WOLKITE UNIVERISTY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTEMENT OF MANAGEMENT

THE RELATIONSHIP BETWEEN EFFECTIVE LEADERSHIP AND

ORGANIZATIONAL COMMITMENT OF EMPLOYEES (IN CASE OF WOLKITE
TOWN TRADE AND INDUSTRY DEVELOPMENT BUREAU)

ARESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF MANAGEMENT

IN THE PARTIAL FULFILLMENTS OF THE REQUIREMENT FOR THE DEGREE
OF BACHELOR OF ARTS IN MANAGEMENT

By:-ESUBALEW BELAY

ADVISOR: WULETAW F. (MBA)

WOLKITE, ETHIOPIA

JUNE, 2018
AKNOWLEDGEMNTS
First and for most, I would like to present words for the power full God. Next, I am very much
indebted to my advisor Wuletaw, F. (MBA) for his continuous and regular follow up in
producing this paper. I am grateful for his Constructive criticism, patience encouragement and
devotion without which this study would have never reached its present stage.

i
 ABSTRACTS
The current study was conducted to investigate the relationship between effective leadership and
organizational commitment in case of wolkite town trade and industry bureau. A simple random
sampling technique was used to investigate the problems and 74 sample size used to conduct
survey. The primary source of data is obtained from employees, supervisors and managers of the
organizations. Transformational leadership and organizational commitment has shown a
correlation (p < 0.01). The findings obtained indicated that transformational leadership has a
significant relationship with the organizational commitment. Transactional leadership and
organizational commitment has shown a correlation (p < 0.01). The above result obtained
indicated that transactional leadership has a significant relationship with the organizational
commitment. Servant leadership and organizational commitment has shown a correlation (p <
0.01). The above result obtained indicated that servant leadership has a significant relationship
with the organizational commitment. Participative leadership and organizational commitment
has shown a correlation (p < 0.01). The above result obtained indicated that participative
leadership has a significant relationship with the organizational commitment. In this study the
researcher found that transformational leadership and organizational commitment have a
positive relationship with each other. The researcher discovered that transformational
leadership is more on giving the employee a goal and provide a good model towards the
employee and increase the cohesiveness among the employee, so the employee organizational
commitment is increased because of the transformational leadership based on the aspect inside
the leadership. Based on this result, the researcher can determine transactional leadership had
significant correlation with organizational commitment. The servant leadership has a significant
value of less than 0.05 whereby no greater than 0.05. The H o (null hypothesis) can be rejected.
Hence, there is a significant relationship between servant leadership and organizational
commitment. Therefore, H1 is accepted. There is significant relationship between participative
leadership and organizational commitment. The participative leadership has a significant value
of less than 0.0001 and it is lower than 0.05. The H o (null hypothesis) can be rejected. Hence,
there is a significant relationship between participative leadership and organizational
commitment. Therefore, H1 is supported. In this study the researcher proved that organizational
commitment had positive relationship with participative leadership, which mean the employee is
really care about the organization in letting them to participate on company decision. Let
employees be the part of achieving organizational goads or allow employees to speak out their
idea in decision making, can improve the organizational commitment of the employee. Based
from the results, it is clearly shows that all the independent variables (transformational,
transactional, participative and servant leadership) has a significant relationship with
organizational commitment.

Key words, Effective leadership, Organizational commitment, Wolkite town trade and

