The Value Based Leadership Theory

Managers do things right
Leaders do the right things…
Value Based Leadership Theory

Moscow 1999

“Leaders are dealers in hope” Bonaparte Napoleon
“We will build a winning tradition” Vince Lombardi to the Green
Bay Packers

Consider the above quotations. These statements of leaders reflect
commitment to a value position. In this paper I am going to describe a
brand new theory of leadership, developed by Professor House — the Value
Based Leadership Theory. I will also present a preliminary test of several
hypotheses derived from Value Based Theory. The tests of hypotheses are
based on data descriptive of 25 relationships between chief executives and
their immediate subordinates. As a concrete example, I am going to present
the results of the real interviews, which took plase in Russia in 1999
among the CEOs. In the process of testing these hypotheses I replicate the
study of charismatic leadership in the U. S. presidency conducted by House,
Spangler & Woycke (1991) using a sample of chief executive officers and
different measurement methods. What I am trying to prove in this paper is
the following: It was considered to think that managers are always the
leadres in the organization. This opinion was proved to be wrong. According
to the first research which appaered in press in the end of 70-s: manager
is the position, and leader is the person who leads others to the desired
result. According to the personal trends and characteristics, managers
should be leaders, and they are, but not always. The question of leadership
is a very interesting topic for me, personally.
I am deeply interested in the question of leadership, and I do think,
that this question and the existing theories have a long life to live.
Leadership is a real fact, which has already been proved. You can be a born
leader, but you also can create the leader in yourself. You can manage to
influence, motivate and enable others. You can succeed, because there is
nothing impossible for a human being. Especially, if he is intelligent on
the one hand and really wishes to achieve something on the other.


During the period between the mid-seventies and the present time a
number of theories have been introduced into the leadership literature.
These new theories and the empirical research findings constitute a
paradigm shift in the study of leadership. The theories to which I refer
are the 1976 Theory of Charismatic Leadership (House, 1977), the
Attributional Theory of Charisma (Conger & Kanungo, 1987), and the
Transformational Theory (Burns, 1978; Bass, 1985), and Visionary Theories
of Leadership (Bennis & Nanus, 1985; Sashkin, 1988; Kousnes & Posner,
I believe these theories are all of a common genre. They attempt to
explain how leaders are able to lead organizations to attain outstanding
accomplishments such as the founding and growing of successful
entrepreneurial firms, corporate turnarounds in the face of overwhelming
competition, military victories in the face of superior forces, leadership
of successful social movements and movements for independence from colonial
rule or political tyranny. They also attempt to explain how certain
leaders are able to achieve extraordinary levels of follower motivation,
admiration, respect, trust, commitment, dedication, loyalty, and
The dependent variables of earlier theories are follower expectations,
satisfaction, and normal levels of performance. The dependent variables of
the more recent theories include a number of affective consequences such as
followers’ emotional attachment to leaders; followers’ emotional and
motivational arousal, and thus enhancement of follower valences and values
with respect to the missions articulated by leaders; followers’ trust and
confidence in leaders; and values that are of major importance to the
followers. These more recent theories also address the effect of leaders
on several follower conditions not addressed in earlier theories, such as
followers' self-worth and self-efficacy perceptions, and identification
with the leader’s vision.
Earlier theories describe leader behavior that are theoretically
instrumental to follower performance and satisfy follower needs for
support, generally referred to as task-and person-oriented leader behaviors
(Fleishman & Harris, 1962; Katz & Kahn, 1952; Likert, 1961; Feidler, 1967;
House, 1971, House, 1996). In contrast, the more recent theories stress
the infusion of values into organizations and work through leader behaviors
that are symbolic, inspirational and emotion arousing.
Earlier theories take follower attitudes, values, desires, and
preferences as given. The more recent theory claim that leaders can have
substantial, if not profound effects on these affective and cognitive
states of followers. Accordingly, leaders are claimed to transform both
individuals and total organizations by infusing them with moral purpose,
thus appealing to ideological values and emotions of organizational
members, rather than by offering material incentives and the threat of
punishment, or by appealing to pragmatic or instrumental values.
Also, McClelland (1975) introduced a theory intended to explain leader
effectiveness as a function of a specific combination of motives referred
to as the Leader Motive Profile (LMP). As will be shown below, this theory
complements the newer theories referred to above.
Since the early 1980s, more than fifty empirical studies have been
conducted to test the validity of the more recent theories of leadership.
Empirical evidence is discussed in more detail below. First, however, the
valued based leadership theory will be described.


