In this assignment, you are to critically read and evaluate a scholarly articles strengths, weaknesses, and contributions to the study field. Learning how to critique a journal art

2021, Vol. 64, No. 2, 458–481.

458

https://doi.org/10.5465/amj.2018.0706

LEADING BY DOING: DOES LEADING BY EXAMPLE IMPACT PRODUCTIVITY AND SERVICE QUALITY?

LIAT ELDOR University of Pennsylvania

Tel Aviv University

This paper presents a research model for the creation of organizational value through leading by example. I argue that leading by example serves as a unique value-creation driver by enhancing engagement, productivity, and service quality at the business level. Using a strategy-based resource management framework, I also argue that there are synergies between leading by example and the manifestation of organizational core values. My theory is grounded in the strategy-based notion that combining organizational resources—leading by example (practical element) and organizational core values (con- ceptual element)—optimizes employee engagement, which in turn enhances productivity and service quality. I examine my model empirically using two-time-point panel data derived from three different sources (employees, financial data, and secret shoppers) in a sample of 233 retail stores. The findings provide evidence that leading by example im- proves productivity and service quality (after taking into account the potential influence of charismatic leadership). The indirect effect of leading by example on productivity and service quality (through engagement) is even stronger when manifestation of organiza- tional core values is high. Contributions to theory, research, and practice are presented.

I believe in the power of personal example. You can rant and rave and threaten, but the most effective way to get results is to show someone what you want done.

—Frank Pacetta, Executive Manager, Xerox Corporation

“Leading by example” (hereafter, “LBE”) is the extent to which a leader is engaged in live demon- strations of the expected performance (Barsade & Mesiek, 2004). By engaging in workday employee actions, the leader shows employees what is ex- pected of them, as opposed to telling themwhat to do (House, 1977). Although the leadership literature has pointed to the benefits of LBE (e.g., Luthans & Avolio, 2003; Yukl, 2006), there is a dearth of studies examining whether LBE actually matters; specifi- cally, whether it actually improves business out- comes (Yaffe&Kark, 2011).One reasonLBEhas been understudied might be that researchers have tradi- tionally considered that a leader’s role is to provide instructions rather than to step into subordinates’

tasks (Barsade & Mesiek, 2004). Moreover, given its popularity among organizational consultants, who often urge managers to “lead by doing,” LBE has become more a catchphrase than an academically valid leadership approach (Bolino & Turnley, 2003). In this paper, I argue that LBE is distinct fromother

leadership approaches in which the leader articu- lates the desired expectations but does not illustrate them in a practicalway.Aprime example, and one of the most widely researched leadership practices, is “charismatic leadership,” whereby the leader influ- ences employee behavior through rhetorical skill and an attractive vision for the future (Howell & Shamir, 2005). Although charismatic leadership and other approaches to leadership may influence em- ployees, they do not emphasize the doing element, which is inherent in LBE. To develop a theory about the value creation of

LBE at the business level, I integrate leadership lit- erature (House, 1977) and social learning theory (Bandura, 1977) with the strategy-based resource management model (Sirmon, Hitt, & Ireland, 2007). There are two fundamental tenets of the resource management model that serve as the foundation for the model I explore in this study. First, resource management is the process of structuring organiza- tional resources to build or cultivate existing capa- bilities, and leveraging those capabilities to create

I would like to thank the editor, Anthony Nyberg, and three anonymous reviewers for their thoughtful and de- velopmental comments, which helped considerably to improve the quality of this paper. I would also like to thank Peter Cappelli, Sigal Barsade, Nancy Rothbard, and AndrewCarton for their invaluable advice and guidance in the development of this work.