Industry Bureau
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Table of Contents
AKNOWLEDGEMNTS...............................................................................................................................i
ABSTRACTS..............................................................................................................................................ii
ACRONOMY..............................................................................................................................................v
CHAPTER ONE..........................................................................................................................................1
1. INTRODUCTION...................................................................................................................................1
1.1. Background of the study...................................................................................................................1
1.2. Background of the Organization.......................................................................................................3
1.3. Statement of the Problem..................................................................................................................3
1.4. Objectives of the study.....................................................................................................................4
1.4.1 General objectives..........................................................................................................................4
1, 4, 2 specific objectives.....................................................................................................................4
1.5. Research Questions/Hypotheses of Study.........................................................................................5
1.6. Significance of Study........................................................................................................................5
1.7 . Scope/Delimitation of the study.......................................................................................................6
1.8. Limitation of the study......................................................................................................................7
1.9. Organization of the Paper.................................................................................................................7
CHAPTER TWO.........................................................................................................................................8
2. LITERATURE REVIEW........................................................................................................................8
2.1. Definition of Leadership...................................................................................................................8
2.2. Transformational Leadership............................................................................................................9
2.3. Transactional Leadership................................................................................................................10
2.4. Servant Leadership.........................................................................................................................11
2.5. Participative Leadership.................................................................................................................12
2.6. Organizational Commitment...........................................................................................................13
CHAPTER THREE...................................................................................................................................16
3. RESEARCH METHODOLOGY...........................................................................................................16
3.1. Description of study organization...................................................................................................16
3.2. Research Design.............................................................................................................................16
3.3. Data Collection Methods................................................................................................................16
3.3.1. Primary Data............................................................................................................................17
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 3.4. Sampling Design.............................................................................................................................17
3.5. Target Population...........................................................................................................................17
3.6. Sampling elements..........................................................................................................................17
3.7. Sampling Size and Technique.........................................................................................................18
3.8. Data collection Instrument /Tools...................................................................................................18
3.9. Sources of Questions in Questionnaires..........................................................................................19
3.10. Data Analysis and Presentation.....................................................................................................19
CHAPTER FOUR.....................................................................................................................................21
4. RESULT AND DISCUSSION..............................................................................................................21
4.1. Descriptive analysis of respondents’ personal information.............................................................21
4.2. Opinions of respondents on characteristics’ of leadership behaviors..............................................23
4.3. Central Tendencies Measurement of Constructs.............................................................................28
4.3.1. Transformational Leadership...................................................................................................28
4.3.2. Transactional Leadership.........................................................................................................29
4.3.3. Servant Leadership..................................................................................................................30
4.3.5. Organizational Commitment....................................................................................................32
4.4. Pearson Correlation Coefficient Analysis.......................................................................................33
CHAPTER FIVE.......................................................................................................................................40
5. RECOMMENDATION AND CONCLUSSION...................................................................................40
5.1. Conclusion......................................................................................................................................40
5.2. Recommendation............................................................................................................................40
REFERANCES...............................................................................................................................................vi
APPENDIX...............................................................................................................................................vii

iv
ACRONOMY
TFL=Transformational leadership

TSL=Transactional leadership

SL=Servant leadership

PL=Participative leadership

OC=Organizational commitment

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 CHAPTER ONE

1. INTRODUCTION
This chapter presents an overview of empirical justifications about leadership styles and
organizational commitment of employees. It starts from different empirical frameworks which
serve as the background of the study followed by background of the organizational, the statement
of the problem, objectives of the study, research questions, significant of the study, scope of the
study, limitations, and organization of the study

1.1. Background of the study

The main purpose of this research/study was to identify the effectiveness of the leadership on
organization commitment in the wolkite town trade and industry development sector.
Organizational commitment has been a vital implication for organization and employees is a
topic that concerned by the scholars on management and organization. Organizational
commitment is considered as the reliable predictors of employees work performance,
productivity, turnover, job satisfaction of the employees, and efficiency. The adverse effect
associated with employees who less committed in an organization include high turnover and
absenteeism (Bennett and Durkin: 2000). Organizational commitment can be defined as the
degree of an employee’s identification with participation and involvement in an organization and
remains employed in an organization and becoming one of its members (Raja and Palanichamy,
2011).

Committed employees normally tend to devote more time, energy and efforts toward the
organization and have high job satisfaction and productivity. Other than that, committed
employees also have a willingness to make the changes and less likely to engage in withdrawal
behavior (Iverson and Buttigieg, 2000). This can help the organization to achieve the goals and
implement business strategies and gain competitive advantage since the employees less
resistance to change. Therefore, it is important to leaders emphasize on the significance of the
employees organizational commitment (Raja and Palanichamy, 2011).
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Leadership has significant and positive impact on job satisfaction of employees and work
performance and influences the employee’s commitment toward an organization. Leadership
plays an important character in the company’s management which helps to maximize the
efficiency and to lead the organization achieve its goals. The word of leadership has been
described in several terms which include position, personality, and influence employees’
behavior and direct the group to achieve the goals (Fang et al., 2009).

In other word, the way of a leader manages the company whereas the employees can influence
the sustaining of the company in the challenging environment. Thus, a leader plays an important
character in an organization to enhance the employees organizational commitment and increase
their loyalty toward organization by allowing the employees to identify the organizational goals
and values and enjoy their jobs in order to have greater development and creation of the
organization in future Furthermore, a capable leader able to motivate and support their
employees by provides the guidance and direction to them in order to achieve the goals and
accomplish the desired outcomes. Hence, the employees’ behavior can be affected by the leader
through using different leadership styles and approaches (Keskes, 2014).