The theory is intended to integrate the newer theories and the
empirical evidence alluded to above. Value based leadership is defined as
a relationship between an individual (leader) and one or more followers
based on shared strongly internalized ideological values espoused by the
leader and strong follwower identification with these values. Ideological
values are values concerning what is morally right and wrong. Such values
are expressed in terms of personal moral responsibility, altruism, making
significant social contributions to others, concern for honesty, fairness,
and meeting obligations to others such as followers, customers, or
organizational stakeholders. Value based leadership is asserted to result
in: a) exceptionally strong identification of followers with the leader,
the collective vision espoused by the leader, and the collective; b)
internalized commitment to the vision of the leader and to the collective;
c) arousal of follower motives that are relevant to the accomplishment of
the collective vision; and d) follower willingness to make substantial self
sacrifices and extend effort above and beyond the call of duty.
The title Value Based Leadership Theory has been chosen to reflect the
essence of the genre of leadership described by the theory. The 1976
theory of charismatic leadership is a precursor to the value based
leadership theory. The title “charismatic leadership” has been chosen
because of its cavalier popular connotation. The term charisma is often
taken in the colloquial sense, rather than the somewhat technical sense
conceived by Max Weber. The word charisma commonly invokes impressions of a
person who is charming, attractive, and sometimes macho, flamboyant, and
sexually appealing. In contrast, Value Based Leadership is intended to
convey the notion of a leader who arouses follower latent values or causes
followers to internalize new values. Such value communication can be
enacted in a quiet, non-emotionally expressive manner or in a more
emotionally expressive manner. Examples of leaders who have communicated
values to followers in an emotionally expressive manner are Winston
Churchill, Lee Iacocca, Martin Luther King, and John F. Kennedy. Examples
of leaders who have communicated values to followers in a less emotionally
expressive manner are Mother Teresa, Mahatma Ghandi, and Nelson Mandela.
A second reason for abandoning the term charisma is that in current
usage it implies that the collectivities led by charismatic leaders are
highly leader-centered and that the leader is the source of all, or almost
all, organizational strategy and inspiration of followers. One popular
conception of charismatic leadership is that it is necessarily highly
directive and disempowering of followers (Lindholm, 1990). In this paper,
I hope to demonstrate the huge potential for value based leadership to be
empowering and effective.

The Process and Effects of Value Based Leadership
In this section, an overview of what Value Based leadership is and how
it works is presented. There is both theory and empirical evidence to
suggest that value based leadership has a substantial effect on
organizational performance. Waldman and his associates reported two studies
of value based leader behavior as an antecedent to organizational
profitability (Waldman, Ramirez & House, 1996; Waldman, Atwater & House,
1996). In these studies value based leadership accounted for between
fifteen and twenty five percent of firm profitability over the three years
following the time at which value based leadership was assessed. The
design of these studies controlled for executive tenure, firm size,
environmental turbulence, and prior firm profitability.
The theoretical process by which value-based leadership functions is
described in the following paragraphs. Evidence for this process is
presented in more detail in later sections in which the specific theories
contributing to value based leadership theory is discussed.
Value based leaders infuse collectives, organizations, and work with
ideological values by articulating an ideological vision, a vision of a
better future to which followers are claimed to have a moral right. By
claiming that followers have this right, the values articulated in the
vision are rendered ideological — expressions of what is morally right and
good. Ideological values are usually, if not always, end values which are
intrinsically satisfying in their own right. In contrast to pragmatic
values such as material gain, pay, and status, end values cannot be
exchanged for other values. Examples of end values are independence,
dignity, equality, the right to education and self-determination, beauty,
and a world of peace and order. Ideological values theoretically resonate
with the deeply held values and emotions of followers.
Acccording to value based leadership theory the visions articulated by
this genre of leaders are consistent with the collective identity of the
followers, and are emotionally and motivationally arousing. Emotional and
motivational arousal induces follower identification with the collective
vision and with the collective, results in enhncement of follower self-
efficacy and self-worth, and have powerful motivtional effects on followers
and on overall orgnizational performance.
Leaders of industrial and government organizations often articulate
visions for their organizations. Such visions need not be grandiose.
Visions of outstanding leaders in the normal work world can embrace such
ideological values as a challenging and rewarding work environment;
professional development opportunities; freedom from highly controlling
rules and supervision; a fair return to major constituencies; fairness,
craftsmanship and integrity; high quality services or products; or respect
for organizational members, clients or customers and for the environment in
which the organization functions. Whether conceived solely by the leader,
by prior members of the collective, or jointly with followers, the
articulation of a collective ideological vision by leaders theoretically
results in self-sacrifice and effort, above and beyond the call of duty, by
organizational members and exceptional synergy among members of the
Follower respect, trust, and self-sacrifice are stimulated by
identification with the values inherent in the leader's vision and the
leader's demonstration of courage, determination and self-sacrifice in the
interest of the organization and the vision. According to this
perspective, value based leaders use follower value identifiction, and the
respect and trust they earn to motivate high performance and a sense of
mission in quest of the collective vision, and to introduce major
organizational change. For some individuals, latent values are brought to
consciousness as a result of the vision articulated by value based leaders.
Also, some individuals change their values to be consistent with those of
the leader.
Visions articulated by value based leaders need not be formulated
exclusively by a single leader. The collective vision may have been
initially conceived by leaders and members of the collective who preceded
the current leader. In this case, the leader is one who perpetuates the
vision by continuing to communicate it and institutionalizing it through
the establishment and maintenance of institutional means such as
strategies, policies, norms, rituals, ceremonies, and symbols.
Alternatively, organizational visions can be formulated by leaders in
conjunction with organizational members.
The effects of the articulation of and emphasis on ideological values
are rather profound. Organizational members become aware of ideological
values that they share with the leader and as a collective. Members
identify with the collective vision and with the organization—thus a high
level of collective cohesion is developed. Collaborative interactions
among organizational members is enhanced. Individuals experience a sense
of collective efficacy and a heightened sense of self-esteem as a result of
their cohesion and the leader's expressions of confidence in their ability
to attain the vision. Further, motives relevant to the accomplishment of
the vision are aroused and organizational members come to judge their self-
worth in terms of their contribution to the collective and the attainment
of the vision.
The result is strongly internalized member commitment, and intrinsic
motivation to contribute to the organization and to the collective vision.
Members are more inclined to support changes in technology, structure and
strategies introduced by top management, which may result in an
organizational culture characterized by values oriented toward teamwork and
meeting customers', clients', constituents' and competitive needs. There
ensues a marked reduction in intra-organizational conflict and a high
degree of team effort and effectiveness. As noted above, members expend
effort above and beyond the call of duty, and sacrifice their self-interest
in the interest of the organization. As a result, individual motivation,
organizational culture, strategy and structure are likely to become aligned
with the collective vision.
A reinforcing process may also occur whereby organizational members
increase their respect for and confidence in the leader and each other
based on the resulting organizational success. As a result, their initial
confidence and motivation is further reinforced. Such effects are
consistent with the notion of romanticized leadership (Meindl, Ehrlich &
Dukerich, 1985). The resulting increased confidence in the leader in turn
gives the leader more influence and thus contributes to the leader's
ability to further influence organizational performance.
This is an “ideal type” theoretical scenario. Clearly all the aspects
of this scenario will not always come to fruition in response to value
based leadership. No such claim is made. Rather, it is argued that
organizational members will be motivated on the basis of shared
internalized values and identification with the leader and the collective,
which are far more motivational than alternative bases of motivation.
It is possible that value based leaders may introduce flawed
strategies and that the result may be organizational decline or failure
rather than improvement and success. It is also possible that the leader
may stand for socially undesirable values such as ethnocentrism, racism,
persecution, dishonesty, or unfair or illegal competitive practices
(Lindholm 1990). Regardless of the strategy or values expressed by the
leader, it is argued that a relationship based on value identification
between leader and organizational members will result in increased member
commitment and motivation, as well as increased organizational cohesion.


