Leadership Styles in Knowledge Management

This research paper aims to study the three basic leadership styles widely practiced in the organizations as well as the emerging concept of knowledge management and examine individually the relationship of these leadership roles on the knowledge management. The three leadership styles under focus are: transformational, transactional and laissez-faire. The purpose of this research is to identify which leadership style is more effective in relation with the knowledge management. Hence, to help organizations make the best use of this phenomenon and increase their knowledge sharing among different hierarchical levels to exercise maximum levels of learning and innovation in their work environment. It will also enable corporations to gain the competitive advantage with respect to their human capital and. When it is discovered that which managerial style has the positive impact on the knowledge management, it will result into employee empowerment and motivation. Among the important findings are that effective knowledge management or knowledge sharing processes lead to a competent work environment and the employees get more involved with their jobs as they feel that their ideas are valued. Moreover, they tend to get more creative and challenging, but these behaviors are majorly dependent upon the manager’s attitude and whether he or she encourages such contributions or interferences from the subordinates and is flexible and open to change and innovation. In the outcomes, transformational leadership has proved to positive relationship with knowledge management and that of the laissez-faire has a negative effect on it. This paper has derived findings through extensive study of literature reviews on these main concepts which is based on theoretical researches.

Keywords: Knowledge management, Transformational leadership, Transactional leadership, laissez-faire, Communication.


Background of study:

In this research we are going to study the various factors affecting the issue of Knowledge Management among employees and how can it become most useful for the growth of an organization. The concept of Knowledge Management basically is about the knowledge an individual possesses about anything and this particular kind is referred to as tacit knowledge which is usually gained through personal observation, experience, values and beliefs. Such form of knowledge is usually exhibited in informal settings and could not be formally written or documented into a proposal to the manager. As it is something that can cross an employee’s mind instantaneously but he or she might not feel confident to share their idea openly in the given atmosphere, where they might think it would sound insignificant or absurd to others. To sum up, the purpose of knowledge management is to provide strategies, processes and technology to amplify the overall organization’s learning (Satyadas et al., 2001). Moreover, system oriented view is highly being emphasized and companies are installing technology applications ranging from traditional data-processing areas to expert networks enabling expert-to-expert communication. These systems are designed to store and make profit from the existing explicit, implicit as well as tacit knowledge of organizations. Hence, they facilitate the flow of knowledge in the processes and also record the information that which employee has put in the knowledge and how its implementation could help the organization, so that the right person should get the reward fairly and it is done as an act of encouragement for others. In today’s world of immense market competition and rivalry among brands, there is an increasing need of formulating progressive organizational strategies constantly for a company’s survival. There organizations are now paying most attention to the notion of innovation, which is majorly generated from the employees. Hence, it is highly important for an organization to have a culture that is flexible, open to new ideas, adaptive to change and appreciative of contribution of knowledge. Hence if the sharing of knowledge from individuals is encouraged and valued, it can enable a company to be competitive and help in achieving its goals, provided it is in relevance with the problem. (Birasnav, Rangnekar, & Dalpati, 2011) Moreover, if that knowledge is used and followed through, it gives a sense of recognition, achievement and personal satisfaction as well as a sense of belonging. It matters most especially to the senior employees who do not much care about the other lower components of the Maslow’s motivation theory of hierarchy, as those needs are already fulfilled at this stage. Leadership Styles are at the center of Knowledge Management importance and approaches that have caught the attention of researchers and scholars for long periods. Overly “technical view” of Knowledge Management seems to downplay the importance of “soft factors” that impact the Knowledge Management phenomena.

Significance of study:

Managing knowledge and intellectual capital has become the key drivers of new knowledge and new ideas to the innovation process, to new innovative products, services and solutions. It helps in better achieving and even exceeding the objectives. (Knowledge Management in Health Science Libraries, 2007) The purpose of knowledge management should not be to become just knowledgeable but to be able to create, transfer and apply knowledge with aim of better achieving the objectives.

Problem Statement:

The current competitive setting of organizations and the changing management paradigm has highlighted the importance of Leadership Styles on Knowledge Management. Identifying Leadership Styles that promote concept and practice of Knowledge Management is crucial as the growth and competitiveness of organizations in new-age economy.

