1. 1
THE IDEA OF COMPLEXITY IN
MANAGEMENT
An empirical investigation of management from ‘above’
and management from ‘below’ in the invisible industry
in Denmark
MASTER THESIS BY SARA DOLMER KRISTENSEN
STUDENT ID: 20102994
DEPARTMENT OF POLITICAL SCIENCE, AARHUS UNIVERSITY
SUPERVISOR: CHRISTIAN BØTCHER JACOBSEN
FEBRUARY 2016
WORD COUNT: 34,973 (INCL. FIGURES AND GRAPHS)
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ABSTRACT
This thesis seeks to investigate the relationship between work engagement, transformational leadership and
complexity theory. The title “The Idea of Complexity in Management: An empirical investigation of
management from 'above' and management from 'below' in the invisible industry in Denmark” is inspired by
complexity theory and its statement that leadership is hard in an unpredictable world. Furthermore, the title is
inspired by my case, the utility industry, and the background interview with a managing director in the industry
who stated that the utility industry is invisible simply because it works without any problems. This thesis is also
an attempt to measure complexity theory quantitatively, which has never been done before. The study is
based on a survey undertaken in nine organisations within the utility industry, where the number of responses
is 268. My results indicate a positive relationship between work engagement and the two independent
variables transformational leadership and complexity theory. Surprisingly, the two management concepts are
not as excluding as expected, and they correlate positively with each other. This indicates a softening of the
whole top-down vs. bottom-up concept, where transformational leadership sets the framework in which
complexity theory operates. The findings are strengthened by the fact that the case is a least-likely case to find
high levels of complexity theory because the utility industry and the work in the industry is legislated from the
highest level possible, the Ministry of Environment and Food of Denmark - a top-down approach. The findings
lead to the discussion of the influence from the study on political science concepts, like Principal-Agent Theory.
In this case, the results lean towards a traditional Principal-Agent relationship where the agent possesses more
information than the principal. This information asymmetry makes it hard for the principal to control the
agent’s actions which are in the self-interest of the agent and not in the principal’s interest. Therefore, ex ante
mechanisms are relevant in this case. Another discussion is that of work engagement and Public Service
Motivation and the relationship between the two motivational concepts, cf. Bakker (2015). The generalisability
of this study is somewhat difficult due to the low number of responses. Therefore, it is advisable that future
studies have more respondents in order to say more about the relationship. Furthermore, the study would be
improved if the survey were to be repeated over time.
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Contents
Abstract ....................................................................................................................................................................2
1. Introduction..........................................................................................................................................................5
2. The Utility Industry as Case ..................................................................................................................................8
3. Theoretical Foundation ..................................................................................................................................... 11
3.1. Work Engagement...................................................................................................................................... 11
3.1.1. The Literature Surrounding Work Engagement .................................................................................. 12
3.1.2. The Influence from Schaufeli and Bakker............................................................................................ 16
3.2. Leadership vs. Management ...................................................................................................................... 18
3.3. Transformational Leadership ..................................................................................................................... 19
3.3.1. Defining Transformational Leadership................................................................................................ 19
3.3.2. Critique ................................................................................................................................................ 22
3.3.3. Definition of Transformational Leadership ......................................................................................... 24
3.4. Complexity Theory...................................................................................................................................... 25
3.4.1. Sources of Inspiration.......................................................................................................................... 25
3.4.2. What is Complexity Theory?................................................................................................................ 28
3.4.3. Placing Complexity Theory .................................................................................................................. 32
3.4.4. Complexity and the public sector........................................................................................................ 33
3.4.5. Critique ................................................................................................................................................ 34
3.5. Connecting the Dots................................................................................................................................... 35
4. Methodological Approach................................................................................................................................. 38
4.1. Case Selection............................................................................................................................................. 38
4.2. Research Design ......................................................................................................................................... 39
4.2.1. Limitations of My Study....................................................................................................................... 40
4.2.2. Data Collection .................................................................................................................................... 42
4.3. Measurements/Questionnaire................................................................................................................... 43
4.3.1. Correlation Analysis of My Variables................................................................................................... 47
4.3.2. Confirmatory Factor Analysis (CFA)..................................................................................................... 50
4.4. Assumptions for the Regressions in the Analysis....................................................................................... 52
5. Findings.............................................................................................................................................................. 53
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5.1. What Does the Data Say About My Theorised Relationships?................................................................... 53
5.2. Individual Level........................................................................................................................................... 54
5.2.1. Individual Variance .............................................................................................................................. 55
5.2.2. SEM Analysis........................................................................................................................................ 55
5.2.3. Linear Regression at Individual level ................................................................................................... 57
5.2.4. Robustness Test: Difference in Measurement Method ...................................................................... 60
5.2.5. Robustness Test: The Slope of High Values on Leadership ................................................................. 61
5.3. Organisational Level as a Robustness Test................................................................................................. 63
5.3.1. Variance Across Organisations ............................................................................................................ 64
5.3.2. Multilevel Analysis of the Relationship at Individual Level ................................................................. 67
5.3.3. Collective View of Leadership.............................................................................................................. 68
5.4. Performance............................................................................................................................................... 70
6. Discussion.......................................................................................................................................................... 72
6.1. The Results vs. Theory................................................................................................................................ 73
6.1.1. Concept Validity................................................................................................................................... 73
6.1.2. Correlations Validity ............................................................................................................................ 76
6.1.3. Limitations........................................................................................................................................... 79
6.2. Application outside the Utility Industry ..................................................................................................... 81
6.2.1. Complexity Theory and Transformational Leadership in Other Cases than the Utility Industry ........ 81
6.2.2. The Degree of Complexity in Denmark................................................................................................ 82
6.2.3. The Influence from my Study on Political Concepts............................................................................ 83
7. Conclusion ......................................................................................................................................................... 87
7.1. Future studies............................................................................................................................................. 88
8. Reference List .................................................................................................................................................... 90
9. Appendix: Spørgeskema/Questionnaire............................................................................................................ 95
Arbejdsmotivation/Work Engagement (UWES 9-item scale)........................................................................ 95
Transformationsledelse/Transformational Leadership................................................................................. 97
Interaktioner - arbejdet i virksomheden/Interactions - the work within the organisation........................... 98
Selvledelse/Self-Management....................................................................................................................... 99
Baggrundsspørgsmål/Background questions .............................................................................................. 100
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1. INTRODUCTION
The increasing complexity in today’s society is becoming a challenge to the management in organisations.
Complexity in the world today arises from different places. Nørgaard & Lykke (2014) note that complexity
arises from components like IT, organisation, processes and projects, and complexity can be both good and
bad. Good complexity may lead to value creation whereas bad complexity may lead to the opposite (Nørgaard
& Lykke, 2014: 41, 62). The increasing complexity arises as different challenges that the executive has to take
into account. This creates a paradox of predictability and unpredictability. On the one hand, decisions about
the future of the organisation must be made in a state of uncertainty. However, on the other hand, it is hard to
know what will happen in the future. An example of this is the financial crisis in 2008. Probably not many saw
that one coming.
”We talk about organizations in abstract as systems, as actually existing ‘things’ subject to impersonal forces,
for example, ‘drivers‘ of change. There is a tendency to do that even when we posit that they are social
constructions” (Ralph D. Stacey in Solsø & Thorup, 2015: 16)
Ralph D. Stacey’s statement illustrates the common view of what an organisation is. Organisations are more
than just systems - organisations are ever-changing organisms. The same may be said about organisational
theories - from Weber's bureaucratic hierarchy to theories about transformational leadership and complexity
theory. As citizens we probably often take organisations for granted – even though organisations are
represented in almost every part of our lives. Organisations take care of things so that we need not worry
about them, e.g. waste water (Douma & Schreuder, 2002: 36). Bovens (1998) also note the fact that our lives
are surrounded by organisations, we live in the “age of organisations”. The definition of organisation is broad,
which means that organisations like hospitals, municipalities, public utility organisations, sports clubs and
voluntary organisations fall under this definition (Bovens, 1998: 10).
On the other hand, leadership has many forms and variations. Max Weber was one of the first to reflect on
leadership. In Weberian times, leadership was easy or at least somewhat simpler. The leader only had to make
sure that the employees followed the rules of the organisation. The bureaucratic form of organisation had a
clear hierarchy and was based on meritocracy. The organisation is a fixed jurisdictional area of interest (Rainey,
2010: 29). However, today the rules are different. Many factors must be taken into account when deciding on
the future for the organisation. This is why many organisations have a strategy to guide them. Since Weber
wrote about the bureaucracy, many theories about organisation have arisen. Some of them take into account
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how exogenous factors can influence an organisation in relation to uncertainty of the future. The idea of a
leader in traditional terms as someone who “just” gives orders to the employees has disappeared.
Furthermore, there is an ongoing debate about the difference between leaders and managers, and which term
is the right one to use.
Bakker (2011) asks the question: Does the managers fulfil their followers’ basic psychological needs and set the
stage for their follower’s engagement by giving them the right mix of job resources and job demands? In recent
years, much research about work engagement has been published but not about the leader’s influence on
employees’ work engagement (Bakker, 2011: 268). The leader’s influence on employee engagement can both
be negative and positive. What is the connection between management and engagement? This is what I want
to explore further in this thesis.
