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Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
3
Nile Journal of Business and
Economics
http://journals.ntnu.ng/ojs/njbe/
NileJBE (2016) 2: 3-16
©Copyright by NTNU
http://dx.doi.org/10.20321/nilejbe.v2i2.48
The Effect of Leadership and Organizational Culture on Effectiveness of
NGOs: An Empirical Study
Hasan METIN1 & Ali COŞKUN
2
1 PhD Candidate, Graduate School of Social Sciences, Fatih University, Turkey
Email: [email protected]
2Professor, Department of Management, Fatih University, Turkey
& International Burch University, Bosnia and Herzegovina
Email: [email protected]
This study aims to investigate the effect of leadership and organizational culture on organizational
effectiveness of nongovernmental organizations (NGOs). In the study, after a comprehensive literature
review, an empirical study by means of a survey questionnaire has been conducted to find out the
effect of leadership and organizational culture on effectiveness. In the study, organizational culture is
conceptualized as motivational climate within the organization, the atmosphere that relies on trust and
confidence and willingness of members to take responsibility and the leadership is analyzed in terms
of being democratic, respecting others, being participative in decision making and taking risks when
necessary. The effectiveness of NGOs refers to the achievement of the previously set objectives, using
benchmarking as an indicator, and diversifying the sources of revenue. The results obtained from the
survey show that organizational culture and leadership both have positive effects on effectiveness of
NGOs.
Key words: Effectiveness, Leadership, NGO, Organizational Culture, Volunteerism.
INTRODUCTION
Non-governmental organizations (NGOs) are crucial for the society with respect to their
humanitarian, political, social objectives they have and the economic activities that take place
within them. They play a very important role by producing goods and services and providing
employment for a very significant amount of people. They are also crucial ―with their
organizational type relying on professional staff, involving volunteers, being formally registered,
having tax-free status, and claiming applied expertise in social policy in terms of delivering social
services or advocating solutions‖ (Srinivas, 2010, p.119).
Leadership and organizational culture are two important concepts for the organizations, which
managers take into consideration when performing in the most effective way. Since NGOs have
common characteristics unique to the sector, which the researcher will cover in the following
sections, the style of leadership plays a very crucial role for the attainment of previously set goals.
Volunteerism is a very significant characteristic of the NGOs that authoritarian leadership style or
military-like culture is less likely to end up with an effective organizational climate.
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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The study first will provide a literature review on NGOs, leadership, organizational culture and
effectiveness. Then the effect of leadership and organizational culture on effectiveness of NGOs is
to be analyzed using the data collected from a survey questionnaire conducted to the solidarity
NGOs in Turkey.
NON-GOVERNMENTAL ORGANIZATIONS (NGOS)
Srinivas, (2010) provided a very detailed explanation on NGOs stemming from a very
comprehensive literature review while quoting from Desmarais (2007, p. 23) and Mintzberg and
Srinivas (2009). Srivinas (2010, p.119) stated ―NGO is typically defined as an organizational type
―relying on professional staff, involving volunteers, being formally registered, having tax-free
status, and claiming applied expertise in social policy in terms of delivering social services or
advocating solutions.
Lewis (2003), Fisher (1994), Najam (1996) and Uphoff (1993) are the other very crucial authors
that expand these distinctions, arguing that a unique voluntary communitarian ethos defines such
efforts, through ―commitment of their workers, volunteers, and members and not primarily
through financial remuneration based on profit making‖ (Lewis, 2003, p. 328).
Given the fact that there are different ways of defining and naming NGOs, it is easy to state that
they have become very crucial with respect to international development especially in developing
countries (Liston, 2008).
NGOs have some specific characteristics that make them different from governmental
organizations (public sector) and private sector such as not seeking profit, having different sources
of revenue from profit seeking organizations, having different kinds of objectives, having multiple
stakeholders, and working with volunteers. Table 1 provides the summary of the characteristics of
the NGOs with their explanations.
