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Transformational Leadership in the Chinese Culture

A Quantitative Study on the Impact of Transformational Leadership on Chinese Internet Companies’ Performance

Master Thesis

Authors: Lingyu Ye & Mohamed-Amine Sakat Supervisor: Krister Bredmar, PhD

Examiner:Marianna Strzelecka, PhD Term: VT21

Program: Business Administration with specialization in Leadership and Management

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« It always seems impossible until it’s done. »

Nelson Mandela

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Abstract

Linnaeus University – Campus Kalmar School of Business and Economics

Leadership and Management in International Contexts (60 credits)

Title: Transformational Leadership in the Chinese Culture – A Quantitative Study on the Impact of Transformational Leadership on Chinese Internet Companies’ Performance.

This research aims to study how transformational leadership affects organizational performance and the mediation effect of employee voice behavior. A quantitative research method and a deductive research approach were used for this research study, where theoretical concepts were developed.

Several hypotheses were derived as means to test the existing theories regarding research variables. The data in this research was collected through a 384 completed online survey questionnaire from employees of the top ten listed Chinese internet companies. Various statistical techniques, including Pearson correlation analysis, linear regression analysis, and mediation effect testing, were implemented to provide evidence for hypothesis testing. The statistical analysis results indicate that a particular dimension of transformational leadership positively impacts Chinese internet companies’

performance, and employee voice behavior has a partial mediation effect in this relationship.

Key words

Transformational leadership, Chinese internet industry, Organizational performance, Employee voice behavior, Promotive voice, Prohibitive voice, Leaders, Motivation, Employees.

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Acknowledgments

The Master's process is comparable to a long sea voyage. There have been many difficulties to overcome: changes, strong winds, torrential rains, and technical challenges. The success of the crossing mainly requires a good dose of enthusiasm, an excellent capacity to adapt, and a lot of perseverance. A trip like this allowed us to understand each other better, develop further, and constantly challenge ourselves. We learned all sorts of personal and academic things that changed our lives and that we will never forget. No one can succeed in this crossing without being accompanied by an experienced crew where everyone's strengths are put to good use to reach the ultimate destination. We would first like to thank our senior lecturer, Mr Mikael Lundgren, for his support during all stages of the journey. Thanks also to Mr Krister Bredmar and Ms Marianna Strzelecka for their guidance, feedback, and professionalism. Finally, thanks to our families, friends and relatives for their moral support throughout our journey.

Tack, , ﺷاﺮﻜ

Alxa / Kalmar, May 2021

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Abbreviations

The main concepts have been shortened below, in order to enhance the comprehensibility of the research study.

ð EVB - Employee Voice Behavior ð IC - Individualized Consideration ð IS - Intellectual Stimulation

ð MLQ - Multifactor Leadership Questionnaire ð OP - Organizational Performance

ð PMV - Promotive Voice ð PHV - Prohibitive Voice

ð TL - Transformational Leadership ð EFA - Exploratory Factor Analysis

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Table of contents

1 INTRODUCTION 1

1.1 Background of the study 1

1.2 Problem discussion 4

1.3 Research questions 6

1.4 Research objectives 6

1.5 Research significance 6

1.6 Delimitation 8

1.7 Thesis outline 9

2 LITERATURE REVIEW AND HYPOTHESES FORMULATION 11

2.1 Transformational leadership 11

2.1.1 Overview 11

2.1.2 The concepts of leadership and transformational leadership 13 2.1.3 Transformational leadership vs Transactional leadership 15 2.1.4 The importance and necessity of transformational leadership 17 2.1.5 Factors affecting transformational leadership 18

2.2 Organizational performance 21

2.2.1 Performance 22

2.2.2 The concept of organizational performance 23

2.3 Employee voice behavior 25

2.3.1 Promotive voice and Prohibitive voice 26

2.3.2 Role of employee voice in transformational leadership and

organizational performance 27

2.4 Conceptual model 29

3 METHODOLOGY 30

3.1 Research philosophy 30

3.2 Research approach 31

3.3 Research method 31

3.4 Population and sample 32

3.4.1 Target population 32

3.4.2 Research sample 33

3.5 Survey design 34

3.5.1 Measurement instruments regarding transformational leadership 35 3.5.2 Measurement instruments regarding organizational performance 36 3.5.3 Measurement instruments regarding employee voice behavior 37 3.6 The reliability and validity of survey questionnaire 38

3.6.1 Reliability test 39

3.6.2 Validity test 40

3.7 Ethical considerations 42

4 FINDINGS 43

4.1 Frequency statistics of respondents’ backgrounds 43 4.2 Evaluating the linear relationships using Pearson correlation analysis 44 4.3 Evaluating the relationships between variables using linear regression

analysis 46

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4.3.1 Linear regression analysis regarding transformational leadership and

organizational performance 47

4.3.2 Linear regression analysis regarding transformational leadership and

employee voice behavior 48

4.3.3 Linear regression analysis regarding employee voice behavior and

organizational performance 50

4.4 Test the mediating effect of employee voice behavior 51

5 DISCUSSION AND CONCLUSION 55

5.1 Discussion 55

5.2 Conclusion 59

5.3 Theoretical implication 61

5.4 Practical implication 62

5.5 Contribution of authors 63

6 LIMITATIONS AND FUTURE RESEARCH DIRECTIONS 65

6.1 Limitations 65

6.2 Future research directions 66

7 LIST OF REFERENCES 67

APPENDIX ... 1

List of figures

Figure 1. Component of Transformational Leadership (Avolio et al., 2009) 20 Figure 2. Conceptual model ... 29 Figure 3. Hypotheses test results ... 54

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List of tables

Table 1. Target population size ... 33

Table 2. The measurement instrument of TL ... 36

Table 3. The measurement instrument of OP ... 37

Table 4. Measurement instrument of EVB ... 38

Table 5. Reliability test (Cronbach’s alpha) ... 40

Table 6. Validity test (Exploratory Factor Analysis) ... 41

Table 7. Frequency statistics of respondents’ backgrounds ... 44

Table 8. Pearson Correlation Analysis Results ... 46

Table 9. Multiple Linear Regression Analysis – TL and OP ... 48

Table 10. Multiple Linear Regression Analysis – TL and PMV ... 49

Table 11. Multiple Linear Regression Analysis – TL and PHV ... 50

Table 12. Multiple Linear Regression Analysis – EVB and OP ... 51

Table 13. Regression Analysis – IC and PMV ... 53

Table 14. Regression Analysis – IC and OP ... 53

Table 15. Regression Analysis – IC&PMV and OP ... 53

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1 INTRODUCTION

In this first chapter, an attempt is made to outline the first glimmerings of our research study through key points such as the context in order to situate ourselves, then the research gap via the discussion of the problem, followed by our research question and the purpose and objectives of this study.