There is extensive empirical evidence with respect to the effects of
behaviors specified by value based leadership theory. Charismatic,
visionary, and transformational theories of leadership are precursors of
the leader behaviors specified by value based leadership theory. Tests of
these theories have been based on various operationalizations that qualify
as measures of value based leadership including interviews (Howell &
Higgins, 1990), laboratory experimentation (Howell & Frost, 1989;
Kirkpatrick & Locke, 1996), questionnaires (Lowe, Kroeck & Sivasubramaniam,
1995), and quantified archival data (House, Spangler & Woycke, 1991). In
all of these tests, the leader behavior measured consists of articulating
an organizational vision and behaving in ways that reinforce the values
inherent in the vision, thus qualifying as indirect evidence relevant to
the effects of value based leadership. Space limitations prevent a
detailed review of the evidence. However, Bass and Avolio (1993), House
and Shamir (1993), Lowe et al,. (1995), and Yukl (1994), present overviews
of these studies. With surprising consistency these empirical studies have
demonstrated consistently that value based leader behavior predicts unusual
levels of leader effectiveness directed toward enhancing organizational
Support for the effects of value based leadership is illustrated by a
recent meta-analysis of the charisma subscale of the Bass and Avolio (1989)
Multifacet Leadership Questionnaire (MLQ). The MLQ charisma subscale
describes relationships between subordinates and superiors. Superiors who
receive high scores on this scale are described by subordinates as having
an exciting vision of the future for the organization they lead, and being
exceptionally motivational, trustworthy, and deserving of respect.
Support for the theoretical main effects of value based leader
behavior has been demonstrated at several levels of analysis including
dyads, small informal groups, major departments of complex organizations,
overall performance of educational and profit making organizations, and
nation states. The evidence is derived from a wide variety of samples
including military officers, educational administrators, middle managers,
subjects in laboratory experiments and management simulations, US
presidents and chief executive officers of Fortune 500 firms (Bass &
Avolio, 1993; House & Shamir, 1993; Waldman, Ramirez & House, 1996).
The evidence shows that the effects of value based leader behavior are
rather widely generalizable in the United States and that they may well
generalize across cultures. For instance, studies based on the charisma
scale of the MLQ have demonstrated similar findings in India (Periera,
1987), Singapore (Koh, Terborg & Steers, 1991), The Netherlands (Koene,
Pennings & Schreuder, 1991), China, Germany, and Japan (Bass, 1997).
In summary, the studies based on various operationalizations of value
based leadership clearly show that this genre of leadership results in a
high level of follower motivation and commitment and well-above-average
organizational performance, especially under conditions of crises or
uncertainty (Pillai & Meindl, 1991; House, Spangler, & Woycke, 1995;
Waldman, Ramirez & House, 1996; Waldman, Atwater & House, 1996).


The value based theory of leadership integrates the precursor theories
discussed above with a number of assertions advanced in several
psychological theories of motivation and behavior. Following is a brief
review of the psychological theories that are integrated into the Value
Based Leadership Theory.

McClelland's Theories of Non-conscious Motivation
According to this theory, the motivational aspects of human beings can
be understood in terms of four non-conscious motives in various
combinations (McClelland, 1985). These motives are the achievement, power,
affiliation, and social responsibility motives. McClelland has developed a
theory of entrepreneural effectiveness based on the role of achievement
motivation, and a more general theory of leader effectiveness consisting of
theoretical assertions concerning the optimum combination of the above four
motives for effective leadership. This theory is entitled the Leader
Motive Profile Theory (LMP). In the following sections we discuss the four
motives discussed by McClelland and the LMP theory.

