TRANSFORMATIONAL LEADERSHIP, INNOVATION AND KNOWLEDGE MANAGEMENT: EMPIRICAL FINDINGS AND EMERGENT CONCLUSIONS

Transformational Leadership and Knowledge Management 1

TRANSFORMATIONAL LEADERSHIP, INNOVATION AND
KNOWLEDGE MANAGEMENT: EMPIRICAL FINDINGS
AND EMERGENT CONCLUSIONS

C. B. Crawford, Ph.D. ccrawfor@fhsu.edu
Fort Hays State University
600 Park St.
Hays, KS 67601
(785) 628-4531

This study (N = 1046) investigated the relationship between innovation, transformational,
transactional, and laissez-faire leadership and knowledge management. The combined model of
innovation and transformational leadership significantly predicted knowledge management,
accounting for 29.4% of the variance. Knowledge management was negatively predicted by
laissez-faire leadership. Knowledge management behaviors were not related to transactional
leadership overall, but were significantly predicted by each subscale. These findings warrant
further investigation.
INTRODUCTION

Nearly every modern organization is confronting the change in information systems, from
ledger cards to digital processing. Today, information flows in directions and with speed that
only a few years ago we could not imagine. The change has been nothing short of a revolution.
Our current trend toward informatics effects the process of leadership by speeding up the inputs,
requiring faster and more personal transformation of the product, all in a business climate that
builds competition through “response time” to customer demands. The function of leadership in
the short-term future will be impacted by the current information revolution.
AN EMERGING KNOWLEDGE ORGANIZATION
Over the past 15 years the term “knowledge management” has evolved to represent the

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changing nature of the workplace – a true paradigm shift. In coining the phrase “knowledge
society” Peter Drucker convincingly argued that land, labor, and capital – the classical factors of
production – had been largely replaced by knowledge (Drucker, 1993), “that knowledge has
become the resource, rather than a resource, is what makes our society ‘post-capitalist’”(p. 45).
Lang (2001) clarified the importance of the knowledge worker, “while the knowledge worker
may need the tools of production the organization owns, while she may well have to work in
organizations, she nevertheless owns the means of production” (p. 44). Hitt (1995) further
argued, “It seems evident that the learning organization is a paradigm shift from the more
traditional organization. Indeed, it is a paradigm shift of the highest order. We are witnessing
the emergence of a radically new perspective of organization: how they should function, how
they should be managed, and how they should cope with change” (Hitt, 1995, p. 17). Rowley
(1999) suggested that “the knowledge based society has arrived, and those organizations that can
succeed in the global information society are those that can identify, value, create, and evolve
their knowledge assets” (p. 416). Rowley continued by noting that effective management of
knowledge, change, and innovation are central or “core competencies” that must be mastered for
organizations to succeed.
BASICS OF KNOWLEDGE MANAGEMENT
As a preliminary consideration, it seems important to define the seemingly self-evident
term – knowledge. While prima facie it seems obvious, the reality is that knowledge is quite
complex (Clark & Rollo, 2001). Of central importance is the type of knowledge that
organizations are forced to manage. If all knowledge were codified and formal, or explicit, then
the function of knowledge management would be little more than compliance and management.
The reality is that much of the information that organizations try to manage is held within the

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personal and collective experiences of the workforce; it is tacit knowledge. Bollinger and Smith
(2001) explained, “Tacit knowledge is unarticulated knowledge that is in a person’s head that is
often difficult to describe and transfer. It includes lessons learned, know-how, judgment, rules of
thumb, and intuition…it is key characteristic of team-based learning organizations” (p. 9). Tacit
knowledge is an important resource of organizations given that 42% of corporate knowledge is
held within employee’s minds (Clarke & Rollo, 2001).
Knowledge management is jointly a goal and a process. As an outcome or goal,
knowledge management is entirely focused on sharing information for the benefit of the
organization, as Bollinger and Smith (2001) concluded. They reasoned, “the knowledge
management process is not so much about control as it is about sharing, collaboration, and
making the best possible use of a strategic resource” (p. 14). Knowledge management is
primarily about making tacit knowledge more accessible since it accounts for a majority of an
organization’s collective knowledge (Clarke & Rollo, 2001). Lang (2001) explicated the goal of
knowledge management, “Knowledge management systems must connect people to enable them
to think together and to take time to articulate and share information and insights they know are
useful to their company” (p. 44). Stonehouse and Pemberton (1999) also suggested, “it is the
role of knowledge management to ensure that individual learning becomes organizational
learning” (p. 132). Birkinshaw (2001) referred to this process as ‘recycling’ old knowledge. The
process of knowledge management is based on the ability of all members of the organization to
add value to the basic business processes through the creation, communication, codification, and
coordination of both explicit and tacit knowledge stores (Nonaka & Takeuchi, 1995).
Knowledge management is a complex process without end, but effective knowledge
management can be a goal for any organization.