Table 1 Characteristics of NGOs
Characteristic Explanation
Institutionalized Having of formal organizational structure
Self-governing Being autonomous in setting goals
Non-profit Being not profit seeking while being economically sustainable
Voluntary Volunteers take roles in NGOs both in operational and
administrational levels
Have independent
governance
Being separated from the state and public Institutions
Sources: JHU CCSS (2010), Ozden (2008), UNDP (2010), Salamon and Anheier (1997), Bulla
Starr-Glass (2006).
NGOs are organized, institutionalized that they have boards, as well as professionals working for
them. NGOs have written rules and procedures, and they are responsible for their operations to
appropriate authorities. They are in contact with other NGOs (Proulx, Hager & Klein, 2014), with
governments, (Ramanath & Ebrahim, 2010) with private sector (Borwankar & Velamuri, 2007)
and they create networks (Poole, 2008).
The second important characteristic of the NGOs as mentioned is being governed independently
that they can have different kind of objectives from profit seeing organizations, which they set
themselves. While the clients of the profit seeking organizations expect satisfactory service or
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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goods with high quality, the donors or contributors of the NGOs do not expect any interest in
return (Henderson, Chase & Woodson, 2002; Beamon & Balcik, 2008; Kendall & Knapp, 2000).
Thirdly, since NGOs do not seek profit, sources of revenue for NGOs might be considered as a
factor that differentiates them from profit seeking or for profit organizations. Profit seeking
organizations obtain their revenues through the sales of their products or services, however the
main sources of the revenue for NGOs are donations, and fundraising, monetary or non-monetary
contributions of governmental institutions, individuals, and private companies.
Fourthly, volunteering (Özmutaf, 2007) is another very crucial concept for NGOs. The
fundamental human source of the NGOs is volunteers. The atmosphere within the NGOs relies on
trust (Burgos, 2012). Since it seems very cost effective to have volunteers to implement the
projects planned for NGOs, it creates challenges for performance measurement due to lack of
formal working relation. NGOs do not sign contracts with the volunteers within their organization
and this makes it very difficult for them to give them assignments and evaluate their performance,
which is very crucial for this study, because the study focuses on effectiveness which can be
considered as a dimension of performance (Ertas, 2012; Rajan & Zingales, 1998; Akingbola,
2012; Samuel, Wolf, & Schilling, 2013, Harris, 2000; Aligica, 2014).
Fifthly, although NGOs have or might have close relationships with governmental institutions and
public bodies, they are separated from them.
VARIABLES OF THE STUDY
Leadership
Leadership can be defined as ―the process by which an individual influences the behavior of
another person or group (Tosi & Hamner, 1982). Another way of defining leadership is ―the
ability to influence the group the achievement of a vision or set of goals‖ (Robbins, Judge &
Campell, 2010).
The theories of leadership can be titled under trait theories (theories that propose specific personal
characteristics differentiate leaders from non-leaders), behavioral theories (Graen & Uhl-Bien,
1990) (theories that assume specific behaviors differentiate leaders from non-leaders), and
contingency theories (theories that assume the situations determine the best style of leadership)
(Robbins, et al., 2010). Transformational leadership, charismatic leadership are other
contributions to the literature of leadership.
Trait Theories
Trait theories as stated above conceptualize leadership with respect to the traits and focus on
determining those who have leadership traits and differentiate them from the others (Owens,
1979). Hundreds of studies have been performed in order to figure out, in what ways the leaders
are different from the others (Scoot & Mitchell, 1976). Samples from Koçel (2011)’s list of the
traits that differentiate leaders from the others is as follows: age, length, gender, race, beauty &
good-looking, intelligence, knowledge, initiative, honesty, sincerity, veracity and determination.
According to trait theories, the only variable of the leadership function is the leader him/herself.
But the studies show that successful leaders have different kind of traits (Koçel, 2011).