Achievement Motivation
Achievement motivation is defined as a non-conscious concern for
achieving excellence in accomplishments through one's individual efforts
(McClelland, Atkinson, Clark, & Lowell, 1958). Achievement motivated
individuals set challenging goals for themselves, assume personal
responsibility for goal accomplishment, are highly persistent in the
pursuit of goals, take calculated risks to achieve goals and actively
collect and use information for feedback purposes. Achievement motivation
is theoretically predicted to contribute to effective entrepreneurship
(McClelland, 1985) and effective leadership of small task oriented groups
(House et al., 1991). Litwin and Stringer (1968) demonstrated
experimentally that small groups led by managers who enacted achievement
oriented and arousing behaviors were more effective than groups with
managers who did not.
In management positions at higher levels in organizations, and
particularly in organizational settings where technical requirements are
few and impact on others is of fundamental importance, managerial
effectiveness depends on the extent to which managers delegate effectively
and motivate and co-ordinate others. Theoretically, high achievement
motivated managers are strongly inclined to be personally involved in
performing the work of their organization and are reluctant to delegate
authority and responsibility. Therefore, high achievement motivation is
expected to predict poor performance of high-level executives in large
organizations. House et al. (1991) found that achievement motivation of
U.S. presidents was significantly inversely related to archival measures of
U.S. presidential effectiveness.

Affiliative Motivation
Affiliative motivation is defined as a non-conscious concern for
establishing, maintaining, and restoring close personal relationships with
others. Individuals with high affiliative motivation tend to be non-
assertive, submissive, and dependent on others (McClelland, 1985).
Theoretically, highly affiliative motivated managers are reluctant to
monitor the behavior of subordinates, to convey negative feedback to
subordinates even when required, or to discipline subordinates for ethical
transgressions or violations of organizational policies. Highly
affiliative motivated managers are also theoretically expected to manage on
the basis of personal relationships with subordinates and therefore show
favoritism toward some. House et al. (1991) found that the affiliative
motive was significantly negatively correlated with U.S. presidential
charismatic leadership and archival measures of U.S. presidential

Power Motivation
Power motivation is defined as a non-conscious concern for acquiring
status and having an impact on others. Individuals with high power
motivation tend to enjoy asserting social influence, being persuasive,
drawing attention to themselves, and having an impact on their immediate
environment including the people with whom they interact. Theoretically, if
enacted in a socially constructive manner, high power motivation should
result in effective managerial performance in high level positions
(McClelland, 1975; 1985). However, unless constrained by a responsibility
disposition, power motivated managers will exercise power in an impetuously
aggressive manner for self aggrandizing purposes to the detriment of their
subordinates and organizations.
High power motivation induces highly competitive behavior. Therefore,
when unconstrained by moral inhibition, power motivation is theoretically
predictive of leader effectiveness when the role demands of leaders require
strong individual competitiveness, aggressiveness, manipulative exploitive
behavior, or the exercise of substantial political influence. The power
motive was found by House et al. (1991) to significantly predict
presidential charismatic behavior and archival measures of presidential

Responsibility Disposition
According to McClelland, individuals who have a high concern for the
moral exercise of power will use power in an altruistic and collectively-
oriented manner. Indicators of high concern for responsibility are
expressions of concern about meeting moral standards and obligations to
others, concern for others, concern about consequences of one’s own action,
and critical self judgment.
Winter and Barenbaum (1985) developed and validated a measure of
concern for moral responsibility, which they label the responsibility
disposition1. The measure is based on quantitative content analysis of
narrative text material. Winter (1991) demonstrated that the
responsibility disposition, in combination with high power and low
affiliative motivation, was predictive of managerial success over a sixteen-
year interval.
The responsibility motive should be predictive of leader integrity and
leaders' concern for the consequences of their own actions on others.
Leaders with high responsibility disposition are expected to stress the
importance of keeping one's word, honesty, fairness, and socially
responsible behavior. Thus, we expect the responsibility disposition to be
associated with value based leader behavior, supportive leader behavior,
fairness, follower trust and respect for the leader and commitment to the
leader’s vision, and consequently organizational effectiveness.