According to Nijhof et al (2000) reveal that apart from the organization make good use of its
human capital and competencies that make an organization to be successful, but also how the
leader provokes commitment among employees to organization also very important. There are
many types of leadership styles such as transactional, transformational, servant and participative
leadership. Transactional leaders need to understand their followers’ needs and how to satisfy
their needs and use contingency rewards to compensate them in order to appreciate their
contribution as exchange. Transformational leaders using inspiring and encouraging approach to
motivate their employees to become high performers and achieve the goals that beyond their
expectations and take the organizational goals as their cases. Servant leadership is about serve
others in the first place, then emphasize on the achievement of organizational goals primarily and
helping the followers to grow than to lead. Participative leadership is about motivate and
encourage their followers participative in the process of decision making and contribute their
ideas and seek their advices under consideration of decision making, and can lead to inspire the
innovation and creativity of the team. The paramount factors that contribute to the organization’s

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success are the different leadership styles necessary to apply in different conditions and depend
on the employee’s commitment toward organization and dedicate their effort to achieve the
organizational goals.

1.2. Background of the Organization

This study was conducted in wolkite town Trade and Industry Development sector. Wolkite town
Trade and Industry Development Bureau located at the center of wolkite town. Wolkite town is
the capital of the GURAGE zone. Trade and Industry bureau is one of the big sectors in the
town. Investment expansion process, Enterprise development agency, transport authority and the
trade promotion process are all organized under the bureau. The current study was focused on
effective leadership and organizational commitment of employees in wolkite town trade and
industry sector. It focused on leaders, supervisors and employees the wolkite town trade and
industry development sector.

1.3. Statement of the Problem

Effective leadership was important in the world, in the United States, and in Mississippi.
Effective leadership was important in the life of the trades and industry office. The person who
was in a leadership position had the potential to affect positively or negatively the people who
worked for him. Various styles and theories of leadership existed. There was not a single
universally approved leadership concept that suggested a unique source of leadership success
(Walker & Scharf, 2001). While leadership success may have been proposed for many reasons,
the desire for leadership should have been to provide an environment to enhance staff growth. A
leadership style that was effective, ethical, supportive, and responsible was possible when such
an environment existed (Sergiovanni, 2005). The staff of an organization was important to the
welfare of the organization. When staff members were not satisfied in their job, their
performance, attitudes, staff relations, and commitment to the organization had the potential to
suffer. Writers and researchers frequently addressed the topic of effective leadership in
organizations. Leadership was an action performed among and with people. Barna (2007) stated
that the American trade and industry office is dying, due to a lack of strong leadership, and that
the trade and industry office was actually losing influence. When employees were dissatisfied at

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work, they would be less committed and would become emotionally or mentally withdrawn from
the organization (Shirbagi, 2007).
Some literature and documents shows that very little research has been conducted on the
relationship between effective leadership and organizational commitment of employ in the
country as a whole and the research geographically restricted only in wolkite town trade and
industry office and finally those research gaps geographical, methodological and conceptual gap
will affect research at an approximately 73.3%.(Riccardo De Vita, 2004).
This study is intended to explain how the employees perceived their leaders behavior and how it
leads to employee’s commitment in trade and industry. The study also tries to capture actual
feelings, experiences and perceptions of employees towards their leaders and to identify which
leadership behavior are the most appropriate to suit the working conditions of employees in trade
and industry. Generally the researcher was tried to investigate is the relationship between
effective leadership of the top managers and organizational commitment of wolkite town trade
and industry development organization.

1.4. Objectives of the study

1.4.1 General objectives

The overall aim of this study is to explore the relationship between effective leadership styles
and Organizational commitments of employees of trade and industry bureau in wolkite town.

1, 4, 2 specific objectives
 studying the influence effective leadership in improving organizational
commitment;

 studying the relationship between each of leadership styles with organizational

commitment;

 Providing the suggested strategies in order to enhance organizational commitment

of employees with the development of leadership styles used by managers.

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1.5. Research Questions/Hypotheses of Study
According to what mentioned above and conceptual model of research about the relationship
between organizational commitment of employees and leadership effectiveness of
managers/leaders the main hypothesis and sub-hypotheses of this study include;

The main hypothesis: effective leadership of manager has a significant effect on organizational
commitment of employees.

Sub- hypotheses

 There is a significant relationship between effective leadership and

organizational commitment.

 There is a significant relationship between leadership style and

organizational commitment.

 There is a significant relationship between strategies of leadership

style and organizational commitment.

1.6. Significance of Study

Effective leadership of managers is the key or element that may influence the organizational
commitment and it appropriate effective leadership style may enhance organizational
commitment of employees. The aims of this study was to help the manager by providing them
more insight in wolkite town trade and industry development sector and which effective
leadership styles have a greater influence on organizational commitment. Thus, different
effective leadership style can be exploited in different way by matching his or her behavior with
the characteristic of their followers along with organization environment because of the leader
was provided with better vision on the situation.