Behavioral Theories
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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As stated above, behavior theories of leadership focus on the behaviors, stating that what makes
the leader successful and effective is the way that the leader behaves rather than the traits that the
leader has. In other words, behavior theories emphasize the second variable of the leadership
function (behaviors) more than the other variables (traits and contingencies). Five studies will be
referred under behavioral theories.
Starting from over one thousand dimensions, the researchers of the Ohio State University reduced
their study to two dimensions after factor analyses and concluded that initiating structure and
consideration to be the ―categories that substantially accounted for most of the leadership behavior
described by employees‖ (Robbins, et sl., 2010). Initiating structure can be conceptualized as the
extent to which the leader defines his or her and employees’ roles in the process of goal
attainment. Consideration behavior is the extent to which the leader creates job relations with the
employees relying on mutual trust, and respect for others (Koçel, 2011; Robbins, et al., 2010).
The University of Michigan Studies again came up with two dimensions while studying on the
behavior characteristics of leaders being: employee-oriented leaders and the production oriented
leaders. Employee- oriented leaders stress the relations of the employees while production
oriented leaders focus on technical side of the job. (Koçel, 2011; Robbins, et al., 2010).
Blake and Mouton (1981) created a matrix that is mostly used in organizational development
programs. They gathered the factors that leaders behave under two main categories being: concern
for production and concern for relations. Their matrix is used especially in trainings (Koçel,
2011).
According to Mc Gregor’s X and Y (1960) theories leaders have different assumptions about
employers’ behaviors and these assumptions effect the way that the leader behaves. X theory
presupposes that average worker does not like to work and is not willing to take responsibility.
That is why in order for effective working environment, workers should be kept under control and
even should be punished when necessary. Y theory on the other hand presupposes that work is as
usual and normal as play, for workers that no one is lazy by definition. Everyone has a potential
and workers learn to take responsibility as they increase their potential. Leaders in favor of theory
X, perform an authoritarian style of leadership while leaders in favor of theory Y perform a
democratic style of leadership.
Likert (1977) categorized 4 dimensions in order to conceptualize the behaviors of the leaders
being, exploitive authoritative, benevolent authoritative, consultative, and participative (Koçel,
2011).
Contingency Theories
Contingency theories stress the situations that the leadership function occurs. According to
contingency theories of leadership, effective leader takes the situations into account when making
the leadership decision. ―It all depends” (Bradshaw, 2009) is a very short way of explaining what
contingency approach proposes. Contingency theories of leadership assume the third variable of
the leadership function contingencies (situations) to be the most important variable (Koçel, 2011)
Fiedler’s (1981) emphasizes three situations or contingencies that determine the behaviors of the
leaders:
Leader member relations
Task Structure
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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Position Power
House and Martin in Path-Goal Theory of Leadership (Evans, 1966) stress four behaviors which
can be used according to the situation.
Achievement-oriented,
Directive,
Participative,
Supportive
―Attracting followers by charisma, providing individual attention to each subordinate, inspiring
followers to take up challenges at the grassroots, and serve as a role model by selfless services
that provide rational for his/her presence other than mere pecuniary considerations to
subordinates‖ (Mahalinga Shiva & Suar, 2011) can be considered as the main functions of leaders
in the NGOs.
Organizational Culture
Robbins, et al., (2010) define organizational culture as ―a system of shared meaning held by
members that distinguishes the organization from the other organizations‖. In other words culture
is the set of values which are collectively shared by the members of the organization.
Organizational culture is very closely related with effectiveness especially in the NGO literature.
(Mahalinga et al., 2011).
Robbins et al., state that the characteristics of organizational culture can be listed as follows:
Innovation and risk taking
Attention to detail
Outcome orientation
People orientation
Team orientation
Aggressiveness
Stability
Deal and Kennedy (1982) identified four categories that most of the companies fell into with
respect to culture:
Tough-guy macho culture
The work hard /play hard culture
The bet-your company culture
The process culture
Tough-guy macho culture is consisted of individuals taking high risks. The work hard /play hard
culture consists individuals that are not willing to take risks where having fun and being in action
are the rules. The bet-your company culture refers to atmosphere where high risk with slow
feedback is taken. The process culture refers to environment where very little or no feedback is
present and it is hard for individuals to measure what they do (Robbins, et, al., 2010).