Leader Motive Profile Theory
McClelland (1975) argued that the following combination of non-
conscious motives are generic to, and predictive of, leader effectiveness:
high power motivation, moderate achievement motivation, high concern for
the moral exercise of power, and power motivation greater than affiliative
motivation. This combination of motives is referred to by McClelland
(1975) as the Leader Motive Profile (LMP).
According to LMP theory, the power motive is necessary for leaders to
be effective because it induces them to engage in social influence
behavior, and such behavior is required for effective leadership. Further,
when the power motive is higher than the affiliative motive, individuals do
not engage in the dysfunctional behaviors usually associated with high
affiliation motivation — favoritism, submissiveness, and reluctance to
monitor and discipline subordinates. Finally, when high power motivation
is coupled with a high concern for moral responsibility, individuals are
predicted to engage in the exercise of power in an effective and socially
desirable manner. Earlier research, also reviewed by McClelland (1985),
suggests that the achievement motive is a better predictor of leader
effectiveness and success in entrepreneurial organizations than LMP.
Theoretically the leader motive profile is predictive of managerial
effectiveness under conditions where leaders need to exercise social
influence in the process of making decisions and motivating others to
accept and implement decisions. In formal organizations these conditions
are found at higher levels and in non-technical functions. By contrast, in
smaller technologically based organizations, group leaders can rely on
direct contact with subordinates (rather than delegation through multiple
organizational levels), and technological knowledge to make decisions.
Thus LMP theory is limited to the boundary conditions of moderate to large
non-technologically oriented organizations (McClelland, 1975; Winter,
1978; 1991), and to managers who are separated from the work of the
organization by at least one organizational level.
Several studies have demonstrated support for the LMP theory. Winter
(1978) found that LMP was predictive of the career success of entry level
managers in non-technical positions in the US Navy over an eight-year
interval. Both McClelland and Boyatzis (1982), and Winter (1991), in
separate analyses of the same data but with different operationalizations
of LMP, found similar results at AT&T over a sixteen-year interval.
McClelland and Burnham (1976) found high-LMP managers had more supportive
and rewarding organizational climates, and higher performing sales groups
than low-LMP managers did in a large sales organization. House, et al.
(1991) found that the motive components of the LMP predicted US
presidential charisma and presidential performance effectiveness.
Since high LMP leaders have greater power than affiliative motivation
it is expected that they will be assertive and at least moderately
directive. Further, since they have high responsibility motivation it is
expected that thay will have highly internalized idological values — values
concerning what is morally right and wrong — and that they will thus stress
ideological value orientation, integrity, and fairness, as explained above,
both verbally and through personal example.

The Path-Goal Theory of Leadership
The essence of path-goal theory is that leader behaviors will be
effective when such behaviors complement formal organizational practices
and the informal social system by providing direction, clarification,
support and motivational incentives to subordinates, which are not
otherwise provided (House, 1971; House & Mitchell, 1974; House, 1996).
According to the 1996 version of path-goal theory, leaders who give
approval and recognition of subordinates, contingent on performance and in
a fair manner, will clarify expectancies of subordinates concerning work
goals and rewards, and will effectively motivate subordinates. This theory
also predicts that leader consideration toward subordinates provides the
psychological support subordinates require, especially in times of stress
and frustration.
Path-goal theory suggests that either participative or directive
leader behavior can provide psychological structure and direction and
therefore clarify subordinates' role demands. Theoretically, directive
leader behavior will be dysfunctional and participative leader behavior
will be functional when subordinates are highly involved in their work,
perceive themselves as having a high level of task related knowledge,
and/or prefer a high level of autonomy. Meta-analyses of 135 relationships
tested in prior studies provide support for these assertions (Wofford &
Liska, 1993).

Dissonance Theory and Competing Values
According to cognitive dissonance theory, individuals experience
anxiety-inducing cognitive dissonance when their self-evaluative
cognitions, feelings and behavior are in conflict with each other
(Festinger, 1980). Under such conditions, individuals are strongly
motivated to reduce the dissonance by changing one or more of the dissonant
components—either their behavior, their cognitions, or their feelings. It
follows from dissonance theory that when leaders appeal to ideological
values of followers and also administer extrinsic material rewards strictly
contingent on follower performance, they will induce cognitive dissonance
in followers. Offering strong extrinsic incentives for doing what is
claimed to be morally correct will theoretically induce dissonance, and is
likely to undermine the effects of leaders' appeals to ideological values.
From dissonance theory, we would expect that with the exception of social
rewards such as approval and recognition, contingent reward behavior on the
part of leaders will undermine the effects of value based leader behavior.

Equity Theory
Equity theory asserts that when individuals perceive the ratio of
their contributions to their rewards (intrinsic or extrinsic) to be equal
to the ratio of contributions to rewards of others, they will believe that
they are treated fairly (Adams, 1963). We expect that under conditions of
perceived unfairness followers will feel resentment, be demotivated, will
not support and may even resist attempts by leaders to influence them.

Situational Strength
Mischel (1973) has argued that the psychological strength of
situations influences the degree to which individual dispositions such as
motives or personality traits are expressed behaviorally. Strong
situations are situations in which there are strong behavioral norms,
strong incentives for specific types of behaviors, and clear expectations
concerning what behaviors are rewarded. According to this argument, in
strong situations, motivational or personality tendencies are constrained
and there will be little behavioral expression of individual dispositions.
Thus, in organizations that are highly formalized and governed by well-
established role expectations, norms, rules, policies and procedures, there
is less opportunity for organizational members to behaviorally express
their dispositional tendencies.
Theoretically, in strong psychological situations, leader motives have
less influence on leader behavior, and leader behavior has less influence
on subordinates and on organizational outcomes than in weak psychological
situations. Studies by Monson, Healy and Chernick (1982), Lee, Ashford,
and Bobko (1990), and Barrick and Mount (1993) have demonstrated support
for Mischel's situational strength argument.


This theory consists of six axioms and twenty-seven propositions that
relate leader behavior, leader motives, and situational variables to leader
The Parsimonious Meta–Proposition of Value Based Leadership
Value based leadership theory is based on the meta–proposition that
non-conscious motives and motivation based on strongly internalized values
is stronger, more pervasive, and more enduring than motivation based on
instrumental calculations of anticipated rewards or motivation based on
threat and avoidance of punishment. The axioms and propositions that
follow are derived from and can all be explained in terms of this
parsimonious meta-proposition.