Research Question:

What are the different leadership styles that affect knowledge management in organization?

What are the ways in which different leadership styles affect knowledge management?

Purpose of study:

The purpose of this study is to examine the different roles of leadership in the knowledge management and how this has an impact on the overall organization.

Research objectives:

To identify and evaluate different roles of leadership

To examine the impact of these different roles of leadership on knowledge management


Only few educational institutes are surveyed for the primary research from Rawalpindi and Islamabad only.

Literature Review:

Knowledge management has been identified as one of the most important resources that contribute to the competitive advantage of an organization. Behavioral and interpersonal skills are most often known as the essentials for successful knowledge management. Knowledge can be within individuals or within the relationships between the individuals groups or sub groups. Without verbal or even the non verbal communication the only way to organize knowledge transfer would be to move around people holding the relevant knowledge. (Ferenc, 2003) For many years it had not been studied despite its importance in this information age; only recently leadership theories and researches have addressed the role of leadership in knowledge management. Researchers (Beron et al. 2006), (Viitala, 2004) suggested that the design and building management information system is one way in which leaders at the top of a corporate have an impact on organizational performance. Recent development in the organizational knowledge literature stresses the importance of knowledge management to building a sustainable competitive advantage. (Bogner and Bansal, 2007) and to the importance of leadership for the success of knowledge management. Recently the growing information systems and knowledge management have continuously stressed the lack of leadership support for the failure of many knowledge management projects. (Davenport et al. 1998), (Chandrashekhar, 2009). It has been found that 42 percent of an organization’s knowledge resides in the minds of the employees (Clark and Rollo, 2001); therefore it is dependent upon the leaders how to make the best use of it. Furthermore, as discovered by Doppelt (2003) that in order to achieve sustainability in a corporation, leadership is the key, because a competent and committed leader encourages dialogue which as a result leads to change and so barriers such as sticking to old ideas and cultural frameworks, past practices, tunnel vision and such approaches that come in the way to draw new progressive visions for the future. According to the researchers Jong and Hartog (2007) and Aragon-Correa (2007) every leadership style has its own pros and cons; but transformational leadership is more attentive and engaging with the sub-ordinates and encourages them to be creative and focuses on the firm’s learning and innovation. Whereas, Bass (1985) presented that transactional leaders are not much involved with the subordinates’ work unless there is a need when a problem arises. On the other hand, he also stated that transformational leaders motivate their workforce, rouses their intellectual skills and acts as role models for them. Moreover, they also have the quality of inspiring the employees into acquiring goal accomplishing skills and improve their performance in achieving the corporate vision (Nemanich and Kellar, 2007). Also, they train, encourage and support their subordinates keenly and optimistically and promote individual and team spirit among them. Consequently, it is paid back in the form of boosting employees’ performance in their tasks and bringing high returns from them (Yulk, 2006; Boerner et al, 2007).

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Information management

Information as now a day includes both physical and electronic information. Now it’s the organizations and its structures that must be capable of managing that information throughout the information lifecycle regardless of its sources and formats. Thus the focus on information management is the ability of organization to capture, manage, preserve, store and deliver the right information to right people at right time. Information management becomes the corporate responsibility that needs to be addressed and followed from the senior level management to the front line management. Information is the key asset for an organization and thus should be treated as corporate asset. (Information Management) And it must be made available to everyone and must be shared.

People management:

Knowledge is the main driver for organizations’ performance. It affects performance by making it possible for people to perform well. So the instrument by which knowledge affects the performance is through people. So knowledge management must be people focused (Wiig, 2004) (Corral, 1999) Cindy Johnson, Director of Collaboration and Knowledge Sharing at Texas Instruments states: “Knowledge management is really about recognizing that regardless of what business you are in, you are competing based on the knowledge of your employees.”

They way of making knowledge available has evolved over time. It started with family clans where knowledge was passed from father to son by the process of learning. With the new ideas of working in teams, groups, and as institutions, people work closer to benefit from the knowledge of each other.