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value for owners and customers (Sirmon et al., 2007). I argue that LBE can serve as a strategic or- ganizational resource to generate value for a variety of organizational stakeholders (i.e., employees, shareholders, and clients) by enhancing produc- tivity and service quality at the store level. The practical nature of LBE implies that it may be more influential in improving these outcomes than lead- ership models based on verbal means, which is characteristic of charismatic leadership (Howell & Shamir, 2005). Second, the resource management model asserts

that certain organizational actions can magnify the effects resources have on organizational capabilities by clarifying the link between these resources and the organization’s ultimate purpose (Sirmon, Hitt, Ireland, & Gilbert, 2011). Building on Sirmon et al.’s (2011) model, I argue that the effect of LBE on pro- ductivity and service quality can be enhanced by integrating it with the manifestation of core values (i.e., the act of communicating an organization’s primeprinciples to itsworkforce), thus clarifying the link between the leader’s practical actions to the or- ganization’s ultimate goal. Articulating how things should be done (i.e., LBE) and communicating why things should be done (i.e., core valuemanifestation) reflects the fact that the individual’s mind is struc- tured into two systems: encoding concrete observa- tions about reality while seeking logic and meaning

about how to relate to this information (Kroll & Merves, 1986). To explore how LBE affects business-level per-

formance, I propose two pathways: one direct, the other indirect. As shown in Figure 1, in the direct pathwayLBEaffects productivity and service quality beyond the beneficial effect of charismatic leader- ship. Within the indirect route, the combined effect of LBE with core value manifestation enhances em- ployee engagement, which in turn indirectly am- plifies the same business-level performance (via engagement). I examine my model empirically with data on store-level performance across 233 locations of a retail chain, using two-time-point panel data measures from three sources of data—employees, financial results, and secret shoppers. By examining the value creation of LBE at the

business level, I contribute to the leadership litera- ture in three ways. First, although the leadership literature has generated much knowledge in the past 40 years (van Knippenberg & Sitkin, 2013), a critical aspect of leadership—what I call “leading by doing”—has been neglected. Rather, the leadership literature to date has conceptualized leadership al- most exclusively from a verbal perspective. I argue that this conceptualization of leadership is narrower than the way leadership can be understood. By ex- ploringLBE, I thereforeoffer amore complete viewof the leadership construct. Second, studying LBE can

FIGURE 1 Theoretical Model of Value Creation of LBE at the Business Level

Core Value Manifestation Leading by Example Charismatic Leadership

Hypothesis 3 Hypothesis 2 Hypothesis 1

Hypothesis 4

Productivity Obtained from accounting data

Service Quality Evaluated by secret shoppers

Business-Level Performance

Employee Engagement

Note: Variables and relationships indicated by solid lines are the focus of our arguments in the hypotheses. Variables and relationships indicted by dashed lines are for comparison. LBE 5 leading by example.

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help scholars revisit assumptions related to one of the foremost roles of leadership: influencing em- ployees (Bennis & Nanus, 1985). By doing so, I an- swer calls to explore additional leader practices to better understandhow leaders canhave an impact on employees (Antonakis, Avolio, & Sivasubramaniam, 2003; van Knippenberg & Sitkin, 2013). Third, whereas research on the effects of leadership has largely been conducted at the employee level of analysis (Waldman, Javidan, & Varella, 2004), very little research examines leadership at a higher level of analysis (i.e., business, organization). For reasons associated with ecological fallacies and multilevel considerations (Chan, 1998; Kozlowski & Klein, 2000), evidence at the individual level does not obviously exist at the higher level of analysis (Klein & Kozlowski, 2000). Moreover, while a handful of studies have explored empirically the effect of leadership (e.g., charismatic leadership) on finance- oriented results (e.g., productivity), they have generally failed to find support for it, due to small sample sizes (Waldman, Ramirez, House, & Puranam, 2001), or be- cause they examined a direct effect only (Waldman et al., 2004), or oversimplified by not controlling for prior performance (Ensley, Pearce, & Hmieleski, 2006). Thus, exploring the direct and indirect effects of LBE at the business level of analysis addresses empirical gaps in the leadership research in general.