Moreover, at the end of this chapter, the thesis plan is formulated.

1.1 Background of the study

For many years now, human beings have effectively participated in the growth and development of their society's economy through several revolutions;

nowadays, the business world is witnessing the fourth industrial revolution baptized by the scientific and technological advances that represent a large accelerator in the recomposition of commercial business and organizations' growth plans. So much so that in just a few years, this recent revolution has transformed the business world, influencing economic growth and competitiveness. It has even transformed huge industries into 360° (Schwab, 2016).

Today, when new technology is mentioned, people's thoughts automatically turn to the Internet, as it has opened the door to new ways of doing business.

In addition, the global society has entered an era where the mobile Internet is predominant. People's daily life activities, such as travel, entertainment and shopping, have become inseparable from internet-based services (Schwab, 2016). As a result, businesses can exploit the Internet to understand consumers' expectations more accurately, anticipate their preferences and create products and services that better meet their needs (Schwab, 2016). In this context,

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business management is also increasingly dependent on the Internet, with new technologies, such as Big Data, offering business leaders enormous versatility and decision-making opportunities. Still, at the same time, these new technologies can bring great perils to organizations if they do not adapt to these drastic changes (Schwab, 2016).

Keeping up with the evolution and application of these new ways of working has become an important asset to gain a competitive advantage in today's markets. It is, therefore, essential to keep up with the contemporary global business environment (Amabile, 1998; Tidd et al., 2006). In this respect, not only leaders have to demonstrate their abilities, but all employees, regardless of their hierarchical level, are required to cooperate with others to achieve the desired results. They need to know how to motivate others to work and, above all, take responsibility for the organization in which they work (Moradi Korejan et al., 2016). This is the origin of transformational leadership, which was conceptualized by Burns (1978). Even more, a transformational leader sees the organization as an entity in which he or she can, through motivation, help, lead and ultimately guide towards the right change (Buchanan et al., 2008; Schein, 2006; Yukl, 2012). One of the most recent challenges facing the leader is the increasing use of the Internet in the workplace and its impact on its role in the organization (Barboza, 2010). This expanding use of the Internet in organizations means a progressed opportunity for transparency and direct engagement with all employees, particularly in a global organization. In the face of technological transformation, the manager's role is twofold: to adapt themselves to be comfortable with the new tools and associated ways of working and support their teams through business development (Schwab, 2016). From a skills perspective, this opens the door to a new set of competencies that a capable leader may need to develop to succeed today.

Therefore, how leaders can change their approaches to leadership in the

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Internet age and improve business performance by strengthening change management has become a practical research topic.

Thirty years ago, China underwent a complete metamorphosis from an underdeveloped country to the world's second-largest economy (Barboza, 2010), and even more to the world's largest economic growth engine (Barboza, 2010). With the development of the economy, many companies with leading positions in the world have emerged in China, especially Internet companies (Zhang et al., 2014). In this rapid development process, Chinese business leaders and their management have had a vital role in advancing their companies (Zhang et al., 2014). However, research and interpretation of these leadership practices are still lacking (Zhang et al., 2014). We believe that transformational leadership can play an essential role in the development of Chinese Internet companies. While this achievement of Chinese leaders was breaking records, researchers have not yet examined and explained their leadership practices (Zhang et al., 2014). While the influence of leaders on organizational performance has received extensive attention, the impact of employees on organizational performance cannot be ignored. Employees are always an essential part of every enterprise, leaders need employees to deliver their leadership, and companies need employees to carry out various business activities to create profits. Therefore, employee behavior has a crucial role in the process of enterprise development. In this context, employee voice as an essential employee behavior is receiving widespread attention because of its potential benefits on corporate performance (Wang et al., 2019). Leaders may have essential impacts on employee voice behaviors, since employees usually choose to talk about their ideas to their officers. This requires leaders to recognize the effect of employee voice and promote its positive influence through their leadership. The attitude and behavior of leaders often determine whether employees are willing to voice their opinions (Morrison, 2014).

Transformational leadership plays a vital role in promoting employee voice

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and achieving high organizational performance (Bass et al., 2006). Therefore, we are interested in studying the role of employee voice in the relationship between transformational leadership and the performance of Chinese Internet companies.

1.2 Problem discussion

Transformational leadership has been central to the leadership literature for nearly three decades (Avolio et al., 2009). Moreover, transformational leadership has gained the most visibility in leadership theory (Sosik et al., 2018). This type of leadership is thought to be associated with a wide range of organizational outcomes, including employee satisfaction and motivation, individual, group and organizational performance and managerial effectiveness (Wang et al., 2011; Judge et al., 2004). Moreover, it is suggested that in contrast to conventional types of leadership such as transactional leadership. The transformational leadership leads to superior employee performance, with employees not only meeting but exceeding expectations (Wang et al., 2011).

In order for organizations to understand and adapt to these changes, many researchers have focused on the study of leadership as an asset for any manager. Moreover, transformational leadership influences employee behavior and performance (Bono et al., 2004). One explanation offered in the literature is that this superior performance is a consequence of the transformational manager's influence on employees. More specifically, Bass' (1985) theory suggests that this superior performance would be achieved when transformational leaders influence the values of their employees to be aligned with those of the organization, i.e., through a mediating process.