Process Management:

Knowledge management is considered as an approach where the employees of the companies would leverage from the buried knowledge that was held closely to them. This enabled the evolution of the term ‘learning organizations’ where knowledge is always evolving and is being made assessable to all the employees who are eager to attain it and apply it. The focus on improving, re-engineering and managing business process is considered as corporate assets. The companies are taking charge of how they will deliver value to their customers by focusing on process effectiveness and efficiency. While KM and process engineering was evolving at the same time, there were no efforts to combine them in the same architecture. KM has always been focusing on the best practices and proven practices but it had failed to understand how valuable the fusion of process and knowledge can be. So process management gives the ability to view, manage, evaluate, and adapt the business activities, applications, and people in organizations to achieve goals. And to achieve these goals there is a need for the management of knowledge where people get an easy access to share and create knowledge (Records, September 2005).

Leadership and knowledge management:

There is no doubt about it that leaders are the ones who set the standards for others in the organizations and they are one of the biggest driving forces who inspire and motivate them to achieve what they meant to achieve so leaders have direct impact on how organizations should see and deal with knowledge management but if knowledge management is not being conducted on all levels in the organization starting from the top then it would not be as effective as expected (Singh S. K., 2008)

Leaders have vital role to play on every level to manage the knowledge but particularly CEO should take part in this process because if he would take it seriously and feel that there is really a need of managing this thing like other practices in the organization then the rest of the people also take it seriously. Organizations with strong cultures and promising compensation programs will not succeed without committed and responsible managers. According to Singh it is the major responsibility of top executives of the organizations to make such strategies and create such values in the organizations which encourage employees to share, create and value knowledge and leaders should provide them with the opportunities to do so and then afterwards measures should be taken to evaluate employees behaviors, attitudes and productivity that are required for effective knowledge management (Singh S. K., 2008)

Four broad approaches were studied to understand the leaders and leadership through the trait approach, the contingency approach, the behavior approach and the transformational approach and some of the approaches does have a role in knowledge management but they are not enough to understand knowledge management systematically. The trait approach does have impact on knowledge management and considers it important thing for leaders, contingency and behavior approach also considers knowledge management vital for effective leaders. The transformational approach also support this phenomena that information creation, keeping and sharing facilitates in obtaining shared vision and values in the organization (Lakshman, 2007).

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Leader’s self realization of importance of knowledge management really matters in the effectiveness of knowledge management’s practices in the organization and realization is needed in two dimensions, one internal other external. Internally it is achieved by establishing technological and socio-cognitive ways of managing knowledge and externally it is by realization of valuing customer focused knowledge management (lakshman, 2009).

Information revolution changes way of doing things in the corporate context, it enhanced the value of time and customers need quick Reponses with relevant and useful knowledge of the products and services so that transformed the process of leadership too by speeding up the inputs, requirement of quick and customized information regarding product and its functions which further builds competition in the business environment. Likewise he emphasizes the need for knowledge managers to achieve and maintain equilibrium between motivating team members with urgency and providing them with time and space to reflect. To become the knowledge sharing and managing organization, leaders have to take the responsibility and have to choose the appropriate leadership style to lead the organization effectively. (Viitala, 2004)

Transformational leadership:

A framework was established to implement quality management within an organization actually a system of profound knowledge .While implementing it leadership and knowledge management were measured and it was found that in order to implement such system leaders required should be participative, collaborative and inspiring (Gapp, 2002)

Transformational leadership have potential to effect employee’s perceptions through the returns that organization get in the form of human capital benefits and these leaders also have potential to make those benefits greater by adding them in the knowledge management processes ,encouraging inter personal communication among employees and creating organizational culture. (Birasnav, Rangnekar, & Dalpati, 2011)

It is possible for transformational leadership to enhance organizational innovation through creating a participative environment or culture and it can do so directly or indirectly by changing organization’s culture which encourages knowledge sharing and management in the organization. It is in the control of transformational leadership to promote such culture so the employees have autonomy to speak about their experiences and knowledge. (Nguyen & Mohamed, 2011)

There is relation between magnitude of knowledge acquisitions and transformational leadership. In today’s challenging world organizational culture should be more empowered and that is achieved by transformational leadership which encourage people to be open about their choices and decisions. (D.Politis, 2001) He encouraged the role of participative leadership, it is this leadership style which relies heavily on the leader functioning as a facilitator rather than simply a leader who orders and wants his assignments done in time. Employee would not be comfortable in sharing knowledge unless employee knows that he/she would be supported by their leaders.