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Transformational Leadership and Knowledge Management 4
Barth (2003) and Seng, Zannes, and Pace (2002) detailed several distinctive personal
knowledge management process tools. Barth’s framework provided perhaps the most effective
and developed comprehensive categorization of personal knowledge management processes. It
included:
1. Accessing. Search strategies, research, inquiry.
2. Evaluating. Judgment, confirmation of information, qualification.
3. Organizing. Filtering, discarding, filing and archiving.
4. Analyzing. Critical thinking, sense-making, testing hypotheses.
5. Conveying. Explaining, presenting, written and spoken conveyance.
6. Collaborating. Messaging, sharing documents, meetings and conversations.
7. Securing. Self-discipline, backup, inoculation, threat awareness.
Of the conclusions that could be drawn regarding the specific processes of knowledge
management, two quickly come to mind. First, each of the knowledge management processes
have been traditionally the domain of leaders and managers. Second, these processes, as in the
past, require much more than just a technological solution.
TRANSFORMATIONAL LEADERSHIP AND INNOVATION
Burns (1978) defined transformational leadership as a process in which "leaders and
followers raise one another to higher levels of morality and motivation" (p. 20). A chief element
of transformation is the ability to cultivate the needs of the follower in a follower-centered
manner. According to Burns, focusing on needs makes leaders accountable to the follower.
First, Burns contended that followers are driven by a moral need, the need to champion a cause,
or the need to take a higher moral stance on an issue. People like to feel that a higher
organizational spiritual mission guides their motives (Tichy & Devanna, 1986). The second

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need is a paradoxical drive for consistency and conflict. Transforming leaders must help
followers make sense out of inconsistency. Conflict is necessary to create alternatives and to
make change possible. The process of transformation is founded on empathy, understanding,
insight, and consideration; not manipulation, power wielding, or coercion.

Few researchers address the link between information technology and leadership, and
even fewer address the relationship between transformational leadership and knowledge
management. According to Klenke (1994), information technology and the actions of leaders
create new organizational forms. The relationship between innovation and leadership is difficult
to articulate given the variety of functional leadership behaviors and the range of information
technologies. Technology and leadership have reciprocal effects on each other; a change in one
necessitates a change in the other. Brown (1994) speculated that transformational leadership is
needed in an evolving technological society. Societally, we are moving from controlled change
to accelerated change nearly beyond control. Transformational leaders must meet market
demands faster and better than before, given the increasingly interdependent economy.

Limited research addressed the relationship between innovation and transformational
leadership. Howell and Higgins (1990a, 1990b, 1990c) contended that champions of innovation
were significantly more transformational than non-champions. Champions are generally
considered to be key organizational decision-makers that advocate enhanced use of technological
solutions, but often are not as technologically literate as specialists in the organization.
Champions operate in three ways:
• Implement rational methods that promote sound decision making based on organizational
rules and procedures,
• Engage in a participative process, enlisting others’ help to gain approval and

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implementation of the innovation,
• Work outside the formal channels of bureaucratic rules and engage in the renegade
process (Howell & Higgins, 1990a, 1990b, 1990c).
In a series of articles, Crawford (1998), Crawford and Strohkirch (1997a, 1997b, 2000), and
Crawford, Gould, and Scott (2003) established the argument that transformational leadership was
related to personal innovation. In their findings, transformational leaders were significantly
more innovative than transactional and laissez-faire leaders. Innovation is often assumed to be
one of the important characteristics of knowledge managers. One behavioral manifestation of
innovation is the ability to create and manage information and knowledge. Given the substantial
relationship between innovation and transformational leadership, research looking at the
relationship of one outcome of innovation (knowledge management) and transformational
leadership seems deserving of further investigation (Bryant, 2003; Crawford & Strohkirch,
2002).

INNOVATIVE LEADERSHIP IN KNOWLEDGE ORGANIZATIONS
Mahoney (2000) crystallized the position well, “Let me say from the start that in my view
leadership must exist at all levels in an organization, regardless of the size, for it to consider
itself a learning organization….there is no excuse for them [leaders] not creating an environment
where everyone can participate in this process” (p. 241). Bailey and Clarke (2000) highlighted
the disconnect in how leadership has not kept pace with the need to understand the role of
knowledge, “for some reason many managers have yet to grasp the clear personal relevance,
utility, and organizational significance of knowledge management” (p. 235). They further
reported that many leaders felt that knowledge management was more fad than reality, or

