. In the following, conditions 2 4 are tested in a multi-level context. As a preliminary, we examine whether there was significant between-group variance in outcomes. The null models shown in the first column of Table 3 suggest that there was significant between-group variance for job satisfaction (ICC = 0.15), IRB (ICC = 0.25), OCBI (ICC = 0.17) and OCBO (ICC = 0.12), but not for organizational commitment (ICC = 0.05). Testing the second mediation condition, model 1 added group-mean centred empowering leadership and the group mean of empowering leadership. Model 2 assesses conditions 3 and 4, by adding groupmean centred psychological empowerment and the group mean of psychological empowerment. The findings for job satisfaction in model 1 suggest that, at both the within-group and between-group levels, empowering leadership

9 134 K. H. Fong and E. Snape Table 3. Hierarchical linear modelling results for employee outcomes a Variable Null model Model 1 Model 2 Job satisfaction Level 1 intercept 4.91*** (0.19***) 3.02*** (0.15***) 0.34 (0.15***) Empowering leadership 0.42*** (0.10) 0.19 (0.02 ) Psychological empowerment 0.73*** (0.07) Level 2 (group means) Empowering leadership 0.38*** 0.13 Psychological empowerment 0.77*** Within-group residual variance ICC 0.15 R 2 within-group R 2 between-group Model deviance Organizational commitment Level 1 intercept 4.29*** (0.06) 4.29*** (0.07 ) 4.29*** (0.09**) Empowering leadership 0.20* (0.01) 0.02 (0.02) Psychological empowerment 0.66*** (0.00) Level 2 (group means) Empowering leadership Psychological empowerment Within-group residual variance ICC 0.05 R 2 within-group R 2 between-group Model deviance IRB Level 1 intercept 4.77*** (0.32***) 3.58*** (0.30***) 1.16 (0.28***) Empowering leadership 0.16* (0.02) 0.12 (0.02) Psychological empowerment 0.23* (0.09) Level 2 (group means) Empowering leadership Psychological empowerment 0.63* Within-group residual variance ICC 0.25 R 2 within-group R 2 between-group Model deviance OCBI Level 1 Intercept 4.96*** (0.18***) 4.29*** (0.19**) 2.73* (0.19***) Empowering leadership 0.11 (0.03) 0.06 (0.03) Psychological empowerment 0.24** (0.02) Level 2 (group means) Empowering leadership Psychological empowerment 0.37 Within-group residual variance ICC 0.17 R 2 within-group R 2 between-group Model deviance OCBO Level 1 intercept 4.74*** (0.20**) 3.71*** (0.19**) 2.34 (0.18**) Empowering leadership 0.16 (0.03) 0.13 (0.01) Psychological empowerment 0.09 (0.14) Level 2 (group means) Empowering leadership Psychological empowerment 0.40 Within-group residual variance ICC 0.12 R 2 within-group R 2 between-group Model deviance Note: a Employees n = 266, Groups n = 41. Entries are estimates of the fixed effects (γs). Estimates of the random variance components (τs) are in parentheses. The analysis was repeated with individual-level control variables, but the pattern of results did not differ substantially from those reported here. p < 0.1; *p < 0.05; **p < 0.01; ***p <

10 Leadership and Empowerment 135 was positively associated with job satisfaction (γ 10 = 0.42, p < 0.001, γ 01 = 0.38, p < 0.001). In model 2, psychological empowerment was significant at level 1 (γ 20 = 0.73, p < 0.001) and level 2 (γ 02 = 0.77, p < 0.001), with the coefficient on level 1 empowering leadership reduced in size, but marginally significant (γ 10 = 0.19, p < 0.10) and that on level 2 not significant (γ 01 = 0.13, p > 0.10). This suggests partial mediation at level 1 and full mediation at level 2, with significant indirect effects for both (Sobel test statistic within = 4.25; p < 0.001; Sobel test statistic between = 2.96; p < 0.01), supportive of Hypotheses 2ai and 2bi. For organizational commitment, the null model suggested that there was no significant between-group variance for organizational commitment (τ 00 = 0.06, n.s.) so we did not analyse the level 2 effect, assessing level 1 relationships only. Model 1 suggested that empowering leadership was positively associated with commitment at the within-group level (γ 10 = 0.20, p < 0.05). In model 2, psychological empowerment was significant at level 1 (γ 20 = 0.66, p < 0.001), and level 1 empowering leadership was non-significant (γ 10 = 0.02, p > 0.10). These results provide evidence of full