LBE

I define “leading by example” as the extent to which a leader demonstrates ideal workday behav- iors by engaging in employee activities (Barsade & Mesiek, 2004). Examples include a store manager who serves clients on the organization’s front line to demonstrate how sales and service should be exe- cuted, or an executive director who works the front desk night shift once a week to illustrate how clients should be treated (e.g., Fair Haven Community Health Center; see Barsade & Mesiek, 2004). Such demonstrations show employees how their leaders expect them to execute work performance, sell a product, serve the company’s clients, and manage issues during service interactions (Zohar & Tenne- Gazit, 2008). Frank Pacetta (1994: 52) captured this notion in describing his leadership style when he served as a manager for Xerox Corporation:

At the end of our first meeting, I turned to my man- agers and said, “I hope everybody has a full day planned. I know I do.” I told them that when the meeting adjourned, all of us were going to hit the street. All of us—myself included.

Thus, LBE cannot be done successfully just from the leader’s office (e.g., operating anewcustomer service system from one’s computer or telling employees how important service quality is) but in person at the employees’workplace (e.g.,working at the front desk or serving customers on the front line). Leadership scholars have addressed the notion of

LBE theoretically. House (1977) initially introduced LBE as a suggested leadership practice. According to House, leaders can have profound effects on their employees if they “express, by their actions, a set of values and beliefs towhich theywant their followers to subscribe. That is, the leader role-models a value system for his/her followers” (House, 1977: 194). Later, Bass (1985: 77) argued that a leader is inspi- rational to an employee to “the extent the leader provides examples and patterns for its followers.” Conger and Kanungo (1987) depicted effective leaders as engaging “in exemplary acts that followers perceive as involving great personal risk, cost, and energy” (641) and who are “worthy of imitation” (642), while Podsakoff, MacKenzie, Moorman, and Fetter (1990: 112) presented effective leadership as “setting an example for employees to follow,” something Kouzes and Posner (1987) referred to as “modeling the way.” Thus, leaders may speak com- pellingly about vision and goals, but, if they are not providing a live demonstration of these goals, em- ployees will not be fully engaged or identify with them (Kouzes & Posner, 1987). LBE can therefore serve as a mirror that signals to employees that these modeled practices and actions are encouraged, ex- pected, appreciated, and rewarded (MacKenzie, Podsakoff, &Rich, 2001; Zohar&Tenne-Gazit, 2008). LBE is distinct from charismatic leadership, a style

in which the leader verbalizes the appropriate action but does not perform it. “Charismatic leadership” re- flects the ability of a leader to articulate an attractive vision for the future—in otherwords, the promise of a better tomorrow (Mumford, Antes, Caughron, & Friedrich, 2008)—by using rhetoric and passionate argument (Awamleh & Gardner, 1999; Groves, 2005; Kirkpatrick & Locke, 1996). Key behaviors of charis- matic leaders include presenting a sense of mission and expressing an inspirational vision (Antonakis, Bastardoz, Jacquart, & Shamir, 2016; Deluga, 1995). Other conceptualizations of charismatic leadership focus primarily on the way a vision is articulated, such as using a dramatic communication style, cre- atingmemorable messages, displaying emotions, and using powerful imagery (Howell & Shamir, 2005; Shamir, Zakay, Breinin, & Popper, 1998). Thus, whereas charismatic leadership focuses on verbally

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articulating a future-oriented message, and using rhetoric as a leadership lever (Shamir&Howell, 1999; Waldman et al., 2001), the focus of LBE is on being a livemodel of the present expected performance. While senior leaders may not be able to personally

cultivate direct ties with each employee through ex- plicit demonstrations on a sustained basis, LBE can trickle down througha cascadingprocess (Schaubroeck et al., 2012; Waldman & Yammarino, 1999) and social and organizational mechanisms such as small talk, so- cial media, and other networking and communication channels (Barsade&Mesiek,2004;Toubiana&Zietsma, 2017; Wallace, 2004). For example, the founder and former CEO of JetBlue, David Neeleman, frequently loaded bags or personally served clients himself, to convey that all employees are expected to pitch in wherenecessary.VideosofNeelemanlive-modelingthe expected service practices disseminated via the com- pany’s website and conferences inspired JetBlue pilots to start assisting aircraft staff and clients during their downtimebetween flights (seeBolino&Turnley, 2003). Ehrhart and Naumann’s (2004) findings support the potentially pervasive effect of LBE by indicating that, when a leader has a role-modeling effect on a group of employees, their actions will have an expansive im- pact on the overall unit-level employees and their performance. Indeed, role modeling has been pro- posed by leadership scholars as driving a cascading process in relation to which employees who do not directly observe it can still be affected by its “cinder” through social contagion and organizational mecha- nisms (Hunt, 1991; Yammarino, 1994).