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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The way that the individuals within the organization learn the culture is another important aspect
of the culture. Culture is transmitted to individuals through
Stories
Rituals
Material Symbols
Language (Robbins, et, al., 2010).
Organizational culture in NGOs has some characteristics unique to the NGOs. Table 2 which is
adapted from Tyler (2005) presents the characteristics of the civil society as a sector while making
important comments on the culture within the NGOs.
Table 2 Characteristic of Civil Society and Culture within NGOs
Commitment of ideological kind to involvement of
community Mason (1996)
Having participatory decision-making process Paton and Cornforth (1992)
Being open to innovation, and having high degree of
responsiveness
Mason ( 1996) Commonwealth of
Australia (2001)
Providing services that are not to be provided
otherwise, filling the gaps of the markets Herman and Heimovics (1994)
Stressing the organizational culture because of its
supportive dimension on decision making Paton and Cornforth (1992)
Meeting the need of the individuals for expressing
their behavior Mason (1996)
Commitment to public sector of the employers and
volunteers that lower wages are accepted. O’Connell (1988), Paton (1992)
Source: Tyler (2006, pp.221-222)
Effectiveness
Effectiveness ―determines how well a service is provided or how successful a department or
program is meeting previously established objectives‖ (Fine & Synder, 1999, p. 24). Robbins
(1983) and Miles (1980) provide a very detailed analysis of approaches related to organizational
approaches. Since there are different classifications, (Miles, 1980; Robbins, 1983; Rojas, 2000;
Herman & Renz, 1998; Herman & Renz, 1999; Herman & Renz,2008; Arıkan, 2009) and
different understandings related to definition and conceptualization of organizational
effectiveness, it can be considered as a jungle (Miles,1980, p.355). Table 3 presents the definitions
on effectiveness.
Table 3 Definitions of Organizational Effectiveness
Author Definition
Georgopoulos and
Tannenbaum
(1957)
―… the extent to which an organization as asocial system, give
certain resources and means, fulfills its objectives without
incapacitating means and resources and without placing undue strain
upon its members
Etzioni (1960)
Katz and Kahn
(1966)
―… the ability of an organization to achieve its goals‖
Yuchtman and ―…the effectiveness of an organization [is defined] in terms of
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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Seashore (1967) bargaining position, as reflected in the ability of the organization, in
either absolute or relative terms, to exploit its environment in the
acquisition of scarce and valued resources.‖
Steers (1975)
―… an organization’s capacity to acquire and utilize its scarce and
valued resources as expeditiously as possible in pursuit of its
operative and operational goals.‖
Cummings (1977)
―…the effective organization is one in which the greatest percentage
of participants perceive themselves as free to use the organization and
its subsystems as instrument for their own ends.‖
Goodman and
Pennings (1977)
―…organizations are effective if relevant constraints can be satisfied
and if organizational results approximate or exceed a set of referents
for multiple goals.
Pfeffer ( 1977)
―…effective organizations are those that accurately perceive patterns
of resource interdependence, correctly perceive demands, and then
respond to demands made by those groups that control the most
critical interdependencies.‖
Source: Miles (1980).
Main measures of organizational effectiveness are productivity, efficiency, profit, quality, growth,
turnover, job satisfaction, absenteeism, control, planning and setting goals (Campbell, 1977). The
list can be extended. The most significant point to be stressed in this part is that ―effectiveness is
not one thing. Perhaps a better way to think of organizational effectiveness is an underlying
construct that has no necessary and sufficient operational definition but that constitutes a model
or theory of what organizational effectiveness is‖ (Campell, 1977, p.18).