Finally, (C.B.Crawford, 2005) argued that there is a clear relationship between transformational leadership and knowledge management in organizations. Crawford’s research is pre empirical and made the point very clearly that empirical testing is needed to understand the relationship of transformational leadership and organizational knowledge constructs.

Crawford’s research provides some basis from which to speculate that transformational leadership might be a causative factor influencing greater knowledge management skills. Transformational leadership and personal innovation are linked. It was found that transformational leaders are more innovative than transactional and laisse-faire leaders. Innovation is considered to be the key factor for knowledge leaders; innovation is the name of managing and creating information and knowledge through different ways.

Transactional Leadership:

The second variable we are studying in this research, affecting the knowledge management in organizations is the ‘transactional leadership style’. This style of leadership is influenced by the concept of reward and punishment; such leaders believe that the employee’s performance is mainly dependent upon these two factors. That means that when there is an incentive the workers put in their best effort and the reward is in monetary terms in most of the cases; while when they fail to achieve the set target they ought to be punished. (Oshagbemi & Ocholi, 2006) Similarly, transactional leaders impose their authority on their followers to take work from them and clearly state what they want and also give employees the opportunity to get detailed information and guidance before they accept an assignment. Such leaders emphasize on present issues; they do not get involved with the employees tasks unless a need arises and in the beginning of a project they provide the workers with all the resources needed for its completion and after that the task becomes totally the responsibility of the workers (Bass, Cacioppe, Gronn, Hughes.et.al, Popper, & Zakkai, 2002).Transactional leadership has two major components, contingent reward and management by exception (MBE). Here, contingent reward means the reward that an employee is promised by the manager, to be acquired if the required target is achieved by him or her and the MBE approach is used to make sure that one should never fail to achieve the desired result due to the resource constraint. Leaders must be clear in explaining what they actually expect and the organizational goal is achieved they must give the recognition. It was also extracted from that manual that MBE is of two types, passive and active. In MBE active, the leader clarifies the standards to be followed and also defines the unacceptable standards of work and are likely to punish if they are not followed. In this strategy, mistakes and errors are identified and steps are taken to correct them. While, in MBE passive, the leader plays a passive role who does not clarify the standards or the requirements to be met by the employees, but only gets involved when there is an obvious issue. Hence, in this case passive style is not considered to be un systematic in correcting the negative issues. (Ogunlana, 2008)

Transactional leaders pay more attention to physical and security needs of the employees. The relationship between the leader and the subordinates mainly revolves around the attraction of reward system as a return for their efforts. It is also said that in transactional leadership one person takes the initiative to make a contact with others in order to make a contract of exchanging functions for the benefit of the organization (Birasnav, Rangnekar, & Dalpati, 2011).


Whereas, the third variable in this study is the ‘laissez-faire leadership style’, in which the leader gives complete freedom to the employees to make decisions regarding the completion of a task while answering their questions wherever they find problems and the workers are provided with all the necessary resources and tools for that by the leader. Apart from that only little guidance is provided by the leaders and the followers are expected to solve problems on their own (C.B. Crawford, 2005). This strategy is successful in case the workforce is highly experienced, skilled and capable of their jobs, otherwise if the labor lacks these expertise, the researchers recommend it to be an ineffective and the weakest form of leadership which yields poor productivity for the organization, as there are some workers which are unable to solve problems and meet deadlines on their own. Although, in such situations the work environment is quite relaxed, free of work pressure and without interference from the manager, but still it brings frustration and demonization among the teams when they are unable to produce the desired results, without the required feedback and assistance from the manager. But laissez-faire strategy contributes to the employee empowerment and it gives a visionary worker the opportunity to perform according to his or her own will. Lassiz- faire is a leader who always runs away when there is a need to make an important decision or when there is a serious problem (Ogunlana, 2008).

