Exploring the impact of empowering leadership on knowledge sharing, absorptive...

Exploring the impact ofempowering leadership on

knowledge sharing, absorptivecapacity and team performance

in IT serviceJungwoo Lee

Graduate School of Information, Yonsei University,Seoul, Republic of Korea, and

Hyejung Lee and Jun-Gi ParkIT Policy & Strategy Research Institute, Yonsei University,

Seoul, Republic of Korea

Abstract

Purpose – The purpose of this paper is to empirically investigate the mechanism through whichempowering leadership of a team leader might influence the team performance in IT service.Design/methodology/approach – The data of 315 individuals collected from 85 different ITprojects through online survey is used to empirically test the hypotheses.Findings – The results confirm that team leader0s empowering leadership raises the level ofknowledge sharing among team members and increase the absorptive capacity of the team, and lead tobetter team performance.Research limitations/implications – This research theoretically presented and demonstrated themiddle- and long-term impacts of empowering leadership resulting from the development ofabsorptive capacity as the effects of knowledge sharing in an IT project team are produced throughabsorptive capacity.Practical implications – The findings indicate that more effective in increasing the performance ofIT project teams can be to strengthen empowering leadership than to promote traditional charisma ordirective leadership. Knowledge sharing at a team level has the direct effect of improving projectperformance by providing information and knowledge regarding the related project, but on the otherhand it contributes to making stronger the path of associating absorptive capacity with projectperformance.Originality/value – The impact of empowering leaderships on team performance of IT project hasreceived less research attention. Little prior research has carried out such an integrated analysis inIT service context. This study contributes to knowledge management research by identifying a keyantecedent of knowledge sharing.

Keywords Leadership, Absorptive capacity, IT project management,Knowledge worker performance

Paper type Research paper

1. IntroductionResearch on effective team management has been highlighting the importance of teamleaders’ behaviors as one of factors critical for successful team performance ( Judgeet al., 2004). Among the team leaders’ behaviors studied, empowering leadership is

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0959-3845.htm

Received 20 October 2012Revised 27 July 2013Accepted 4 August 2013

Information Technology & PeopleVol. 27 No. 3, 2014pp. 366-386r Emerald Group Publishing Limited0959-3845DOI 10.1108/ITP-10-2012-0115

This work was supported by the National Research Foundation of Korea Grant funded by theKorean Government (NRF-2012S1A3A2033474).

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drawing attentions, recently, reflecting current trend toward increased autonomy ofactuating employees (Bennis and Townsend, 1995). Though empowerment is not a newconcept traceable back to the early work of Lewin (1947), recent literature on empoweringleadership focus on leaders’ empowering actions, such as enhancing meaningfulnessof work, expressing confidence in performance, shared decision making, providingautonomy (Zhang and Bartol, 2010), leading by example (Kirkman and Rosen, 1997).

Although empowering leadership has been known to be important for teamperformance (Srivastava et al., 2006), few studies have examined mechanisms linkingempowering leadership and team performance, particularly in IT project teams. It isstill not clear how empowering leadership may lead to effective performance in teams.While some studies focus on employees’ responses to empowering leadership (Congerand Kanungo, 1988; Spreitzer, 1995; Thomas and Velthouse, 1990), this study focusseson investigating mechanisms through which empowering leadership might influencethe performance of IT project teams.

It is argued here that the relationship between project team leader’s empoweringbehaviors leading to team performance especially in IT service environment is a bitmore complex than just a simple trigger. As critical mediators linking empoweringleadership to team performance in IT services, two are included through extantliterature review: knowledge sharing and absorptive capacity. Knowledge sharing is ateam process defined as team members’ sharing of task-relevant ideas, information andsuggestions with each other (Tiwana and McLean, 2005), while absorptive capacity isthe ability to recognize the value of new information and knowledge, thus assimilateand apply it (Nemanich et al., 2010).

In earlier studies examining the relationship between leadership behavior and teamoutcomes in IT service projects, knowledge sharing and absorptive capacity have beenrarely considered simultaneously in a single model, though both concepts areconsidered critical in different contexts (Liao et al., 2007). In this study, knowledgesharing and absorptive capacity of a team are conceptualized as nomologicalmediators leading empowering leadership toward the team performance.

