CHAPTER ONE

INTRODUCTION
This chapter introduces the research subject briefly and outlines the research background,
incorporating the problems and results from the past studies. The problem statement is given and
research objectives have been clearly described and based on which, hypotheses are formed and
model is specified. Apart from this, it also identifies the significance, scope & limitations of the
study.

1.1 Background of the Study

Leadership competence entails leadership skills and behaviors in which leaders engage in for
the improved performance of the organization. The concept of competence could be used by
leaders to promote and create a better identity for the organization, and it is essential in the
creation of the next generation leaders for an organization. Although competence is a
necessary attribute of leadership in all organizations, specific organizations should define the
level of expertise required in the organization. Each organization has a distinct factor which,
when incorporated, creates a competitive advantage for the organizations. The second
necessary concept of leadership entails the idea of courage. Courage is essential in putting
together all the talents in an organization. Courage in eldership is also critical in enabling the
leaders to be able to take initiatives to propel the organization into success (Coleman et al.,
2018).

In essence, through the projection of courage, the leaders can engage in new efforts for the
organization.Courage is also being necessary in enabling the leaders to handle the various
challenges that the organization face. Clarity facilitates the development of essential
leadership. In essence, a good leader can lead with clarity and articulate points within the
organization. Transparency in administration fundamentally critical in propelling the
organization forward in the event of uncertainties - the lack of clarity, uncertain conditions
could lead to the paralysis of the functioning of the organization. Transparency in
organizational leadership is essential in the provision of organizational guidance (Coleman,
2018).

It helps in enabling the workers in the organization to align themselves with the corporate

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mission, vision, and core values. The character also forms an essential element of leadership
concepts. Through the possession of dynamic nature, leaders generate significant following
and loyalty. Attitude is critical to the provision of the moral authority that enables the leaders
to perform well in their various roles and duties. Through the possession of dynamic
character, the leaders have the ability of consolidation following and resources in their areas
of jurisdiction. The performance generated, therefore, efficiently matches the vision, mission,
and core values of the organization. Leadership entails the ability of the individuals to
persuade other individuals to attain defined objectives enthusiastically (Armstrong, 2016).

It involves the human factor that connects individuals in a team do to enable efficient
attainment of goals and objectives. Among the types of leadership that facilitate
organizational performance include transactional leadership and transformational leadership.
Transformational leadership entails a leadership approach in which the leaders engage in the
inspiration, motivation, and encouragement of the employees. The employees are encouraged
to participate in innovation and facilitation of change, facilitating the growth and shaping of
the organization. Transformational leadership entails the leader acting as an example and
setting an organizational trend for the rest of the employees to follow. It is essential as it
encourages and facilitates independence, corporation. Organizations that enable
transformational leadership are vital in ensuring the employee achieves their objectives
without the management engaging in micromanagement and doing follow up to the
employees (Golensky et al., 2020).
The leaders trust and believe that the employees can i8ndependently and efficiently fulfilling
their mandate.The wide range of research resources on leadership skills in an organization
underlies the link between business productivity and improved service delivery in the
workplace. However, there is a significant gap relating to the study of the effects of leadership
skills and employees' performance within a business organization. Therefore, our research
will try to address this existing gap in the research literature by reviewing the current
relationship between leadership skills and workplace productivity (Hallinger, 2018).
The proposed research will allow for creating a clear basis of understanding organization
leadership in general and comprehending how leadership competency enhances effective
organization management.

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Furthermore, a Leadership Skills and Its Impact on Organizational Control have been
investigated for many years, but researchers have found different results with different contexts.
Accordingly, there is no specific result, which can be generalized on the extent of the
relationship between Skills and its factors, thus there is a constant for new research in different
context for achieving a more complete understanding for the dynamics relationship between the
firm’s Leadership Skills & it affecting factors.

1.2 Statement of the problem

The study begins from the cognizance of the view that one must seek to transform their
organizations or communities by heading them through new tracks, instead of moving them
along historically unsuccessful tracks. To learn this over time, one has to develop the ability
to help in the development of a new vision in different areas and mobilize others who believe
in a prevailing ideology. For instance, numerous studies in leadership skills suggest that

