An International Journal Emerald Article: How women entrepreneurs lead and why they manage that way Dorothy Perrin Moore, Jamie L. Moore, Jamie W. Moore Article information: To cite this document: Dorothy Perrin Moore, Jamie L. Moore, Jamie W. Moore, (2011),”How women entrepreneurs lead and why they manage that way”, Gender in Management: An International Journal, Vol.
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The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download.The current issue and full text archive of this journal is available at www. emeraldinsight. com/1754-2413. htm GM 26,3 How women entrepreneurs lead and why they manage that way Dorothy Perrin Moore The Citadel School of Business Administration, Sullivan’s Island, South Carolina, USA 220 Jamie L. Moore Long Island Forum for Technology, Applied Science Center, Bethpage, New York, USA, and Jamie W. Moore The Citadel School of Business Administration, Sullivan’s Island, South Carolina, USA and DJM Consulting, Charleston, South Carolina, USA AbstractPurpose – The purpose of this paper is to present six testable propositions to guide future research on the power of the trust building, interactive transformational leadership style women employ to succeed in corporate environments and which they further re? ne as entrepreneurs. Design/methodology/approach – The propositions are drawn from ? ndings in the ? elds of management, entrepreneurship, organizational behavior, leadership, teamwork and trust. Findings – In organizational life, to move beyond outsider stereotypes, women employ collaborative behaviors to create a climate of trust in work teams.As managers and later as entrepreneurs, their leadership style yields a number of performance enhancing outcomes. Originality/value – Little research links the leadership style of women in organizations to their later entrepreneurial ventures. The propositions and recommendations for testing offered here provide several methods to carry out empirical and theoretical studies. Keywords Transformational leadership, Trust, Women, Team working Paper type Research paper Introduction Over the past several decades, the forces of rapid economic and technological change, the in? x of women and minorities into the workforce, the economic shift to a post industrial, global economy and an investment market emphasis on short-term pro? ts combined to reshape organizations. Major components of the change included organizational restructuring, the erosion of employee trust, increasingly greater workforce diversity and the emergence of work teams as drivers of ? rm performance. Concurrently, many women in organizations, mostly con? ned to the lower and middle management levels and in the majority of ? ms denied any opportunity to move Gender in Management: An International Journal Vol. 26 No. 3, 2011 pp. 220-233 q Emerald Group Publishing Limited 1754-2413 DOI 10. 1108/17542411111130981 “Women entrepreneurs style of transformational leadership and performance outcomes: an interactive approach to building a climate of trust” – an earlier version of this paper was previously presented at the United States Association of Small Business and Entrepreneurship Conference, Hilton Head Island, South Carolina, and published in the USASBE 2011 Conference Proceedings. nto upper management (Bass and Avolio, 1994; Dencker, 2008), made the transition to private ownership (Bullough et al. , 2010). Taking their corporate experience and management style with them, they founded businesses at twice the rate of men and were equally successful (Moore and Buttner, 1997; Moore, 2010). This work connects the approach used by women in corporate environments with research in the ? elds of entrepreneurship, leadership, teamwork and trust to explore the management and leadership trategy common to women entrepreneurs. The propositions that emerge are based on ? ndings that trust, governance and team member relationships have mutual, complimentary effects (Puranam and Vanneste, 2009; Faems et al. , 2008), that conceptualizations of trust vary widely (Bigley and Pearce, 1998) and that the style of leadership practiced by women owners, which has a pronounced impact on employer-employee interactions and performance outcomes (Karakowsky and Siegel, 1999), enhances trust and productivity. We begin by ? st examining the work environments women construct through their interactive transformational leadership to create a climate of trust that enables employees to move from outsiders to being insiders. We then examine the phenomenon of trust, the in? uence of gender and diversity in trust building and the development of highly productive, team-centered enterprises. We conclude by offering suggestions on how the propositions of the entrepreneurial woman’s leadership style may be tested and suggestions for further research.Background and development Organizations and changes in leadership styles Over the past decades, to deal with globalization, more intense