In this regard, the goal of this study is to examine the roles of knowledge sharingand absorptive capacity leading empowering leadership to team performance.Findings of this study may increase understanding of how empowering leadershipactuates team members to produce better team outcome through higher level ofknowledge sharing and increased level of absorptive capacity. It would not only helpacademics explicate theoretical relationship between empowering leadership and teamperformance, but also aid practitioners in managing IT service teams in whichknowledge sharing and absorptive capacity are critical for effective team performance.

This study fills the research gap in IT service by bringing in empoweringleadership research. IT service projects demand tight collaboration between businessand technology, and this collaboration occurs in team environment. Despite theimportance of IT service teams for effective development of systems (Montoya et al.,2010), details of team processes related to empowering leadership, knowledge sharingand absorptive capacity of these teams have not been examined in as much detail in ITservice project teams as in other types of teams. Yet such investigations are criticalbecause, unlike teams in other domains, in which the focus is on a series of predefinedtasks, IT project teams are effective only insofar as they are able to effectuate high levelknowledge sharing with increased level of absorptive capacity.

In this context, a research model was set up in this study, nomologically linkingempowering leadership, knowledge sharing, absorptive capacity and team

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Exploring theimpact of

empoweringleadership

performance based on reviews of research results in related area, and collectedempirical data from 315 subjects across 82 different IT service projects.

In the following section, we discuss in detail how we conceptualize empoweringleadership of team leaders, knowledge sharing, absorptive capacity of a team. Next, wedevelop hypotheses that delineate the mediating effects of knowledge sharing andteam absorptive capacity on team performance. Details of data collection and analysesare presented at the end followed by findings and discussions.

2. Background and research modelIT service is one of those services that require high level of professional credence as theoutcome quality of service is mostly invisible and knowledge intensive (Park et al.,2012; Carr, 2006). Also, as technical experts need to work closely with domainspecialists from the beginning of requirements elicitation till the final implementation,team activities are critical for the success of project (Chen and McQueen, 2010).We define the empowering leadership as a critical variable that lead to higher level ofknowledge sharing among team members, in turn increase the level of absorptivecapacity of the team, so that the team can perform effectively and efficiently.

2.1 Empowering leadership in IT servicesLeadership style has been highlighted as a strategic and critical factor for successfulorganizational performance, especially in knowledge management area (Nonaka andTakeuchi, 1995). Among a variety of leadership behaviors, empowerment is beingemphasized, recently, in effective knowledge management (Oliver et al., 2006; Singh,2008), as empowerment is considered consistent with the transition into knowledgeeconomy in which individuals’ autonomy is emphasized. Moreover, employeeempowerment is found to critical in promoting employee’s creativity (Zhang andBartol, 2010). Empowered employees with a certain degree of autonomy in taskachievement can provide a useful agility to the organization’s knowledge culture, whichthen enables and motivates the employees to achieve what they intend to achieve withhigher level of knowledge sharing among organizational members (Oliver et al., 2006).

Empowerment stimulates knowledge sharing among employees and, in turn, is knownto help raising the organizational performance level (Srivastava et al., 2006). Leaders needto commit themselves to this style of leadership, consciously reflecting on their way ofmanagement behavior (Bass, 1999). Managers’ self-awareness of and reflection on theirleadership style helps them to trigger the empowerment (Fowler and O’Gorman, 2005).

IT service project teams may benefit from an empowering leader. An empoweringleader consults with and makes joint decisions with team members. An implication ofempowering leadership is that much of the decisions and control processes thattraditionally had been the prerogative of the team leader are now shared among teammembers, increasing the sense of participation and responsibility. An empowered teamwill actually share control, formally or informally. This kind of shared leadership viaempowerment is known to be best applied to knowledge teams engaged in complexwork where tasks are highly interdependent, require high levels of creativity (Pearce,2004). As systems development is this type of knowledge work, empowered leadershipmight provide the balanced levels of autonomy and shared control necessary foreffective team performance, collaborating members with different background.Actually, it is found that, in creating, organizing, applying and using knowledgeeffectively in systems development teams, teams with empowering leader exhibitbetter team performance (Singh, 2008). Employees given sufficient authority and

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responsibility in terms of managing their own work at the workplace seems to feel freeto experiment and innovate on their own with personal attention to and analysis offacts and figures around, and performs better than the ones being constantly directedand supervised closely by their leader.