Transformational leadership skills can be applied to a person's leadership development in

ways such as intellectual stimulation, where one is always opposing the status quo and do not
fear failure (Holmberg et al., 2016). Consequently, an individual might foster an environment
where they will be safe to voice ideas and become creative while ensuring that all the
opinions are valued. For instance, one can challenge the norms in their workplace and inspire
passion among peers (Hackworth et al., 2018). Eventually, they might join efforts to achieve
their goal and a positive change, which entails transformational leadership - stimulating
others to make change across different areas of life leads to better ability to transform at
higher levels in the future and, thus, better direction.
Additionally, practicing inspirational motivation in every aspect of life develops a leader's
transformational capability. One should know where they want to go to achieve a given vision
at every stage in life. Consequently, they should set a strategy through which the achievement
can be made. Therefore, they articulate their vision through passion and optimism to indicate
that it matters (Armstrong, 2016). They then seek the contribution of other people, especially
in the form of supportive ideas, and inspire them to work together as a team to achieve the
vision.
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 Practicing motivating and setting visions that they can make in different areas in life ultimately
equips individuals with skills to become better leaders in the future, ultimately contributing to
leadership development (Jambunathan et al., 2020).
Therefore, this study, examines Leadership Skills and Its Impact on Organizational Control in
Dashen bank s.c by using identifying their impacts.

1.3 Objectives of the study

1.3.1 General Objective of the study

The general objective of this study is to examine Leadership Skills and Its Impact on
Organizational Control in Dashen bank.

1.3.2 Specific Objectives of the study

Based on the above main objective of this study and the problem statement, the researcher will
address the following specific research objectives:
 To ascertain the relationship between leadership style and employees commitment to
work.
 To ascertain the relationship between organizational employees behavior and employees
commitment to work.
 To ascertain the relationship between leadership style and organizational behavior.

1.4 Hypotheses of the Study

A major purpose of this paper is to estimate the impacts that determine the Leadership Skills and
Its Impact on Organizational Control in dashen banks. To achieve the intended goal, the
researcher has formulated three hypotheses.

: There is no significant relationship between leadership styles and employee)s commitment to

Ho1

work

: There is no significant relationship between organizational behavior and employee)s

Ho2

commitment to works

: There is no significant relationship between leadership style and organizations employees

Ho3

behavior

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 1.5 Scope of the study
The scope of this study is limited to the relationship between leverage and determinants of
capital structure decision of private banks in Ethiopian over the period 2008 to 2021. To this end,
this study is limited to firm specific determinant of capital structure (profitability, tangibility,
growth, size, and liquidity), external factors (Inflation) and theories of capital structure that can
explain the capital structure of Ethiopian banking industry.

1.6 Limitation of the study

The major limitations that hamper the study are resource constraint and unavailability of active
secondary market which forced the researcher to measure the dependent variable i.e. measures of
leverage as well as the proxies of the independent variables in terms of book values rather than
market values.

The study has one dependent variable, Capital structure of the private banks, and six independent
variables including profitability, tangibility, Size, growth, inflation and Liquidity. Even if there
are many different factors, the researcher is interested to see the effects of the mentioned
independent variables on the named dependent variable. The other limitation of this study is the
fact that it only considers private banks without including Government owned bank.

1.7 Significance of the Study

Every research work is expected to be of relevance to certain persons thus this work will be
relevant to the following;

 To the academia, this work will be relevant as it will constitute a literature of

relevance on the topic organizational behavior and leadership.
 It will serve as a working document for firms and business organizations on the type
of leadership style to adopt and the implications of employee’s behavior on their
performance.
 To further researchers, this work will be adopted as a research material for further
studies and reference material.
 This work will highlight various strategies to manage different organizational
behaviors since people behave differently.

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 1.8 Organization of the Proposal
This Proposal is organized into four chapters. Chapter one presents background of study,
statement of the problem, objective of the study, hypothesis of the study, scope and limitation,
and significance of the study. Following on this, chapter two of the study presents review of
theoretical and empirical literatures on determinants of capital structure, and Conceptual
framework. Chapter three presents the research methodology this includes research design and
approach, data type and source, population and sampling technique, model specification and
description of variables and ethical consideration.

CHAPTER 2

REVIEW OF RELATED LITERATURE

A literature review is the backbone of research in the selection of the appropriate research
methodology connected to research topic. It is essential for researchers, as a reader, and for us, as
authors, to have a concrete frame of reference in mind before continuing the search journey.
Most of all, a solid framework represents the coherence of the theories chosen.