Lecy, Schimitz and Swedlund (2011) presented a structural literature review on NGO
effectiveness and concluded the following:
there is broad scholarly consensus that unidimensional measures of effectiveness are not
useful—even though such measures are commonly used by NGO/NPO rating agencies; (2)
the scholarship on NGO/NPO effectiveness is dominated by conceptual works, while
empirical studies remain rare; (3) a consensus on how to operationalize effectiveness
remains elusive. These results suggest that progress in our understanding of NGO/NPO
effectiveness requires enhanced efforts at crossing disciplinary divides, adding empirical
analyses, and increasing attention to develop shared categories and methodologies (Lecy,
et.al, 2011).
EMPIRICAL STUDY
Methodology
This study is ontologically realist; epistemologically positivist. The study is quantitative because,
statistical analyses are implemented on the data gathered from the questionnaires.
Linear regression has been utilized in order to determine the effect of the independent variables of
the study (leadership and organizational culture) on the dependent variable (effectiveness).
Participants have been delivered questionnaires with a five point Likert scale with one being
strongly disagree and five being strongly agree. The questionnaire included following categories.
Leadership
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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Organizational Culture
Organizational Effectiveness
Data Gathering
Data gathering of this study was very complicated. The researcher succeeded in contacting 139
solidarity NGOs. Data gathering process was dependent on the personal relations. 17 of the
questionnaires were not properly filled out, that is why net figure of properly filled out
questionnaire was 122. The sample of the research is about 30 percent of the population given the
whole population is around 400. The survey questionnaires of Wadongo’s (2014) and Coşkun’s
(2005) studies have been adapted.
Hypotheses
The study has two hypotheses:
Hypothesis 1: Leadership effects organizational effectiveness.
Hypothesis 2: Organizational culture effects organizational effectiveness.
This study refers to leadership in terms of being democratic, respecting others, being participative
in decision making and taking risks when necessary.
Moreover study refers to organizational culture in terms of motivational climate within the
organization, the atmosphere that relies on trust and confidence and members’ willingness about
taking responsibility.
Lastly the study refers to effectiveness in terms of achieving the previously set objectives, using
benchmarking as an indicator, and diversifying the sources of revenue.
Results of the Analysis
Table 4 provides the summary of the statistics. The Adjusted R square value of the results is 26.60
percent is that independent variables describe the 26.60 percent of the impact on dependent
variable. In other word 26.60 percent of the total variation of the total market can be
explained.The dependent variable of the study is effectiveness while independent variables are
leadership and organizational culture.
Table 4 Model Summary
R
R
Square
Adjusted
R
Square
Std.
Error of
the
Estimate
Change Statistics
Durbin-
Watson
R
Square
Change
F
Change df1 df2
Sig. F
Change
0.527 0.278 0.266 0.60201 0.278 22.92 2 119 0 1.584
As it can be seen in Table 5 there is no problem with the significance of the study.
Table 5 ANOVA Sum of
Squares df
Mean
Square F Sig.
Regression 16.613 2 8.306 22.92 0.000b
Residual 43.127 119 0.362
Total 59.74 121
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
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Table 6 provides the coefficients for the linear equation as well as the significance figures for the
variables. As it can be seen all significance figures are below 0.01.
Table 6 Coefficients
Unstandardized
Coefficients
Standardized
Coefficients T Sig.
Collinearity
Statistics
B Std. Error Beta
Tolerance VIF
(Constant) 1.095 0.382
2.864 0.005
Organizational
Culture 0.31 0.102 0.297 3.022 0.003 0.626 1.597
Leadership 0.273 0.093 0.29 2.946 0.004 0.626 1.597
Therefore the regression function is :
Effectiveness= 0.310 (Leadership) + 0.273 (Leadership) +1.095.
The assumptions of the regression model should be checked as well. First assumption of the
regression model is “multicollinearity” assumption. Multicollinearity does not seem to be a
oroblem because the VIF figures are less than 10.