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struggled to both conceptualize and practice knowledge management. Scharmer (2001) charged
leaders with a nearly impossible task, “Leaders…face a new challenge. Leaders must be able to
see the emerging opportunities before they become manifest in the marketplace” (p. 137).
Leaders play a crucial role in building and maintaining an organizational culture of learning.
They specifically infer that leaders must attach a high value to knowledge, encourage
questioning and experimentation through empowerment, build trust, and facilitate experiential
learning of tacit knowledge (Stonehouse & Pemberton, 1999).
Some limited empirical findings on the role of leadership in the knowledge organization
have been published, but this type of investigation has not been the norm. In a limited interview
of leaders, Johnson (2002) found a common theme, “A critical point, though, is that they paid
attention themselves [sic] to the learning organization initiative….The idea that everyone in the
organization pay attention to learning ran through the data” (p. 246). Johnson (2002) made
several conclusions based on the data, but of most significance is the idea that knowledge
management applies to the entire organization, from top to bottom. Finally, in another
substantial empirical piece, Politis (2001) looked at the relationship between self-management,
transformational/transactional leadership, and various knowledge management attributes. Politis
found that self-management, transformational, and transactional leadership styles are related to
dimensions of knowledge acquisition. The empirical findings, though limited, seem to lend
some support to the theoretical assumptions made by many authors speaking of the need for
participative collaborative leadership in the face of the transition to the knowledge society. The
construct of leadership is either not distinguished from organizational position or may be directly
confounded by it.
Finally, Bryant (2003) argued that there is a clear relationship between transformational

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leadership and knowledge management in organizations. While Bryant’s piece is pre-empirical,
this foundation serves as ample motivation for further investigation of the relationship between
the two concepts. Bryant (2003) made the point very clearly,
The greatest need in this area is empirical testing of the organizational knowledge
constructs. Researchers may want to explore…the link between transformational
leadership and managing knowledge at the individual and group levels and the link
between transactional leadership and managing knowledge at the organizational level (p.
41).
Bryant’s research provides some basis from which to speculate that transformational leadership
might be a causative factor influencing greater knowledge management skills, though his
research focus does not empirically test the causative direction between the two variables.
METHODS
Subjects
Subjects (N = 1046) were selected from a sample of students taking classes in a non-
traditional graduate degree program and other associated individuals. Over 50% of the subject
population was over 30 years of age. More females (n = 581) completed the assessment than
males (n = 487). Well over 50% had been employed for over 5 years, and well over 50% were in
positions of management (ranging from supervisory to executive level). Finally, over 90% of the
sample indicated that they used computer technology more than irregularly, and by far, most
used computer technology on a daily basis.
Procedure
The entire instrument battery was administered to subjects following a brief set of
instructions. Subjects were asked to grant legal consent and to indicate if they wished for more

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information following the accumulation of results. Subjects were given ample time to complete
the instrument (generally 20 minutes was sufficient). Participants were asked to return the
instrument to an instructed location when they completed it. Following administration of the
instrument battery data analysis occurred.
Instrumentation

The first instrument utilized in this instrument battery was the Knowledge Management
Inventory (KMI). This inventory focused exclusively on the behavioral aspects of knowledge
management and the content of the questions was derived from the Barth (2003) typology of
personal knowledge management categories. Barth had seven categories of personal knowledge
management and four questions from each of the categories were selected for the KMI. Once
created, the KMI was administered to a pilot sample (N = 99) for the purposes of establishing
reliability estimates (α = .86). Two of the questions were further clarified based on this analysis
to improve the instrument. The KMI achieved an alpha reliability of .89 in this sampling. Based
on Barth’s typology a series of subscales were computed: information acquisition, document and
information creation, document and information application.
Table 1
Alpha Reliability Coefficients of Scales and Subscales of the Knowledge Management Inventory
Scale/Subscale Alpha
coefficient
Knowledge Management Inventory
α = .86
Information Acquisition
α = .70
Accessing & Evaluating

Information (and Document) Creation
α = .79
Organizing & Analyzing

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Information Application
α = .71
Conveying, Collaborating & Securing


The second instrument, the Multifactor Leadership Questionnaire (Version 5-S) created
by Bass (1985), is a 70 item survey consisting of four subscales of transformational leadership
acts (charisma, individual consideration, intellectual stimulation, and inspiration), two subscales
of transactional leadership acts (contingent reward and management by exception), and one scale
measuring laissez-faire leadership. Subjects self-reported specific leadership attributes using five
point Likert scales ranging from strongly agree to strongly disagree. The MLQ has been found
to be very reliable (Howell & Higgins, 1990a) as either a self-report measure or as a measure of
a superior’s performance. In the present application the MLQ was used as a self-report of
transformational, transactional, and laissez-faire leadership attributes. The reliability scores for
the subscales ranged from α = .84 to α = .63, which are consistent with prior research.
Third, all participants were asked to complete the Acceptance of Technological
Innovation scale (Crawford, 1998). The version administered was shortened (20 items) from the
original 30 item measure. Though subscales were developed for the original ATI measure, none
were computed for this research. Alpha reliabilities in past implementations of the ATI have
consistently approached α = .90, and in this study the same level was noted, when α = .91 was
computed.
Finally, several questions regarding basic demographics of the sample were deemed
important for this investigation. Subjects were asked to report on the following: age, sex, years
employed, education, type of career, use of technology, and position. In the below analyses the
only variable used was the position variable where subjects self-rated themselves as entry level,

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