2.1 Conceptual Review

2.1.1 The concept of leadership

Leadership is an act that has several definitions and conceptions, however, the following
conceptual definition and perception of leadership will be adopted in this research. Leadership is
the process through which an individual tries to influence another individual or a group of
individuals to accomplish a goal. It is an organizational tool or mechanism for control and
monitoring. Scholars in relation to the context and situation have always defined leadership.
There is actually no consensus on the definition of leadership .Thus Yuki (2006) defines as an
act that could be carried out in terms of group process, influence, personality, compliance,
particular behavior, persuasion, power, goal achievement, interaction role differentiation and a
combination of two or more of these. Hemphill and Coons as cited in Yuki 2006 defined
leadership as a behavior of an individual when he is directing the activities of a group toward a
shared goal. Robbins (2001), defines leadership as the ability to influence a group toward the
achievement of goals.
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A leader is interpreted as someone who sets direction in an effort and influences people to follow
that direction. How they set that direction and influence people depends on a variety of factors
that we'll consider later

Amidst this definitional plurality of leadership, there are certain element that are inherent in the
definitions and are applicable to leader irrespective of the definition dimension. The truth of
leadership is that it is not what is contained in the leader or his personal charisma rather it is his
ability to transcend or exact an influence on peoples acts and actions. The act of leadership is
transactional in that while the leader affects and influences the followers, the acts and actions of
the followers does the same to his. Thus, the relationship between the leader and his followers
are transactional. The act of leadership is dependent on the act of influence thus no influence no
leadership. Oko (2015). In its totality the definition of Yukl and Van Fleet (1992), will be
feasible for this study

“Leadership is a process that includes influencing the task objectives and strategies of a group
or organization, influencing people in the organization to implement the strategies and achieve
the objectives, influencing group maintenance, and identification, and influencing the culture of
the organization’’

2.1.2 Leadership Behavior

Leadership has been a very controversial concept and it has more than 350 definitions (Burke,
1985). Other than that, Kuchler (2008) was highlight that leadership persistent to be one of the
most extensively discussed topic by the researchers from all over the world. The term leadership
means different things to different people. Although no ultimate definition of leadership exists
Yukl, (2001), the majority of definitions of leadership reflect some basic elements, including
“group” “influence” and “goal” Bryman, (1992). Today, new definitions are added to the list as
well. Despite the fact that there have been very different definitions of leadership, concept of
‘influence’ has been used in almost all of them Çokluk & Yılmaz, (2010). One of the most
important reasons for this difference in leadership definitions is the difference and leadership
theories in positioning leadership.

Moreover, leadership also is a process of interaction between leaders and followers where
Northouse (2010) was highlighted the leader attempts to influence followers to achieve a
common goal which according in a popular textbook on leadership. Yukl (2010) defined

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leadership as the process of influencing others to recognize and agree about what needs to be
done and how to do it, and the process of facilitating individual and collective efforts to
accomplish shared objectives. Yet, Yukl’s states that leadership includes efforts to influence and
facilitate the current work of the group, and it also ensures that the group is ready to meet future
challenges. By referring Daft (2008), considerate leaders are sociable, provide open
communication, develop teamwork, and are oriented toward their subordinates. Tjosvold (1981)
theorized that if power were to be defined in field theory rather than in behavioral terms, it is
more like the control of valued resources where A has power in relation to B when A has
resources that can affect the extent that B accomplishes goals. Later, contingency or situational
approach came into the picture which largely displaced the dominant trait and behavior
approach. This approach views leadership effectiveness as dependent upon a match between
leadership style and the situation. It also focuses on the degree to which the situation gives
control and influence to the leaders. The primary thrust was that the qualities of leaders
differentiate in various situations and so were those qualities were perhaps appropriate to a
particular task and interpersonal context. One of the most important theories evaluated among
situational leadership theories is Path-Goal Theory developed by Evans, 1970; House, (1971).
Currently, Path-Goal theory is the most influential contingency approach to leadership Robbins,
(2005). In this theory, the way the leader impresses the followers, the way goals about the work
are perceived, and the ways to achieve the goals are taken into consideration. Thus, according
Njoroge, (1997), leaders cannot be successful and responsible leaders without the right skills,
tools and resources. According to Path-Goal Theory, motivations, satisfactions, and work
performances of followers depend on the leadership styles chosen by their administrators Bycio,
Hackett, & Allen, (1995) House, (1971), Sayles(1981).

Multiple dimensions of leadership behavior were carefully examined and revised in Path-Goal
Theory studies. In this investigation, some dimensions such as leader initiating structure,
consideration, authoritarianism, hierarchical influence, and degree of closeness of the
supervision were determined. All dimensions were analyzed with Path-Goal Theory’s variables
such as balance and effectively taken into consideration House, (2010). As a result of these
analyses, four basic leadership behaviors were determined in Path-Goal Theory. These are
supportive, directive, participative, and achievement-oriented leadership behavior.