Empowering leaders get their subordinates involved in making decisions, thusremove the sense of powerlessness, and allow them to be as flexible as circumstanceswarrant (Arnold et al., 2000). Such a leadership style helps employees learn and elicitbehaviors that are consistent with the culture of experimentation and innovation. Suchempowerment is known to produce a positive impact on sharing knowledge bychallenging people to be more exploratory and creative.

2.2 Absorptive capacity as ability and motivationOrganizations maintain the ability to recognize the value of new information andknowledge. Valued information and knowledge are to be assimilated, and applied fortheir organizational advantages, leading to innovative actions (Lane et al., 2006). Cohenand Levinthal (1990) first defined this as the absorptive capacity. Mowery and Oxley(1995) further refined the concept of absorptive capacity as a broad set of skillsnecessary for dealing with tacit components of knowledge transfer. In this regard,absorptive capacity allows a firm to adapt to environmental changes and improveorganizational performance with knowledge intensive strategic maneuver. Absorptivecapacity is known to depend mainly on prior knowledge, i.e. the knowledge available inthe organization (Szulanski, 1996). Organizations assimilate new knowledge moreeasily if the new knowledge resembles and closely relates to their prior knowledge(Nonaka and Takeuchi, 1995), leading to increased capacity for absorption.

Cohen and Levinthal (1990) explicates that the absorptive capacity tends to developcumulatively and path-dependently, building on existing knowledge. “Absorptivecapacity is more likely to be developed and maintained as a by-product of routineactivity when the new knowledge domain that the firm wishes to exploit is closelyrelated to its current knowledge base” (Cohen and Levinthal, 1990, p. 150).

In this line of argument, Zahra and George (2002) suggested to differentiate realizedabsorptive capacity from potential absorptive capacity. Realized absorptive capacity isgeared toward transformation and exploitation, while potential capability towardacquisition and assimilation of new information. A leader who is conscious of allorganizational routines and strategic processes through which the firm absorbsknowledge to create value strengthens efforts to foster potentials and achieve higherlevel of realized absorptive capacity directly utilized for organizational performance(Zahra and George, 2002). Despite the use of word ‘capacity’ that may imply fixed level ingeneral sense, the absorptive capacity has been conceptualized and used as a capabilitysubject to be developed, nurtured and grown, not as a trait unchangeable and fixed.

Increasing absorptive capacity via knowledge sharing. A basic premise of absorptivecapacity is that ability (acquired prior knowledge) and motivation (to learn) of anindividual facilitate the identification, selection, and implementation of new andinnovative practices by that individual (Volberda et al., 2010). While examining a firm’scapability to utilize and exploit previously acquired knowledge, employees’ abilityand motivation are identified as key aspects of firm’s absorptive capacity (Minbaevaet al., 2003).

It was also found that managers can develop organizational absorptive capacity byproviding information to people in the organization who might potentially adopt a newpractice (Lenox and King, 2004). In other words, through the interaction with other

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members, team members can acquire new knowledge that increases their absorptivecapacity which leads to successful team performance. Knowledge sharing among teammembers and members outside the team may increase the level of absorptive capacityof the team as it increases the members’ ability and motivation. Liao et al. (2007) showthat the absorptive capacity is the intervening factor between knowledge sharingand innovation capability, in which knowledge sharing maintains positive influence onabsorptive capacity.