THEORETICAL FRAMEWORK AND HYPOTHESES

The Direct Effect of LBE on Productivity and Service Quality

As noted above, the resource management model (Sirmon et al., 2011) argues that the ultimate purpose of organizational resources is to create and sustain value for the organization and its stakeholders. Prior research points to managerial skills and manage- ment actions as explicit organizational resources and unique value-creating assets (Ndofor, Sirmon, & He, 2011; Sirmon & Hitt, 2003; Sirmon et al., 2011). I argue that LBE is one such strategic resource. At the broad level of value creation, LBE helps leaders gain greater knowledge about ongoingbusiness and client needs. It may cultivate more awareness of the effi- ciency of work production and procedures and de- velops higher sensitivity to service quality dynamics

(Barsade & Mesiek, 2004; Trueman, 1991). Indeed, discussing his leading-by-doing leadership style, John deButts, AT&T’s former chairman, expressed the advantage of “having a good day-to-day feel for the way the business is going” (Barsade & Mesiek, 2004: 111). To understand the psychological effect behind LBE,

Bandura’s (1977) social learning theory is a key foun- dation. According to this theory, leaders are an impor- tant and valuable source of modeling for employees in terms of learning new capabilities, ideal behaviors, and expected norms, given their high position and influen- tial status in the organizational hierarchy (Bandura, 1977, 1986). This occurs through social and psycho- logical processes (i.e., imitation, social learning, con- tagion, and modeling; Bandura, 1977) through which the leader generates a cognitive structure among em- ployees on how performance should be executed and how to act in their working routine (Mayer, Kuenzi, Greenbaum, Bardes, & Salvador, 2009; Sy, Côté, & Saavedra, 2005). Specifically, I argue that LBE will enhance produc-

tivity through imitation and social learning. Social learning theory (Bandura, 1977) states that individuals will strive to emulate the behaviors of their role models to ensure that their actions are in line with desired per- formance. Employees witnessing work performed by their leader in the natural work environment realize how effectively it can be executed, mirroring leader behaviors and adjusting their own performance ac- cordingly (Bandura, 1991; Weiss, 1977). When man- agers exhibit leadership by performing employee activities, these ideal behaviors and actions become substantial learning tools regarding expected norms and undesired actions for employees operating in similar situations (Bandura, 1986;Mayer et al., 2009). Employees thus infer appropriate behaviors and per- formance expectations (Rich, 1997). By observing how their leader performs and the outcomes the leader achieves, employees receive a clearer signal about what is expected of them and how they can better meet those required outputs (Bandura, 1991), thus increasing productivity. In addition to creating value by enhancing pro-

ductivity, I argue that LBE creates value for organi- zations by improving the quality of service rendered to customers. When employees are exposed to their leader’s service interactions on the organizational front line, a contagion effect takes place (Barsade, 2002). This starts with exposure to a behavioral stimulus of a leader, which influences employees’ cognition in such a way that their behaviors and reactions start to resemble those of their leader

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(Hatfield, Cacioppo, & Rapson, 1994; Sy et al., 2005). Prior research already indicates that, through the ef- fect of contagion, employees adopt service-oriented attitudes and behaviors, and even facial expressions, of their leaders. By internalizing the leader’s ideal service approach, employees exhibit positive attitu- dinal manifestations to clients and serve them more effectively and attentively (e.g., Barsade & O’Neill, 2014; Barsade,Ward, Turner, & Sonnenfeld, 2000; Sy et al., 2005). According to Bandura (1991) and Bass (1985), leader modeling is more influential for en- hancing behaviors that are less supported by formal job descriptions, such as service quality, by encour- aging employees to act according to organizational interests while putting aside their own self-interests. Seeing their leader engaging with clients on the ser- vice front line stimulates employees to pursue the service objectives and prioritize client interests over their own self-interest (Piccolo & Colquitt, 2006). Moreover, I expect the effect of LBE on productivity