In addition, the leaders able to select the appropriate effective leadership style to improve the
organizational commitment and lead follower to achieve organizational objectives and goals.
These were to help the leaders to obtain a better understanding on the importance of the

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employee commitment as well as organizational commitment. So, the increasing awareness and
knowledge about the effect of different leadership which may impact the employee’s
organizational commitment is the main importance of this research/study. Besides that, the
information provided in this study enables help the leaders to know the key and way increasing
the level of organizational commitment.

Employee is an important asset of an organization. It is a challenge for manger to retain the

employee loyalty toward organization. Employees are more favor the managerial style than
organization. Furthermore, it is an opportunity for their followers to learn from leaders on the
behavior part of how to be a successful leader. On the other hand, it was definitely reduced the
turnover rate of the organization. This study further examined which leadership style most affect
organizational commitment.

Further, this study was helpful and valuable to administrators and leaders of the trade and
industry sectors as it was to help them understand the importance of leadership styles that may
influence the organizational commitment in their firm. In addition, the management team can
emphasize on their leadership in order to reach the company’s objectives and make the
achievement, at the same time the effectiveness of employees will increase. Although this study
focuses on the trade and industry sector, it provides a framework that can be relevant and
applicable in organizational commitment field for other. It was also act as future guidelines for
other researcher on the subject of organizational commitment.

1.7. Scope of the study

The main focus of this study is examination of the relationship between effective leadership
styles and organizational commitment of employee in wolkite trade and industry bureau. The
data for this study is delimited to the employees and their leaders of the trades and industry
bureau in wolkite town. This study also has its share of delimitation in the sampling frame which
only considered a particular group of trade and industry bureau in wolkite town and therefore the
results cannot be generalized to the whole trade and industry bureau or to other types of
organizations of the country. Therefore, any term found in this study should be interpreted in
relation to the leadership styles and employee commitment of trade and industry bureau in
wolkite town.
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1.8. Limitation of the study
The current study were faced several challenges especially in collecting the data. One was the
fact that most respondents had the opinion that researcher was bounded to benefit financially.
This was overcome by clearly explaining the core objectives of the study. The other major
limitation was the unwillingness of the respondents to give comprehensive information about
their operations for fear of government reprisal. The respondents were asked to give only the
information they felt comfortable to divulge.

1.9. Organization of the Paper

This paper comprises of five chapters. Chapter one focuses about introduction of the study which
comprises sub-headings from background of the study, problem statement, objectives of the
study, research question, significance of the study, scope of the study, limitations of the study
and conceptual frame-work of the study. The second chapter focuses literature review of the
related study from various authors’. Chapter three deals about methodology of the study; which
comprises organizational profile, study design, data type and sources, sample size and sampling
techniques, methods of data collection and data presentation and analysis. The fourth chapter
focuses on result and discussion of the analyzed data. The fifth chapter was about conclusion and
recommendations of the study based on the data analyzed results.

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 CHAPTER TWO

INTRODUCTION
Doing a review of literature is a critical issue in order to create depth understanding of the
research under study and it is used to build a foundation for important ideas. It also as part of
research, used to describe the results of closely related studies and to establish the importance of
the current study in relation to previous studies. This chapter, presents about different concepts
so as to give comprehensive understanding about leadership styles and organizational
commitment of employees.

2. LITERATURE REVIEW

2.1. Definition of Leadership

Leadership has been defined in terms of individual traits, behavior, influence over other people,
interaction patterns, role relationships, occupation of an administrative position and perception
by others regarding legitimacy of influence. Leadership is an interaction between two or more
members of a group that often involves a structuring or restructuring of the situation and the
perceptions and expectations of members (Yukl, 2006).

Some other definitions are as follows:

Leadership is “a particular type of power relationship characterized by a group member’s

perception that another group member has the right to prescribe behavior patterns for the former
regarding his activity as a group member (Janda, 2006).

Leadership is “an interaction between persons in which one presents information of a sort and in
such a manner that the other becomes convinced that his outcome will be improved if he behaves
in the manner suggested or desired (Jacobs, 2004)

Leadership is “the influential increment over and above mechanical compliance with the routine
directives of the organization.” (Katz et al., 2005)

Leadership is “the process of influencing the activities of an organized group toward goal
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achievement (Roach, et al., 2004).

Leadership is the “the process of influencing employees to work toward the achievement of
objectives”. Then also it is “the ability to influence a group toward the achievement of goals”
(Robbins, 2000).

Leadership as an interpersonal process through which a leader directs the activities of individuals
or groups towards the purposeful pursuance of a given objective within a particular situation by
means of communication (Gerber et al., 2002).