Empowering leadership for increased knowledge sharing and higher absorptivecapacity. One of the ways organizations could improve efficiency and performance is toempower their employees and let them share what they have, so that other employeesmay learn from others. In this regard, knowledge sharing is a critical aspect ofempowered teams (Argote et al., 2003). Empowering leader can set an example forsubordinates by sharing his or her own knowledge first, which signifies his or hersupport for team-wide knowledge sharing (Xue et al., 2011). And the coaching behaviorof an empowering leader includes teaching team members how to effectivelycommunicate with one another and encouraging them to collaboratively solve problems,thereby providing opportunities for them to share their knowledge in practice (Nemanichet al., 2010; Robertson et al., 2012).

Also, in this regard, empowering leadership can also heighten the level of absorptivecapacity of the team as the leader enables and promotes individual absorption behavior(ability and motivation) by sharing his/her knowledge and coaching team members(Bosch et al., 1999). Empowered team members are more motivated to learn andassimilate new knowledge as they have more responsibility concerning their ownperformance than when they are directly micro-supervised with detail instructions inwhich case responsibility is more on the supervisor. In a theoretical sense, absorptivecapacity of the team may be influenced directly by the leader’s empowerment and/orindirectly through the increased level of knowledge sharing among team members,as knowledge sharing may increase the ability and motivation to absorb new waysof practice.

2.3 Research modelEmpowering leadership can be contrasted with autocratic leadership, and one of thecentral differences is that autocratic leadership inhibits knowledge sharing amongteam members but follow charismatic one-way instruction from the leader (Yukl, 2002).Thus, knowledge sharing is a potentially important benefit of empowering leadership(Srivastava et al., 2006). Empowering leaders are the key for integrating processes toconstruct a learning organization, and subsequently raising the level of absorptivecapacity (Srivastava et al., 2006; Amitay et al., 2005). In this regard, these threeconstructs are strategic in creating a climate that stimulates the disciplines oforganizational learning and their interaction. Research model in Figure 1 graphicallydepicts this line of argument leading to team performance in IT service project teams.

Knowledge processes such as knowledge sharing and knowledge transfer are animportant component of knowledge management, as they help in codifying therepository of available knowledge in the team and expanding this repository over time(Fang et al., 2012). When team members are empowered to make job-related decisionson their own, they need to possess adequate information to ensure that the decisionsare reasonable and justifiable given the decision contexts. They are more likely to shareknowledge with one another before and during the decision process. Therefore,empowering leadership is the enzyme that stimulates and nurtures knowledge sharing

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(Xue et al., 2011). An empowering leader who possesses these attributes will be seen asa supportive leader who provides guidance to followers, treats them fairly andrecognizes the value of their input. Team members are likely to receive fair recognitionby an empowering leader for their contribution of ideas and information, whichmotivates them to share their knowledge with each another. Similarly, participativedecision-making and coaching behaviors of an empowering leader will also encourageknowledge sharing in teams (Srivastava et al., 2006).

The empowering leadership skills of current team leaders can be strengthened byimproving each of the five components identified by Arnold et al. (2000): leading byexample, coaching, participating decision making, informing and showing concern.Appropriate training programs can be provided to help team leaders identify theirweaknesses and develop the specific skills that they lack. Such training is likely totransform the organization’s current managerial practice. Though difficult to achieve,empowering practice has great potential to stimulate employees’ knowledge sharingbehavior and subsequently increase the performance level, especially in knowledge-based tasks (Xue et al., 2011). Jobs and tasks in IT service projects are knowledgeintensive, characterized by varying levels of task uncertainty and collaborationchallenges. The empowering leader encourages team members to solve problemstogether and participate in decision making, thereby providing them withopportunities to share their knowledge. Thus:

H1. Empowering leadership will be positively associated with the level ofknowledge sharing in IT service project teams.

Leaders play crucial role creating and modifying cultures, systems and structures thatmay foster the absorption, assimilation and application of information and knowledge(Kavanagh and Ashkanasy, 2006). Leaders encourage workers to share their ideas bycreating a climate that is receptive to new ideas and by growing absorptive capacity(Bryant, 2003; Garcıa-Morales et al., 2008) Empowering leaders can make organizationsmore effective by stimulating active participation and self-management for performance(Faraj and Sambamurthy, 2006).