Two theories about management/leadership with different views will be tested them against each other. On
the one hand, there is the theory about transformational leadership. The main idea is all employees follow a
shared vision for the organisation, which originates from the leader of the organisation. On the other hand,
there is complexity theory. The main idea is that there is more to leadership than making strategies. Strategies
arise from the interactions with/between the employees. The idea of self-organisation is prominent. I will test
the two theories in relation to work engagement. Work engagement is the engagement you put into your work
– how involved you are, your drive etc. Engagement differs from other types of work-related components, e.g.
job satisfaction, because the definition of engagement has an element of energy (cf. Bakker, 2011: 265).
I got the idea about testing complexity theory at a book reception for a Danish book by Solsø & Thorup (2015)
about Ralph D. Stacey and his concept of complexity theory. At this book reception, it was said that there was a
need for complexity theory because of increasing complexity in management, and Stacey and his colleagues
were often invited to Denmark to help dealing with the increasing complexity. Studies of complexity theory in
management have increased in number since the 1990’s, making Stacey one of many theorists writing about
this subject. Much research on complexity theory is mainly based on qualitative research methods, which is
important for understanding of components in complexity theory. However, now the time has come for a more
general understanding of the concept complexity theory. I hope to provide some more general aspects of
complexity theory by examining it quantitatively.
My motivation for this thesis is threefold. First, my motivation comes from my student job and former
internship at Ramboll Survey Consulting (part of Ramboll Management Consulting). Here, I was involved in a
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number of employee satisfaction surveys where I noticed which factors were important for employee
satisfaction. Second and fostered by the first point, my motivation was strengthened by a class about
leadership, motivation and performance I attended during the spring semester 2015. This lead to an exam
paper about engagement and how transformational leadership affects engagement. Third and lastly, my
motivation for this thesis arose when I read an article in a member magazine published by DJØF featuring Ralph
D. Stacey who claims that modern leadership is an illusion, a utopia so to say1
. All combined, it triggered my
interest in figuring out what influences engagement or, more precisely, work engagement. Furthermore,
complexity theory has in general not been investigated much quantitatively, most complexity theory studies
have been qualitative. Complexity theory takes into account different theories from other authors and
combines them. Many articles about complexity theory, management and the public administration often just
describe why complexity theory in the context of management and public administration is preferable to other
theories. To the best of my knowledge, no quantitative study has been conducted, at least not in Denmark.
As mentioned above, many people perceive management of today as something complex. However, is
management as complex as perceived? Complexity theorists would agree with that statement whereas
transformational leadership theorists would probably not. This thesis attempts to investigate whether
complexity theory has its relevance in a very top-down industry. The idea is to investigate whether complexity
theory with self-organisations (management from ‘below’) or transformational leadership with the visionary
leader (management from ‘above’) has the largest influence in relation to work engagement.
My main research question is:
“Which type of management has the largest influence on engagement? Management from ‘below’ or
Management from ’above’?”
Statistically speaking, I will look at which management type predicts work engagement the best. In
organisations, it is important to know which type of management contributes positively to the organisation in
order to increase the employee engagement, which in the end will increase the organisational performance.
Bakker (2015) notes that highly engaged employees are more likely to perform better than less engaged
1
http://www.djoefbladet.dk/nyheder/2015/3/moderne-ledelse-er-en-illusion.aspx (Danish, 14/8 2015)
8. 8
employees (Bakker, 2015: 724). Organisational performance, or extra role performance, will also be analysed in
relation to engagement and management, as a side project.
The idea behind the subtitle is that management may come from different directions. Management from
‘above’ may be viewed as the leader giving the orders, in this case, the leadership/management creates a
vision/strategy that the employees have to follow. This view will be represented by transformational
leadership. Transformational leadership bases leadership on the characteristics of the leader and how these
characteristics may influence the followers. Management from ‘below’ may be viewed as the employees self-
managing themselves, therefore leadership is at a minimum. It is all about the interactions between people in
the organisation. This view will be represented by complexity theory.
I will analyse the utility industry in Denmark. The industry is often overlooked in Denmark, an invisible industry
so to speak. I spoke with a managing director in the utility industry who described the industry as an “invisible”
industry in Denmark that is being taken for granted. As long as they do their job, no one will take notice. It is
also an industry with a minimum of scandals. It just works.
2. THE UTILITY INDUSTRY AS CASE
The utility industry is an interesting case. First, it is a relatively unexamined area within the Danish public
sector. Normally, in political science, the social area (schools, day care, elder care etc.) is the most common
subject of research. Second, this industry has been under a lot of pressure and development ever since the
passing of the Water Sector Act (Danish: Vandsektorloven). Third, it is probably the most top-down industry in
Denmark, simply because their work and tasks are regulated by law.
Originally, the utility industry was a part of the municipalities because water, heat production, etc., was a task
to be handled locally. Today, as mentioned, it is an industry regulated by the legislation. Christensen,
Christiansen & Ibsen (CCI) (2011) note that the utility organisations are, in theory, small, local natural
monopolies with decreasing marginal costs. The utility organisations are non-profit companies, which means
that they cannot generate profit nor can they receive subsidies from the municipality. The separation of
municipality and utility industry means no financial strain on the municipal budget. It also means that
politicians do not pay much attention to the utility industry (CCI, 2011: 193-194).
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The Water Sector Act was introduced in 2009 and it separated all activities involving water and waste water
from the municipalities. In the new construction, the organisations involved in these activities became joint-
stock companies owned by the town council.
The purpose of the Act is to “ensure water and waste water supply of high health-related and environmental
quality, taking into consideration security of supply and nature, and managed in an effective way that is
transparent for the consumers”2
(own translation). Furthermore, the Act includes a maximum charge for the
organisations, based on former charges, development as well as effectiveness3
. To ensure this maximum
charge, every organisation has to report their charges to the joint benchmark (more about it below) in order to
measure the effectiveness of the organisations.
According to Søren Linding, a financial commentator in the Danish newspaper Jyllands-Posten, it is remarkable
that the municipal utility organisations have been under the radar for so long. They do not have any
competition and should apply to the same rules as the state companies. The municipal utility organisations are
in a grey area when it comes to sector form. They conduct a number of societal tasks, while operating under
the same terms as private companies. A reform of the utility organisations is needed. The utility organisations
must work after the principles of good business and focus on value creation within the setting of the
legislation. 4
I did a background interview with a managing director from the Danish utility industry in order to get a better
understanding of what is probably the most invisible industry in Denmark. According to the managing director,
the structure of the organisation looks like this:
2
https://www.retsinformation.dk/Forms/R0710.aspx?id=125346 §1 (23/2 2015)
3
Ibid.: §6
4
http://finans.dk/protected/live/opinion/ECE8205854/Kommunale-selskaber-skal-ud-af-Stenalderen/1?ctxref=ext (27/11
2015)
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Figure 1 Based on the interview with the managing director
According to my background interview, the board of directors creates the strategies and visions for the
organisation along with some input from the managing director. The managing director takes care of the
business and makes sure that all activities are in accordance with the legislation. The owner does not have
much influence besides giving input to how to run the business. The owner is the town council, in some cases
more than one town council. This means that, as the owner, the town council has a dual role: owner and
authority. However, the above structure may not apply to all utility organisations.
Utility organisations are a hybrid mix of private and public organisation. Rainey (2010) notes that private and
public organisations differ with regard to background factors such as funding and ownership, otherwise
organisations have the same structure. Generally, organisations may be owned by the government or private
owners and their funding based on private or governmental sources. In this case, the Danish utility
organisations are owned by town councils (government) and privately funded because their revenue derives
from the citizens living in the area of the utility organisation. Another dimension to take into account is the
dimension of authority. An organisation can either have economic authority or political authority, measured on
a continuous scale. Economic authority is when executives and owners gain control over the organisation’s
finances. The degree of economic authority is lessened, the more control an external government gain over the
organisation’s finances. Political authority, on the other hand, is given by elements of the political system, e.g.
municipalities. Political authority makes it possible for organisations to act and make lasting decisions based on
the mentioned elements. The combination of economic authority and political authority makes up the
organisation’s level of publicness (Rainey, 2010: 74-79). Danish utility organisations have some of both
authorities. On the one hand, the executives and owners of a utility organisation has full control over the
finances. On the other hand, the utility organisations are under a lot of governmental control – as all
Town Council(s)
(Owner)
Board of
Directors
Director of the
organisation
Department 1
Department 2
Department 3
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organisations have to report how much they charge for water. The price of water is benchmarked with the
other organisations, and each organisation can compare their performance with other organisations.
Furthermore, utility organisations are able to make their own decisions concerning investments. The Danish
utility organisations are a mix of government corporation and state-owned enterprise because they are both
controlled by the polyarchy through legislation and by markets through the above-mentioned benchmark
(ibid.). From a political science view and accordingly to Wilson’s (1989) typology, the utility organisations are
production agencies. In a production agency, the principal does not have any control problem because the
whole process is transparent (Wilson, 1989: 159-163).
According to the background interview, the Water Sector Act meant a major reorganisation because the water
and waste water organisations were part of the municipality before the commencement of the act.
Consequently, organisation and budget needed rethinking.
The utility industry is an interesting case because it has undergone changes, and still a subject to constant
pressure. The managing director note that consolidations were one of the subjects discussed in the industry.