The second assumption of the regression model is ― autocorrelation” assumption.Durbin Watson
test results below are obtained.
0 dl du 2 4-du 4-dl 4 d
dl= 1.522 (from Durbin Watson table)
du= 1.562 (from Durbin Watson table)
4-du =2.438
4-dl= 2.478
d value of 1.584 is between du (1.562) and 4-dl (2.478) so , Ho is not rejected which means there
is no autocorrelation problem.
DISCUSSION OF THE FINDINGS
Findings of the linear regression indicate that both hypotheses are supported. The results obtained
from the linear regreession present that both leadership and organizational culture have effects on
effectiveness. As stated above the linear funtion derived from the analysis is
Effectiveness= 0.310 (Culture) + 0.273 (Leadership) +1.095
The results present that, all t values are statistically significant as well as the coefficients are all
positive. Moreover no multicollinearity and autocorrelation problem is observed.The hypotheses
are supported.The effect of leadership and organizational culture on effectiveness is presented.
The equation above means 1 standart unit increase in leadeership causes 0.310 standart unit
increase in effectiveness, and 1 standart unit increase in organizational culture causes 0.273
standart unit increase in effectiveness.As it was explianed in 3.3., this study refers to leadership in
terms of being democratic, respecting others, being participative in decision making and taking
risks when necessary and organizational culture is analyzed in terms of motivational climate
within the organization, the atmosphere that relies on trust and confidence and members’
Hasan METIN & Ali COŞKUN/ NileJBE; April 2016
12
willingness about taking responsibility. What effectiveness represents is achieving the previously
set objectives, using benchmarking as an indicator, and diversifying the sources of revenue.
Namely, 1 standard unit increase in the democratic attitude or respecting behavior of the leader is
likely to increase the achievement of previously set objectives by 0.310 units. By the same token,
1 standard unit increase in the motivational climate of the NGO or willingness about taking
responsibility is likely to increase the diversification of the sources of revenue of the NGO or
achievement of previously set objectives by 0.273 units.
CONCLUSION
This study analyses the effect of leadership and organizational culture on organizational
effectiveness of NGOs using an empirical research. The results of the analysis show that
organizational culture; which is analyzed in terms of motivational climate within the organization,
the atmosphere that relies on trust and confidence and members’ willingness about taking
responsibility has positive effects on effectiveness. The study analyses effectiveness in terms of
achieving the previously set objectives, using benchmarking as an indicator, and diversifying the
sources of revenue. In addition, leadership; which is analyzed in terms of being democratic,
respecting others, being participative in decision making and taking risks when necessary is
shown to have positive effects on effectiveness as well.
Importance of motivational character of organizational culture and democratic leadership style can
be emphasized within this study due to specific characteristics of the NGOs. The members and
volunteers of NGOs have no financial expectations and most of them show their presence in the
NGOs with respect to making differences for the community. Moreover as it can be understood
from the definition of volunteerism, there is no obligation to participate the activities of the NGOs
for volunteers as well as for members. That is why, the atmosphere that relies on trust and
confidence is very crucial for the human resources sustainability of the NGOs. Moreover, by the
establishment of an atmosphere where members and volunteers show their willingness to
participate and take responsibility, the likelihood of the effectiveness of the NGOs increases.
One of the limitations of the study would be the low R squared score. The study only focuses on
leadership and organizational culture and leadership, but size and age have not been analyzed
because of their insignificant scores, altough literature provides researches on them. The second
limitation of the study would be the fact that most of the participants from the NGOs that fillled
out the questionniares were the presidents of the NGOs that they data they provided about the
effectiveness of the leader of the NGO might be misleading.
The managerial implications of this study would be the encouragement of the democratic
leadership and motivational atmosphere wihin the NGOs due to specific characteristics of the
NGOs such as volunterism and the absence of monetary expectations in return for the spent time
and effort.
Future research recommendation would be concentrating on relatively more institutionalized
NGOs due to difficulty of collecting delivered questionnaires.
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