Int. Journal of Business Science and Applied Management, Volume 7, Issue 1, 2012

Transformational leadership and job satisfaction: The mediating

effects of perceptions of politics and market orientation in the

Japanese context

Takuma Kimura

This paper investigates the causal relationship among transformational leadership, perceptions of organizational

politics, market orientation, and work-related outcome. In this study, we assumed that organization-level

perceptions of organizational politics and market orientation mediate the relationship between top

management’s transformational leadership and employees’ work-related outcomes and that perceptions of

organizational politics diminish market orientation. Data were collected from a sample of 200 employees

working in Japanese companies. To test the hypothesized correlations, we used structural equation modelling

using AMOS 16.0. As we hypothesized, both perceptions of politics and market orientation mediated the

relationship between transformational leadership and employees’ job satisfaction. However, contrary to our

expectation, perceptions of organizational politics were not significantly correlated with market orientation. This

Acknowledgments: The author would like to thank the anonymous reviewers for their insightful comments and

suggestions to improve the quality of the paper. And the author wishes to thank Ryuichi Hirano and Miku

Yamagishi at Neo Marketing Inc. for their support in conducting this research.

1 INTRODUCTION

Since the 1960s, organizational politics has been a prominent issue in organizational management studies.

One of the most often cited definitions of organizational politics is Mintzberg’s which views it as “individual or

group behaviour that is informal, ostensibly parochial, typically divisive, and above all in a technical sense,

illegitimate—sanctioned neither by formal authority, accepted ideology, nor certified expertise (although it may

exploit any one of these)” (Mintzberg, 1983, p. 172). Some studies define organizational politics as a broader

and more general set of social behaviours (e.g., Pfeffer, 1981). However, for the purpose of this study, we

studies were carried out in the Western context. To the best of our knowledge there are no studies that

empirically examine organizational politics in Japanese companies.

However, organizational politics is a common issue in Japanese firms. Japanese firms widely exhibit

political behaviours, such as sub-optimization, power struggles, factional disputes, and tactics used by

individuals to wield influences, such as ingratiation. Despite the lack of academic research, a lot of Japanese

business people have pointed out the existence of organizational politics and its harmful effects. For example,

Tsujino (2010), in memoirs of his working life at Sony stated that the recent slump of Sony was partly due to the

spreading of an introvert attitude and a decline in market orientation caused by organizational politics.

Market orientation enhances business performance and leads to other positive work-related outcomes

(Jaworski & Kohli, 1993). Thus, if organizational politics detrimentally affects market orientation, firms would

In this study, we investigated correlations among transformational leadership, organizational politics,

market orientation, and work-related outcomes. More specifically, we examined the correlation between

transformational leadership and job satisfaction, and the mediating effects of POPs and market orientation on

the relationship. We tested our model by using a sample of employees working in Japanese firms. Cultural

differences among countries may lead to differences in some aspects of organizational politics. However,

because there have been no academic studies of organizational politics in the Japanese context, and some

previous studies implied the applicability of the Western framework to the Japanese context, we relied on

theoretical framework of Western studies.

As described below, previous Western studies have already examined many of our hypotheses. In this

respect, our study is an application of a Western theory in the Japanese context. However, to the best of our

transformational leadership. This distinction was first suggested by Burns (1978) and has been developed by

subsequent studies (e.g., Avolio & Bass, 1991; Bass & Avolio, 1993). Whereas transactional leaders seek to

satisfy the current needs of followers through transactions or exchanges mediated by contingent reward

behaviours, transformational leaders arouse heightened awareness and interests in the group or organization,

increase confidence, and move followers gradually from concerns for existence to concerns for achievement and

growth (Yammarino & Dubinsky, 1994).

Previous empirical research revealed that while transactional leadership behaviours are negatively related

to organizational performance, transformational leadership behaviours lead to higher organizational

performance (Howell & Avolio, 1993; MacKenzie, Podsakoff, & Rich, 2001; Parry, 2003). Although some

studies emphasized a ‘culture-specific’ perspective of leadership effectiveness (for review see Dickson, Den

(1990) identified six key behaviours of transformational leaders: (1) identifying and articulating a vision, (2)

providing an appropriate model, (3) fostering the acceptance of group goals, (4) high performance expectations,

(5) providing individualized support, and (6) intellectual stimulation.