How large should the water organisations be in order to be effective? Furthermore, the Water Sector Act is
under revision, this means that sometime in spring 2016 there will be a new revised Water Sector Act.
The background interview has partly been a source of inspiration for the title. The managing director viewed
the industry as people doing their jobs and as long as they did they were invisible. When there are no
problems, then no one gives it a second thought. However, it is a problem to be invisible if you want to be
visible.
3. THEORETICAL FOUNDATION
In the following, I will introduce the theoretical foundation for my analysis and touch upon the concepts of
work engagement, transformational leadership and complexity theory. Each section will have a literature
review of each concept and the definition used in this thesis. This section closes with my hypotheses for the
analysis. The theoretical foundation will be the basis for my analysis in section 5.
3.1. WORK ENGAGEMENT
Engagement says something about how involved you are in a certain context, e.g. work, how dedicated you are
in a certain situation. Engagement also has some influential underlying factors, e.g. Job Demands and Job
Resources (Schaufeli & Bakker, 2004). Job demands are the requirements of the job, whereas the Job
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Resources are your own toolbox. There has been some discussion of work engagement: Is it a personality trait
or is it behaviour? The definition from Schaufeli & Bakker leans towards a personality trait on the edge of being
behavioural.
In the following, I will start with a review of the literature about work engagement and end with the
conceptualisation of work engagement by Schaufeli and Bakker.
3.1.1. THE LITERATURE SURROUNDING WORK ENGAGEMENT
One of the first to write about work engagement was William A. Kahn who in 1990 wrote the article
Psychological Conditions of Personal Engagement and Disengagement at Work. Kahn (1990) did not write
specifically about work engagement, his conceptualisation is similar to the common idea of work engagement.
Kahn felt there was a need for a more in-depth psychological explanation of what it meant to be present at
work – quite opposite the broader and the more general explanations offered by contemporary literature.
Kahn (1990) identified characteristics about personal engagement and disengagement through observations
and 32 in-depth interviews. Kahn studied two groups varying in age, seniority etc. They were, however, similar
with regard to a number of background factors, e.g. socioeconomic background. All participants came from
either the lower middle class or the upper middle class in the US, except for one Brit. The one group was a
group of camp counsellors and the other a group of employees from an architecture firm (Kahn, 1990: 693,
696-697). Kahn’s choice of cases may give rise to problems because the same result would perhaps not apply if
tested on people from a poorer or a richer class. However, the difference between poor and rich (or
socioeconomic classes) is relatively in Denmark, opposite the US, therefore, socioeconomic class does not have
much influence in my case (Stubager, 2003).
Personal engagement is a condition where an employee can express his/her preferred self. When employees
are personally engaged, they bring themselves into the tasks, get fully involved in the tasks – whether working
alone or in teams (Kahn, 1990: 700). In other words, where the employee can see him-/herself in the given role
and give him-/herself fully to the work role. From his analysis, Kahn derives three psychological factors that all
must be present in order for the employee to be personally engaged: psychological meaningfulness, safety and
availability. Psychological meaningfulness is the sense of getting something out of the engagement.
Psychological safety is being able to be oneself without worrying about negative outcomes. Psychological
availability is the sense of having the necessary resources to invest in the engagement. According to Kahn, they
all come into play every time the employee/person have to decide whether to be personally engaged or not in
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a given situation/task. Furthermore, the personal engagement varies from situation to situation depending on
the employee’s perception of benefits or according to the resources the employee perceives to have available
(ibid.: 703). All of these factors have underlying factors that are important for the engagement. The
management style and process, a part of the psychological safety factor, is the most relevant for this thesis.
The supportive, resilient and clarifying manager is a contributing factor in order to increase the employee’s
psychological safety, simply because the leader translates the demands from above and provides the support
that the employees may need (ibid.: 711).
Related to Kahn’s (1990) psychological factors is the Job Characteristics (JC) model by Hackman & Oldham
(1976). Just like Kahn, Hackman & Oldham point to three psychological factors/states, which is the core of the
JC model; “experienced meaningfulness of the work, experienced responsibility for the outcomes of the work
and knowledge of the results of the work activities” (Hackman & Oldham, 1976: 255). The experienced
meaningfulness is similar to Kahn’s psychological meaningfulness. They are both about feeling what you do is
meaningful. The two other psychological states constructed by Hackman & Oldham are not in the same way
comparable to the psychological factors put forward by Kahn (see figure 2). The two other psychological states
are about the sense of responsibility and the sense of continuously knowing how he/she is performing at work
(ibid.: 256-257). Furthermore, the job characteristic model also includes some underlying job dimensions: skill
variety, task identity, task significance, autonomy and feedback. The first three are related to meaningfulness,
autonomy is related to responsibility and feedback is related to knowledge of the results (ibid.: fig.1). All job
dimensions combined make up the Motivating Potential Score (MPS), the employee’s internal motivation (ibid.:
258). In a quantitative study, Hackman & Oldham find that the psychological states Experienced
Meaningfulness and Knowledge of Results can be predicted by the job dimensions related to them; the job
dimensions can be affected by each other, however. Generally, the psychological states have a mediating effect
on the relationship between the job dimensions and the outcomes, e.g. internal motivation. The job
dimensions themselves have positive correlations with the outcomes. As the authors expected, the MPS had a
strong relationship with the outcomes (ibid.: 263-264, 269).
However, the model is not the complete solution. In their book from 1980, Work Redesign, Hackman & Oldham
discuss the JC model as it appears in the book and in their article from 1976. The model is not without
concerns. First, the effects are not as expected. Second, the concept of feedback is flawed due to the fact that
the concept of feedback can be understood differently. (Hackman & Oldham, 1980: 95-97). Even though there
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are some implications to the JC model, it still provides some insight into which underlying factors can be in the
play when it comes to work engagement.
Figure 2 Comparison of the antecedents for work engagement based on Kahn (1990) and Hackman & Oldham (1976)
One distinct difference between the antecedents in Kahn (1990) and Hackman & Oldham (1976) is that while
Kahn focuses on the employee’s behaviour, Hackman & Oldham focus on the job and the requirements that
come with the job. However, Kahn as well as Hackman & Oldham give some insights into what causes work
engagement.
A newer concept of work engagement derives from Macey & Schneider (2008). They note that, in academia,
work engagement is a relatively new concept whereas HR consulting firms have used engagement for years to
tell organisations how to create it and enhance it. Their reasoning behind their article is the many definitions of
engagement, and the common thing about the definitions, desirability of engagement and the involvement of
commitment, energy, passion etc. (Macey & Schneider, 2008: 3-4). They derive three independent types of
engagement: trait engagement (the employee’s personality), state engagement (the employee’s feelings), and
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behavioural engagement (the extra effort the employee puts into the job) (ibid.: fig.1). They differ on whether
these are an outcome or an independent variable. Macey & Schneider (2008) note that the most common type
of engagement is the state engagement, which many researchers agree has a strong appealing tone.
Components are e.g. organisational commitment, Positive Affectivity (PA) and self-involvement (ibid.: 14).
Fisher (2010) notes that engagement may be part of organisational commitment. Furthermore, in organisations
with high performance work practices (high involvement and high commitment approaches) the
motivation/engagement is high because the employees have the opportunity to fulfil their psychological needs,
e.g. autonomy, one of the job characteristics cf. Hackman & Oldham (1976). The high performance work
practices seem to enhance the employees’ engagement, commitment and satisfaction (Fisher, 2010: 387, 394).
PA is described as e.g. mood states, a state of mind between activation and pleasantness. One example of
studies with PA is the work by Schaufeli et al (further explanation below). PA can also be seen as a part of trait
engagement, however, as the definition of an engaged person. Self-involvement deals with feelings about the
self: self-esteem, self-identity, and self-efficacy. It deals with how much of yourself you put into the work, this
is in line with the work by Kahn (1990). Macey & Schneider (2008) state that behavioural engagement and state
engagement go hand in hand (Macey & Schneider, 2008: 11-12, 19, 24). In relation to leadership, if there is
alignment between the organisational goals and the individual goals, the work engagement will be high (ibid.:
23).
Macey & Schneider’s (2008) arguments have been a subject of criticism. Saks (2008) criticizes Macey &
Schneider (2008) for defining engagement imprecisely and for using a construct of other definitions, which is
problematic for multiple reasons. First, academia has different definitions of engagement. It is all about
employees doing what they are supposed to do. Second, Saks (2008) notes that adaptive discretionary
behaviour is highly probable an outcome of engagement rather than a part of engagement. Saks also criticizes
Macey & Schneider (2008) for the argument that academia has been slow in adapting the engagement
concept. Although only few empirical studies had been conducted when the article was published (up to five
years before the article), Saks points out that many studies had been measuring, developing and testing the
engagement concept, e.g. Kahn (1990) and Schaufeli et al (2002). Therefore, Macey & Schneider’s claim that
the concept of engagement be unclear is not true. Instead, Macey & Schneider contribute to confusion about
the term of work engagement (Saks, 2008).