competition and other forces for change, corporate managers employed new technologies to reduce layers of bureaucracy and trim the number of long-term employees while simultaneously raising productivity by relying on well coordinated work teams (Ilgen and Sheppard, 2001).It worked because with the new information sharing systems people with differing backgrounds, information sets, resources, perspectives and problem-solving approaches could be brought together to contribute to a collective creativity in environments real or virtual (Mannix and Neale, 2005). The best results were achieved when teams were built by assembling people with the skills needed and permitting them to operate in a culture that encouraged openness, knowledge sharing and empowerment (Davis et al. , 2000).Well-functioning teams thus required a style of leadership conducive to constructing a climate of trust and the free exchange of information (Mannix and Neale, 2005, pp. 41-2). The problem was that the ongoing and widespread restructuring that reduced the numbers of employees and eliminated many of the bene? ts of those who remained had eroded trust: queried in 2009, more than half of American workers said they did not trust their organization’s leaders and an even higher percentage felt their employer had violated their contractual relationship (Dirks et al. , 2009). Further complicating the roblems of leadership were the presence of biases inherent in organizational groupings that formerly had been homogenous (Mannix and Neale, 2005). With work teams now critical to organizational productivity (Salamon and Robinson, 2008), organizations needed a management style that encouraged the creation of a culture of trust to enable them to deal with periods of uncertainly or the eruption of a business crisis (McKnight and Chervany, 2006). How women entrepreneurs lead 221 GM 26,3 The interactive transformational style of leadership provided an answer and was increasingly employed.Women in organizations As work environments became more diverse, women moved into work roles traditionally occupied by men. The numerous obstacles they encountered included hostile wok climates (Kossek et al. , 2003) and stereotypical negative behaviors (Ely, 1995). Lacking role models and supportive relationships in organizations (Ely, 1994, p. 203; Liff and Ward, 2001), highly visible but isolated, often marginalized and denied access to power (Sealy, 2010), they learned from experience to practice collaborative and interactive job behaviors to moderate the effects of gender biases (LePine et al. 2002). To attain a management position, many women had to ? rst overcome their outsider status, then meet requirements more stringent than their male counterparts, and once in a position of leadership act more skillfully to avoid backlash (Tharenou, 1999; Oakley, 2000). They thus brought to positions of leadership a repertoire of behaviors consistent with what people expect from women, in order to ease the transition and acceptance into the group (Gupta et al. 2009), and also to avoid or lessen the negative reactions most had experienced from exerting authority, particularly over men, or displaying a too high level of competence or appearing to dominate (Eagly et al. , 2003, pp. 572-4; van Engen et al. , 2001; Madlock, 2008). Women as leaders The style in which women lead has been relatively unstudied and few researchers have examined how they build trust in entrepreneurial teams. Finding in other settings, however, suggest that while evidence for sex differences in eadership is mixed and depends upon context, in general, women tend to employ a transformational approach and are more likely than men to do so (Bycio et al. , 1995; Bass and Avolio, 1994; Yammarino et al. , 1997). They behave more democratically than men in leadership situations, use interactive skills, place emphasis on maintaining effective working relationships, and value cooperation and being responsible to others, practices that all serve to further organizational goals by integrating people into the group as respected individuals (Yammarino et al. 1997; Rosener, 1990, 1997; Moore and Buttner, 1997; Buttner, 2001; Eagly and Carli, 2003; Eagly et al. , 2003). This interactive approach, described by Helgesen (1995) as a web, is especially applicable in organizational team settings wherein the construction of individually unique, one-to-one, somewhat egalitarian interpersonal relationships is advantageous. The process may be visualized as the leader sitting at the center of a wheel and connecting directly to each subordinate by a spoke, with each team member linked along the rim: a style which makes each team member an insider.As entrepreneurs, women employ the same interactive (all minds are needed at the table) approach to both encourage creativity and balance the authoritative command and control behaviors expected of a male boss with the more collaborative language and communication styles expected of a woman (Moore, 2000, pp. 100-6): P1. Women entrepreneurs employ an interactive and transformational leadership style to move beyond the stereotypes associated with being an outsider in business environments (Figure 1). 