The Value Based Leader Behavior Syndrome

Behaviors that characterize value based leadership include a)
articulation of a challenging vision of a better future to which followers
are claimed to have a moral right; b) unusual leader determination,
persistence, and self-sacrifice in the interest of the vision and the
values inherent in the vision; c) communication of high performance
expectations of followers and confidence in their ability to contribute to
the collective; d) display of self-confidence, confidence in followers, and
confidence in the attainment of the vision; e) display of integrity; f)
expressions of concern for the interests of followers and the collective;
g) positive evaluation of followers and the collective; h) instrumental and
symbolic behaviors that emphasize and reinforce the values inherent in the
collective vision; i) role modelling behaviors that set a personal example
of the values inherent in the collective vision; j) frame-alignment
behaviors—behaviors intended to align followers' attitudes, schemata, and
frames with the values of the collective vision; and, k) behaviors that
arouse follower motives relevant to the pursuit of the vision. We refer to
these behaviors collectively as the value based leader behavior syndrome.
This specification of value based leader behaviors integrates the
behaviors specified in prior extensions of the 1976 theory of charismatic
leadership as well as behaviors specified in other theories of charismatic,
transformational and visionary leadership. House and Shamir (1993) provide
the rationale for inclusion of the above behaviors in the theoretical
leader behavior syndrome.

Axioms are statements, the validity of which are taken for granted,
either because the enjoy substantial empirical evidence or becuse they
cannot be tested. Axioms provide a foundation for more specific
statements, such as propositions. The axioms stated here provide the
foundation for the selection of leader behaviors from among all of the
leader behaviors specified in the various theories described above.

Axioms Concerning Human Motivation
1. Humans tend to be not only pragmatic and goal-oriented, but are also
self-expressive. It is assumed that behavior is not only instrumental-
calculative, but also expressive of feelings, aesthetic values and self-
concepts. We «do» things because of who we «are,» because by doing them we
establish and affirm an identity for ourselves, at times even when our
behavior does not serve our materialistic or pragmatic self-interests.
2. People are motivated to maintain and enhance their generalized self-
efficacy and self-worth. Generalized self-efficacy is based on a sense of
competence, power, or ability to cope with and control one's environment.
Self-worth is based on a sense of virtue and moral worth and is grounded in
norms and values concerning conduct.
3. People are also motivated to retain and increase their sense of self-
consistency. Self-consistency refers to correspondence among components of
the self-concept at a given time, to continuity of the self-concept over
time, and to correspondence between the self-concept and behavior. People
derive a sense of «meaning» from continuity between the past, the present
and the projected future, and from the correspondence between their
behavior and self-concept.
4. Self-concepts are composed of values, perceptions of self-worth,
efficacy, and consistency, and also identities. Identities, sometimes
referred to as role-identities, link the self-concept to society. Social
identities locate the self in socially recognizable categories such as
nations, organizations and occupations, thus enabling people to derive
meaning from being linked to social collectives.
5. Humans can be strongly motivated by faith. When goals cannot be
clearly specified or the subjective probabilities of accomplishment and
rewards are not high, people may be motivated by faith because being
hopeful in the sense of having faith in a better future is an intrinsically
satisfying condition.
6. When individual motives are aroused in the interest of the collective
effort, and when individual identify with the values inherent in the
collective vision, they will evaluate themselves on the basis of the degree
to which they contribute to the collective effort. Under conditions of
motive arousal and value identiication individuals experience intrinsic
satisfaction from their contribution to the collective effort and intrinsic
dissatisfaction from failure to contribute to collective efforts.
These axioms incorporate the extensions of the 1976 theory of
charismatic leadership offered by Shamir, House and Arthur (1993), and
House and Shamir (1995) and provide the integrative framework for the Value
Based Theory of Leadership.

The theory is expressed in the form of twenty-seven propositions which
assert specific ways in which leader motives and behaviors, in conjunction
with situational variables, affect follower motivation and performance and
organizational performance. These propositions are based on the leadership
and psychological theories reviewed above and reflect the extensions of the
1976 Theory of Charismatic Leadership contributed by House et al. (1991),
Shamir et al. (1993), House and Shamir (1993), and Waldman, Ramirez and
House (1996).

Propositions Concerning Leader Behavior and Its Effects

1. The motivational effects of the behaviors of the value based leader
syndrome described above will be heightened follower recognition of shared
values between leaders and followers, heightened arousal of follower
motives, heightened follower self-confidence, generalized self-efficacy and
self-worth, strong follower self-engagement in the pursuit of the
collective vision and in contributing to the collective, and strong
follower identification with the collective and the collective vision. We
refer to these psychological reactions of followers as the value based
motive syndrome .
2. The behavioral effects of the value based motive syndrome will be
heightened commitment to the collective as manifested by follower
willingness to exert effort above and beyond normal position or role
requirements, follower self-sacrifice in the interest of the vision and the
collective, and increased collective social cohesion and organizational
collaboration. We refer to these effects as the value based follower
commitment syndrome. While the value based motive syndrome described in
proposition one is not directly observable, the behaviors of the value
based follower commitment syndrome are.