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As Bass et al. (2006) point out, over the past twenty years, the positive effects of transformational leadership on performance have been demonstrated in many contexts. For example, meta-analyses by (Lowe et al.,1996; Fuller et al., 1996) found significant correlations between transformational leadership and several individuals and group constructs of effectiveness and performance. As Yammarino et al. (2005) point out, despite the prominence of transformational leadership (Lowe and Gardner, 2000), most studies have been conducted at the individual level of analysis. Thus, transformational leadership was positively related to performance in many different countries, types of organizations and contexts. These results were confirmed by the meta-analyses of Lowe et al.

(1996) and Fuller et al. (1996), which affirmed the positive effect of transformational leadership on performance. Shamir et al. (1993) present the mechanisms that lead to this performance by insisting on the motivational effect on both individual and collective constructs. They develop a motivational theory based on the self-concept, which explains how the transformational leader produces transformational effects on subordinates. As an employee behavior, employee voice may have different expressions and effects due to different cultural environments. In other cultures, internal communication in enterprises often has to comply with various rules. For example, in Asian culture, employee voice may be regarded as disrespectful of leaders. Therefore, in a specific environment, employees may lack the courage to express their opinions, and leaders may lack attention to employee voice. Although existing studies suggest that employee voice may have a mediation effect on transformational leadership's influence on organizational performance (Rasheed, Shahzad and Nadeem, 2021), this view is mainly based on western cultural backgrounds.

The researchers believe that it is impossible to judge whether such a mediation effect will affect enterprises with Chinese cultural background through existing research.

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1.3 Research questions

How does transformational leadership affect Chinese internet companies’

performance?

Does employee voice behavior have a mediation effect in the relationship between transformational leadership and Chinese internet companies’

performance?

1.4 Research objectives

We will try to understand and examine different aspects related to transformational leadership in Chinese internet companies, so the aims and objectives can be divided as follows:

- To understand how the performance of Chinese internet companies is influenced by this so-called transformational leadership.

- To understand the role of voice behavior in the relationship between transformational leadership and Chinese internet companies’

performance.

1.5 Research significance

The organizations operating in this new era particularly those that are technology-driven, face an environment known for its dynamism, technological change and globalization, especially since China opened its doors to the Internet in 1994, the growth and impact of the Internet on Chinese society have been remarkable. While in 1997, only 0,62 million people had

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access to the Internet, the latest statistics from the China Internet Network Information Center (CNNIC, 2021) show that by December 2020, the number of mobile Internet users in China had reached 986 million, 88,85 million more than by March 2020. Furthermore, the proportion of Chinese citizens accessing the Internet via their mobile phones was 99,7%.

Indeed, the Internet is a central aspect of many Chinese's private, professional and public life. The core of our research study, as said before, is to explore how transformational leadership affects the performance of Chinese Internet companies. This research is necessary because, with the development of the economy, many companies with leading positions in the world have emerged in China, especially Internet companies. This says that Chinese business leaders and their leadership have played an important role in the advancement of their companies. Unfortunately, very little research has been done on this topic.

However, research and interpretation of these leadership practices are still lacking. Transformational leadership can play an interesting role in developing Chinese Internet companies because first management is essentially an organizational function that coordinates people's works and allocates resources to maximize effectiveness in accomplishing set objectives. Leadership affords direction, supporting and motivation to drive a team to reach organizational success. In addition, transformational leadership plays an essential role in maintaining effective performance. For instance, followers who recognize a connection between their performance and the organization's aims and values increase their attempts to participate positively to its ends (DeGroot, 2000;

Dumdum, 2002). The issue is that researchers have not yet examined and explained these leadership practices. (Zhang et al., 2014)

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Bass (1985) elaborates theoretical reasoning underlying the leadership school.

He claims that leaders can be transformational and transactional and that both leadership styles can have favorable outcomes toward performance. Bass perceives that in the case of transformational leadership, followers feel assurance, appreciation and devotion towards the leader and are therefore motivated to do more than required. As a consequence, their performance exceeds expectations. In transactional leadership, there is a process of exchange in which leaders set goals and rewards in business for behavior in the role. Such leadership behavior is also essential, but it is likely to result in follower compliance rather than 'beyond expectation' performance. Therefore, based on Bass' work, transformational leadership can be expected to be more beneficial to performance than transactional leadership.

For this reason, it is crucial to conduct this study significantly that the results of this study will help achieve the objectives mentioned in the previous sub- chapter.

1.6 Delimitation

After decades of growth, the Internet has expanded into a vast industry with a significant influence in China. According to Jia (2018), Chinese Internet companies play an important role in economic globalization and the development of global capital markets. The statistical report from CNNIC (2021) indicates that by the end of 2020, there were 147 listed Internet companies in China, and the market value of the top ten Internet companies accounted for 86,9% of the total. These companies include Tencent Holdings, Alibaba, Meituan Dianping, Pinduoduo, JD.com, Netease, Xiaomi, Baidu, Qihoo 360, and iQiyi (SCMP Research, 2020). These companies are the leaders of China's Internet industry that covers many users; their business

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scope includes social media, Internet finance, e-commerce, Internet games, etc.

So, these companies are representative of China's Internet industry. In addition, these companies are listed on stock exchanges within or outside China, so researchers can obtain accurate information from their annual reports to support the research. Therefore, instead of the entire Chinese internet industry, these ten companies are set as the research scope, enabling the study to be more feasible and practical.

1.7 Thesis outline

This master thesis entitled “Transformational Leadership in the Chinese Culture – A Quantitative Study on the Impact of Transformational Leadership on Chinese Internet Companies’ Performance” is structured in six chapters which include an introduction, theoretical framework, methodology, data analysis and results, conclusion, discussion, ethics and finally, limitation and future research.

The first chapter provides an introduction to the subject of the thesis, starting with the context of the study, followed by a discussion of the problem, the research question and sub-questions, then the aims and objectives of our study, then the significance and finally the outline of the thesis.

The next chapter illustrates the theoretical framework of the thesis topic. The main content of this chapter includes a review of the theoretical literature on How we collect and review relevant pieces of literature and other types of references Transformational leadership, the Chinese internet industry and then the Business performance of leading Chinese internet companies.

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The third chapter includes the methodology, which is the part where collecting the empirical data is described. The study is conducted according to the deductive reasoning approach, and the quantitative approach will be conducted to satisfy the positivism research paradigm. The Methodology chapter also contains the description of the population and how to choose our sample, the method of survey design, as well as the reliability test and validity test of the survey questionnaire. Also, ethical considerations such as the privacy of respondents and many other aspects have been discussed in this chapter.