222 Increasingly diverse work force Greater numbers of women in organizations Work behaviors that minimize insider/outsider effectsTrust building practices How women entrepreneurs lead Intereactive transformational style of leadership Team led problem solving Reshaped organizations Lower levels of employee trust Team leadership by insiders Work setting experiences referenced by women 223 Figure 1. Transitions emergence of women’s leadership approach Insider/outsider organizaional stereotyping tendencies The importance of trust Collaboration, reciprocity and equity Transactions that foster venture innovation are frequently the result of collaborations that depend on open-mindedness, shared vision and mutual expectations of positive ? eciprocity (Viklund and Sjoberg, 2008). They require patterns of trust that lead to inter-group trust and, in turn, spawn inter-organizational trust (Currall and Inkpen, 2006, p. 245). Within a business venture, then, trust “is as much a condition or ingredient as the outcome of action” (Sydow, 2006, p. 379). At the most basic level, trust is conveyed by an individual, the trustor. The trustee may be a formal or an informal group, a larger subset of the organization or the ? rm itself (Janowiez and Noorderhaven, 2006).The interactions take place within the overlapping social, cultural, institutional, organizational and sub-organizational environments. Collectively, this is the climate created by the everyday practices and reputations that leaders build and maintain overtime (Rhee and Valdez, 2009). When the culture encourages trustworthy behavior by containing “a high degree of taken-for-grantedness,” it will enable trust and “shared expectations,” even among employees “who have no ? mutual experience or history of interaction” (Mollering, 2006, p. 73). Outcomes The observed bene? ts of a climate of trust – enhanced ef? ciency, greater productivity, decreased absenteeism, lower rates of employee turnover, better safety records and higher levels of commitment (Neves and Caetano, 2006) – contribute directly to ? rm value (Mayer and Gavin, 2005). This is especially true when a trust climate results in a sharing of knowledge among employees because the acquisition and utilization of knowledge, which “has the potential to be the source of extraordinary returns” (Madhok, 2006, p. 08), is a special, intangible economic asset (Casson and Giusta, 2006). Ideally, a company will employ systems designed to build this into a climate of collective trust. But this is not always the case, and even ? rms that try to create a culture of trust may accomplish the task only in varying degrees: P2. Because trust is essential to ? rm performance and productivity, the most successful entrepreneurial leaders will employ an interactive leadership style to create and maintain a climate of trust. GM 26,3 224The transformational leadership style has a signi? cant positive impact on team performance because of its moderating effects in dealing with complex or contentious issues (Huettermann and Boerner, 2009). Among the reasons, women ? nd it appealing are its utility in multi-cultural settings (Fein et al. , 2009), its effectiveness in encouraging employee learning, creativity and implementation skills (Chiu et al. , 2009) and the advantage it offers in building high-quality leader-follower relationships and trust (Brahnam et al. , 2005): P3.The employment of a transformational leadership style by a woman entrepreneur will be perceived as highly effective in settings where interactions are sensitive and performance outcomes are highly valued. Gender at work Gender and productivity The number of studies isolating any effects of gender on productivity is slight (LePine et al. , 2002), though there is a suggestion of an “overall positive linear relationship between gender diversity and employee productivity” (Ali et al. , 2009). The value of adding women members to teams has been supported in studies of IPO ? ms (Welbourne et al. , 2007), small ? rm performance (Litz and Folker, 2002), military settings (Hirschfeld et al. , 2005) and most recently, corporate boards (Konrad et al. , 2008). Findings suggest that when the number of women increases to the point where they are no longer tokens, collaboration, solidarity, con? ict resolution, reciprocity and self-sustaining action all rise (Westermann et al. , 2005), as does work group effectiveness (Knouse and Dansby, 1999) and levels of interpersonal sensitivity (Williams and Polman, 2009).Other studies indicate that the participation of women either leads to positive outcomes or shows no negative productivity effects (Kochan et al. , 2003). Among the strongest suggestions favoring the business case for gender diversity at the higher levels is a longitudinal examination of 353 companies