Propositions Concerning Leader Attributes

3. Self-confidence and a strong conviction in the moral correctness of
one's beliefs will be predictive of proactive leadership. This proposition
is a slight modification of proposition three of the 1976 Theory of
Charismatic Leadership. This proposition has been supported by Smith
(1982), House et al. (1991), and Howell and Higgins (1991).
4. Strong leader concern for the morally responsible exercise of power
will be predictive of constructive, collectively oriented exercise of
social influence by leaders and predictive of the value based motive and
follower commitment syndromes specified in propositions 1 and 2 above.
5. Power motivation coupled with a strong concern for the morally
responsible exercise of power will be predictive of the constructive,
collective-oriented exercise of social influence by leaders.
6. Power motivation, unconstrained by a strong concern for the moral
exercise of power, will be predictive of impetuously aggressive and self-
aggrandizing exercise of social influence.
7. Power motivation, in conjunction with a strong concern for the moral
exercise of power, will be predictive of effective leadership when the role
demands of leaders require substantial delegation of authority and
responsibility and the exercise of social influence.
8. Power motivation, unconstrained by a strong concern for the moral
exercise of power, will be predictive of effective leadership when the role
demands of leaders require strong individual competitiveness,
aggressiveness, manipulative and exploitive behavior, or the exercise of
substantial political influence.
9. Affiliative motivation will be predictive of non-assertive leadership,
close relationships with a small subgroup of followers, partiality toward
this subgroup, and ineffective leadership.
10. The leader motive profile will be predictive of proactive leadership
and leader effectiveness when the role demands of leaders require
substantial delegation of authority and responsibility and the exercise of
social influence.
11. Achievement motivation will be predictive of effective leader
performance in entrepreneurial contexts and for small task-oriented groups
in which members have direct interaction with the leader.
12. Achievement motivation will be predictive of ineffective leader
performance for the leadership of organizations in which the role demands
of leaders require substantial delegation of authority and responsibility
and the exercise of substantial social influence.
Propositions four through twelve are derived from the motivation
theories reviewed earlier.

Propositions Concerning Specific Leader Behaviors
13. Leader behaviors intended to enhance followers cognitive abilities
will increase follower and overall organizational performance when such
behaviors complement formal organizational practices and the informal
social system by providing direction, clarification, feedback,
encouragement, support, and motivational incentives to subordinates which
are not otherwise provided.
14. When leader behaviors intended to enhance followers cognitive
abilities are redundant with formal organizational practices and the
informal social system they will be viewed as excessively controlling, will
cause follower dissatisfaction, and will be resented and resisted.
15. To be accepted by followers, it is necessary for leaders to be
perceived by followers as acting in the interest of the collective and the
followers, to be perceived as fair and trustworthy in their interactions
with followers, and to be perceived as not self-aggrandizing.
16. Leader support behavior will be predictive of low follower stress,
trust in by followers, and follower satisfaction with their relationships
with leaders.
17. Leader contingent recognition and approval will be predictive of
follower role clarity, follower perceptions of leaders as fair, and
heightened follower satisfaction and motivation.
18. Directive leader behavior will result in follower role clarification
but will be dysfunctional when followers prefer to exercise independent
actions and initiative, are highly involved in their work, and/or perceive
themselves as having requisite knowledge and skills for effective task
19. Participative leader behavior will result in follower role
clarification and will be functional when followers prefer to exercise
independent actions and initiative, are highly involved in their work,
and/or when followers perceive themselves as having requisite knowledge and
skills for effective task performance.
20. Leader fairness behavior will be predictive of follower acceptance of
leaders, and the leader's vision and values.
21. Perceived lack of fairness will result in follower resentment and
resistance to the leaders vision and directions. These propositions are
based on equity theory of motivation.
Propositions 13 through 21 are based on the 1996 version of Path Goal
Theory of leadership (House, 1996).
22. Leaders arouse motives of followers by enacting specific motive arousal
behaviors relevant to each motive. For example, defining tasks and goals as
challenging arouses the achievement motive; invoking the image of a
threatening enemy, describing combative or highly competitive situations or
describing the exercise of power arouses the power motive; making
acceptance of the leader contingent on mutural acceptance of followers, or
stressing the importance of collaborative behavior arouses the affiliative
23. Leaders who engage in selective behaviors that arouse motives
specifically relevant to the accomplishment of the collective vision will
have positive effects on followers' value based motive syndrome described
in Proposition 2.
24. The more leaders engage in the value based leader behavior syndrome the
more their followers will emulate (a) the values, preferences and
expectations of the leader, (b) the emotional responses of the leader to
work-related stimuli, and (c) the attitudes of the leader toward work and
the organization.
Propositions 22 through 24 are slight revisions of propositions
advanced in the 1976 Theory of Charismatic leadership (House, 1977).
25. The use of strong extrinsic material rewards contingent on performance
will conflict with appeals to ideological values and will thus undermine
the effects of the value based leader behavior syndrome. This proposition
is based on dissonance theory (Festinger, 1980) and supported by the
findings of Korman (1970), and Dubinsky and Spangler (1995) described

Propositions Concerning Social Context

26. Two necessary conditions for leaders to have the effects specified in
proposition two are that leaders have the opportunity to communicate the
collective vision to potential followers and that the role of followers be
definable in ideological terms that appeal to them. This is a modification
of one of the propositions originally advanced by House (1977).
27. The emergence and effectiveness of value based leaders will be
facilitated to the extent to which a) performance goals cannot be easily
specified and measured, b) extrinsic rewards cannot be made clearly
contingent on individual performance, c) there are few situational cues,
constraints and reinforcers to guide behavior and provide incentives for
specific performance, and d) exceptional effort, behavior and sacrifices
are required of both the leaders and followers. This proposition is based
on the earlier discussion of strength of situations and dissonance theory
and is a modest modification of one of the propositions originally advanced
by Shamir et al. (1993).
The hypotheses were tested within the context of a latent structure
casual model, using Partial Least Squares Analysis (PLS). This modelling
procedure requires that substantive hypotheses be modelled in the form of
paths connecting the hypothesized variables. The variables are latent
constructs composed of scores on manifest indicators. The The slopes of
these relationships are presented in Figure 3. This finding supports the
competitive hypothesis 5a which states that LMP will have greater effects
in non-entrepreneurial firms than in entrepreneurial firms, and will be
discussed below.