The fourth chapter contains the results obtained by statistical tests and the analysis of the collected data. The chapter gives an overview of the answers given by the participants using SPSS to find out whether the hypotheses were supported by the data or not.

This chapter will lead to another fifth chapter dedicated to the discussion and conclusion of the study to summarize the results and the answer to the research questions. Finally, the sixth chapter comes to shed light on the limitations and prospects for future research.

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2 LITERATURE REVIEW AND HYPOTHESES FORMULATION

In this chapter, we will give an overview of transformational leadership, then present the concepts of leadership and transformational leadership, the importance and necessity of transformational leadership, the characteristics of transformational leaders and the factors affecting transformational leadership.

Then we will focus on the concept of performance, especially organizational performance. And finally, present the literature regarding employee voice behavior, including its characteristics and how does employee voice link with transformational leadership and organizational performance. During the process of delivering such concepts, the researchers propose hypotheses based on existing literature related to transformational leadership, organizational performance, and employee voice behavior.

2.1 Transformational leadership 2.1.1 Overview

In a world that is changing at an incredible speed, organizational leadership acquires incomparable importance and is considered a crucial element of success (Moradi Korejan et al., 2016). To the extent that not only the top managers in the organization need to demonstrate their skills and abilities, but rather all employees at any level of the hierarchy see the need to collaborate with others to achieve their goals (Moradi Korejan et al., 2016). Ideally, they should know how to inspire and influence others, get them to work, and work tirelessly while taking ownership of the performance achieved (Moradi Korejan et al., 2016). Indeed, transformational leadership refers to leaders who seek to bring forth ideas from new insights to create a new path of growth and development for the organization in which they work. (Susilo, 2018) This

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process would boost the organization's passion and faithfulness, therefore supporting its improvements and achieving the highest performance. The issue facing some organizations today is proper management of human resources, particularly in career development. (Susilo, 2018) Encouraging employees is extremely valuable in enhancing their capabilities in their chosen field.

(Susilo, 2018) To be able to impact the people who follow them, an adequate leadership strategy is needed. Many types of leadership styles are suitable, and every organization has its specific leadership strategy. Leadership is the ongoing process of guiding and shaping the work activities of those who follow it. Leadership is also the process of influencing and setting organization's goals, motivating the performance of followers and affecting their communities and cultural backgrounds (Rivai, 2011). Leadership is the way in which a leader can influence his or her followers so that they cooperate and perform effectively in line with the leader's direction. To meet the objectives of the company and the employees is not an easy task, as the efficiency of a good leader is judged by the performance and the increase of the organization that he or she commands and the contentment of the employee with the performance of the leadership. (Susilo, 2018)

Consequently, a manager must guide his or her people to perform the assignments given to them without any compulsion so that they will willingly carry out the tasks in conformity with the organizational needs through their leadership direction. (Susilo, 2018) This is essentially a transformational leadership style that focuses on the necessity for a manager to generate a visual and environmental stimulus that inspires followers to achieve more (Burns, 1978). However, the evidence is that there are always less staff who get proper support and attention from their managers, resulting in a decline in staff performance and affecting the organization's productivity, which is becoming sub-optimal and not fulfilling the vision of the company. Ermawati &

Amboningtyas (2017) carried out a study about the effect of Intrinsic

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Motivation on work performance. The research concentrates on quantifying employee achievement metrics; therefore, they targeted production staff and came up with the result that intrinsic motivation may positively affect the performance of employees. They also suggested that managers have to be more aware of their employees' requirements and keep up the level of communication to ensure a favorable working atmosphere that can support employees in their tasks.

2.1.2 The concepts of leadership and transformational leadership

Leadership is the "ability to direct and sustainably mobilize a group of individuals towards the achievement of specific goals" (Robbins and Judge, 2011, p. 416). Considering their charisma, Schein (2010) mentions that leaders need to pay attention to, measure, and control the aspects they believe are essential to the organizational culture. He specifies that in these attention mechanisms, measurement and control are above all the vital cohesion and not the intensity according to which they pay attention. Shamir et al. (1993) propose that leaders act as models through a process of inspiration. To this end, they explain that leaders become role models when employees infer relevant messages by observing leaders' behaviors, values, aspirations etc.

Thus, subordinates will model their beliefs and behaviors on those of the leader. In this sense, Lord and Brown (2001) mention that the impacts of solid leadership are noted when their values and personal identities form consistent patterns. Considering the phenomenon of categorization, members tend to be prototypes of the group they belong to. Thus, the individual who occupies the position that most symbolizes the organization, such as a leader, can, through his or her social attraction, influence subordinates who will comply with his or her suggestions and recommendations (Hogg, 2001; Meleady and Crisp, 2017). Furthermore, as some researchers have mentioned, a leader who identifies with his or her organization tends to internalize its goals and values (Van Dick et al., 2007). By integrating the values of the organisation into their

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self-image, they can encourage their subordinates to see them as role models, to relate to them and to the organisation.

Moreover, leadership is a set of steps by which a person affects a group of people in attaining a shared purpose (Northhouse, 2016). When leadership style is mentioned, it is essentially the way in which the leader delivers guidelines, executes projects, and inspires others. Many different leadership styles are exhibited by leaders in political, business, and other fields.

Nanjundeswaraswamy & Swamy (2014) concluded that leadership style, organizational engagement, and work appreciation are interdependent from a study carried out on different leadership styles in large global organizations.

Leading people came into existence with the rise of life in society (Moradi Korejan et al., 2016). Some people are put together and start their social life and influence each other. Transformational leadership is attained when both leaders and followers motivate each other for higher morality. These managers have improved relationships with their superiors. They assist the organization more than transactional leaders, and they generate more added value for the business. Transformational leaders are able to inspire their staff to go beyond their employment agreements and concentrate on the high needs of the employees. These leaders act as mentors and coaches with attention to personal growth, training, and fulfilment of their employees' wants and expectations. They give challenges, a clear mission, broader horizons, mutual respect, and trust to staff, and they serve as good models for their colleagues.