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However, this study will adopt only to two leadership behaviors these are

2.1.3 The Supportive and the Directive leadership style.

I. Supportive Leadership Behavior

Rollinson & Broadfield (2002) sees supportive leadership as talking to people, supporting their
efforts, giving them hope, solving their problems, and participate them in decision-making
process. Thus, supportive leadership involved in emotions and personal expectations are taken
into consideration. Leaders tend to stray from the path they follow for the sake of happiness and
satisfaction of their followers. In this context, House (1996) was highlighted that supportive
leadership is the most effective leadership behavior on subordinates. In additional, supportive
leaders could be described as having characteristics such as being a model, appreciating and
congratulating what has been done, helping their subordinates, explaining reasons for criticisms,
and set constructive criticisms. Furthermore, leader's response was legitimate, having an
increased commitment, building support for the leader, defending the leader's response, having
increased respect for the leader, empathizing with the leader, and offering to find a joint solution
Eubanks, Antes, Friedrich, & Caughron, (2010). In further elaborated that a supportive
leadership style is one in which the leader creates a facilitating task environment of
psychological support, mutual trust and respect, helpfulness, and friendliness Hernandez, Eberly,
Avolio, & Johnson, (2011).

ii. Directive Leadership Behavior

Directive leadership simply infers that the leader tells subordinates exactly what they are
supposed to do. the directive leadership behavior could be described as the situation where
leader gives complete and essential directives on a particular subject. In directive leadership
behavior, the questions like “what to do, how to do, where to do, when to do, and who should
do?” was clearly specified. Thus, Hanson (2003), Lunenburg and Ornstein (2000), and Rollinson
and Broadfield (2002) examined the performances of the organization members are secretly
inspected and observed. In the other hand the behavior of directive leadership is telling the
expectations to those under the command (followers), planning, programming, autocratic

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controlling goal performance, and bringing out standards in behavior. The leader explains
followers’ roles, and followers clearly understand what they are expected to do.

2.1.4 Leadership Style

Leadership as a key factor in determining organizational success has been studied extensively in
the past century in the management field Bass & Avolio, (1997). Current leadership theories
indicate that leadership behaviors can be categorized into two main styles:

Transformational Leadership and Transactional Leadership

i. Transformational leadership

This is the most studied leadership style across disciplines. Transformational leaders are
charismatic. They motivate subordinates and appeal to their ideals and moral values by creating
and representing an inspiring vision of the future Bass & Avolio, (1997). This form of leadership
involves the creation of an emotional attachment between leaders and employees.
Transformational leaders take a real interest in the well-being of their employees. As suggested
by Jin (2010), transformational leadership integrates the elements of ―empathy, compassion,
sensitivity, relationship building, and innovation. It fosters a climate of trust, nurtures
employees‘ confidence, and encourages their individual development. In addition,
transformational leadership includes the elements of participative decision making and sharing of
power, as noted by Aldoory and Toth (2004). Podsakoff et al. (1990, 1996) suggested that six
dimensions define transformational leadership behavior:

I. identifying and articulating a vision

II. providing an appropriate model
III. fostering the acceptance of group goals
IV. setting high performance expectations,
V. Providing individualized support
VI. and promoting intellectual stimulation

Identifying and articulating a vision involves leaders identifying new opportunities for the unit or
the company, and developing, articulating, and inspiring employees with the vision of future.
Providing an appropriate model refers to leaders setting examples for employees that are

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consistent with the values they hold. Fostering the acceptance of group goals means promoting
cooperation among employees and getting them to work together toward common goals. High
performance expectation refers to leaders demonstrating their expectations for excellence,
quality, and high performance for employees. Providing individualized support means that
leaders respect employees and attend to their personal feelings, needs, and well-being.
Intellectual stimulation refers to leaders stimulating employees to challenge their status quo and
to ―think creatively, take risks, and participate intellectually Harms & Crede, (2010).

ii. Transactional leadership

This is an exchange process. It is a matter of contingent reinforcement of employees based on

performances. It motivates subordinates by appealing to their personal desires, based on
instrumental economic transactions. Transactional leaders generally use organizational
bureaucracy, policy, power, and authority to maintain control; this style of leadership is
occasionally referred to as authoritative Bennet, (2009). Previous leadership scholars Bass,
(1985) Podsakoff, (1990) have identified contingent reward, which involves leaders clarifying
roles and task expectations and providing contingent rewards on the fulfillment of contractual
obligations, as the principal behavior to represent transactional leadership because it ―captures
the exchange notion fundamental to transactional leader behavior‖ Podsakoff, (1990) . The
transactions or exchanges 11 included in contingent reward may include tangible (e.g., pay
increases) or intangible (e.g., recognition) commodities.