andservicequality tobestronger thanthatofcharismatic leadership, given the tangible and practice-oriented na- ture of LBE. Charismatic leaders, who focus on deliver- ing their future-oriented message through rhetoric, are inclined to distance themselves from their employees (Antonakis et al., 2016; Shamir, House, &Arthur, 1993). They use status and authority to influence employees andtoconnect themtoasetvision (Awamleh&Gardner, 1999; Howell & Shamir, 2005; Shamir, 1995). LBE, in contrast, centers on tangible demonstrations of the ex- pected behavior—on being a livemodel rather than just speaking about it theoretically. This difference is par- ticularly salient in service-related outcomes (i.e., sales productivity) and service interactions (i.e., service qual- ity). Prior research finds that effective leaders in service settings often encourage frontline employees to learn through trial and error and to adapt their behaviors ac- cordingly (Bowen & Ford, 2002). This approach ismore likely to bear fruit if leaders lead by doing, offering tan- gible demonstrations and providing live examples of ideal behavior as opposed to verbalizing desired actions in theory (Antonakis et al., 2016; Strange & Mumford, 2002). Thus, I posit:

Hypothesis 1. LBE enhances productivity and service quality at the store level, beyond the beneficial effect of charismatic leadership.

The Indirect Effect of LBE on Productivity and Service Quality

According to the resource management model (Sirmon et al., 2011), value creation for the organi- zation’s stakeholders is a comprehensive process

indirectly achieved by structuring organizational resources, developing organizational capabilities, and leveraging those capabilities to maximize the value that is created. Building on these insights (Sirmon et al., 2011), I disentangle the direct effect of LBE on productivity and service quality by taking a process-oriented view and proposing engagement as an important organizational capability that organi- zations can develop through LBE. I also propose that engagement can be magnified by integrating LBE with themanifestation of organizational core values, thereby enhancing the value creation of the entire process (i.e., enhanced productivity and service quality).

The effect of LBE on employee engagement. Kahn (1990) originally defined engagement as “the harnessing of organization member selves to their work roles, by which they employ and express themselves physically, cognitively, and emotionally during roleperformance” (694). InKahn’s (1990,1992) view, engagement is best illustrated as a motivational concept through which employees simultaneously and holistically become physically involved in role activities, emotionally identified, and cognitively fo- cusedon the serviceof theirorganization. Engagement is therefore an ideal employee–organization relation- ship (Kahn, 1990, 1992) through which employees invest their “hands, head, and heart” (Ashforth & Humphrey, 1995: 110) into their organization’s ob- jectives. Despite the scholarly calls, little research has explored engagement at the higher level of analysis (e.g., organization, work unit), in general, and at the business level, in particular (Barrick, Thurgood, Smith, & Courtright, 2015). Kahn (1990) argued that, when employee values,

goals, and skills are more aligned with those of their organization, they are more willing to engage them- selves with their work. Drawing on Bass’s (1985) argument that role-modeling leaders are in a better position to collectively motivate employees through affecting employees’ perceptions of their compe- tence and fit with the organization, I expect that LBE will have a positive effect on employee engagement. Exploratory group interviews that I conducted with employees from several representative stores (by geographic locations and size) in the data set support the proposed direction. In response to questions such as “How do you feel when you see your store manager actively participate in service front line?” and “How do you feel when you see your store manager leading by doing?” employees’ answers included, for example, “being proud to be part of that store,” “willingness to do above and beyond in my