They establish an environment of confidence and motivation for employees to serve the organization over and above their interests (Khorshid & Pashazadeh, 2014, p. 7). It was James MacGregor Burns (1978) who first used the concept of transformative leadership in his exploratory research dedicated to political leaders. However, the use of this concept is nowadays also used in organizational psychology. (Roberts, 1985)

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As Burns (1978) sees it, transformative leadership is a set of steps in which the manager and follower help each other move towards a higher state of righteousness and motivation. Burns (1978) talks about the difficulty of distinguishing between the managerial and leadership aspects. Furthermore, he stated that the distinctions are at the level of traits and attitudes. This leads to the fact that he defined two concepts: transformative leadership and transactional leadership.

2.1.3 Transformational leadership vs Transactional leadership

The transformative leadership adopted by Burns (1978) makes a significant impact on people's and organization's lives. This shift redefines goals and beliefs and modifies the employees' aspirations and requirements. As opposed to the transactional model, which is not based on a relationship that favors both parties, but rather on the aspect of how that leader responds to others (Roberts, 1985) his or her character traits and potential to make a change, the energetic formulation of a compelling mission and empowering aims. (Roberts, 1985) Transformative leaders are being favored more frequently because they represent a moral and work ethic ideal for their team and the organization in which they cooperate. (Roberts, 1985) Moreover, transformational leadership is about leaders trying to create new insights and visions to forge a new way of growth and flourishing for the entire organization.

By developing the involvement, enthusiasm and allegiance of both leaders and staff, they attain the required capabilities to reach out in new directions and accomplish more significant peaks of performance objectives (Mirkamali et al., 2014). The transformational leader continuously strives for possible incentives in his or her followers and attempts to attract followers' attention to superior necessities as well as the transformation of individuals' interests into collective ones.

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According to (Bass et al., 1994), transformational leadership is a purposeful process that offers tools for improvement to the organization via trusted leadership with shared empowerment. Transformational leaders convey a clear idea of the organization's perspectives while providing an appropriate role model that helps them improve acceptance of the group's objectives and support the organization's staff to pursue the set aims (Mortazavi and Nikkar, 2014).

As already mentioned, transformational leadership can motivate people to perform at their highest level and build up their competencies to achieve superior mental states (Alqatawenh, 2018). According to Conger (2002), transformational leadership extends well beyond performance incentives and concentrates more on conceptual and innovative enhancement and sustainment of collaborators. It is characterized by Trofino (2000) as the type of leadership that brings a clear and transparent perspective to their organizations. Kirkan (2011) stated that transformational leadership is a form of leadership utilized by leaders with the aim of enhancing the present situation by identifying those who follow the problems of the organization through inspiring, persuading, and stimulating them to reach a high stage of clairvoyance that will contribute to the selection of joint outcomes.

Transactional leadership is present whenever there is a transaction of resources; these resources do not have to be money related but can also be resources related to recognition. Kuhnert and Lewis (1987) have briefly defined transactional leadership as moving from one goal to another in order to increase the organization's performance. Transformational and transactional leadership reveals a link that determines the goals of employees to sharpen and develop professional and organizational achievements. (Kuhnert and Lewis, 1987)

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Transactional leaders try to avoid changing the organizational culture while maintaining the same existing culture, whereas transformational leaders generally try to change that culture. (Roberts, 1985) Transactional leaders are constantly ready to give something back for following them. This can be a variety of elements, such as evaluating outstanding achievement, a promotion, additional tasks, or a desired new job.

Transactional leadership is also acknowledged as managerial leadership and concentrates on overseeing, managing, and fulfilling the group's performance.

Transactional leaders hardly ever display the characteristics or actions of charismatic managers; they can also remain very effective in numerous situations whilst generating committed parties.

They are also capable of designing arrangements that motivate and can be beneficial to an organization. The question then is merely sustainability (Germano, 2010; Odumeru & Ifeanyi, 2013; Northouse, 2016). Transactional leaders employ bonuses and penalties to obtain the acquiescence of their followers; they admit the purposes, the composition and culture of lasting organizations. They are prepared to operate inside subsisting regimes and bargain to accomplish organizational intentions. (Kabeyi, 2018) They are inclined to think inside the box meanwhile resolving difficulties. Transactional leadership is principally inactive, and the actions most amalgamated amidst this type of leadership are establishing the guidelines for recognizing followers and keeping the current state of things (Odumeru & Ifeanyi, 2013). Hence, transactional leaders work within actual ends, aspirations and plans, are not significantly change-oriented and infrequently attempt unusual ways and explications to real obstacles.

2.1.4 The importance and necessity of transformational leadership

Nowadays, thinking of change has become something widespread as the world that holds us together is transforming fast. This also affects businesses that

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need time to cope with the unstable environment that they interact with.

(Moradi Korejan et al., 2016) That is why transformational leaders are demanded. The leader's role in managing change is to help companies enhance their achievements in a mutated and doubtful world. Having transformational leaders is considered a great benefit for organizations to win in competitiveness. (Moradi Korejan et al., 2016)

Conversely, a company without a transformational leader cannot make the best of its resources to gain productivity because it has made no effort in dealing with global changes that affect it directly. (Eskandari, 2014, p. 124). With the emergence of change, it is unquestionably that leaders need to create a whole new procedure that emphasizes the steps to follow for employees to fit in the new situation. This also includes how the leader should be behaving. The team's response to the change procedure is entirely related to the management style adopted by the leader. (Farazja and Khademi, 2010, p. 51)

2.1.5 Factors affecting transformational leadership

According to Ghadi et al. (2013), transformational leadership comprises four sub-dimensions. The first one is idealized influence, and it concerns the sense of leaders to enhance the degree of commitment, dedication and association externally by focusing on self-interest. Besides, inspirational motivation leads to leaders' knowledge to generate a viewpoint that influences followers to perform an essential function in the company. Thirdly, intellectual stimulation points to leaders' understanding to give employees direction to remain ingenious and take risks. Finally, individual consideration, the leaders are connected with the subordinates or seem a top-down motivation of the authority. This is done by proffering followers the power to execute settlements and deliver them.