Leadership is as the behavior of an individual when that person is directing and coordinating the
activities of a group toward the accomplishment of a shared goal (Rowden, 2000).

The presence of the leader is to motivate, directs, and influence others to accomplish specific
tasks and expected to set the direction and values for the followers and organization and lead the
subordinate to perform better and being efficient in order to achieve the organizational goals.
Further explained that employee work attitudes and behaviors was directly influenced by the
leadership style (Mulki et al., 2006). Besides that, there is mutual effect and reciprocal
relationship between leader and subordinates because they have influence each other in the
achievement of organizational goals.

Leadership has been defined in terms of individual traits, behavior, influence over other people,
interaction patterns, role relationships, occupation of an administrative position, and perception
by others regarding legitimacy of influence. (Yukl, 2006)

Leadership as an interpersonal process through which a leader directs the activities of individuals
or groups towards the purposeful pursuance of given objectives within a particular situation by
means of communication. (Gerber, Neland Van Dyk, 2005).

Chemers (2006) defines leadership as “a process of social influence in which one person is able
to enlist the aid and support of others in the accomplishment of a common task

xv
2.2. Transformational Leadership
Burns (1978) explained that leaders who employ the transformational theory operate by
encouraging followers to do more than they believed they could. He explained that a
transforming leader transcends transactional leadership to a higher level where a leader knows
the needs of followers and works together to meet their expectations. Burns (1978) describes
transforming leader as “looks for potential motives in followers, seeks to satisfy higher needs,
and engages the full person of the follower.

According to Garcia, M., et al.,( 2012) stated that in an organization, transformational leadership
theory stress on values, emotions, and the importance of leadership focused on encourage the
innovation of employees. Therefore, employees are the assets for the company.

Transformational leadership style provides valuable feedback for their employees; motivate them
to think creatively through their intrinsic value and assisting them in accomplishing the task.
Creative in the working environment is a key characteristic as a leader, as it motivate and
encourage employee to challenge themselves in term of the ways they doing things, the creativity
is being affected by transformational leadership (Amabile, et al., 2004).

Transformational leadership is estimated to form employee behavior through three psychological

processes. The first process is transformational leaders lead employees through enhance their
consciousness of what is the value and desired result to the organization. The second process is
transformational leader direct employees to be idealized influence, acts as a role model, uphold
with confidence, and feel proud of the organization. The third process is transformational leaders
assist followers to accomplish their mission and assists them to overcome the challenges that
related to the organizational issues effectively and efficiency (Bass, et al., 2003).

A leadership style that is intended to raise leader and member to high moral, ethical, and
performance levels through the inspiration and motivation of the leader (Bass & Avolio, 2001).

xvi
2.3. Transactional Leadership
. Bass (2005) argued that transactional leaders operate by recognizing what actions their followers
must take to accomplish the desired outcome or performance, and then subsequently facilitating
those actions. Bass emphasized that contingent reward and punishment have an effect on the
performance of followers. Therefore, this approach is labeled as th e “carrot or stick” (Bass, 2005).
Yukl (2003) refers to transactional leadership as a tool to stimulate followers by appealing to their
self-interest. Yukl (2003) also argued that “Transactional leadership involves values, but they are
values relevant to the exchange process, such as honesty, fairness, responsi bility, and reciprocity.
Waldman, Bass, and Einstein (2005 ) stated that transactional leadership is useful when the goal s are
short-term. Zaleznik (2006) pointed out the available tasks within transactional leadership as
“Management selects goals, directs resources and activities, rewards performance, strategizes the
best ways to accomplish tasks, negotiates and bargains, penalizes for non-performance, and
ensures the skills for task completion.

Transactional leadership refers to the exchange relationship between leader and follower to meet
their own self-interest. In this case, some followers might receive some certain valued outcomes
in terms of wages or status when they act based from their leader’s requirements and orders
(Bass, 1999). According to Clinebell et al (2013), this type of leadership might involve a certain
underlying transactions between both managers (leader) and employees where followers are
introduced to a positive behavior that is expected from the leaders in order to entitle to the
reward based on the followers compliance or job performances. This basically has the relations
on the outcome of the turnover rate in a organizations based from the connections between the
expected job performances that done by the employees in the organization and also which type
of leadership style that a person in charge use. Hence, transactional leadership can be described
as a corrective sense which can be divided into means of identification and management
mistakes ahead of time or after it occurs some of the condition.

