Effects of executive-level leader's transformational leadership on talent retention in post merger and acquisition in China

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Zhang, J., 2014. Effects of executive-level leader's transformational leadership on talent retention in post merger and acquisition in China. DBA, Nottingham Trent University.

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Abstract

Talent retention, which can be defined as organizational practices aiming at maintaining the continued employment of high potential and high-performing incumbents to fill the key positions that have the potential to have an impact on the competitive advantage of an organization (Schneider, 1987; Coldwell et al., 2008; Zhang et al., 2014), has been identified by previous researchers (e.g. Lubatkin et al., 1999; Cooke, 2006; Hartmann et al., 2010; Makela et al., 2010) as a particularly important measure of post-merger and acquisition (M&A) performance in contemporary M&A situations in multinational organizations. Connected to this, research (e.g. Bass, 1985; Bycio et al., 1995; Ya-Anan and Bunchapattanasukda, 2011; Zhang et al., 2014) has shown that transformational leadership can be one of the most important factors in predicting talent retention, but little research has been conducted to understand the underlying mechanisms through which transformational leadership may influence retention strategies in post-M&A performance. The aim of this DBA study is to address this research gap by examining whether and how executive-level leaders‘ transformational leadership style influences talent retention in a post-M&A Chinese context. Three research questions guide this DBA study. Firstly, to what extent does executive-level leaders‘ transformational leadership exert direct influence on post-M&A talent retention in mainland China? Secondly, to what extent does executive-level leader‘s transformational leadership exert indirect influence on post-M&A talent retention in mainland China? Thirdly, what factors mediate the influence of transformational leadership on talent retention and why? In the first stage of this doctoral study it was identified that transformational leadership can exert direct influence on talent retention without any mediator (Bass, 1985; Bycio et al., 1995; Ya-Anan and Bunchapattanasukda, 2011), and among factors that mediate the indirect influence of transformational leadership on talent retention, job satisfaction (Locke, 1976; Petty et al., 2005; Mallol et al., 2007; Smith et al., 2011) and organizational commitment (Price and Mueller, 1981; Hom and Kinicki, 2001; Brown and Yoshioka, 2003; Mallol et al., 2007) are recognized by previous researchers as the most important two. A conceptual framework was therefore presented describing the relations of key variables. Allied to this 8 framework, and arising from the theoretical arguments for transf ormational leadership‘s influence on talent retention, are six propositions. To test these propositions and explain the associations among variables in the conceptual framework, a Chinese local company (known here as ‘FB’) located in Shenzhen city, acquired by a multinational corporation (known here as ‘FA’) in 2008, was chosen as the central study for this investigation as they have experienced post-M&A integration. A multi-method approach was taken to data collection and analysis. In the first phase, a fully-structured questionnaire was sent to 54 current employees recognized by the case company as talent, based on their performance, potential, and position. Correlation analysis and structural equation modeling enabled the relationship among variables to be examined. In the second phase, analysis of nine semi-structured interviews with talent was undertaken to map the relationships between different variables. Following this, a short, informal interview with the President of FB was conducted to gain information about his leadership style and FB‘s retention strategies. Results of this DBA study not only prove all six propositions but also indicate significant causal relationship among variables. Findings show that there are four approaches through which transformational leadership can influence talent retention: Transformational leadership directly exerts positive influence on talent retention. Transformational leadership‘s positive influence on talent retention can be mediated by job satisfaction of talent. Transformational leadership‘s positive influence on talent retention can be mediated by organizational commitment of talent. Transformational leadership‘s positive influence on talent retention can be mediated firstly by job satisfaction, and then by organizational commitment of talent. Results from survey and interviews indicate that executive-level leaders‘ transformational leadership style, especially their attributed charisma, idealized influence, and inspirational motivation, can directly exert positive influence on talent retention in the post-M&A Chinese context. Transformational leaders can also increase the rate of post-M&A talent retention through enhancing talent‘s satisfaction with regard to the job itself, learning and development opportunities, and some external job factors such as supervisor and co-worker relationship, organizational culture, and effectiveness of communication and working flow, or through enhancing talent‘s affective commitment. This DBA study contributes to the literature in several ways. Firstly, despite a significant degree of academic and practical interest, the topic of talent management remains under-investigated (Collings and Mellahi, 2009; Iles et al., 2010a; Zhang et al., 2014). This study increases this body of knowledge by defining talent and identifying critical factors that may affect the propensity of an individual to remain with or leave an organization. Furthermore, as Bass indicates in his works (1985; 1998), transformational leadership can be one of the most important factors to control talent turnover. However, although such association has been studied, it is surprising that little research has been conducted to understand the underlying mechanisms through which transformational leadership exerts its influence on talent retention. This study contributes an empirically-supported theoretical framework for relationships between transformational leadership and talent retention by describing four approaches through which transformational leadership can influence talent retention. It also contributes to this line of studies by recognizing transformational leadership‘s superior effectiveness in increasing the rate of talent retention over other leadership styles such as transactional and laissez-faire in Avolio and Bass‘ (1991) Full Range of Leadership Model. With regard to lessons for managerial practice, this DBA study recognizes the important role of executive-level leaders on talent retention strategies in the post -M&A context. Furthermore, although talent retention has been studied extensively in a western context, there are few studies addressing these issues with regard to Chinese companies (Cooke, 2008; Zhang et al., 2014). By using a case from mainland China, this study attempts to provide strategic guidance for multinational M&A practitioners who seek to increase their company’s rate of talent retention in the Chinese context. In addition, only a limited number of studies examine the underlying relationship between leadership styles and talent retention have been carried out in such a dynamic and unstable environment as post-M&A integration. Finally, the study attempts to provide a guidance for post-M&A executive-level leaders to adopt a suitable leadership style, or for multinational firms to select ‘the right leader’ for their acquisitions.

Item Type:	Thesis
Creators:	Zhang, J.
Date:	November 2014
Divisions:	Schools > Nottingham Business School
Record created by:	EPrints Services
Date Added:	09 Oct 2015 09:35
Last Modified:	30 Apr 2017 03:00
URI:	https://irep.ntu.ac.uk/id/eprint/290