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Transformational leaders acknowledge the actual wants of the organization and the staff and foster and fulfil high-level urges in an individual. A transformational leader motivates people to unite to pursue more significant objectives to impact an organization positively. Transformational leadership incorporates four main features, as Figure 1 shows: idealized influence, inspirational motivation, intellectual stimulation and individualized considerations (Krista Hoffmeister et al., 2012).

1. Inspirational motivation: Motivating and uplifting leaders are the ones who are challenging their people in their workplace and who provide a bright vision for the achievement of the objectives and the way forward by enhancing efficiency in the work environment. This would also enable the organization to formulate shared goals among its employees, then establish a basis for the improvement of the organization's performance (García-Morales, Jiménez- Barrionuevo and Gutiérrez-Gutiérrez, 2012).

2. Individualized consideration: The leader acts with followers based on their specific traits and potential. The leader shows personalized interest to individuals to build a strong partnership with them by giving them new learning possibilities depending on their concerns and talents. This may quite effective in developing employees' various abilities in the workplace so that employees would better contribute to the operation and performance of the organization (García-Morales, Lloréns-Montes and Verdú-Jover, 2008).

3. Intellectual stimulation: Leaders inspire their staff to generate enthusiasm and productivity by modifying the attitudes and possibilities of their employees. This usually results in the improvement of employee's learning and creative ability in the workplace. The leader's primary aim is to offer a clear circulation of thoughts and visions for his / her followers to try to reach brand- new methods and procedures. Therefore, the organization may expect an

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increase in its performance (García-Morales, Jiménez-Barrionuevo and Gutiérrez-Gutiérrez, 2012).

4. Idealized influence: Leaders became models for followership by their friendly attitude. They respect, trust and appreciate their followers. They give more consideration to the requirements of their followers rather than their necessities, as well as refraining from using authority and control for self- interest (Aneja Deveshvar, 2014, p. 178). It will enable the employees to pride, respect, and believe in their organization, thus increasing employee willingness and loyalty towards employers. This is considered to have a positive influence on the performance of the organization (García-Morales, Jiménez-Barrionuevo and Gutiérrez-Gutiérrez, 2012).

Figure 1. Component of Transformational Leadership (Avolio et al., 2009)

As presented above, all aspects and features of transformational leadership are suggested impacting organizational performance positively. However,

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according to Burns (1978) and Bass (1985), transformational leadership usually take effect through its influence on individuals within the organization.

Among the four features of transformational leadership, intellectual stimulation and individualized consideration deliver impacts primarily to individual employees. At the same time, idealized influence and inspirational motivation are dimensions that provide effects mainly to groups (Kark and Shamir, 2002). The existing literature suggests that transformational leadership may have positive impacts on organizational performance through influencing individuals in the organization (Burns, 1978; Bass, 1985; Hooper and Potter, 2000), which means that the dimensions more related to individual employees are key factors in the relationship between transformational leadership and organizational performance. Therefore, the researchers only focus on two dimensions of transformational leadership, including intellectual stimulation and individualized consideration then developed the following hypotheses regarding this theory:

H1a: Intellectual stimulation has a significant positive impact on Chinese internet companies’ performance

H1b: Individualized consideration has a significant positive impact on Chinese internet companies’ performance

Bass et al. (1990) developed the most widely used tool to measure transformational leadership in organizations called the Multifactor Leadership Questionnaire; this tool will be further discussed in the survey design section.

2.2 Organizational performance

The existing studies indicate that the change regarding transformational leadership will result in changes in organizational performance. So, what is exactly the concept of performance, and more specifically, organizational performance?

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2.2.1 Performance

Performance is among the most debated concepts on which there is no agreement between different scientists and thinkers. This notion, besides several meanings, becomes used in numerous fields like airlines (Ismail et al., 2014; Jenatabadi, 2013; Jenatabadi, 2013; Jenatabadi et al., 2012; Jenatabadi et al., 2014), education (Hui et al., 2013; Dadkhah et al., 2014), management (Hui et al., 2013; Hui et al., 2013; Hui et al., 2013; Jasimah et al., 2013;

Jenatabadi, 2014; Radzi et al., 2013) and IT (Jenatabadi, 2014; Jenatabadi, 2013). Cameron (1986) indicates a specific failure to correctly interpret or explain the explanation of the idea of performance. Naturally, there will be differences in understanding and reasoning depending on one's point of view in the absence of an operational representation of performance. This is something to which the generality of the researchers concerned agrees. This dissension and lack of compromise are partly due to the lack of a significant effort to recognize and determine the concept in a philosophical or effective way. Consequently, a generally affirmed interpretation of the concept encounters multiple obstacles, signifying that the chance of any definition and the source of some criteria to reach the aspired key is vague. Companies carry out a wide range of actions in order to accomplish their business objectives.

Those repetitive processes that the organization undertakes to achieve its goals require quantification for circumscribing the degree of performance and management. Therefore, it can be stated that there is a tight connection between the organizational purpose and the organizational performance concept. Hence, all businesses are likely trying to meet certain pre-set expectations using the existing resources. Thus, both perspectives of the notion, i.e., the organizational purpose and the organizational resources, may be considered in defining organizational performance. (Thompson, 1967;

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Friedlander et al., 1968) see performance as a consistent topic in management frameworks.

Likewise, strategic management and operations management are incorporated in the performance, a characteristic of interest to both practitioners and university researchers. Performance is thus framed as the assessment of constituencies that tries to gauge the capability and competence of a company to meet the levels of ambition of using criteria of efficiency, effectiveness, or social relevance. Effectiveness is the highest degree to which the production functions can satisfy and meet the requirements and needs of the customers.

In contrast, efficiency is assessing and measuring of how an organization's resources are used economically by the production operations to accomplish its ends. In quantitative terms, performance and scale are interrelated. For example, the performance level might be specified as a proportion or an amount in such a way that makes it understandable for managers. According to (Macleod et al., 1997), the quantification of performance objectives is the unique method of ensuring that they are significant. Additionally, performance relates to the nature and adequacy of activities carried out in an organization to successfully fulfil its main tasks and responsibilities to generate benefits (Sink, 1991).