2.4. Servant Leadership

As Schneider and George (2011) study, they defined servant leaders as first place their
follower’s interest, needs and others than themselves. Servant leadership is desire motivate and
guide the followers to grow as well as provide the organization opportunities though establish

xvii
quality relationship. The concept of servant leadership where the primary functions is serving
other and ensures that their followers are able to attain towards their personal well-being and
grows. Other than that, others role of leader focuses on the organization goal and objectives
instead of the needs followers in the organization. The theory of the servant leadership is more
focus on concern the followers holistic need, autonomy and development than other leadership
theory.

According to Van Dierendonck (2011), state that the characteristic of servant leader involves
authorizing and developing employees, authenticity, stewardship, humility, interpersonal
acceptance, and delivering direction. A leader with characteristic of empowering and developing
employees which giving the power or autonomy to their employees to carry out the job, to make
decision and self- determining (Conger et al., 2012). Besides, humility is another characteristic
of leader has capability to out their strength, achievement, and interest in the correct ways (Van
Dierendonck, 2011). Authenticity is known as the leader willing to share their feeling and inner
thinking and able to bring honest about one self. Interpersonal acceptance defined as where the
person comes from “understand and experience the feelings of others and where the person
comes from” as defined as the interpersonal acceptance (Harter, 2002).

The providing direction is the followers know what is expected from the leaders and employees
will perform their job well. The last characteristic of the servant leader is the stewardship which
refers to the leader is willing to care and take responsibility for the whole organization.

2.5. Participative Leadership

Bogdanic, (2012), defined that participative leadership has empower and encourage the
involvement of the others participative in the process of decision making. According to
Koopman and Wierdsma (2009), participative leadership is defined as the process of making the
decision jointly or at least partake the influence in decision-making by a leader and his or her
subordinates. The characteristics associated with participative leadership style such as
empowerment, joint decision making, consultation, democratic leadership and power sharing.

A participative leader encourage the employees contribute their ideas, solicit advice from their
followers, obtain their views and thoughts and integrate their ideas into the consideration of the
final decision making (Northouse, 2013; House and Mitchell,2000). However, the final decision
xviii
making authority still fall over the hand of the leader. A leader may not know everything, thus
need the participation and involvement of knowledgeable and skilled people to gain their
different perspective and diverse opinions in order to make better decision and have greater
creativity and innovation and eliminate insularity. There will be a wider of opinion provide by
the diverse group member to organization and create synergy within the organization. This
leadership behavior enables the participation and involvement in organization activities, hence
able to cultivate the feeling of “psychological ownership” among the employees, enhance their
self-efficacy and decrease their powerlessness and increase their self-growth through their jobs
(Arnold, Arad, Rhoades and Drasgow, 2000). The feeling of ownership make them believe that
they are imperative human asset in the organization and they are appreciate and accept by the
leader.

Other than that, participative leadership is associated with potential benefits and positive impacts
which include increases and enhances the decision’s quality the quality of employees’ work lives
has been improved, facilitate employees motivation and increase the organizational commitment.
As an example, the frontline bank employees always direct interact with the customers, so they
know better about the customers’ needs and expectations than the manager, therefore
management have to permit the employees to participate in the process of decision making. The
direct involvement of the employees mostly is regard of their immediate work. (Dolatabadi and
Safa, 2010). According to Graham and Bennet 2007), employees have to access sufficient
information as the basis of the decision, they will consult before the decision has been made and
negotiation can be made between the management and the employees regard the implementation
of the decision. Openness to new idea through the participation can facilitate employees’
commitment toward organization and development of the employees.

Besides that, participation and involvement of employees in the process of decision making and
business activity can make the group members feel more inter-connected and encourage them to
contribute their creativity. Participative leadership is appropriate and effective in team situation
due to solicit different ideas and seek advice from team members generate the high levels of
team outcomes. Employees feel satisfied and appreciate when the leader allocates important
tasks and delegate the decision making authority and responsibility to them. Power sharing by

xix
the leader to the follower can gain the level of trust, employees’ motivation, facilitate and boost
the employee’s innovation and their job satisfaction in the organization.

2.6. Organizational Commitment

Organizational commitment represents an employee work attitude towards their own company,
this degree of commitment will affect the employees on their own jobs, if employees are
committed will greatly increase their work performance and reduce their intention to leave the
company (Rauf, A., et al., 2013).

Organizational commitment comprise by three factors: employee’s belief towards the

organization’s value and target, employee willing to pay effort in their own work, the less
intention of leaving the organization (Jian, W., et al., 2006). From this article we understand that
organizational commitment is really important to maintain one employee’s membership in the
organization, so organizational commitment becomes one of the keyword that reduce the
turnover rate in wolkite town trade and industry development sector. The change of the
organizational focus and effective leadership styles/behavior rapidly causing the employee no
longer committed to their own job this is because the employee didn’t feel any security in their
own work causing the intention to leave increase.