mediation at the within-group level only, with a significant indirect effect (Sobel test statistic = 4.08; p < 0.001), providing support for Hypothesis 2aii, but not 2bii. For IRB, in model 1 empowering leadership was positively associated with IRB at the withingroup (γ 10 = 0.16, p < 0.05) and between-group levels (γ 01 = 0.24, p < 0.10). In model 2, psychological empowerment was significant at level 1 (γ 20 = 0.23, p < 0.05) and at level 2 (γ 02 = 0.63, p < 0.05). The coefficient on level 1 empowering leadership was smaller, but still significant (γ 10 = 0.12, p < 0.10), suggesting partial mediation (Sobel test statistic = 1.90; p < 0.10), providing support for Hypothesis 2aiii. The coefficient on level 2 empowering leadership was not significant (γ 01 = 0.10, p > 0.10) suggesting full mediation (Sobel test statistic = 2.09; p < 0.05), consistent with Hypothesis 2biii. For OCBI, model 1 suggested that empowering leadership was not significantly associated with OCBI at the within-group (γ 10 = 0.11, p > 0.10) or between-group level (γ 01 = 0.14, p > 0.10). In model 2, psychological empowerment was significant at level 1 (γ 20 = 0.24, p < 0.01), but not at level 2(γ 02 = 0.37, p > 0.10). The coefficients on level 1 and level 2 empowering leadership were still nonsignificant (γ 10 = 0.06, p > 0.10, and γ 01 = 0.09, p > 0.10). There was no support for betweengroup mediation (Hypothesis 2biv), with no significant association between empowerment and OCBI at this level. However, the within-group analysis provides an example of what some have termed an indirect effect (Kenny, Kashy and Bolger, 1998), questioning the need for a direct relationship between the initial variable and outcome in mediation, on the grounds that such a relationship may be distal and hence more difficult to detect than the indirect paths to and from the mediator. Consistent with this, condition 2 was not met, but empowering leadership was associated with empowerment and empowerment with OCBI. This indirect effect was significant (Sobel test statistic = 2.84; p < 0.01), providing evidence for Hypothesis 2aiv. Finally, for OCBO, model 1 suggests that empowering leadership was not significantly associated with OCBO at the within-group level (γ 10 = 0.16, p > 0.10), but was at the betweengroup level (γ 01 = 0.21, p < 0.10). In model 2, psychological empowerment was significant at neither level 1 (γ 20 = 0.09, p > 0.10) nor level 2 (γ 02 = 0.40, p > 0.10). These results provide support for neither within-group nor betweengroup mediation (Hypotheses 2av and 2bv). Discussion We sought to make two contributions: to evaluate empowering leadership as a group-level construct, and to test a model in which psychological empowerment mediates the relationships between empowering leadership and employees work outcomes. On the first, consistent with Srivastava, Bartol and Locke (2006), who used an abbreviated version of the ELQ, we found acceptable levels of within-group agreement and betweengroup variability, providing evidence for the validity of empowering leadership at the group level. On the second, our findings suggest that empowering leadership was associated with psychological empowerment at both the individual and group levels. At the individual level, psychological empowerment played a role as a mediator between empowering leadership and job satisfaction, organizational commitment, IRBs and OCBI, but not OCBO. At the group level, there was also significant mediation, although only for

11 136 K. H. Fong and E. Snape job satisfaction and IRB. The individual-level findings provides support for those who argue that leaders treat individual subordinates differently in terms of empowerment (Zhang and Bartol, 2010), but the group-level findings suggest that it is also important to look at between-group differences in empowering leadership. There are implications for debates on differentiated leadership (Wu, Tsui and Kinicki, 2010). We found individual-level effects suggesting that leaders differentiate in their treatment of followers, which has positive effects on followers attitudes and behaviour. We did not examine group-level outcomes, but Wu, Tsui and Kinicki (2010) found that differentiated leadership resulted in within-group