2.2.2 The concept of organizational performance

Organizational performance is a set of steps that aims to simultaneously advance organizational effectiveness and staff well-being through various defined interventions. Organizational performance is about the effective delivery or outcomes of an organization, measured with intended deliverables, aims and purposes (Jon et al., 2009).

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Organizational performance may be defined as the result that shows the organization's effectiveness or underperformance in terms of brand image, proficiency and monetary achievement (Khanderkar et al., 2006). According to (Dyler et al., 1995), four types of organizational performance metrics exist.

Firstly, human resource outcomes are generally connected to behavioral change, staff satisfaction, turnover and then absenteeism, and organizational outcomes, including work productivity, customer satisfaction and product or service quality. Thirdly, financial accounting outputs include three measures:

return on assets, return on equity, and profitability. Finally, capital market results show how the market values an organization and consist of three indicators: share price, share price growth rate and market returns.

Employment performance is the process by which employees do their work.

An employee's performance is identified through a work performance examination, where the employer considers indicators like leadership competencies and productivity to examine each worker on a case-by-case basis.

Work performance evaluations are usually conducted on an annual basis. They can help determine whether an individual is deserving of a raise, eligible for a career promotion, or perhaps even whether an individual should be dismissed (Rowold, 2011). There are so many different methods to evaluate employees' performance in the workplace.

According to Rowold (2011), high-performance systems and work processes require identification as instrumental in attaining business objectives and enhancing organizational efficiency. While there is no consensus on an optimal combination or mix of these mechanisms and procedures, the rationale is that high-performance work arrangements affect and orient the attitudes and behaviors of employees to the strategic aims of the organizational structure and enhance employee commitment and thus organizational performance. In general, organizational performance is defined as a set of indicators that reflect

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an organization's operation outcomes (Kaplan et al., 1992). According to (Richard et al., 2009), organizational performance can be measured from three aspects: first one is the financial performance, then the product-market performance, and finally, the shareholder return performance. It can be considered that organizational performance, especially the financial outcomes, broadly defines a company's survival and development. Other than financial and market ratios, Singh et al. (2016) indicate that organizational performance can also be evaluated from the dimensions including HR outcomes and organizational outcomes.

There are different perspectives when it comes to measuring organizational performance. García-Morales, Lloréns-Montes and Verdú-Jover (2008) indicate that organizational performance can be measured according to objective indicators such as return on sales and market share, or subjective data as employee's perception on performance. Both perspectives have been proved to be valid and reliable when calculating organizational performance (García- Morales, Lloréns-Montes and Verdú-Jover, 2008). Kareem et al. (2019) proposed a widely used approach to measure organizational performance based on employee's subjective perception; it enables employees to assess organizational performance compared with the company's competitors. This approach will be further presented in the survey design section.

2.3 Employee voice behavior

Van Dyne (2003) demonstrates that voice is when workers verbalize their opinions and views in the workplace. Later on, researchers categorized voice into two further dimensions: the promotive and the prohibitive dimensions (Liang, Farh and Farh, 2012). As Van Dyne and Lepine (1998) point out, voice has a stimulating and nurturing nature since promotive voice is staff involvement with constructive thoughts and insights for the workplace and the

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current processes in an organization. It is also creative because it proposes enhancements and the implementation of systems, making the organization an excellent work environment.

In a nutshell, employee voice behavior is defined as the communication protocol of an employee who can impact the organization by expressing their opinions on specific topics (Morrison, 2011; Wilkinson et al., 2014). The concept of employee voice was originally introduced by Hirschman (1970); it was described as the employee's attempt to change towards unsatisfactory situations.

2.3.1 Promotive voice and Prohibitive voice

Liang et al. (2012) classified employee voice into two groups: promotive and prohibitive voice. The prohibitive voice calls attention to the employee's behavior of expressing concerns about incidents that may damage the company. This is essential in warning management of potential future damage to the organization. It may bring to light an unidentified issue that can affect ongoing or prospective workflows in the unit of activity. This is more crucial and important as promotive insights involve both resources and costs to the organization. Prohibitive proposals, by contrast, seek to end detrimental practices that do not need cash resources but save the organization from anticipated penalties.

A conceptual distinction is made between the two sides of the voice. One concerns an idealistic state by advocating alternatives, and the other is about prevention. The time content is relevant because the promotive voice offers forthcoming guidance, whereas the prohibitive voice concentrates on the past and the future (Liang, Farh and Farh, 2012). The promotive voice refers to the employee's behavior that aims to offer suggestions for improvement. This is a proposal for the efficient running of the organizations, while the prohibitive voice recognizes areas that may affect the organization's existing state of

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affairs. These vary in their involvement as much as the constructive input might bring temporary improvements but eventually benefit the whole community in the long term. On the contrary, views regarding the discontinuation of any work-related practice reflect the lack of success of the measures established by the management. This may cause disputes and ruin the interaction between the management and the employees in an organization.

On the other hand, adverse feedback is helpful to the organization; due to the differences, stakeholders' attitudes to such behavior also differ. The measure of employee voice behavior is usually achieved by analyzing employees' willingness to make the promotive and prohibitive voice in certain situations.

A representative approach is a questionnaire developed by Liang, Farh and Farh (2012). This will be further explained in the survey design section.