that remained on the Fortune 500 list for four years out of a ? ve-year span (1996-2000) whose signi? cantly higher returns on equity (35 percent) and total returns to stockholders (34 percent) correlated with their greater representation of women in senior management (Catalyst, 2004).As Konrad et al. (2008) have shown, when the number of women on corporate boards reaches three or more, the presence of women becomes normalized rather than stereotyped. The result is a higher level of ? rm performance and innovation (Nielsen and Huse, 2010; Torchia et al. , 2010). The numbers are important. In organizations, where the percentage of women on top management teams and/or their corporate boards is 15 percent or greater, male participants tend to exhibit higher levels of trust in female leaders than in organizations where women’s inclusion is less than 15 percent.By contrast, while men have signi? cantly more positive evaluations of women when there are more of them, the con? dence women have is high irrespective of their numbers (Lortie-Lussier and Rinfret, 2002): P4. In ? rms led by women entrepreneurs practicing interactive transformational leadership, employees will exhibit a high level of trust in their women owners. Building trust through equity Biases and perceptions Establishing a climate of trust can be dif? cult, particularly when employees are responding to stereotypes rather than actual leader behavior. The existence of biases ased on self-categorization (we are more comfortable among people like us) and similarity attraction (us versus them) in relatively or formerly homogeneous groups is indisputable. Men, in general, trust a new male team member more than a new female team member (Spector and Jones, 2004), view a new male to have better management skills (Karau et al. , 2009) and prefer a masculine leadership mode (Butter? eld and Powell, 2010; Johnson et al. , 2008; Moore, 1984). Male and female employees alike exhibit strong opinions of how leaders should talk, act and behave and they employ gender stereotypes in evaluating leadership (Namok et al. 2009). As Butter? eld and Powell (2010) note, the masculine mode of behavior represents power and the leadership dimensions most employees seek. Similar traits are associated with entrepreneurs (Gupta et al. , 2009; Moore, 2010). Such in-group/out-group mindsets can create harmful fault lines, especially in situations where success depends on collaboration and the sharing of knowledge (Gratton et al. , 2007). Establishing a trust chain Diversity in organizations can produce both positive and negative outcomes, chie? y because of stereotyping (Jackson et al. , 2003).While the negative effects of stereotyping can be counteracted by a recognition that diversity in expertise, skill sets and the like can contribute to team performance, establishing that recognition can be dif? cult because it requires creating a climate of trust and its maintenance: a leader has to violate trust expectations only once to cause “a signi? cant drop in the level of trust” (Dirks, 2006, p. 24). For women leaders to be perceived as effective, then, they must surmount the obstacle of needing to demonstrate both strength and sensitivity and overcoming stereotypes in work settings.With fewer margins for error (Caleo and Heilman, 2009), they do this by treating individuals uniformly and equitably to create within the work group a feeling of cooperative interdependence, the belief that we gain when others succeed (Williams, 2001). It is a group-focused leadership style that facilitates identi? cation and collective ef? cacy (Wu et al. , 2010): P5. The most effective tool for building and maintaining organizational trust is in applying the transformational leadership process in a manner that employees perceive as equitable.How women entrepreneurs lead 225 Trust, team building and ? rm-related outcomes Balancing control and behaviors Work dynamics occur within distinct, overlapping, unique environments: the norms, values and beliefs of society at large; the culture and background of the person; their individual expertise derived from education, experience, specialization and pro? ciency; and the views, insights, suggestions and opinions of family, friends and trusted others. In organizations and small businesses alike, employees reference these norms and values across all levels of interactions.Achieving high performance thus requires engineering a work climate consistent with organizational aims and employee values. This requires balancing management control with behaviors that encourage trust (Schoorman et al. , 2007). Key factors that drive perceptions of trustworthy behavior include the degree to which the leader acts with integrity, demonstrates openness, takes an interest and displays con? dence in people, acts as coach and advocate, and shares clear expectations about performance outcomes. Because individual perceptions of the leader or owner’s abilities and trustworthiness differ from his or