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job,” “happy to come to work at that store,” and “willingness to givemywhole soul to performwell.” Specifically, LBE cultivates employees’ sense of

engagement by making them realize that their role matters to the organization’s success (Rosso, Dekas, & Wrzesniewski, 2010). Seeing their leader demon- strate workday employee activities enables em- ployees to realize how their service role contributes to the organization’s objectives and how the organi- zation’s vision is accomplished through their own work (Smircich &Morgan, 1982). According to Kahn (1990), the magnitude of engagement is determined by the degree of employees’ perceived fit between their skills and the organization’s values and goals. Seeing their leader perform employee job activities gives employees knowledge (e.g., expected norms, desired behaviors, and service strategies), which, according to Kahn (1990) and Rich, LePine, and Crawford (2010), enhances employees’ sense of en- gagement by making them feel more competent and that their skills are more aligned with the objectives and values of their organization. Kahn (1990) also argued that, when employees are valued for their work activities, and not simply as the occupant of a role, they are likely to become more engaged. Real- izing that the leader is willing to invest time and ef- fort to demonstrate employee activities generates a greater sense of engagement because it conveys to employees that their work contributions are signifi- cant and valuable (May, Gilson, & Harter, 2004; Rich et al., 2010). Seeing that the leader iswilling to invest resources (physical and psychological) in demon- strating employee work activities and serve as a live model, employees will be more likely to invest their own full resources (i.e., be engaged) in their work roles as well (Kahn, 1990). Thus, I posit:

Hypothesis 2. LBE increases employee engagement at the store level.

The interactive effect of LBE and core value manifestation on engagement. The resource man- agement model states that certain organizational actions canplay a crucial role in leveraging resources basedupon howeffectively they link those resources to the organization’s ultimate goals (Ndofor et al., 2011, 2015; Sirmon&Hitt, 2009; Sirmon et al., 2011). Possessing resources alone does not guarantee the optimization of value creation; rather, optimal value of organizational resources is realized when re- sources are managed effectively (Sirmon & Hitt, 2003; Sirmon et al., 2007). This is because the way resources are managed results in different capabil- ities and outcomes across organizations possessing

similar resources andoperating in similar conditions (Sirmon et al., 2007, 2011). Building on these insights, I point to the potential

synergy between LBE and organizational core values. Organizational core values convey the im- portance of LBE by answering why the leader’s tan- gible examples on the service front line are crucial for business success, thus clarifying the link between the leader’s practical actions and the organization’s ultimate purpose. This notion is drawn on a corpo- rate culture construct, which argues that substantial beliefsandultimategoalsofanorganizationcanactasa coordination mechanism (Cremer, 1993; Kreps, 2004; Thakor, 2016). For example, “superior service quality” is an organizational core value that represents a guid- ing principle for the organization’s ultimate goal of “being a market leader” (Fleishman & Peters, 1962; Lord & Brown, 2001; Rokeach, 1973; Russell, 2001; Schwartz, 1992). Management scholars have long ar- gued that communicating the organizational core values through formal channels is a necessary means by which to direct the organization’s members toward achieving its ultimate goals (Fleishman& Peters, 1962; Schein, 2010). Here, I focus on this key aspect of core values—that is, the way values are communicated. Whereas prior research has largely focused on the content of core values, less attention has been given to thewaycorevaluesaremanifested (O’Reilly,Chatman, & Caldwell, 1991). Core values can be communicated through various ways, such as supervisor conversa- tions, leader speeches, team meetings, videos, and or- ganizational conferences. Here, I focus on another potentialmechanismof corevaluemanifestation in the workplace: official, written statements (e.g., posters, marketing materials, and working reports). Formal, written manifestation is one of the primary ways or- ganizations communicate core values (Gioia & Chittipeddi, 1991; van Rekom, van Riel, & Wierenga, 2006) and serves as a cognitive learning source for employees through which they can realize and align with an organization’s business objectives and service vision (Schein, 2010; Rivera, 2012, 2015). I propose that the combined effect of LBE and the

manifestation of core values optimizes the value created by an engaged workforce. Kahn (1990) ar- gued that employee engagement is more strongly cultivated when employees are provided with a “clear delineation of procedures and goals” (705). Even though an organization’s members are likely to feel some sense of engagement merely by the per- ception of their leader as an exemplar, this sense of engagement will be strengthened through the mani- festation of core values, because this will provide

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employees with a better understanding of why their leaders’ practical acts are important for the organi- zation’s success. When core value manifestation is higher, employees can better connect the leader’s tangible examples of frontline service to the organi- zation’s success, thereby having greater clarity around how their own work and service roles con- tribute to the organization’s goals and success. According to Kahn (1990), the magnitude

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