2.1.5 Organizational Commitment

According to Demir et al. (2009), commitment is a personal relationship to some course of

action. Personal or self-commitment involves a guarantee to do the best one can in every
situation and to be the best that employees can be. While there are different definitions of
organizational commitment in scholarly literature, these definitions share a common theme in
that organizational commitment is recognized to be a bound of the individual to the organization
Samad, (2005). Committed employees feel the need to go beyond normal job requirements in
order to make a significant personal contribution to the organization Perryer & Jordan, (2005).
Moreover, organizational commitment is multi-dimensional construct refers to view in the

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direction of employee's attachment to organization and it is a constant process which indicates
the contribution of individuals in organization Eisenberger, Fasolo, & Davis-LaMastro, (1990).
So that, the organizational commitment determines individual characteristics with a certain
organization and its contribution in that organization, consistently organizational commitment
considered as a kind of emotional and psychical attachment to the organization. Thus, according
to this advance by Aghdasi, Kiamanesh and Ebrahim (2011) individual with strong attachment to
this organization will feels cohesive with it and get pleasure from being a member of
organization. Furthermore, it is employee’s feelings of obligation to stay with their
organizations. These feelings result from the normative pressures employees’ experience Viljoen
& Rothmann, (2009). According to this definition, organizational commitment has three basic
components are identification as a strong belief in and acceptance of the organization’s goals and
values, involvement as willingness to exert a considerable effort on behalf of the organization,
and loyalty as a strong intent or desire to remain with the organization. Therefore, organizational
commitment has been suggested three different types by Allen and Meyer (1990) which has been
commonly used in other studies in last 20 years for example Dawley, Stephens and Stephens
(2005) as listed below and also adopted by Omar et. al. (2013):

i. Affective Commitment

Based on Meyer and Allen (1991), definition of affective commitment refers to employee’s
emotional attachment, identification and involvement in the organization. Due to this loyalty,
one is fully willing to accept the company’s goals and values as his/her own. Moreover, affective
attachment refers to affective orientation to the group; it is the strength of individual
identification with the group or organization, or an emotional bond between individual and
organization Ashman & Winstanley, (2006). According to Hartmann and Bambacas (2000)
affective commitment is a feeling of attachment and belonging to an organization, that includes
the structure of the organization, the type of work experiences, and personal characteristics.

ii. Continuance Commitment

In continuance, commitment refers to employee’s point of view of whether the costs of leaving
an 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. In
addition, anything that increases the cost associated with leaving the organization can lead to the

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development of continuance commitment where 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 Meyer & Allen, (1991). Lost benefits include accrued pensions, promotions based on
tenure, loss of values, future opportunities, or lost efforts if skills or systems are not transferable
Hartmann & Bambacas, (2000).

iii. Normative Commitment

Dawley et al. (2005) refer to normative commitment as obligation reflected as the result of
familial or cultural pressures. In other words, normative commitment is more focused towards
employees’ feelings of obligation to the organization. Where the employees with high levels of
normative commitment stay with the organization because they feel they ought to Parish,
Cadwallader, & Busch, (2008). On the basis of the works of Meyer and Allen (1991), Scholl
(1981), and Wiener, (1982) suggested that two mechanisms, socialization and exchange, play a
key and operative 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.
The second mechanism is the principle of exchange, or what Scholl (1981) call a norm of
reciprocity. Based on this principle, normative commitment develops through the receipt of
rewards from the organization that instill a sense of moral obligation to reciprocate with
commitment. Referring to Carrière and Bourque (2009), the most universal forms of
organizational commitment studied and reported in the academic literature are affective
(emotional attachment to the organization), continuance (perceived costs related with leaving the
organization) and normative (feelings of obligation towards the organization). Organizational
commitment are depends on the perception of employees. Eisenberger, Huntington, Hutchison
and Sowa (1986) and Steers (1977) show that if the employee finds the organization to be more
supportive, a higher level of organizational commitment will result and the direct effort to induce
commitment can produce long-term benefits for the organization.

2.1.6 Leadership and Management

John Kotter (1988) distinguishes leadership from management. Effective management carefully
plans the goal of an organization, recruits the necessary staff, organizes them, and closely
supervises them to make sure that the initial plan is executed properly. Successful leadership

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goes beyond management of plans and tasks. It envisions the future and sets a new direction for
the organization. Successful leaders mobilize all possible means and human resources; they
inspire all members of the organization to support the new mission and execute it with
enthusiasm. When an organization faces an uncertain environment, it demands strong leadership.
On the other hand, when an organization faces internal operational complexity, it demands
strong management. If an organization faces both an uncertain environment and internal
operational complexity, it requires both strong leadership and strong management.

2.1.7 Leadership and Management are they the same?

Specifically, management is associated with four major traditional function : planning,

organizing, leading and controlling/coordinating. However, many educators, practitioners and
writers disagree with this traditional view. These functions are similar to those of leadership.
However, leadership is correlated with management in certain cases.