Empowering leaders foster the absorptive capacity of the team as they encourageautonomous and responsible action from the employee side. They only provideinformation with appropriate responsibilities while employees use their skill and other

AbsorptiveCapacity

TeamPerformance

KnowledgeSharing

EmpoweringLeadership

H1

H5

Lead byExample

ParticipativeDecision making

Coaching

Informing

ShowingConcern

H2

H3

H4

- Project Members- Project Duration- Project Type

Control Variables

Figure 1.Research model

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competencies to acquire and implement new information and knowledge, thustransform their practice into innovative ones with creative ideas (Melkas et al., 2010).In this process, they improve internal communication by reducing barriers to sharingknowledge, thereby increasing the efficiency of the absorption process (e.g. Cohen andLevinthal, 1990; Bosch et al., 1999). In this regard, absorptive capacity has recentlybeen recognized as a specific type of organizational learning (Sun and Anderson, 2010).Most of these discussions are related to the role of leadership in creating an atmosphereof openness and psychological safety, which is regarded as a crucial factor for effectiveorganizational learning to occur (Edmondson, 1999). Empowering leaders may makebetter use of the same contextual factors and enhance the members’ learning byincreasing the level of absorptive capacity (Amitay et al., 2005). Thus:

H2. Empowering leadership will be positively associated with absorptive capacityin IT service project teams.

Minbaeva et al. (2003) defines absorptive capacity with two elements: priorknowledge (members’ ability) and intensity of effort (members’ motivation).Members’ ability is acquired job-related skills including their educationalbackground and training that may represent the level of acquired prior knowledge:their potential and current ability. Motivation refers to the members’ energy intendedfor how rigorously contribute to task and job effectiveness by using this ability againstnewly acquired information and knowledge. Despite the high potential for learningabilities, a members’ absorptive capacity is low if the motivation to do so is low orabsent (Nazri et al., 2011; Todorova and Durisin, 2007).

Building a knowledge-sharing culture and activity in a team has an impacton the performance and satisfaction of team members (Huang et al., 2013). Liaoet al. (2007) emphasized that, when members share more of their knowledgewith one another, they are more likely to experience improvement in their ability andmore motivated to participate in knowledge sharing. In an IT service project team,knowledge sharing is very important because of the differences between teammembers in their expertise and background. Only when the technical knowledgeand prior experience with other systems for other corporations or other domainsshared with business professionals of the target organization, the businessprofessionals can increase their knowledge of and experience with applications,and contribute to the collaborative efforts to develop systems that may suitablefor what they are doing (Wang et al., 2007; Srivardhana and Pawlowski, 2007), andvice versa. Consequently, knowledge sharing in IT service projects helps enhancingthe teams’ absorptive capacity (ability and motivation). Therefore, we propose thefollowing hypothesis:

H3. Knowledge sharing will be positively associated with absorptive capacity inIT service project teams.

Knowledge sharing has a positive influence on team performance. Knowledgesharing enhances decision-making effectiveness. Stasser and Titus (2004) argued thatfrequent knowledge sharing enables members to consider a variety of possibilitiesfor solving problems faced by effectively using the knowledge held within theirteam and to make decisions appropriate for the context. In addition, knowledgesharing contributes to improving team performance by having a positive impact on

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the effective cooperation and collaboration among team members. Okhuysen andEisenhardt (2000) suggested that if team members continue to share information for acertain period of time, members would develop the ability to perceive the informationprocesses occurring within the team as a single pattern or block rather than seeingthem as individual fragments need to be integrated. Processing information as apattern is faster than as a collection of fragments to be cognitively integrated.Therefore, continuous sharing information is useful in developing a collective mentalmodel for information and knowledge processing (Srivastava et al., 2006).Furthermore, team members may increase the level of appreciation of othermembers’ unrevealed skills or capabilities, and use these skills and capabilities to makeup for their own weaknesses (Isenberg, 1984). As a result, knowledge sharing is helpfulin increasing the team spirit among the team members who try to perform their tasksand accomplish higher performance (Marks et al., 2000; Mathieu et al., 2000).