Commitment is a construct that seeks to explain consistencies involving attitudes, beliefs and
behavior and involves behavioral choices and implies a rejection of feasible alternative courses
of action. It is a manifestation of the individual’s own self, and reflects value standards that are
basic to the individual’s existence as a person

Commitment reflects the relative strength of an individual’s identification with and involvement
in that organization. According to this definition, organizational commitment has three basic
components (Steers, 1997).

 A strong belief in and acceptance of the organization’s goals and values (identification)
 A willingness to exert a considerable effort on behalf of the organization (involvement)
 And a strong intent or desire to remain with the organization (loyalty).

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Affective Commitment; refers to employee’s emotional attachment, identification with, and
involvement in the organization. Employees with a strong affective commitment stay with the
organization because they want to. An organization typically provides rewards or punishments at
its disposal in return for the contributions its employees make or fail to make, and the employees
commit themselves to the organization in return for the rewards received or the punishments
avoided.(MAYER and ALLEN,2005).

Continuance Commitment: refers to employee’s point of view of whether the costs of leaving the
organization are greater than of the costs of staying. Employees who perceive that the costs of
leaving the organization are greater than the costs of staying remain because they need to.

Anything that increases the cost associated with leaving the organization can lead to the
development of continuance commitment. Self investment is the amount of valuable resources
such as effort, time, and energy that an employee has spent in the organization for its well-being.
Increased effort and energy by employees will increase their continuance commitment, because
leaving the organization will result in the loss of the valuable resources spent for the
organization. The lack of transferability of job skills and knowledge will also increase the costs
of leaving the organization, because it makes it difficult for employees to find alternative jobs
that fit (Meyer & Allen, 2005).If employees move to another organization, it may disrupt the
social relationships they have and increase the psychological ' 'cost of making new friends and
learning to get along with new working associates. The lack of external job opportunities
increases the costs associated with leaving the organization. Therefore, the fewer available
alternative jobs in the environment, the greater will be the employees' continuance commitment
to their current employer (Becker, 2007).

Normative commitment; refers to employees feelings of obligation to the organization.

Employees with high levels of normative commitment stay with the organization because they
feel they ought to. Socialization and exchange play a key role in the development of normative
commitment. According to Wiener (1982), normative commitment develops as a result of
normative beliefs that are internalized through pre-entry (familial and cultural) and post entry
(organizational) socialization processes. Therefore, a commitment norm, which is labeled as
internalized normative beliefs by Wiener, is examined as a possible determinant of normative .
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 CHAPTER THREE

INTRODUCTION
Research design and methodology is very crucial that helps the researchers how to address the
research problems and provides the overall structure for the procedures that researchers should
follow. It is also very important to get meaningful data to achieve objectives of the study. Thus,
this chapter presents the study areas description, research philosophy, research design, data
sources, data collection instruments, sampling design, target population, sampling element and
sample size and data analysis tools.

3. RESEARCH METHODOLOGY

3.1. Description of study organization

This study was conducted in wolkite town trade and industry development sector. Wolkite town
Trade and Industry Development Bureau located at the center of wolkite town. Wolkite town is
the capital of the GURAGE zone. Trade and Industry bureau is one of the big sectors in the
town. Investment expansion process, Enterprise development agency, transport authority and the
trade promotion process are all organized under the bureau. The current study was focused on
effective leadership and organizational commitment of employees in wolkite town trade and
industry sector. It focused on leaders, supervisors and employees the wolkite town trade and
industry development sector.

3.2. Research Design

This study was based on descriptive research design because it is able to collect data from larger
sample sizes of respondents and produces accurate results. It describes the characteristic of
group, object, people, environment and organization.

3.3. Data Collection Methods

In my research I used the primary data which is questionnaire to conduct the current study.
Questionnaires can consider as an efficient data collection instrument due to the researcher can
collect and obtain a big amount of data in a certain short period of time. The prime reason is

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researcher can distribute and gather the questionnaires at the same time; it was shorten the study
time and more convenience. Besides that, primary data was more up-to-date rather than
secondary data that based on past statistic which is outdated information. Furthermore, primary
data is the original study that research was conducted specifically for the purpose of a specific
study.

3.4. Sampling Design

Sampling process for one research or study is very important. A sample is the portion or part of
the population. Hence, we need to select the sample accurately and conduct the sample properly
to ensure the sample can represent the entire population. (Wimmer et al., 2003).