In this section we first discuss the implications of the findings
with respect to the value based leadership. Next we discuss the
implications of the findings for each of the five theories that were
integrated in the models tested. We then discuss the more general
implications of the study for the discipline of Organizational Behavior.

Value Based Leadership
Thomas (1988), House et al. (1991), and by Waldman, Ramirez and House
demonstrate longitudinally, and with adequate controls for spurious
relationships, that leaders have substantial effects on the performance of
the organizations they manage. However, there have been no studies, other
than the U.S. presidential study (House et al., 1991), that investigate the
leader motives and behavior that lead to such leader effects. Thus there
has been a «black box» concerning how leader processes influence overall
organizational performance that remains to be explained.
Collectively, the findings of the present study help to understand the
phenomena in the «black box.» More specifically, the findings show, in
some detail, important relationships between chief executives' motives and
behavior and subordinates' motivation and commitment to their organization.
Having shown how the components function, it is now possible to test
linkages between leader behavior, subordinate responses, and organizational
effectiveness using longitudinal quasi experimental designs.

Implications for Specific Theories
In this section we discuss the implications of the study findings for
each of the theories that are integrated to form the Value Based Theory of

Achievement Motivation Theory
Achievement motivation has a more positive effect on CEMS and all
leader behaviors in entrepreneurial firms than in non-entrepreneurial
firms. This finding constitutes yet another confirmation of achievement
motivation theory concerning the specific conditions under which
achievement motivation is predicted to result in high performance.

Moral Responsibility Theory
The bivariate relationships between the moral responsibility
disposition and value based leader behavior, leader fairness and CEMS, and
the moderating effect of responsibility on the relationships between the
power motive, and CEMS, leader charisma, and support/reward behavior all
provide support for Moral Responsibility Theory. Moral responsibility
motivation is clearly an important disposition that deserves further
investigation and attention.

Leader Motive Profile Theory
The positive relationships between LMP and executive value based
leader behavior, support/recognition behavior, and directiveness provide
support for LMP Theory. These two relationships are consistent with the
interpretation that because high LMP leaders have low affiliative
motivation they enact social influence in an impersonal and more proactive
and assertive manner than low LMP leaders.
The findings are consistent with the propositions that LMP affects
leader behavior, and leader behavior in turn has a positive effect on CEMS.
These findings suggest a re-specification of the boundary conditions for
the role of LMP in organizational functioning. Contrary to the initially
specified boundary conditions, LMP has negligible effects on leader
behavior and CEMS in non- entrepreneurial firms and positive effects in
entrepreneurial firms. These findings imply that LMP has its' major impact
on organizational outcomes through its' influence on leader behavior under
weak psychological conditions.

Path Goal Theory

As predicted by the Path-Goal Theory of Leadership (House, 1996),
leader contingent
recognition and supportive behaviors are predictive of CEMS, and leader
directiveness is more strongly negatively related to CEMS in
entrepreneurial firms. Thus Path-Goal theory is provided additional
support in the present study.


The major conclusions that can be drawn from the above findings and
discussion are: 1) the value based theory of leadership successfully
integrates five prominent theories of leadership (transformational,
charismatic, visionary, LMP, and path-goal theories) and assertions drawn
broadly from established psychological theories of motivation and behavior;
2) the components of the value based theory of leadership are rather
strongly and quite consistently supported, although their exact
combinations remain to be established; 3) the psychological theories
integrated within the value based theory are largely supported; 4) the
value based theory of leadership, with various kinds of
operationalizations, has rather broad generalizability; 5) the theory
supported by the U.S. presidential study holds for CEOs with respect to
effects of leader behaviors on subordinates' cognitions and affective
responses; 6) a re-specification of the boundary conditions of LMP should
be further investigated; and 7) the motives that are most appropriate for
effective leadership are contingent on the orientation of the collective
being led.
Beginning with the 1976 theory of charismatic leadership (House,
1977), a new leadership paradigm has emerged. This paradigm consists of
several theories of similar genre (House, 1977; Bass, 1985; Conger &
Kanungo; 1987; Bennis & Nanus, 1985; 1987; Sashkin, 1988) and concerns the
determinants of exceptionally effective or outstanding leadership.
According to this paradigm, value based leaders infuse organizations and
work with ideological values which are intrinsically and powerfully
motivational. Value oriented motivation is stronger, more pervasive, and
more endurable than pragmatic oriented motivation. The theories of the new
paradigm are now integrated and formalized as the Value Based Theory of
Leadership. Hopefully, this theory and the supporting research will
stimulate further leadership research and further development of leadership
and organizational behavior theory.
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