In this regard, knowledge sharing has been identified as a strong predictor ofperformance in IT service projects (Pee et al., 2010). It improves performance bybridging different perspectives, producing what Kotlarsky and Oshri (2005) called“collective knowledge and transactive memory” and leads to innovative solutions toproblems that they faced, as sharing of accurate and complete requirements isfundamental for meeting users’ needs (Chou et al., 2009):

H4. Knowledge sharing will be positively associated with team performance inIT service project teams.

Drucker (1999) argued that productivity is a key indicator of performance inknowledge work. Cohen and Levinthal (1990) suggested that absorptive capacityshould be taken into account to maximize the use of knowledge for business interests.Many studies have examined the relationship between an absorptive capacity andperformance (Zahra and George, 2002). Griffith et al. (2003) reported a relationshipbetween absorptive capacity and productivity in the economic development andsupply chain contexts. Tsai (2002) demonstrated that an organization’s absorptivecapacity in inter-organization knowledge delivery influences system-wide innovationand business performance. Liao et al. (2007) emphasized that it is important to enhancemembers’ absorptive capacity and that system-wide innovations can only be madepossible through the enhancement of such absorptive capacity. Thus, the followinghypothesis is proposed:

H5. Absorptive capacity will be positively associated with team performance in ITservice project teams.

In addition to the constructs discussed above, some factors may influence projectteam performance in the proposed model as control variables. Project member (size)and project duration may influence project team performance (Pee et al., 2010). It maybe more challenging for a large team and long-term project to perform well given thepotential for an increase in conflict among members as team size grows or projectterm increases. Project type may also influence team performance. Some studies havesuggested that the team performance decreases as project difficulty (Rai et al., 2009)as project types dependent on business complexity have more challenges toovercome. Thus, we control for the effect of project number, project duration andproject type.

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3. Research method3.1 MeasuresMeasures of all four constructs were mostly adopted from prior research. Adoptingfrom Arnold et al. (2000), empowering leadership is modeled as a second orderconstruct comprising five first order reflective constructs: lead by example,participative decision making, coaching, informing and showing concern.Knowledge sharing is measured by Faraj and Sproull’s (2000) four-items, developedin a field study of IT service project teams. Absorptive capacity is modeled as a secondorder reflective construct consisting of members’ ability and motivation, adoptingfrom Liao et al. (2007) study. The scale for project team performance was adapted fromHenderson and Lee (1992). All of the items were evaluated by a five-point Likert scalewhere 1 represents ‘‘strongly disagree’’ and 5 represents ‘‘strongly agree.’’

Absorptive capacity measures are still evolving in the field. For example, somemeasure the shape and scope of knowledge assimilation as “[y] groups of factors asfollows: (1) communication with the external environment, (2) level of know-how andexperience within the organization, (3) diversity and overlaps in the knowledgestructure, and (4) strategic positioning (Liao et al., 2007),” while others measure “[y]the component capabilities of knowledge process: recognition, acquisition, assimilationor transformation, and exploitation” (Todorova and Durisin, 2007). As team absorptivecapacity is the focus of our study, we have borrowed and employed individual levelmeasures of absorptive capacity, consisting of member’s ability and motivation fromLiao et al. (2007). Their operationalization of absorptive capacity constructis based on cognitive aspects of the capacity, coming from the theory of learning.This cognitive definition is also well accepted in a community as “conceptualization ofabsorptive capacity by emphasizing employees’ motivation as well as employees’ability as the important aspects of absorptive capacity” (Minbaeva et al., 2003) and“[y] identify employees’ ability and motivation as the key aspects of the firm’sabsorptive capacity that in turn facilitates internal knowledge transfer” (Minbaevaet al., 2003). “Both aspects of absorptive capacity (ability and motivation) must bepresent to optimally facilitate the absorption of knowledge” (Volberda et al., 2010).