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In the literature, there is not much critique of work engagement. One critic is John Purcell (2014), who points
out that the problem with work engagement as a term used in studies and HR-firm practices is that the context
is often forgotten. The engaged employees have many positive attributes, they are happier, healthier, create
their job, and engage others. The problem is, however, that the engaged employee is a rare breed, which is
why Purcell wonders about the great devotion towards engagement when it is unobtainable for most of the
employees in the organisation. The actively disengaged employees will undermine their co-workers’
accomplishments and display their unhappiness. This will give rise to conflicts in the work environment
(Purcell, 2014: 241-243).
3.1.2. THE INFLUENCE FROM SCHAUFELI AND BAKKER
Two of the most influential researchers in the work engagement literature are Arnold B. Bakker and Wilmar B.
Schaufeli; they are authors of two of the most commonly used papers on work engagement: The Measurement
of Engagement and Burnout: A Two Sample Confirmatory Factor Analytic Approach (Schaufeli et al, 2002) and
Job Demands, Job Resources, and Their Relationship with Burnout and Engagement: A Multi-Sample Study
(Schaufeli & Bakker, 2004).
Unlike Kahn (1990), but like Hackman & Oldham (1976), both papers test work engagement quantitatively. The
method used both papers is the SEM analysis, a method to determine whether your model is correct (more
about the method in section 4). Schaufeli et al (2002) find a negative relation between the Engagement and the
Burnout scale, but they also find that the scales correlate positively within the scale (within engagement or
burnout). Furthermore, they find that students tend to have higher levels of burnout and lower levels of
engagement except on one engagement dimension than the employees in their data (Schaufeli et al, 2002: 79-
81). Schaufeli & Bakker (2004) find that engagement and burnout load on more than one underlying
dimension. Furthermore, they find the core components of engagement and burnout, – however, the
correlations and factor loadings have a moderate size (Schaufeli & Bakker, 2004: 305).
Schaufeli et al (2002) challenges the idea that engagement is the opposite of burnout in a continuum, as put
forward by Maslach & Leiter in 1997. However, Schaufeli et al do not share this idea as, in their opinion,
engagement and burnout are two different concepts and cannot be measured on the same scale. In their 2001
paper, Schaufeli & Bakker found two underlying dimensions of work engagement, vigor and dedication,
through a theoretical analysis of activation and identification. The theoretical analysis examined activation,
ranging from exhaustion to vigor, and identification, ranging from cynicism to dedication. Work engagement
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has high scores on activation and identification, meaning that work engagement has the underlying factors,
vigor and dedication. Burnout has low scores on activation and identification, meaning that the underlying
factors of burnout are exhaustion and cynicism. A third underlying dimension of work engagement, absorption,
has derived from 30 in-depth interviews by Schaufeli et al in 2001. Vigor is identified as having high levels of
energy and mental resilience at work, being persistent and willing to do the work. Dedication is being deeply
involved in the work at hand, while feeling significant, enthusiastic, inspired and challenged. Absorption is
being very concentrated and involved in one’s work, getting into a flow where time flies by. Dedication and
absorption may sound similar because they both includes involvement. However, the difference is the sense of
time. Absorption is forgetting everything about time, whereas dedication is not forgetting time. Therefore,
work engagement is defined as ”a positive, fulfilling, work-related state of mind that is characterized by vigor,
dedication and absorption. Rather than a momentary and specific state, engagement refers to a more
persistent and pervasive affective-cognitive state that is not focused on any particular object, event, individual
or behavior.” (Schaufeli et al, 2002: 73-75). In short, work engagement is the part of yourself you put into your
work, the driving force for working. This definition of work engagement leans towards being behavioural; it
focuses on personality traits, however. Schaufeli et al (2002) created a scale for work engagement called
Utrecht Work Engagement Scale (UWES) in order to measure work engagement properly. The engagement
definition from Schaufeli et al (2002) will be used in this thesis as it captures a good combination of
involvement and emotions towards work and because it involves more than one type of motivation.
Schaufeli & Bakker (2004) is based on Schaufeli et al (2002) and adds job demands and job resources to the
model. Both concepts are physical, psychological, social or organisational aspects of the jobs. Job demands are
defined as the requirements of the job (the tasks that need to be done), whereas job resources are one’s own
tools for dealing with the stress that the job demands give, it helps to obtain work goals and stimulates
personal growth and development at work. On this basis, the authors created the Job Demand-Resources (JD-
R) model. The model includes two processes: an energetic and a motivational process. The energetic process is
closely related to job demands and burnout. When meeting high demands, the employee either has to lower
the performance level, that will cost the employee nothing, or maintain the current performance, which will
have extra costs for the employee and lead to burnout. The motivational model is the reverse, where the job
resources are linked to work engagement, either by having an intrinsic role (help foster the employee’s
development and growth) or an extrinsic role (achieving work goals) (Schaufeli & Bakker, 2004: 296-298). In
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line with the JC model, this fit rather well. As mentioned before, there are five job dimensions, all having
influence on the internal motivation, which is related to job resources, following Schaufeli & Bakker (2004).
Below I will try to differentiate between the meaning of leadership and management.
3.2. LEADERSHIP VS. MANAGEMENT
Leadership can be many things and mean different things to different people. Even though they may sound
alike, they are not. Management vs. leadership has been discussed at length, and in this section the discussion
will be briefly mentioned.
The leadership tradition focuses on the leader as the chief executive officer of the organisation and as a central
person within the organisation. Examples of leadership theorists are Gary J. Miller and Hal G. Rainey. Miller
(1992) writes that a leader is the one conveying the organisation’s goals and vision to the employees and
building trust. (Miller, 1992: 223-224). Transformational leadership is one example (more about the theory in
section 3.3.). Rainey (2010) defines organisation on the basis of the leader. Organisations can be defined as a
group of people working together to achieve a goal by using the resources provided by the environment. The
resources are transformed by accomplishing tasks and the application of technology in order to be effective
and perform. A leader takes charge and develops strategies the organisation can follow (Rainey, 2010: 20).
The leadership tradition has a very positive view of the leader. However, the tradition does not take other
everyday tasks into the equation. An example of the former is daily practical organisation (management).
The management tradition, on the other hand, focuses on the manager who handles the daily practical
organising within the organisation. The focus is on the daily challenges within the organisation. Complexity
theory is one example. In complexity theory, the manager is a part of the internal interactions in the
organisation.
The two theories in this thesis are each other’s counterparts in relation to management. Transformational
leadership focuses on the leader and the associated characteristics of the leader (cf. Bass 1990), whereas
complexity theory focuses on interactions in the organisation. Transformational leadership has been criticized
for not having a clear explanation of how to set the employees free and the relationship between leader and
employee. Complexity theory assumes that the employees are free because of the self-organisation within the
organisation, and the relationship between the manager and employees emerges in the self-organising
interactions. In section 3, the terms of leadership/management will be used in accordance with the theories.
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However, when I compare the two theories or write about it in more general terms, I will use ‘executive’ as a
collective name for leader/manager in order to avoid confusion.
In the following sections, I will further explore the theory of transformational leadership and the complexity
theory.
3.3. TRANSFORMATIONAL LEADERSHIP
Transformational leadership is a classical theory about leadership, which focuses on the leader and the
associated characteristics of the leader. Wright et al (2012) note that over the past 30 years the theory about
transformational leadership has become a prominent theory on organisational behaviour (Wright et al, 2012:
207). The transformational leader leads through a vision and unifies the employees in order to achieve the
organisational goals (Bass, 1990: 21). Transformational leadership is often analysed and compared to
transactional leadership, which is based on the quid pro quo principle – where you do something and get
something in return, e.g. work for a wage (Bass & Riggio, 2014: 103-104). One example is Bass (1990), and this
will be further explored in the section below.
In the following, I will touch upon the literature surrounding transformational leadership and the critique of
transformational leadership. I will end this section with the definition of transformational leadership used in
this thesis.
3.3.1. DEFINING TRANSFORMATIONAL LEADERSHIP
One of the founding fathers of transformational leadership is James MacGregor Burns. Burns (1979) notes that
two basic types of leaders exist, the transactional and the transforming leader, which he illustrates by using
famous leaders and their leader characteristics as examples. The transforming leader evolves and recognizes
the potential of the employee. Furthermore, the transforming leader elevates and stimulates the
followers/employees (Burns, 1979: 4). According to Burns (1979), Weber concluded that societies go through a
cycle of three “pure” types of leaders: the charismatic, the rational-legal, and the traditional leader. The society
starts with the charismatic leader whose followers routinize the ideas, which change the leader into a rational-
legal leader. Over time, the system will evolve into a traditionalist society and the need for new charismatic
leadership will arise. However, Weber is not clear as to whether charisma is a part of the leader or whether it
depends on the followers’ perception. Burns (1979) notes that transforming leadership is shaping and elevating
the motives, values and goals of the employees (ibid.: 243, 425).
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Following Burns’ (1979) example, Bass (1990) notes that two factors of modern leadership were found in a
study of management shift. On the one hand, the leader must show consideration for the employees in order
to satisfy the skilled employees. On the other hand, the leader must organise and initiate work with focus on
accomplishment of the tasks (Bass, 1990: 20). Transformational leadership – or in Bass’ words superior
leadership performance – occurs when the leader elevates and broadens the interest of their employees while
generating acceptance and awareness of the group’s vision and as well encouraging employees to selflessly
look beyond themselves and do what is good for the group. Bass (1990) also mentions the characteristics of the
transformational leader (which will be elaborated below). Bass illustrates his point by using data consisting of
228 employees of 58 managers in a large engineering firm. The managers are ranked by their leadership scores
based on the Multifactor Leadership Questionnaire (MLQ) which includes descriptions from employees and
colleagues. The data show that 72-84% of the “four star” transformational leaders had employees who
indicated that they did an extra effort at work – as opposed to 22-24% of the “one star” transformational
leaders whose employees did an extra effort (ibid.: 21-23).