2.1.8 Views That Leading Is Different Than Managing

Siokwu (2013) in her research adopted the following views

Different scholars have different view from the traditional view that leading is a major function
of management. Management Styles (says they're different and compares different traits)
Leadership (includes good overview of styles, and differences of manager and leader) View That
Separating "Leading" from "Managing" Can Be Destructive. Another view is that to be a very
effective member of an organization (whether executive, middle manager, or entry level worker),
you need skills in the functions of planning, organizing, leading and coordinating activities the
key is you need to be able to emphasize different skills at different times. Yes, leading is
different from planning, organizing and coordinating because leading is focused on influencing
people, while the other functions are focused on "resources" in addition to people.

However, that difference is not enough to claim that "leading is different than managing" any
more than one can claim that "planning is different than managing" or "organizing is different
than managing". The assertion that "leading is different than managing" and the ways that these
assertions are made can cultivate the view that the activities of planning, organizing and
coordinating are somehow less important than leading. The assertion can also convince others
that they are grand and gifted leaders who can ignore the mere activities of planning, organizing

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and coordinating they can leave these lesser activities to others with less important things to do
in the organization. This view can leave carnage in organizations.

2.1.9 Leadership style and employee performance and empowerment

Scholars have identified the important role that organizational leadership plays in empowering
employees. According to Spreitzer (1995), two work context factors determine employees‘
feeling of empowerment: information and rewards. Specifically, information about the
organization‘s mission and information about performance are crucial for empowering
employees. Without being informed about where the organization is headed, employees will not
be able to have the sense of control or being involved; without performance information,
employees will not be able to know how well they are performing, which is fundamental to
reinforcing a sense of competence Lawler, 1992; Spreitzer, (1995). Transformational leaders
characterized by open communication can empower employees by articulating clear
organizational future goals, generating employee enthusiasm for worthy causes, and expressing
high performance expectation from employees. A second critical factor for empowerment is an
incentive system to reward employee performance Lawler, 1992; Spreitzer, (1995).
Performance-based rewards, often associated with transactional leadership, may recognize and
reinforce employee competencies. However, an over-reliance on rewards and punishments will
create the perception of a lack of delegation among employees Bass & Avolio, (1994).
Therefore, overall, a negative relationship should be expected between transactional leadership
and empowerment. Behling and McFillen (1996) posited that employees‘ feeling of
empowerment is crucial to the ability of transformational leadership to have a positive influence
on the responses of employees. In a similar vein, Epitropaki and Martin (2005) suggested that by
empowering employees, transformational leaders could create a perception among employees
that they are being taken seriously, listened to, and valued as members of the organization.
Following Bass‘s (1999) notion that employee empowerment is a potential mediator for
transformational leadership effects, Castro, Perinan and Bueno (2008) demonstrated that
employee empowerment (including perceived competence and control) mediates the relationship
between transformational leadership and employee attitudes, specifically, job satisfaction and
affective commitment to the organization. Following their line of thinking, the present study

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posits the mediating role of employee empowerment in the influence of transformational
leadership and transactional leadership on perceived organizational reputation by employees.

2.2 Theoretical Review

There are various theories in the study of organizational leadership style and behavior. Some of
these theories are discussed below in relevance to this research.

2.2.1 Traits Theories of leadership

the totality of this theory is based on the perception that specific characteristic are associated
with different leaders and their target. The physical, mental, and personality traits are believed to
affect the leadership style of a leader. Traits lead to certain successful outcome of a leader. The
theory assumes that leaders are born with special characteristics and traits, inherit certain traits
and combine the inherited with the born trait which in turn distinguishes them from others. In the
wors of Hitt et. al (2007), the notion was that those destined to be leaders are born with special
qualities that enable them to lead others rather than to be dominated. Scholarly, there has been no
particular leadership trait proven to be of best fit to promise effective leadership as at 2015 as
observed and identified by Robins (2015).

However, it has been observed that a combination of these qualities and traits will make an
effective leader.

2.2.2 Behavioral theory

In line with the studies carried out in Ohio State university in the late 1940s, leadership styles
were perceived to be in two dimensions theoretically and behaviorally. Initiating structure and
consideration. Initiating structures refers to “ the extent to which a leader is likely to define and
structure his or her role and those of employees in the search for goal attainment” whereas
initiating structure behaviors were essentially task behaviors, including such acts as organizing
work activities, consideration refers to a… “a type of leader behavior that describes the extent to
which a leader is sensitive to subordinates, respects their ideas and feelings, and establishes
mutual trust ” Hersey, et al (2001).