divergence in identification with the leader, and ultimately undermined group collective efficacy and effectiveness. This is an area where further research on empowering leadership would be valuable. In addition, it would be useful to consider the possibility of alternative mediating mechanisms. We examined two levels of analysis and several attitudinal and behavioural outcomes of empowering leadership. A primary aim was to assess the impact of empowering leadership on the empowerment of followers, and the mediating role that this may play with respect to outcomes. Nonetheless, our findings include instances of partial mediation, which leaves open the possibility that there are other mediating processes at work. We do not consider culture directly, so we cannot draw firm conclusions about the implications of cultural differences. Nonetheless, our findings on the efficacy of empowering leadership in a Chinese sample are significant, because questions have been raised as to whether Western leadership models are applicable in Asian cultures (Hui, Law and Chen, 1999). Some argue that employees from a high power distance or uncertainty avoidance culture may react to attempts at empowerment with stress and withdrawal rather than a sense of empowerment (Hui, Au and Fock, 2004; Robert et al., 2000), although others have found a positive association between empowerment and employee attitudes among Asian workers (Avolio et al., 2004). Our sample responded positively to empowering leadership, suggesting that empowering leadership is generalizable to the Chinese context. Stronger insights on the efficacy of empowering leadership await true cross-cultural studies (e.g. Felfe, Yan and Six, 2008), although samples such as ours may have utility in meta-analyses incorporating a crosscultural analysis. These findings have practical implications. The attitudes and behaviours of customer-service employees are crucial, as customers perceptions of service may be influenced by their interactions with employees, while high-quality customer service may provide a competitive advantage (Chebat and Kollias, 2000). Our results suggest that encouraging supervisors to practise empowering leadership may underpin employee empowerment and result in positive employee attitudes and behaviour, and ultimately improve customers service experience. Our findings suggest that empowering leadership contributes positively to the psychological empowerment, attitudes and work behaviours of followers. Employees responded to their leader s empowering leadership as an ambient stimulus, and also to the extent to which their leader empowered them relative to others in their group. These findings add to our knowledge about the effects of empowering leadership, showing that it is important to differentiate between effects at the individual and group levels. References Ahearne, M., J. Mathieu and A. Rapp (2005). To empower or not to empower your sales force? An empirical examination of influence of leadership empowerment behavior on customer satisfaction and performance, Journal of Applied Psychology, 90, pp Arnold, J. A., S. Arad, J. A. Rhoades and F. Drasgow (2000). The empowering leadership questionnaire: the construction and validation of a new scale for measuring leader behaviors, Journal of Organizational Behavior, 21, pp Avolio, B. J., W. Zhu, W. Koh and P. Bhatia (2004). Transformational leadership and organizational commitment: mediating role of psychological empowerment and moderating role of structural distance, Journal of Organizational Behavior, 25, pp Bandura, A. (1986). Social Foundations of Thought and Action: A Social Cognitive Theory. Englewood Cliffs, NJ: Prentice- Hall. Baron, R. and D. Kenny (1986). The moderator mediator variable distinction in social psychological research: conceptual, strategic and statistical considerations, Journal of Personality and Social Psychology, 51, pp Bass, B. M. and R. E. Riggio (2006). Transformational Leadership, 2nd edn. Mahwah, NJ: Lawrence Erlbaum Associates. Bogler, R. and A. Somech (2005). Organizational citizenship behavior in school: how does it relate to participation in decision making? Journal of Educational Administration, 43, pp

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