Podsakoff et al. (1990) demonstrated that there is a great deal of consensus among the researchers on some

of these behaviours, but not on others. For example, almost all of the reviewed literatures had established

“identifying and articulating a vision” as an important component of the transformational leadership process.

Similarly, more than half of the studies had identified “fostering the acceptance of group goals” and “providing

an appropriate model” as elements of transformational leadership. In contrast, concerning the other three

2.2 Perceptions of Organizational Politics (POPs)

The literature on organizational politics can be classified into three approaches: (1) studies on influence

tactics, conflict, and actual political behavior in organizations, (2) studies on POPs, (3) studies on political skills

and capacities of the self within the workplace (Drory & Vigoda-Gadot, 2010). Since the seminal work by Ferris

et al. (1989) proposed a model for the examination of employees’ POPs, researchers have conducted empirical

intentions, job stress, job dissatisfaction, and declines in organizational commitment (cf. Atinc et al., 2010;

Kacmar & Baron, 1999: Miller, Rutherford, & Kolodinsky, 2008). Therefore, reduction of employees’ POPs

should be viewed as an important issue both in the theory and practice of organizational management.

Political behaviours are likely to occur when a work environment is characterized by a high degree of

uncertainty or ambiguity (Ferris et al., 1989) which are generated when objective and specific criteria for

decision making are absent. Such uncertainty and ambiguity give organization members room to engage in

opportunistic behaviours and influence-related tactics. Even though an organization has some formal rules and

regulations, employees’ perceptions of the decision-making process can be political if the evaluation criteria for

decision making are obscure. Such a political environment will be viewed as unjust and unfair (Andrews &

Kacmar, 2001). Indeed, Andrews and Kacmar’s (2001) empirical research revealed a significant negative

hypothesized the following;

H1: Transformational leadership is negatively correlated with POPs.

As noted above, Ferris et al.’s (1989) POPs model assumes that POPs negatively influence work outcomes.

Indeed, a lot of empirical research has shown various detrimental effects of POPs on employees. Ferris et al.’s

(1989) model posits that organizational politics is a source of stress in the work environment, and thus POPs

induce negative work-related outcomes. Some researchers have argued that if the work environment is political,

employees’ investment into the organization (i.e., expenditure of effort to work in the organization) becomes

more risky (Cropanzano, Howes, Grandey, & Toth, 1997; Randall, Cropanzano, Bormann, & Birjulin, 1999). In

The POPs model was established in the Western context (Ferris et al., 1989), and much empirical research

on the model was conducted in Western countries. However, in recent years some research has replicated the

antecedents and consequences of POPs suggested by Ferris et al.’s (1989, 2002) model in the Eastern context

(e.g., Huang, Chuang, & Lin, 2003; Liu, Liu & Wu, 2010; Poon, 2003; Poon, 2006). Thus, we assume that POPs

have negative effects on work-related outcomes in Japanese organizations as well. However, there has been no

empirical research in the Japanese context. According to Hofstede (2001), a notable feature of Japanese culture

is high uncertainty avoidance in which people tend to feel stressed by uncertain or unknown situations.

Therefore, Japanese employees may be likely to suffer a feeling of dissatisfaction when they perceive their

Market orientation is defined as “an organization culture that most effectively and efficiently creates the

necessary behaviours for the creation of superior value for buyers.” (Narver & Slater, 1990, p.21). Narver,

organization’s culture. They argued that appropriate leadership is essential to create market orientation in an

organization. Jaworski and Kohli (1993) echoed these viewpoints. They argued that unless an organization gets

clear signals from top managers about the importance of being responsive to customer needs, the organization is

not likely to be market oriented. Indeed, their empirical analysis showed that the greater top management’s

emphasis on market orientation, the greater the market orientation in the organization.