Bernard M. Bass & Ronald Riggio (2014) build upon Bass (1990) and describe different elements of
transformational leadership, and note that transformational leadership is in some ways an expansion of
transactional leadership because transformational leadership encourages and inspires its followers whereas
transactional leadership is based on transactions between leaders and employees (Bass & Riggio, 2014: 4). The
authors explain the MLQ measurement, often used to measure leadership. The measurement has been revised
and it measures nine characteristics of the leader with four items per characteristic. The measurement also
includes some transactional characteristics. This follows the idea of transformational leadership as an
extension of transactional leadership (ibid.: 21). The characteristics of the transformational leader are similar to
the ones in Bass (1990), however, Bass & Riggio (2014) changed Charisma and Inspiration into Idealised
Influence and Inspirational Motivation. Bass & Riggio (2014) offer a more detailed description of the four
characteristics of the transformational leadership than Bass (1990) does. Intellectual Stimulation is the way
that the leader encourages and coaches the employees to seek new and innovative ways to do their work
without criticism from the leader. Individual Consideration follows in the footsteps of Intellectual Stimulation
because just like the latter Individual Consideration is about the leader being a coach for the employees and
focusing on the needs of each employee (Bass & Riggio, 2014: 7). Intellectual Stimulation and Individual
Consideration overlap because both leader characteristics empower the employees (ibid.: ch. 13). Idealized
Influence is characterised by being the behaviour of the transformational leader, which makes the leader a role
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model for the employees. The employees want to model themselves on the leader because they identify with
the leader. Furthermore, this characteristic gives the leader the feeling of respect, admiration and trust. This
characteristic is divided into two in the MLQ because one side of Idealized Influence is attributed charisma – in
other words a characteristic relating to the attributes of the leader – and the other side of Idealized Influence is
the leader’s behaviour. The last characteristic, Inspirational Motivation, is based on the transformational leader
who provides meaning for and challenges the employees in their work in order to motivate and inspire them.
The leader involves the employees by creating goals, sharing the organisational vision and communicating the
expectations to the employees (ibid.: 6). Bass & Riggio (2014) note that leadership today, including
transformational leadership, must be based on coaching, empowering and supporting employees. This also
applies to today’s employees, who often are knowledge workers and specialists in a specific field – meaning
that the employees know more about a subject than the leader (Bass & Riggio, 2014: 225). Transformational
leadership has some similarities with Principal-Agent Theory (PAT), where the principal has the agent to do
their bidding because the agent has more information about the process (Miller, 2005: 204).
Bass & Riggio (2014) note that transformational leadership is an effective type of leadership during a crisis
because the transformational leader is able to rise above the needs of his/her followers, keeps his/her head
cool, and does not make hasty decisions. During crisis, the transformational leader is able find the right
solution because of the transformational leader’s ability to plan ahead of time and prepare the organisation for
potential crises (Bass & Riggio, 2014: 79). Organisational culture/structure has an important influence on the
leader within the organisation. The organisational culture is often based on the founder’s idea of good
leadership, values and assumptions. Values and assumptions can both be a help or a hindrance to efforts at
changing the organisation when there is a need for change due to exogenous or endogenous factors (ibid.:
100). Most organisational cultures are a mix of transformational and transactional modes, mainly
transformational mode with some transactional factors. Transactional mode is a trade-off between employee
work effort and rewards plus avoiding disciplinary cases, whereas the transformational mode focuses on being
a family and having long-term commitments (ibid.: 103-104). Wright & Pandey (2009) note that a common
theme among transformational leadership and organisational structures is that the employees must have a
certain amount of flexibility to do their job. The flexibility increases the employees’ intrinsic motivation (Wright
& Pandey, 2009: 77).
However, transformational leadership is not the solution to everything. When the organisation is stable, there
is more need for day-to-day leadership. In the everyday life, management-by-expectation (a part of
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transactional leadership) can be effective because the leader can take corrective action if needed.
Transformational leadership is only effective during troubles in the environment surrounding the organisation.
In order for transformational leadership to work, it must be implemented at all levels. The good
transformational leader is present when it comes to the employees. All of the previously mentioned
characteristics of the transformational leader come into play in relation with employees. However, if the leader
is tied up with tasks and problems not relating to the employees, then the quality of transformational
leadership will be low (Bass & Riggio, 2014: 136-137).
Moynihan et al (2013) note that there exists a general agreement on some components of the transformative
leader: inspirational motivation, idealised influence, and intellectual stimulation. The transformative leader has
to do more than create a vision; in order to be successful, the leader must encourage the followers to work
towards the vision. There are two ways for the leader to do this: 1) Being a role model for the employees and
act according to the vision, and 2) Inspire employees to look in new directions to find other practices for doing
the work. Furthermore, the authors note that much research has pointed to a relationship between
transformational leadership and high organisational performance (Moynihan et al, 2013: 89). Studies have
shown that if the leader clarifies the goals of the organisation, it is easier for the employees to see which tasks
are important and how they are achieved. Furthermore, clarification of the organisational goals will increase
the employees’ perception of the mission ahead (ibid.: 95).
3.3.2. CRITIQUE
Transformational leadership is not (cf. above) the solution to every problem within the organisation, however.
Some theorists argue that there are problems in the concept of transformational leadership. The most famous
critical article about transformational leadership is the article by van Knippenberg & Sitkin (2013) describing an
ongoing debate within the literature about transformational leadership. As the authors note in the conclusion,
they feel like the naïve child in H.C. Andersen’s tale The Emperor’s new clothes because they are speaking
against something many people have written about and agreed on – just as in The Emperor’s new clothes.
When it comes to transformational leadership, many use the MLQ made by Bass in 1985 to examine
transformational leadership. However, van Knippenberg & Sitkin want this to change (van Knippenberg &
Sitkin, 2013).
Van Knippenberg & Sitkin (2013) miss a clear conceptualisation of transformational leadership within the
literature. As the authors note, transformational leadership is often described by its operational terms and not
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by conceptual definition. As previously mentioned, the most common used definition of transformational
leadership originates from Bass’ work in 1985 who also developed the MLQ. However, Bass’ model with the
four dimensions is not the only one. Van Knippenberg & Sitkin (2013) mention a few articles, which all have
been inspired by Bass’ 1985 model and have all either developed upon Bass’ original model or have made an
alternative model to Bass’ 1985 model. Some of these may appear different from Bass’ 1985 model – there are,
however, at operational level more similarities than differences (van Knippenberg & Sitkin, 2013: 4-6). Another
problem identified by van Knippenberg & Sitkin (2013) with regard to the concept of transformational
leadership is the fact that there are no clear boundaries of the concept of transformational leadership and
what makes transformational leadership different from other theories. Instead of the conceptual definition, a
number of characteristics are labelled as transformational, even though it is not clear why the characteristic is
defined as transformational, and the authors mention trust as an example. If a leader diffuses trust in the
employees as a part of being a transformational leader, how is it different from the perception of trust in the
leader due to leader fairness or other types of leader behaviour? Van Knippenberg & Sitkin (2013) note that
Bass’ model does separate transformational leadership from transactional leadership. Transactional leadership
is based on extrinsic motivation through rewards and avoidance of sanctions, whereas transformational
leadership should be based on intrinsic motivation through appealing to employees’ internal motivation. This
distinction is not enough to limit transformational leadership to Bass’ four dimensions, cf. van Knippenberg &
Sitkin (ibid.: 10-12). Van Knippenberg & Sitkin (2013) also note that the problems with the conceptualising of
transformational leadership are derived from and defined by its effect – and not defined as an independent
concept. The Bass concept of transformational leadership clearly has some problems with tautology. Is it a
concept in itself or is it an effect of something else? Furthermore, the causal model and theory of
transformational leadership is underdeveloped, and a need for a clear argument as to why transformational
leadership is multidimensional. It may be worth considering that the different dimensions of transformational
leadership have different mediators. This calls for transformational leadership not being seen as one
comprehensive unit of analysis (ibid.: 14-16). Van Knippenberg & Sitkin believe that new tools for measuring
transformational leadership is needed and list three interrelated issues why they are needed. First, the current
measurement models do not capture the multidimensional aspects of transformational leadership. Second,
there is no clear empirical separation of transformational leadership from other types of leadership. Third,
there is also no clear empirical separation of subjective ratings used to measure leadership effectiveness.
Transformational leadership is often measured by using MLQ, which is developed as a multidimensional
measure. However, the MLQ is not a good measure because the underlying dimensions are highly correlated
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with each other. This leads the studies of transformational leadership towards only using one-dimensional
measure (ibid.: 40-41).