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Initiating structure is associate d with efficiency and effectiveness in task performance, while
consideration is normally considered to be correlated with job satisfaction and lower turnover.

2.2.3 Contingency Models of Leadership

i. Fiedler’s Leadership effectiveness Model

This is the most recognized theory of leadership. Fiedler (1967) leadership effectiveness model
brings into consideration the organizational variables that affect leadership, suggesting that the
“best” style of leadership will be dependent upon the variable factors in the leadership situation
including position power, task structure, and leader-member relations. the theory premise is that
the leader’s personal style is fixed, so amendments must be made in the situation to enable that
particular leader to become truly effective Robbins (2006). This theory has been the subject of
considerable controversy due to the ambiguity in situational variables; lack of clarity in the
meaning of LPC (Least Preferred Co-worker) score, and inconsistent validations. Another
criticism of the theory is that it fails to adequately explain what organisations should do when
there is a mismatch between the leader and the situation in the workplace Northouse (2001).
Instead of advocating that leaders be taught how to adapt their style to various situations as a
means of improving leadership in an organization this approach advocates that leaders engage in
situational engineering: changing situations to fit the leader Yukl (2006).

ii. Path-goal Theory

This model similar to the Fiedler’s contingency theory attempts to predict leadership
effectiveness in different situation. The model argues that leaders are effective because of their
positive impact on followers motivation, ability to perform, and job satisfaction . in addition, it is
the leaders job to assist his or her followers in attaining their goals and to provide the direction or
support needed to ensure that their goals are compatible with the overall objectives of the group
or organization. The path goal theory is based on the belief that individual’s motivation is
dependent upon the expectations that increased effort to achieve an improved level will be
successful, and that improved performance will be instrumental in obtaining positive rewards
and avoiding negative outcomes.

However, in contrast to Fiedlers view that a leader could not change his or her behavior, the
path-goal theory argues that leaders are flexible or need to be flexible. The path-goal theory

17
suggests four main types of leadership behavior that can be practiced by the same person, at
different times, and in varying situations. These are directive leadership, supportive leadership,
participative leadership, and achievement-oriented leadership. By choosing the appropriate style,
the leader can increase subordinates perceptions and motivation, and smooth the path to their
goal. Northouse (2001).

Other theories relevant to this work are the transactional and transformational theories. These
have been discussed in the conceptual review.

2.3 Empirical Review

Several studies have been carried out by several researchers on the relationship between
employees performance and leadership style as well as organizational behavior. Some of which
are reviewed below.

Siokwu (2103), carried out a research on the impact of leadership and organizational behavior
on employees productivity. a case study of Diamon bank plc, Enugu branch. The work adopted a
descreiptive design for its methodology, the study was carried out to effectively ascertain the
positive or negative effect of leadership style appraisal on the organizational behaviour of
management and employees. The researcher employed various methods and procedures to
achieve the objective of the research. The descriptive method was mostly adopted which survey
method extensively and describes the researchable situation. It also ascertains the properly
desired data. The findings also shows that these qualities are very much indispensable to growth
in the organization, positive relationship amongst all the members of the organization, the
behaviour of management and employees are very much affected by traits, skills, actions in
situation and full recognition of all employees in the organizational system. The present study
shows specially, that whatever the case may be, suggestions highlight that organizational
efficiency and growth in profit is a function of the preferred leadership style by management and
employees.

Omar et. al (2013) carried out a research work on the Impact of Leadership Behavior On
Organizational Commitment in Plantation Companies in Malaysia. This research was carried out
with the intention of examining the impact employees’ perceptions of their immediate
supervisors’ supportive and directive leadership behavior and different types of organizational

18
commitment in plantation companies in Malaysia. The study used a survey strategy “self-
administered questionnaire”, to collect the primary data. The sample of the targeted consists of
300 supervisors and employees from various plantation companies in Malaysia by using the non-
random sampling technique to participate in this study. The statistic results found that there are
significant strong relationship between the leadership behavior and the organizational
commitment. More importantly, there are significant impacts of the leadership behavior on
organizational commitment. In addition, supportive and directive leadership behaviors do play
important roles in determining the levels of employee’s commitment. Leaders should consider in
matching both leadership behaviors based on the situation of their subordinate. Thus, the paper
contributed to the existing pool of knowledge on the empirical impact of leadership behaviors on
organizational commitment. Different aspects of these variables were tested, so as to provide a
wider and more comprehensive understanding of the factors that affect organizations and
employees in plantation company’s societies in Malaysia.