To reinforce market orientation, top management should articulate their vision and propagate it among

members so as to integrate the interests and values of various individuals and/or departments/groups within the

organization, and enable members to prioritize goals and objectives of the organization. We can regard these

leadership behaviours as essential parts of transformational leadership. Specifically, these leadership behaviours

are equivalent to “identifying and articulating a vision” and “fostering the acceptance of group goals”

Political behaviours are unsanctioned attempts at using influence to promote self-interest at the expense of

organizational goals (Ferris & Judge, 1991; Ferris & Kacmar, 1992; Ferris et al., 1996). Thus, in a political

organization, individuals and/or departments/groups tend to prioritize their own interests, and pay less attention

to the interests of other groups and/or that of the overall organization. They are prone to engage in political

behaviours in an attempt to receive favourable treatment and acquire more resources. These behaviours distort

resource allocation leading to detrimental effects on organizational performance.

To be market oriented, an organization requires cross-functional customer-value creation processes and

activities. In other words, each member, function, department, and/or group has to cooperate to create desired

customer value (Narver et al., 1998). However, in a political organization, because of self-serving behaviours of

each group or member, cross-functional customer-value creation processes and activities might be unlikely to

POPs (Nye & Witt, 1993; Harris, Harris, & Harvey, 2007).

On the basis of these arguments and findings, we can assume there is a negative association between POPs

and market orientation. Indeed, empirical research has shown that the extent of political behaviour by

organizational members is negatively associated with the degree of market orientation (Harris & Piercy, 1999).

Thus, we hypothesized:

H4: POPs are negatively correlated with market orientation.

significantly affect the strength of the link between market orientation and performance, the link itself

universally exists across various contexts (Ellis, 2006). Therefore, we can assume the same association between

market orientation and its outcome in the Japanese context as in the Western context. As noted above, because

of the restrictions in research implementation, we limited our focus to job satisfaction. Thus, we suggested the

following hypothesis:

H5: Market orientation is positively correlated with job satisfaction.

Summarizing the above discussion, we suggest the model presented in Figure 1. This model proposes that

POPs and market orientation mediate the association between transformational leadership and job satisfaction,

research issue.

obtained, representing a response rate of 41.5%. Among them 303 respondents met the research requirements

and were then sent the main questionnaires. In this main questionnaire we collected the data regarding our four

focal constructs (i.e., transformational leadership, POPs, market orientation, and job satisfaction). We obtained

200 responses (66.0% of 303 qualified members). To ensure anonymity and confidentiality, response data were

Because of concerns about response burden, tenure at organization was measured categorically with

responses being grouped in four blocks (i.e. 2 years and more to less than 3 years, 3 years and more to less than

4 years, 4 years and more to less than 5 years, 5 years and more). We only included respondents with 2 years

and more at their organization because a certain degree of time is necessary for an employee to understand

subtle features of their work environment, especially organizational politics. Although lacking a scientific

rationale, as a rule of thumb in Japan it is said that it takes about 3 years for new employees to be well informed

about their workplace. However, limiting respondents’ tenure to 3 years and more might have resulted in too-

small a sample. Thus, we limited respondents’ tenure to 2 years and more. We also limited respondents to full-

time employees, omitting part-time workers. In Japanese firms, full-time and part-time employees generally

work under different human resource management systems even if they are in a same workplace. A lot of part-

power struggles and conflicts a common and inevitable outcome in these jobs. Therefore, they are appropriate

for investigating organizational politics. Although this occupation classification is popular in Japan on a

practical level, it does not fully correspond to that of Japanese government surveys. Giving priority to

respondents’ convenience, we adopted this type of popular classification. Thus, we could not rigorously

compare the distribution of job categories in our sample with that of the entire Japanese labour force.

Nonetheless, by comparison with the results of the Japanese Labour Force survey, we would say that the job

distribution of our sample was not very different from that of the national labour force.

multiple levels, namely, individual, group, and organization. Recently, some theorists have emphasized the

importance of applying a multi-level perspective to empirical analyses of organizational politics (e.g. Darr &

Johns, 2004; Fedor, Maslyn, Farmer, & Bettenhausen, 2008; Hochwarter, Kacmar, Perrewé, & Diane, 2003;

Maslyn & Fedor, 1998). The larger organization can be nonpolitical while an employee experiences high levels

of politics in his or her immediate work group (Maslyn & Fedor, 1998). Indeed, Maslyn and Fedor (1998) and

Hochwarter et al. (2003) found that employees distinguish between political behaviours occurring within their

own work groups versus those in the larger organization.