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The phenomenon of knowledge management is applicable on the whole organizational structure, taking into all the levels of hierarchy. While studied empirically it was discovered that the relationship between the different components of knowledge management and transformational leadership, transactional leadership and self-management have a link with the accomplishment of knowledge forms. Moreover the leaders should be able to give an empowering environment to the employees. Although according to the empirical findings, which are quite limited in this aspect, as well as the theoretical assumptions of a number of authors, there is a need for participative collaborative leadership style in order to facilitate the flow of knowledge. Hence it was pointed out that empirical testing of the knowledge attributes in an organization should be carried out, to find out the relationship between the management of knowledge and transactional leadership in a firm. (C.B. Crawford, 2005)

The researcher selected a sample of 1,046 males and females enrolled in liberal classes who were side by side employed in different economic sectors. In the first round they were asked to answer the questions based on the behavioral aspects of knowledge management in which the questions taken from the Barth (2003) typology of personal knowledge management categories. In the round they were asked to fill in the Multifactor Leadership Questionnaire 5-S (MLQ) derived from Bass (1985) which comprised of scales measuring the attributes of the three leadership styles: transformational, transactional and laissez-faire. The scales ranged from strongly agree to strongly disagree and as a measure for superior performance or as a self-report measure. But he used the MLQ as a self-report of transformational, transactional and laissez-faire leadership characteristics. Finally, in the last round, the respondents were asked about their demographics considered important for the research including sex, age, years of employment, education, career type, position at work and use of technology. While conducting the analysis, only the position variable was used that described the respondents as senior managers or executive, supervisors and at entry level. Though the basic purpose of this study was to determine the relationship between the knowledge management attributes and the transformational leadership style. In the end various correlations were found that determined the degree of the relationship between the knowledge management behaviors and transformational, transactional and laissez-faire leadership. Eventually, the outcome of the investigation concluded that the variables leadership and knowledge management are significantly related, both in the organizational setting as well as in theoretical context. The most important results included that there exists a strong relationship between knowledge management and transformational leadership. Moreover, transactional leadership, it was discovered that as knowledge management is technical in nature, the more effective management style would be transactional. Furthermore, transactional leaders are more goal oriented and not much concerned about the personal development of the sub-ordinates. In addition, another finding was that transactional leadership had strong correlations with knowledge management and contingent reward and it had considerable negative correlation with management by exception. On the other hand, it was analyzed that laissez-faire came out to have a negative effect on knowledge management, which indicates that a leader’s role is very essential in managing knowledge behaviors in corporate. Consequently, the negative correlation between the two components indicated an inverse relationship, which means that when knowledge management behavior increases, the extent of laissez-faire decreases (C.B. Crawford, 2005)

Additionally that investigation also showed that the hierarchical position an employee has in a company also has a link with the knowledge management, as people handing more information are expected to possess more skill and grip on building knowledge management capabilities. Likewise, leadership attributes are practiced and exerted most according to the position an individual holds; the more the responsibility, the greater the actions of a leader exhibited, to succeed in following an aim or achieving a goal. As a result, there were higher levels of transformational leadership witnessed as the position in a corporate increased, whereas transactional and laissez faire got less. Hence, the position in the hierarchy is also crucial in examining the relationship between knowledge management and leadership attributes; and that variable proved to be predictive of knowledge management, just like transformational leadership. Only transformational leadership style, not transactional or laissez-faire was related to the impact of position on knowledge management. In that investigation, it was concluded that transformational strategies worked best even where the most technical skills were required, in modern corporate environments as compared to transactional or laissez-faire and are more successful in other organizational constructs too because of their person-centered approach. Whereas, transactional strategies did not enhance knowledge management behavior and laissez-faire leadership slowed it to a significant extent. Furthermore, the higher the positions got in a corporate for individuals; they dealt with knowledge more effectively, because they then adopted more of transformational strategies. But in the significance, leadership is of much greater value than the position variable, effecting knowledge management. (C.B. Crawford, 2005)

Laissez-faire as leadership style exhibits ineffectiveness, unproductiveness and dissatisfaction. These leaders avoid interfering in the followers’ jobs and stay away from taking the responsibility their position demands and also avoid developing a relationship with the subordinates. (Ogunlana, 2008)

Proposed Methodology:

The sampling method that we will use is purposive sampling which is a non-probability sampling technique. Subjects would be selected because of we will be able to select people of interest and exclude who do not suit the purpose of research. The sector chosen for this study is educational sector, coordinators and head of departments would be researcher’s respondents. Total sample will be 100 individuals.

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