As the direct selling industry becomes more competitive, many direct selling firms are trying to find ways to succeed. The “distributor” or salesperson lies at the heart of the direct selling business. If there is no distributor, there is no revenue. In this industry, the distributors are independent from the company. Therefore, defining, measuring assessing distributor “style” becomes a critical issue. This paper investigates leadership style and its impact on performance in the direct selling industry. Specifically, this research focuses on the following questions: (1) What is the impact of “upline” (superior) leadership style on “downline” (follower) performance and work environment? and (2) Is there any relationship between leadership style and leader outcomes such as follower satisfaction, increased effort and effectiveness? In an empirical survey of 300 distributors in Thailand's direct selling industry, it was found that, contrary to conventional wisdom and prior studies, ‘transformational leadership' has no effect on follower performance while ‘transactional' leadership has a negative effect on follower performance. However, both types of leadership style have a positive impact on follower satisfaction, increased effort and effectiveness. Implications for leadership training and strategy in the direct selling industry are discussed.
[...] One-way ANOVA was used to explore the relationships between age, education background, work experience and follower performance Results Perhaps the most interesting finding was that both transformational and transactional leadership styles had no impact on downline (follower) performance. Hence, both H1 and H2 were supported. However, unlike the case of transformational leadership, the results show that transactional leadership actually had a negative impact on follower performance. On the other hand, the results show that both types of leadership styles had a positive impact on leader outcomes. Hence, H3 and H4 were supported. [...]
[...] The present study examines the impact of transactional-transformational leadership style on follower performance in the direct selling industry Research Model and Hypotheses In the direct selling industry, the distributor usually works in a team but is independent from his team members. The relationship between leader (upline) and follower (downline) in the team is very important. The upline acts like a quasi-leader. Most followers believe that they can be successful if they follow what their leaders do. Therefore, this research will investigate the impact of leadership style on follower performance in the direct selling industry. [...]
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[...] The finding that transformational leadership has no effect on follower performance and that transactional leadership has a negative effect on follower performance should be of concern to any direct selling management team. The direct selling business is unique: the salespeople/distributors are independent from their company, meaning that they will not have any corporate financial support and will have to rely on themselves for their performance. Therefore, motivation is more important than reward or punishment from the leader. It implies that if the leader exchanges something with the follower when the latter did well or worse, it can't inspire the follower to achieve the goal. [...]
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