her self-perceptions,GM 26,3 it is critical to recognize differences between the extension of trust and how it is monitored. The goal is to have the outcome of the series of leader/owner actions and individual responses culminate in the creation of an atmosphere of reciprocity – the expectation that acts of trust will be repaid. When this happens, the potential for mutual trustworthiness and higher productivity is maximized (Ferrin et al. , 2007). Sharing power As Rosener (1990) notes, women “are far more likely than men to describe themselves as transforming subordinates’ self-interest into concern for the whole organization. A female team leader is also likely to view her position in terms of assisting team members in reaching performance goals (Paris et al. , 2009). The result is that women lead in a participative style (Nielsen and Huse, 2010). Using effective communication skills (Madlock, 2008), they focus on sharing power and information to create a collaborative team environment (Keeffe et al. , 2008) whose ingredients include the employee’s personal propensity to trust, their past experiences and perceptions of the manager. When the owner/leader is seen as an advocate who will reciprocate trustworthy behaviors (Drath et al. 2008), perceptions of the ? rm’s overall fairness increase (Brockner et al. , 2007). As Morrison and Robinson (1997) note, in a high trust climate people show increased levels of loyalty, satisfaction and engagement and the resulting cooperation and free exchange of information lead to quicker and better decisions, and higher performance. For a business owner, the reasons to proceed in this fashion are thus compelling: P6. The application of the interactive, transformational leadership style as a tool to create a climate of trust will enhance the longevity of women-owned ? rms through higher employee performance. 26 Summary The propositions shown in Figure 2 provide an approach to understanding the power of women’s interactive transformational leadership style (the predictor variable) which they use in team building to create a climate of trust and empowerment (moderator variables). The resulting organizational outcomes include open communications, employee satisfaction, innovation and enhanced productivity that collectively provide greater ? nancial returns and potential for ? rm growth. The propositions may be tested with a single or series of empirical and longitudinal tests in a variety of respondent groups of ? ms with 25 or more employees. Some of these Team building moderators P2 Predictor for women’s entrepreneurial success P1 Interactive transformational leadership P3 P4 P5 Climate of trust Gender diversity Higher levels of employee trust Employee perceptions of equitable treatment Collaboration and reciprocity Effectiveness outcomes Open communication and exchanges Satisfaction Innovation Enhanced productivity Higher financial returns Market retention and expansion, including global Figure 2. Propositions entrepreneurial women’s leadership effectiveness P6 ?rms may be in that group identi? d by the Center for Women as being part of the “missing middle. ” Still other respondent groups will be found across the small business and entrepreneurial sector, including those engaged in the international market, technology, manufacturing and the service industries. This last group, according to research from the Diana Project (Holmquist and Carter, 2009), clearly demonstrates the positive potential of female entrepreneurship. Another possible research avenue is to test cross-gender effects by drawing the respondents from those organizations with mixed sex leadership or equivalent ownership in copreneurial enterprises.A number of current valid measures are available for testing work team relationships for climate, trust and repair approaches (Gillespie and Dietz, 2009), stereotypes and attitudes toward women entrepreneurs (Namok et al. , 2009) and managers (Zeynep and Soner, 2010). Variations of the transformational leadership inventory and productivity scales that measure the end predictor results on work teams can be combined with a trust index inventory (Palrecha, 2009). The approach may be enhanced by adding other links to the propositions.For example, important additions would be the three levels of trust repair, attributions and expectations in building effective work teams. Instruments developed by Konrad et al. (2008) and Huse and Solberg (2006) to measure the impact of the number of women in leadership positions on innovation and productivity are also relevant here. It has often been said that research on gender yields a limited number of theoretical underpinnings for building models. Not so. When considering the pool of theories from various ? elds of research, a number of robust propositions emerge.Those presented here are not only important in understanding the emergence of organizational cultures common to women-owned businesses. 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