Another critic of transformational leadership is Dennis Tourish (2013) who compares the traits of
transformational leadership to the traits of cult leaderships, not in the sense that organisations using
transformational leadership are cults, but the traits of the two types of leadership are similar (Tourish, 2013:
31). Tourish notes that too much power can make things turn a wrong direction. He uses the cases of two
American cults, Heaven’s Gate and People’s Temple, as examples. In both cases, the leaders were charismatic
and were in the end able to lead their followers to commit suicide (ibid.: part 2). The charismatic leader can be
persuasive and make the followers do their bidding. The idea of transformational leadership is that the leader
sets the ideal and the followers try to follow by this example (ibid.: 77). Tourish (2013) argues that the leader
must not be the centre of hierarchies, and that followership should be used instead of leadership. The benefit
of followership is that the followers and the leader can affect each other (ibid.: 200-201). Tourish (2013) note
that a dark side of transformational leadership and leadership in general is the fact that the leader does not
involve the employees in the strategy planning. Employee involvement is crucial in the process of decision-
making because the employees will be more committed to the strategy if they are involved in the process. The
leader will not get the real picture of the state of the organisation, unless the organisation has a two-way
feedback culture, which is supported by research (ibid.: 78-80).
3.3.3. DEFINITION OF TRANSFORMATIONAL LEADERSHIP
The used definition of transformational leadership in this thesis is from the research project LEAP, Aarhus
University. The definition focuses on one dimension of transformational leadership, the visionary part:
“Behaviors seeking to develop, share, and sustain a vision with the intend to facilitate that employees transcend
their own self-interest and achieve organization goals” (Bro et al, 2014: 7). I have chosen this definition
because of the critique from van Knippenberg & Sitkin (2013) who notes that it is not possible to measure
transformational leadership as a multidimensional concept.
In the next section, I will explore the depths of complexity theory and argue how and why it matters in
management studies.
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3.4. COMPLEXITY THEORY
Complexity theory originates from the natural sciences, which is reflected in the sources of inspiration, e.g.
chaos theory. The main idea in complexity theory is that interactions between the members in an organisation
is the key to thrive. Complexity theory is a patchwork of different theories, borrowing from other theories. My
main source to complexity theory comes from the work of Ralph D. Stacey who for more than two decades has
been influential in managerial complexity theory.
Below I will introduce complexity theory and put it in the context of other theories about
leadership/management and political science. First, I will touch upon some of the sources of inspiration for
Stacey’s work and complexity theory in general. Second, I will introduce the concept of complexity theory.
Third, I will place complexity theory according to other relevant theories. Fourth, I will touch upon the
complexity theory in the context of the public sector. Fifth and lastly, I will introduce the critique against
complexity theory.
3.4.1. SOURCES OF INSPIRATION
Complexity theory has several sources of inspiration. Stacey (2011) names Mead and his work about social
objects as one. Another clear source of inspiration is systems thinking. In the following these sources of
inspiration will be described in detail. Complexity theory calls for a non-linear relationship because of the
influence from chaos theory and the idea that human relations are non-linear (Stacey, 2011: 259; Wheatley,
1994: 125).
Chaos theory has the assumption of nonlinearity in the sense that it may be difficult to predict the future
(Holland, 1998: 43). Chaos theory models are based on a number of interrelated nonlinear equations that
explain a phenomenon’s movement and change over time. The model iterates itself over time and a pattern
emerges, e.g. ‘point attractor’. A ‘Point attractor’ is a stable pattern of equilibrium, where the model decides
upon an equilibrium point to settle. The model’s movement between stable and unstable points may appear to
be random, but it is not – it is a paradox pattern of regular irregularity or stable instability, also known as
‘strange attractors’. Here, both stability and instability are intertwined and inseparable. The system is sensitive,
when following a chaotic pattern of movement, which means that the tiniest change etc. may lead the systems
to move in an unexpected direction. Therefore, it is impossible to make long-term predictions in a
mathematical chaos-based system. Spontaneous moves within the model can only happen by external factors
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(Stacey, 2011: 237-238, 240). Looking through management glasses, this means that the manager cannot
predict what will happen in the future. The paradoxes make it hard to predict the unpredictable.
Self-organisation is an important feature of complexity theory, and it is introduced by Kant as ‘self-organising
systems’ in order to explain mechanisms that are defined by their own autonomy. The recognition of the
systems derives from our own analogy and sense (Harste, 2009: 284; Kant, 2007: 204). Kant uses this definition
of self-organising organisms in order to separate organisms from mechanisms. There is more to the organism
than mechanisms. Kant note that organisms have an element of formative power in them. This is why
organisms are able to reproduce themselves (Kant, 2007: 202).
Stuart A. Kauffman gives a more natural scientific approach to self-organisation, which has inspired the
managerial complexity theory. Kauffman follows in line with Kant, and notes that an organism has both a
structural and a functional side to it (Kauffman, 1993: 7). In thinking about evolution, there is always the
thought of how hard is it to find a certain structure. This is why there is a hope that “spontaneous order will
help account for origin problems in evolution” (ibid.: 21). When it comes to self-organisation and selection,
themes like a blind watchmaker and the invisible hand arises. Kauffman (1995) sees everything (organisms,
organisations etc.) as “evolved structures”. Therefore, when humans try to intentionally plan and construct, the
blind watchmaker is in play (Kauffman, 1995: 246). The blind watchmaker exists because we cannot imagine
something emerge without a creator just as a watch cannot be produced without a watchmaker (Kauffman,
1993: 643). According to Kauffman (1995), the reason why complex systems exist on the edge of chaos is
because evolution leads them there (Kauffman, 1995: 90). Living on the edge of chaos means that the self-
organisation creates nonlinearity, which in return makes it hard to predict the future. This is similar to the
thoughts of chaos theory.
Systems thinking has evolved a lot over the years. Stacey (2011) note that systems thinking has evolved
simultaneously into three pathways: General systems theory, Cybernetic systems (cybernetics), and Systems
dynamics (Stacey, 2011: 55). Cybernetics will briefly be mentioned because this is the theory, Stacey mainly
counters. Cybernetics originates from the world of engineers and is based on an idea of controlling human
activity, management being the controller. Negative feedback is an important feature of this theory, it is a
comparison of a previous action and a desired outcome, which in the difference between the two is used as a
guideline for the next action in order to reduce the future differences. If something disturbs the system and the
27. 27
system is ruled by negative feedback, the system will return to stability through self-regulating systems. The
negative feedback mechanism is not as simple as it may sound. Cyberneticists have concluded that the process
of negative feedback is too fast to be controlled. For an organisation to run over time, cybernetics assumes two
motivating forces: 1) the drive to achieve something and 2) organisation as subsystem of a larger system.
Therefore, the motivating force for organisations is the desire to get to a state of a stable equilibrium (Stacey,
2011: 66-69). Stacey does not agree with Cybernetics because he believes that systems are more fluid than
represented in Cybernetics. The cybernetics approach is similar to McNollGast (1987) and the idea of deck
stacking with ex ante and ex post control mechanisms: candidate selection, fire-alarm and police patrols.
However, McNollGast do not describe in detail ex post control mechanisms, fire-alarms and police patrols
(McNollGast, 1987) but McCubbins & Schwartz (1984) do. Fire-alarms can be organisations, etc., that raise the
alarm to the authorities when an agency does not follow the legislation. Police patrols, on the other hand, is a
constant oversight from central side. McCubbins & Schwartz note that police patrols are very time consuming,
wherefore fire-alarms may be the best type of oversight (McCubbins & Schwartz, 1984: 166, 168).
George H. Mead is a main source of inspiration for complexity theory. Relevant to this subject are his ideas
about the self. According to Mead (1934), the self emerges as the social experiences grow. The emergence of
the self depends on a social process emerging from interaction between individuals and implies the
precedence of an affiliation to a group. Mead distinguishes between self-consciousness and consciousness.
Self-consciousness is an awakening of the self, whereas consciousness is the experiences of the individual
(Mead, 1934: 135, 163-164). Therefore, the self is a social object. Self-consciousness is the individual taking an
impersonal objective attitude towards the individual itself. This happens in social experiences where the
individual experiences him-/herself both directly and indirectly, taking the mentioned approach. Self-
consciousness is centered around a social individual, not because of its belonging to a social group but because
the individual experiences by taking action upon others (ibid.: 138, 171). The self is constructed by a number of
elements/minor selves which contribute to the whole and complete self. Furthermore, the self is a reflection of
the social process and therefore of the social group which the individual is a part of (ibid.: 144). In relation to
management, management would emerge in interactions within the group or organisation. The manager as an
individual brings his/her self into the interactions on the same terms as the employees.
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3.4.2. WHAT IS COMPLEXITY THEORY?
Ralph D. Stacey, one of the most influential and prominent theorists on this subject, has written many books
and articles about complexity theory and management. His most famous book, Strategic Management and
Organisational Dynamics, has been published in many editions (the first edition in 1993 and the latest in 2011).
With the book, Stacey tries to break with the dominant discourse about management. Stacey also tells the
story about the theories, which are the inspiration for the complexity theory. It should be noted that Stacey’s
book (2011) is a textbook to be used for educational purposes; however, it provides a good insight into the
world of complexity theory and the underlying reason for the emergence of complexity theory. In this section, I
will focus on the works of Stacey and like-minded, while combining it with other theorists whom Stacey is
either inspired by or have criticized.