Linjuan (2010) carried out a research on the impact of organizational leadership on public
relations effectiveness from an internal perspective. The work discovered and stated that
organizational behavior and leadership style impacts on public relations and effectiveness . The
results showed that transformational leadership positively influences employees‘ perception of
organizational reputation, not only directly but also indirectly, through empowering employees.
Transactional leadership represented by contingent reward behavior has a significant negative
direct effect on employees ‘perception of organizational reputation. Transformational leaders are
more likely to delegate power to employees and involve them in decision making than
transactional leaders. Employees who feel more empowered in terms of competence and control
tend to have a more favorable evaluation of organizational reputation.

CHAPTER THREE

Research methodology

This chapter deals with research methodology will be used to carry out the research. The chapter
is organized in six sub sections. In its first part there is a research design, then after it presented

19
subsequently about research approach, data type and source, target population and sampling
technique, method of data analysis and model specification.

3.1 Research design

Cooper et al. (2003) discussed that explanatory studies unlike descriptive studies, go beyond
observing and describing the condition and tries to explain the reasons of the phenomenon. Thus,
explanatory research design will be used in this research because the study identifies the impact
and effect of Leadership Skills and Its Impact on Organizational Control of Dashen banks which
is appropriate for the objective of the study.

3.2 Research approach

As noted in Creswell (2003), in an investigative study there are three familiar types of research
approaches to business and social research namely, quantitative, qualitative and mixed methods
approach. Though, each approach has its own strengths and limitations, Creswell (2003)
advocates that certain types of social research problems call for specific approaches. Hence, in
selecting an approach one should take in to account the nature of the research problem, the
personal experience of the researcher, and the audience for whom the report will be written.

Considering the research problem and objective along with the philosophy of the different
research approaches, the quantitative nature of the data collect, quantitative research approach is
found to be appropriate for this study.

3.3. Data type and source

To achieve the purposed objective of the study, both primary and secondary sources of data
collection were utilized. The quantitative-based primary data were collected using the
formulation of questionnaires that were distributed to numerous organizations' staff. Qualitative
data was collected through interviews.

3.4. Target population and sampling technique

3.4.1 Population
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The target population of this study will be on dashen bank s.c. the researcher will be use a more
feasible approach by selecting a small group from the population as a sample size; because
dashen Bank Bank has 440 branches all over the country as of June 30, 2021. Among all
157Branches are available in Addis Ababa till 30 th of June 2021. This study will cover all
dashen bank branchs in Addis ababa area which have a years’ experience from opening the
branch at the time of data collection on variables desired to investigate.

3.4.2sampling technique

To conduct this research in agood manner the researcher will be use purposive sampling
technique/judgmental sampling to select the representative sample. In the judgmental sampling
method, researchers select the samples based purely on the researcher’s knowledge and
credibility. In other words, researchers choose only those people who they deem fit to participate
in the research study.

3.3.3 SAMPLE SIZE

Out of the tota 178 branchs 31 Grade A branches, 69 Grade B branches and the remaing 78
Grade C branches. Dashen bank categorized all city branches into grades A - C based on
numbers of staff, customer flow and deposit amount. These categorization were also served as a
bases for selection of 8 grade A ,5 grade B and 3 grade C branches and Head office staffs
purposively/judmentaly from each classes, From those selected branches senior staffs including
Branch manager and Ass. Branch manager will be purposively selected this due to senior staffs
are believed to have enough knowledge about deposit mobilization practice of the bank.

3.4 METHODE OF DATA COLLECTION

To conduct this research in good manner the researcher will use primary and secondary data.
Primary or original data will collect by the researcher from the field personally for the purpose of
the research work. It will carry out mainly through the use of questionnaire to obtain original
data for the purpose of answering the research questions or problems. Secondary data will use to
ensure completeness of the research work. It involved the consultation and use of articles from
the newspapers, management’s reports and from the internet. The secondary data will be to
supplement the information and explanations which the source could not provide for the research

21
work. Secondary data from publications of Dashen bank (DB), National Bank of Ethiopia (NBE)
Central Statistics Authority (CSA). Additionally,about the primary data questionnaire and
interview questions will be to collect information from employees of the bank, who believed
their task is highly related to the study.

.3.5 METHODES OF DATA ANALYSIS

To achive the objective of this study the researcher will be use the frequency distribution output
to examine questionnaires and describe the outcome of using both qualitative and quantitative
data. The qualitative data analysis the researcher had examined the information from the
secondary sources of data by using descriptive analysis techniques to designate the result.
Accordingly, as to demonstrate the total deposit growth trend of Dashen Bank and the
assessment of each elements of deposit growth, the researcher has study the data with Microsoft
excel and SPSS, such as total deposits growth and total number of branch growth graph result
and its related factors are exhibited together with their real interpretation and likely suggestion
by researcher.

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