Since our focus was at the organization-level, in the analysis we focused on organization-level variables,

Market orientation: Market orientation was measured by an eight-item scale developed by Farrell and

Oczkowski (1998). Sample items from this scale include “We monitor our level of commitment and orientation

to serving customers’ needs.” and “Our strategy for competitive advantage is based on our understanding of

customer needs.” Cronbach’s alpha for scores on this scale was 0.89.

Job Satisfaction: Job satisfaction was measured by a two-item scale developed by Hackman and Oldham

(1975). A sample item from this scale is “Generally speaking, I am very satisfied with this job.” Cronbach’s

alpha for scores on this scale was 0.82.

We performed exploratory factor analysis (EFA) on these items by the principal factor method with

varimax rotation and extracted predicted factors (i.e., transformational leadership, POPs, market orientation, and

job satisfaction). Since two items of POPs, “Rewards come only to those who work hard in this organization”

(reverse scored) and “Pay and promotion decisions are consistent with existing organizational policies” (reverse

scored) demonstrated low factor loadings (i.e., lower than 0.50), we deleted these items from the analysis below.

Next, we performed four separate confirmatory factor analyses (CFAs) to assess the discriminant validity

of these constructs. CFAs were conducted on the proposed four-factor model and three alternative models.

models. Thus, we proceeded to test the four-factor model.

Note: N=200; *p<0.10, **p<0.05, ***p<0.01

4.2 Hypotheses Testing

Figure 2 shows the SEM results of the structural model. Each numerical value shown in Figure 2 is a

standardized coefficient. The resulting fit indices indicated an acceptable fit of the model as all fit indices

showed a good fit. As for the absolute goodness-of-fit indices, chi-square=1.640 (p=0.20), RMSEA=0.057,

GFI=0.996, AGFI=0.959. As for the relative goodness-of-fit indices, NFI=0.993, CFI=0.997, IFI=0.997.

Figure 2 shows that top management’s transformational leadership was negatively correlated with

Finally, to test whether the mediation of POPs and market orientation was ‘partial’ or ‘full’, we set a

comparative ‘partial’ model which assumed partial mediation: the direct effects of transformational leadership

on job satisfaction. In this comparative model’s setting, we added an arrow from transformational leadership to

job satisfaction, and deleted the arrow from POPs to market orientation. The resulting fit indices indicated that

the fitness of the hypothesized model was better than that of the ‘partial’ model. As for the absolute goodness-

of-fit indices of the ‘partial’ model, chi-square=8.370 (p<0.01), RMSEA=0.192, GFI=0.980, AGFI=0.798. As

for the relative goodness-of-fit indices, NFI=0.971, CFI=0.974, IFI=0.974.

market orientation.

Figure 2: Results of the Proposed Research Model (Standardized Coefficients)

market orientation. As stated by Podsakoff et al. (1990), essential components of transformational leadership

include identifying and articulating a vision, and fostering the acceptance of group goals. These functions serve

to make employees concentrate their attention on their company’s goals and to reduce unproductive conflicts.

Thus, top management’s transformational leadership can serve to enhance organization’s market orientation and

lower the level of organizational politics.

Since organizational politics represents certain unique domains of organizational culture and climate

(Shaker, 1987), it may be that we need to examine POPs in consideration of the national culture. However, since

there has been neither theoretical nor empirical research on POPs in the Japanese setting, we developed a

correlational model based on Western literatures. Our findings are in line with previous empirical research in the

Western context (e.g., Vigoda-Gadot, 2007). We thus assumed a similar theoretical basis and expected similar

(1991) argued that POPs consist of three dimensions―“general political behaviour”, “go along to get ahead”,

and “pay and promotion”―and much recent empirical researches has adopted this view. Thus, the two items

used in this study may not have been enough to measure whole aspects of organizational politics in the

workplace. This may be one of the reasons why POPs was not correlated with market orientation.

The EFA result that two items showed low levels of factor loading might reflect work environment features

in Japanese organizations. These two deleted are matters of distributions and procedures of rewards such as pay

and promotion. In Japanese firms, pay and promotion decisions are sometimes distorted not only by

organizational politics but also by “seniority-based evaluation”. Since the 1990s, many Japanese firms have

discarded the “seniority-based personnel system” and introduced a “performance-based personnel system”

(Keizer 2010). However, attitudes of seniority orientation still exist in many workplaces in Japan. Thus, we can