Complexity theory challenges the dominant management thinking and calls for a radical change in the scientific
management thinking. Stacey (2011) points at the following reasons why there is the need for a change. First,
complex systems are based on paradoxes, both stability and instability exist and cannot exist without each
other, in line with chaos theory. Patterns within the system emerge over time, described as “chaos” or “the
edge of chaos”. The patterns appear to be random; they are, however, coherent patterns because they all
include instability in the space of stability and some regular amount of irregularity. Second, equilibrium does
not exist because long-term predictions are impossible in chaos, in terms of paradoxes, unpredictability and
predictability coexist. Third, complex systems rely on self-organisation, which translates into local interactions.
The abovementioned patterns emerge from local interactions. Fourth, the system can only evolve if diversity
exists in the system. Evolution happens through self-organisation or, rather, local interactions. Stacey wants
people to understand that complexity theory gives different insights in understanding organisational life
(Stacey, 2011: 231-232). Furthermore, the paradox in complexity theory is the fact the individuals and group
are both formed by and forming each other. The paradox of being formed by and forming something can be
translated in other parts of the organisation, e.g. local and global patterns forming and are formed by each
other (ibid.: 474).
Emergence is a key concept in the sciences of complexity. Another component is self-organisation. Self-
organisation means that the agents interact locally with each other, which generates emergent new forms of
the whole system (Stacey, 2011: 253, 263). To sum up, figure 3 contains the definitions of the key concepts in
complexity theory
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Figure 3 Key concepts in complexity theory
Another complexity theorist is Margaret J. Wheatley (1994). Just like Stacey, Wheatley describes the use of
complexity theory in management studies. Wheatley, however, incorporates more from the natural sciences,
wherefrom complexity theory originates. Self-organising systems are open to new forms and new
environments, cf. Wheatley (1994). This means that the self-organising system reacts when external changes
take place. As it evolves, the system becomes more stable, efficient in using resources as well as existing in its
environment. The self-organising system creates a basic structure, which includes a kind of buffer from the
outside environment in order to protect the system from constant change from the outside. Therefore, the
self-organising system is stable over time. The self-organising system is able to have many autonomy levels
within the system, which enforces its stability (Wheatley, 1994: 91-92, 94-95). Wheatley quotes Jantsch for
noting a paradox within the self-organising system – “the more freedom in self-organisation, the more order”
(Jantsch in Wheatley, 1994: 95). Another important component in self-organisation is self-reference. When
changes take place, the system references back to itself in order to maintain its identification and its
consistency for the future. Self-reference is key, when change has to be orderly in a chaotic environment
(Wheatley, 1994: 94).
• Complexity emerges in a system, when there is more
possibilities than there can be actualised (Cilliers,
1998: 2)
Complexity
• A system (usually living organisms) based on
nonlinear relationships and feedback loops (ibid.: 3)
Complex
systems
• The creation of new properties within the system,
both unpredictable and predictable by antecedents
(Rhodes et al, 2012: 14)
Emergence
• The system's ability to emerge spontaneously from
agent interactions and respondiable to feedback
from the environment (ibid..)
Self-
organisation
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A good way to illustrate complexity theory is by using the shape of a
fern (figure 4). In Wheatley’s (1994) description, there is a basic
shape within the fern and a few rules apply. One of them is that the
shape is free to echo itself at different levels. This simple drawing will
in the end turn into a fern. There are more layers to the fern
(Wheatley, 1994: 131).
In complexity theory, the role of the manager is sparse. The
manager’s role is to facilitate structure in a way that the structure
conditions development of new structures. However, the manager
does not have much influence on the self-organisation. Stacey notes
that with self-organisation emerging comes the question: Does
leadership matter? According to Stacey (2011), some theorists argue
that leadership emerges in the interaction between agents.
Leadership is the glue between actions of the individual agents and the
collective nature (Stacey, 2011: 280-281). Wheatley (1994) concurs by stating that leadership has developed
into being about relationships in the sense that the leaders should involve stakeholders and empower
employees. Furthermore, leadership depends on context and valued relationships (Wheatley, 1994: 144).
Burnes (2005) states that complexity theory is an umbrella for a number of theories (Burnes, 2005: 74). The
most relevant theories are complex adaptive systems, complex evolutionary models of industries and complex
responsive processes. Ralph D. Stacey is advocate for the last one. The mentioned theories all have this
common feature: it is about interaction between agents within a complex system. In this case, the most
relevant is complex adaptive systems and complex responsive processes.
One advocate for complex adaptive systems is Mary Lee Rhodes and her colleagues (2012). Rhodes et al (2012)
examine complex adaptive systems in the context of the Irish healthcare system. A complex adaptive system
(CAS) is an extension of traditional systems thinking. The complex adaptive system includes a feedback
mechanism and exogenous factor in the model. CAS models are similar to open systems and, in its simplest
form, the CAS model is about actions and interactions between agents in the systems and the agent behaviour
Figure 4 The fern from Wheatley, 1994 p. 131
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within the system. The model incorporates both exogenous and endogenous factors, which most previous
models have not included. (Rhodes et al, 2012: 9-10). Rhodes et al (2012) note that in order for a system to be
complex adaptive, the system must have some form of dynamics, e.g. self-organisation. According to Rhodes et
al, the dynamics is reason why it is compelling to use complexity theory in public administration (ibid.: 13, 15).
Another advocate for CAS is John H. Holland (1995), who describes adaptive agents. Agents in CAS follow the
rules in the system. The rules must fulfil some criteria in order to be unifying. One, in order to define agents, a
syntax is needed. Two, the syntax arranges the interaction between the agents. Three, an acceptable
procedure for adaptive modification of the rules must be present (Holland, 1995: 43). Furthermore, the rules
must be consistent with each other. In the system, there is a procedure called credit assignment, which
modifies strength as the experiences in the systems evolve. Holland uses the classic example of Prisoner’s
Dilemma to illustrate his point (ibid.: 53, 80).
Complex responsive processes are the processes of interactions over time becoming strategies within the
organisations. Strategies are understood as the desires and intentions developed in local interaction and
emerging to a global pattern. The organisation does not exist as a whole organisation, but as an imaginary
construct with an ongoing process of local interactions between agents. Organisations are patterns of locally
emerging interaction across a population. From this perspective, organisations are patterns of interaction
between social objects (people) (Stacey, 2011: 436-438, 465). Complex responsive processes also accentuate
the unpredictability in the long term. The population-wide patterns are only achievable in the short term.
Strategies are second-order abstractions, perceived as the rules of the organisational game. Complex
responsive processes are a counterargument to strategic planning, claiming that happenings within the
organisation is a product of interactions between employees in the organisations (ibid.: 440-442). Furthermore,
complex responsive processes emphasise that meaning and knowledge derive from the local interaction within
the organisation. Knowledge is a process due to its evolutionary components; it cannot be stored or shared
(ibid.: 454).
Both of the two above-mentioned approaches can be used to examine complex system. In my thesis, I will use
the complex responsive processes approach because unlike the CAS approach this approach does not have an
assumption of time. CAS has the assumption of feedback loops in the system, which requires a longer time
span than the one I have for my thesis. In order to measure the feedback loops (like Rhodes et al) properly, the
research design would have to be a longitudinal design. However, due to time restraints, this is not possible for
my study.
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3.4.3. PLACING COMPLEXITY THEORY
As beforementioned, complexity theory is a patchwork with different inspirations. Solsø & Throup note that it
is important for complexity theorists to position themselves in relation to other theories (Solsø & Thorup, 2015:
61). Therefore, it is relevant to place complexity theory in context with other theories to get a grasp of the
theory.
Complexity theory shares some similarities with Mintzberg’s concept of mutual adjustment where co-
ordination exists internally. In complexity theory, co-ordination is the interactions between the agents within
the organisation (Douma & Schreuder, 2002: 37-38). Another similar approach is the concept of self-
management. Self-management creates challenges with regard to leadership in the organisation. In some way,
the concept of self-organisation in complexity theory is similar to self-management. Self-managed employees
have the power to determine how to solve their tasks within the framework established by the organisation.
However, it can be unproductive to be self-managed like this. Kristensen & Pedersen suggest that self-
management should be strategic. Strategic self-management involves that the employees manage themselves
according to the organisational line of business, making it possible for the employees to decide how and why
the tasks should be done. Employee performance depends on the context that the employee works in
(Kristensen & Pedersen, 2013: 69, 71-72).
Complexity theory has some component in common with the work of Elinor Ostrom – e.g. the article "Self-
organization and Social Capital” about how farmers with different preferences together create a net of
benefits. The social capital occurs in the negotiation of which rules should or should not apply. Self-
organisation in Ostrom (1995) relates to social capital and governing in associations (Ostrom, 1995). Ostrom
has also written about the collective action problem, which in short is about a group making decisions on how
to handle a social dilemma. The collective action problem is similar to complexity theory since it relies on
interactions between people in order to handle the social dilemma. Collective action has an assumption of
rationality, which I am uncertain whether it exists in complexity theory. However, according to both complexity
theory and the collective action problem, the individual behaviour cannot be predicted by strategies, as in the
case with collective action Nash Equilibrium strategies (Ostrom, 1998).