This research utilized the convenience sampling technique since the researcher was unable to
acquire a detailed database covering trade and industry office in wolkite town. Therefore, it
would be helpful in future research to have a better database. Convenience sampling is simply
defined “as accidental sampling or haphazard sampling, is the process of including whoever
happens to be available at the time” (Gay et al., 2009, p. 134). This technique is used most often
when we have difficulty using probability sampling techniques, which employ true random
sampling approaches.

3.5. Target Population

Population is the research would like to investigate about the entire group of people, objects
interest or the measurement obtained from all individuals or objects of interests (Cavana,
2001).In Wolkite town trade and industry bureau there were a total number of 92 employees. The
targeted population of this research/study was the employees working in the wolkite town trade
and industry development sector.

3.6. Sampling elements

A single member of the population is considered as the sampling element (Cavana et al., 2001).
An element is each individual of the targeted population. Therefore, the current study, the
employees in the wolkite town trade and industry development sector was taken part as
respondents. These respondents were provided their experience and knowledge to current study.
Other than that, researcher was distributed the questionnaires to the respondents from different
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group such as gender, age, education levels, income levels and job period.

Hence, this can help researcher to generate different perspective from the respondents in order to
accomplish more accurate and relevance results.

3.7. Sampling Size and Technique

A simple random sampling technique was used to investigate the problems. The probability
sampling techniques was used because every members of the population had a known non zero
probability of a selection. Simple random sampling was employed to select employees,
supervisors and administrators of the organization. The sample size was determined using the
formula for single population proportion and the following assumptions were made. The study
considered 95% level of significance. Margin of error is 5 percent and the expected prevalence of
50% will be considered as there is no previous study conducted on the issue. The sample size
was calculated using the Yamane sample size determination (1960).

n=N/ (1+N (e) 2, where, n=sample size

N=total population

E=level of precision or error

If 5% is selected as an error

n = N/ (1+N (e) 2
n = 92/ (1+92(0.05) 2

n =74

3.8. Data collection Instrument /Tools

Data collection instrument is a measuring instrument used in a study; the researcher was used the
questionnaire as a data collection instrument in the current study. Data collecting technique that
needs the target respondents to fill in the set of questions in fixed order is known as
questionnaire.

Questionnaire is more suitable for us to collect data as compare to interview and observation

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because it is easier and less time consuming. Besides that, questionnaire can help us to get the
direct response from the respondent in lower cost, the predetermined order of a questionnaire
also allows us can interpret the data more easily. The reason researcher was not used interview
and observation is because interview is more time consuming and due to the interviewer bias, it
may influence the respondent to change their own opinion.

3.9. Sources of Questions in Questionnaires

The researcher has a number of questions that have been set in the study questionnaires in order
to measure the responses of the employees in wolkite town trade and industry development
sector about the effective leadership styles or behaviors that influence their commitment toward
the organization. All dimensions of the variables was covered in the current study questionnaires
which include the four types of leadership styles such as transformational, transactional, servant
and participative leadership and also the organizational commitment. The research
questionnaires primarily developed from research questions. The researcher adopt few set of the
questionnaires in the current study questionnaire design that already done by the past researchers
in order to ensure the dimensions of the variables are appropriately measured (Ozsahin et al.,
2013 and Liden et al., 2015).

3.10. Data Analysis and Presentation

Once the researcher have collected all the data from the employees through questionnaire that
researcher was distributed, the next procedure that need to do is to make sure the data collected
from the employees is quality which mean in consistent and more systematic order. There are
few steps that can run or test the data include checking, editing, coding, transcribing and lastly
cleaning to ensure the data collect can be used in current study/research.

Data checking is particular process which is to ratify the data that researcher would have
collected in to more significant order and the questionnaires that researcher had collected must
be accurate and complete data information.

The main objective for data editing is to detect and make correction for the illogical, omission
and inconsistency of any information that has been received from the respondents. If there is an
error in our questionnaires for example like left out some answers or may be one question same
answers, the researcher can able to adjust some of the data in to more accurate and consistent
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(Sekaran et al., 2010).Data coding is a process that use to allocate the number to the participants
responses in order to make it more systematic when key into the database. In this study all the
data that researcher was collected coded by using Microsoft Excel Spreadsheet and transported
to SPSS software for analysis.

Descriptive analysis was considered as the initial transformation of the raw data into a form that
make them easier to understand and interpret. There were few methods which include
organizing, summarizing and presenting data in an informative way that consist in the descriptive
analysis. Average, frequency distribution and percentage distribution of the demographic
information that provided by the respondents was calculated in the descriptive analysis. Besides
that, the measures of central tendency and measure of variability will be involved in the
descriptive measure. Measure of central tendency was used to report a single piece of
information and the typical difference between the values in a set of value was revealed in the
measures of variability.

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