2.3.2 Role of employee voice in transformational leadership and organizational performance

Employees are the essential part of an enterprise. In an enterprise, leadership cannot be separated from the employees to play its role, and the enterprise cannot survive and develop without the employees. The existing literature has found that employee voice behavior has a direct and positive relationship with transformational leadership and organizational performance (Kim et al., 2021;

Thomas et al., 2012). According to (Morrison, 2011), employees voice their opinions intending to contribute to the success and development of the organization, which enables employee voice behavior to have a significant effect on the organization's performance. Also, employee voice behavior is found to have a close relationship with transformational leadership. Duan et al. (2017) reported that transformational leadership would create a secure and supportive environment for employees to encourage them to voice their thoughts and ideas. On the other hand, Katou (2015) reported that transformational leadership positively influences employees' responses to organizational performance. In other words, employee voice behavior

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transmits the effect of transformational leadership to organizational performance. However, the existing literature suggests that employee voice behavior plays a mediating role in the relationship between transformational leadership and organizational performance (Katou, 2015). Employees' behavior may differ due to different cultural settings (Castaneda and Bateh, 2013). The researchers propose the following hypotheses regarding the theory in the setting of Chinese internet companies:

H2: Employee voice behavior has mediating effect in the relationships between transformational leadership and Chinese internet companies’

performance

H2a: Intellectual stimulation has a significant positive impact on promotive employee voice behavior in Chinese internet companies

H2b: Individualized consideration has a significant positive impact on promotive employee voice behavior in Chinese internet companies

H2c: Intellectual stimulation has a significant positive impact on prohibitive employee voice behavior in Chinese internet companies

H2d: Individualized consideration has a significant positive impact on prohibitive employee voice behavior in Chinese internet companies

H2e: Promotive employee voice behavior has a significant positive impact on Chinese internet companies’ performance

H2f: Prohibitive employee voice behavior has a significant positive impact on Chinese internet companies’ performance

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2.4 Conceptual model

Figure 2. Conceptual model

Since the research aims to study how transformational leadership affects organizational performance and the mediation effect of employee voice behavior. A conceptual model is created based on the mediation model proposed by Baron et al. (1987) to describe the relationships and their directions between research variables as Figure 2 shows. It demonstrates the one-way causation between transformational leadership and organizational performance and the mediating effect of employee voice behavior in this relationship. As presented in previous sections, the research takes two dimensions of transformational leadership: intellectual stimulation and individualized consideration. These dimensions are set as independent variables. The two dimensions of employee voice behavior, including promotive voice and prohibitive voice, are designated as mediating variables.

Then, the organizational performance is set as a dependent variable. The relationships and directions between different variables are presented with the lines and arrows in various colors as Figure 2 shows.

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3 METHODOLOGY

This chapter provides details of the methodology used to carry out the research. It also provides details of the techniques and approaches used in this research study. The measurement instruments, population and sample size, and data collection method are also discussed to give more visibility and especially in-depth knowledge.

3.1 Research philosophy

In academic research, the research philosophy defines the framework that guides researchers to develop knowledge (Saunders et al., 2019) towards concerning research topics. It enables researchers to determine appropriate research methods, collect and analyze data correctly and efficiently, and ultimately provide evidence that helps researchers answer research questions (Crossan, 2003). In business and management, Saunders et al. (2019) identified five main research philosophies: positivism, critical realism, interpretivism, postmodernism, and pragmatism. Each research philosophy has different effects in research. Positivism seems an appropriate philosophy in this research that enables researchers to evaluate the relationship between variables according to a particular theory and generate results from an objective and neutral perspective (Saunders et al., 2019).

However, the limitation of positivism decreased its feasibility in this research;

it neglects the impacts of complex reality on academic research (Eun, 2017).

Therefore, a so-called post-positivism philosophy is adopted in this research to suit the actual circumstance of the study. As a widely used philosophy in social science, post-positivism accepts the influence of a researcher's value, experience, and environment in scientific research (Manjikian, 2013). In other words, post-positivism pursues objective knowledge but in a more practical way (McMurtry, 2020). Therefore, the researchers believe that post-positivism

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would be a feasible and practical philosophy to guide this research to generate objective outcomes.

3.2 Research approach

Concerning the theory development involved in academic research, researchers can adopt three primary research approaches to design the study and generate theoretical contributions, including deductive approach, inductive approach, and abductive approach (Saunders et al., 2019).

This research adopts a deductive research approach based on the researcher's purpose and the framework of post-positivism philosophy. It allows researchers to design hypotheses about the relationship between transformational leadership and organizational performance based on existing literature, verifying these assumptions by collecting and analyzing relevant data. In other words, the deductive approach enables researchers to generate outcomes regarding the relationship between transformational leadership and organizational performance based on the test of a series of hypotheses (Saunders et al., 2019). Therefore, the researchers believe that deductive is the most appropriate research approach in this research.

3.3 Research method

According to Saunders et al. (2019), the research method defines the type of data that the researcher intends to collect and the approaches to collect and analyze data. There are three common research approaches in business and management research, including quantitative, qualitative, and mixed-method approach. The choice of research method is usually related to the identified research philosophy and research approach during the research design. Since the research aims to evaluate the relationships between transformational

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leadership and organizational performance in a large population, the quantitative research method is adopted according to the post-positivism philosophy and the deductive approach. It enables researchers to develop variables regarding transformational leadership, organizational performance, and employee voice behavior, then examines the relationships between these variables based on the statistical data collection and analysis (Saunders et al., 2019).

Specifically, the data in this research will be collected through an online survey that is distributed to the employees of listed Chinese internet companies, then processed with various statistical techniques, including correlation analysis, linear regression analysis, and mediation effect testing, to provide evidence for hypothesis testing.

3.4 Population and sample 3.4.1 Target population

In this research, the population is defined as the people who work in Chinese internet companies. However, considering the status of the Chinese internet industry, this would be a large group that is difficult to research and generate reliable outcomes. In addition, there is no reliable data regarding the exact size of this population. Therefore, a target population is defined to narrow down the research scope and enable researchers to manage the research appropriately (Saunders et al., 2019). It also allows the researcher to identify the size of the population to develop the study more appropriately.

As described in the delimitation, the ten listed Chinese Internet companies with the highest market value represent the Chinese Internet industry.

Therefore, the full-time employees of Tencent Holdings, Alibaba, Meituan Dianping, Pinduoduo, JD.com, Netease, Xiaomi, Baidu, Qihoo 360, and iQiyi

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are defined as the target population in this research. As companies listed on stock exchanges, their financial reports provide researchers with accurate and reliable data regarding the companies’ employment status. As Table 1 shows, the size of the target population is 671,969 in this research.

Table 1. Target population size

3.4.2 Research sample

Given the size of the target population, researchers cannot collect data from the entire target population. Therefore, the researcher must collect the required data from a random sample to make the research easier to conduct (Saunders et al., 2019). Since the research aims to generate results with a high level of generalizability concerns the target population, the probability sampling technique is implemented in the study, which means that every individual in

References

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