In a Danish context, performance management or New Public Management (NPM) are very dominant
leadership approach. In its core, NPM looks to privatise parts of the public sector in order to optimize the
public sector. NPM assumes faith in the manager/management. As Meier & O’Toole (2009) note, a good
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manager can make the difference. They find that management has a positive effect on the performance.
Furthermore, they note that good management is a pattern with different managerial activities. However, the
correlation between the different managerial activities are not high, which indicate that managers are not
alike, each manager chooses how to manage. (Meier & O’Toole, 2009: 15-16). Managerial authority is at the
core of NPM. The manager has clear goals to follow and flexibility to achieve these goals. However, the
manager is accountable for the use of resources and the results (Moynihan, 2008: 31-32). Performance
management is based on the idea of using the results as a management tool because of the assumption about
inefficient government (ibid.: 27).
Transformational leadership is opposite to complexity theory because, just like NPM, transformational
leadership focuses on the leader/leadership. As mentioned in section 3.3.1., transformational leadership bases
its ideas of leadership on the leader and the characteristics of the leader. The transformational leader is seen
as a visionary who coaches and considers every individual in the organisation. This idea of the leader
contradicts the idea of the leader in complexity theory where the leader is part of the interactions within the
organisation as facilitator/manager.
3.4.4. COMPLEXITY AND THE PUBLIC SECTOR
My survey takes place in the utility industry, which means that all the participating organisations are public
organisations (further details in section 4). Therefore, it is relevant to have a look at complexity and the public
sector. Stacey (2006) notes that in many public sectors, governance is based on cybernetic thinking. This means
that the employees are a part of the system/organisation, but employees are not perceived as humans. Stacey
notes that there is a need for change in thinking organisation within the public sector (Stacey, 2006: 39-40).
Williams (2006) takes the same approach as Stacey and states that in the public sector the focus is on visions
and how the organisation will evolve in the future. The leader is a supernatural being who can motivate the
employees in order to achieve the organisational goal. In short, the leader is idealized (Williams, 2006: 50-51).
However, complexity theory and public management/administration appear to be a good fit. As Teisman &
Klijn (2008) note, complexity theory focuses on the dynamics and the development of a phenomena, in the
case of the public sector, a policy process. Furthermore, complexity theory adds more variation in examining
what has influence on a policy process – as well as adding more perspectives of changes in public
administration. Processes in public administration are self-organising and therefore do not act according to
laws. They can develop in an unknown direction. Teisman & Klijn note that the concept of self-organisation is
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the most appealing concept in complexity theory to public administration. The complexity theory concepts of
fitness landscapes and agent behaviour can further explain what happens in public administration when
change occurs (Teisman & Klijn, 2008: 288-289). Klijn (2008) note that complexity theory can offer insight into
decision and interaction patterns in public administration. Furthermore, complexity theory and the concept of
positive/negative feedback can give insight into the consequences of decision-making in public administration
(Klijn, 2008: 302). The dominant system view in the early public administration literature is from Easton and his
systems theory from 1953 with demands and supports as input and authorized decisions as output. Later, the
idea of complexity arose in the literature – strategies are an outcome of processes and not anomalies of policy
policies (ibid.: 304-305). With regard to management and complexity theory, Klijn lists three important
concepts from complexity theory about management. First, the paradox of managing the unmanageable – a
paradox arising due to the emerging properties in complex systems. The idea is that the manager adjusts
according to developments in the system and does not try to control the direction of the developments.
Second, due to the unpredictability of a complex system, it may be a good idea to intervene in order to get the
right interactions and outcomes. The manager is both a part of the system and an influencing object in the
interactions within the system. Third, following the idea of fitness landscapes, the manager has to be aware of
the opportunities of the landscape in order to go in the desired direction (ibid.: 313-314).
3.4.5. CRITIQUE
Even though complexity theory appears to have a solution for everything, complexity theory is not without
critics. Paul Cilliers (2000) writes that it is hard to extract knowledge from a complex system. Knowledge can be
both objective and subjective, the subjective part being something underlying in the knowledge network
(Cilliers, 2000: 8-9). Cilliers notes that understanding and knowledge are products of interpretation. This means
that we oversimplify in order to understand complexity. Context and history are important factors in
understanding because of lack of experience (ibid.: 11-12). Cilliers (1998) also provide the critique that it is hard
to give a simple definition of complexity – simply because complexity implies that there are more possibilities
which can be actualised (Cilliers, 1998: 2). Cilliers (1998) notes that a criticism of self-organisation and
complexity theory is the mechanical view of human activities. Furthermore, the interplay between values and
complexity theory does not seem compatible (ibid.: 111).
Other critics of complexity theory are Houchin & MacLean (2005) who write that it is problematic to take a
natural scientific theory and apply it to social sciences without making any changes to make it fit social
sciences. Most of the conducted studies are based on computer simulations, which do not give an insight in
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human behaviour. Furthermore, no studies have proved that complexity theory has a long-term effect on
organisational changes. The current studies are only short-term. The authors’ article is based on a four-year
study of an organisation undergoing change (Houchin & MacLean, 2005: 151-152).
Other complexity theorists are critics as well. Douglas Griffin’s critique of Wheatley’s work is one example.
Douglas Griffin (2002), criticizes Wheatley for having a “both … and” position. Participation is learning to live in
a world full of processes. Griffin (2002) writes that Wheatley underestimates the importance of “as if”
Furthermore, Griffin also criticizes Wheatley for giving paradox a meaning, which Kant eliminated when he
developed the “both … and” (Griffin, 2002: 63-64, 66).
3.5. CONNECTING THE DOTS
The purpose of this section is to briefly discuss the theorised relationships between the concepts in order to
derive the hypotheses.
A conceptual difference between complexity theory and transformational leadership is the way they perceive
the executive. Transformational leadership perceives the executive as a visionary leader with a clear vision of
the future and where the organisation will be in that future. The leader is a unifying factor in the organisation
and therefore the leader has a central role in the organisation. The focus is on the leader and the associated
characteristics of the leader. This could be perceived as leadership from above, since it relies on visions from
the leader – in the outset that leaders define leadership and not the employees. Complexity theory perceives
the executive as a manager who is a part of the local interactions in the organisation. The manager
administrates and guides the employees. Complexity theory assume that the employees are able to handle
their job in any way they like – they are free to choose work methods, work hours etc. In transformational
leadership, it is not clear if the employees have the same possibilities – just that they have flexibity, cf. Wright
& Pandey (2009). In the mentioned article in section 1, Stacey claims that modern leadership is an illusion, and
it is impossible to predict the future. Therefore, too much strategising in the organisation is a waste of time5
.
Strategies arises in the local interactions within the organisation (cf. Stacey, 2011: 436). This could be perceived
as management from ‘below’. However, the two theories have some similarities, like the executive as a coach
for the employees.
5
http://www.djoefbladet.dk/nyheder/2015/3/moderne-ledelse-er-en-illusion.aspx (Danish, 14/8 2015)
36. 36
In the eyes of complexity theory, there is no need for leadership. An organisation is a living organism that
regenerates itself through self-organisation. However, this view is not excluded by transformational leadership.
Transformational leadership emphasises the importance of leadership during times of change, where an
organisation needs a leader to take the lead and show the direction for the organisation. However,
transformational leadership does not specify whether the need for leadership is the same in the daily work (cf.
Bass & Riggio, 2014: 79). As mentioned above, Bass (1990) note two factors of modern leadership, however,
Bass do not state or theorise what will happen if the employees do not accept the leadership. Hypothetically, if
the employees do not accept the leader, will the lack of acceptance resolve into anarchy in the organisation?
Another way to perceive complexity theory and transformational leadership is as bottom-up and top-down.
Complexity theory with its local interactions and transformational leadership with the direction-setting leader
share characteristics with the two types of leadership. Is it the employees or the executives who set the
agenda? In my case, the top management (as in the owner of the utility organisation and the legislation)
decides the direction of the organisation, but the employees are free to solve their work tasks as they want to.
In relation to my dependent variable, work engagement, the two theories also differ. Complexity theory or,
rather, self-organisation creates more engaged employees because they get to choose their own working
hours. For the organisations, it means that the employees are more effective and will be happier because they
get to decide their own work hour; it also means that they can be in control of their own life (cf. Kristensen &
Pedersen, 2013; Stacey, 2011). Transformational leadership, on the other hand, assumes that leaders can help
their followers overcome feelings of disengagement, denial, detachment to the organisation etc. (Bass &
Riggio, 2014: 71). Transformational leadership is all about motivating employees to perform their best (Wright
et al, 2012: 207).
This leads me to my hypotheses for this thesis, which are as follows:
1. Both complexity theory and transformational leadership theory will have a positive effect on work
engagement
2. Complexity theory will explain more than transformational leadership because of the fact that the tasks
in the utility industry are statutory, which encourage the employees to self-organisation.
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3. However, the two theories do not exclude each other, they complement each other, which is shown by
an increase in the explanatory factor in the full model compared to the separate models for complexity
theory and transformational leadership.
Therefore, my expected causal model will look like the following:
Figure 5 The causal relationship
In this model, transformational leadership is perceived as management from ‘above’ and complexity theory as
management from ‘below’. Transformational leadership as management from ‘above’ because of the idea of
having a vision placed upon the employees. Complexity theory as management from ‘below’ because of the
idea of self-organisation.