Minbaeva et al. (2003) defined, as the basis for the measurement of absorptivecapacity, prior knowledge (employees’ ability) and intensity of effort (employees’motivation). This study used their proposal and adopted a version produced andvalidated by Liao et al. (2007). Motivation (intensity of effort) refers to the amount ofenergy expended by members to solve problems. Intensity of effort is well studied incognitive process theories such as the expectancy valence theory of work motivation.Even though the team may consist of individuals with high abilities, its ability to utilizethe absorbed knowledge will be low if their motivation is low or absent. Therefore,the second construct of absorptive capacity is the employees’ motivation, and thismotivation includes not only the individually originated motivation but externalmotivation such as rewards. Lane et al. (2006) also noted that “[y] absorptive capacity[y] depends on the organization’s ability to share knowledge and communicateinternally.” In other words, it is theorized and empirically tested here that the abilityand motivation to absorb external and internal knowledge (absorptive capacity) maygrow stronger when members share knowledge, probably because knowledge sharingmay help members to synchronize their mental models and trigger motivation to learnand absorb together as a team.

Measurement items are presented in the Appendix. A qualitative pretest wasconducted with five client personnel selected from the primary data sampling frame.

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A few modifications were made in terms of word sequence and syntactical errors, butno major changes were suggested in the pretest.

A note of caution is in due order concerning the unit of analysis. Out of fourconstructs of interests in this study, empowering leadership seems to be an individuallevel trait of the team leader while other constructs seem to be appropriate to bemeasured at the team level – team performance, team absorptive capacity andknowledge sharing level in the team. That is, all data in this study were collected fromwere collected at the individual level and multiple respondents for each team. We wereaggregated for each team after assessing within-team agreement. Before aggregatingindividual responses to a team level, it was necessary to statistically test theconformity of the level of measurement to the level of the theoretical analysis. To assesssuch within team agreement, the interclass correlation coefficient (ICC) was used to testwhether members in a team also led to similar patterns of responses. The ICC valuesshowed in Table II range from 0.544 to 0.681, which indicates sufficient within-teamagreement to justify aggregation (Klein and Kozlowski, 2000). Aggregated valuesconfirmed the average of individual members’ perceptions of their team.

3.2 Sample and procedureA survey was conducted online. In a large electronic parts manufacturing firm, 400employees with IT service project experiences across 85 different IT service projectteams. A total of 330 questionnaires were returned. As 15 returned questionnairecontains inappropriate or missing responses, a total of 315 data points across 82different IT service projects were used for analysis.

Table I shows the demographics of respondents. Male respondents outweighedfemale respondents: males and females accounted for 83.5 percent (263) and 16.5percent (52), respectively, of the respondents. This indicates that there are a far greaternumber of male participants in IT service projects than women. University graduateswere found to constitute 98 percent (309) of the surveyed IT project team members: thisindicates that the projects in the IT sector require a high level of education. Themajority (56.9 percent, 173) of the surveyed IT project participants (or project teammembers) was found to have less than three years of work experience in the field, and aconsiderable number of respondents (12.1 percent) were manager-level team memberswhose length of service was more than 11 years. Most project teams (95.1 percent) weresmall groups of o30 members, and the proportion of project teams with less than tenmembers was 74.4 percent. The project periods were mostly between six months andone year (39.02 percent), and the largest portion of IT projects (81.7 percent) wasrepresented by projects of between three months to two years’ duration. Most ITprojects were found to have a budget of o1.0 billion Korean won, the majority(52.4 percent) of which was small-scale projects with a budget of 100 million Korean.

4. AnalysisA partial least squares (PLS) analysis was performed to test the research modelpresented. PLS analysis is a component-based approach and thus does not have strictrequirements for sample size and residual distribution (Lohmoller, 1989). Anotheradvantage of the PLS analysis is that it can evaluate a theoretical structural model anda measurement model simultaneously (Chin et al., 2003). SmartPLS software was usedin two stage approach. In the first stage, all measurement models were examined forproper psychometric properties, while the second stage was focussed on testing theresearch model and hypotheses – structural model.

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4.1 Measurement modelAssessment of the measurement model involves evaluations of reliability, convergentvalidity and discriminant validity of the construct measures. Reliability was examinedusing Cronbach’s a and composite reliability. As indicated Tables II and III, Cronbach’sa exceeded 0.8 for each construct. The average variance extracted (AVE) indicates theamount of variance in the measurement items accounted for by the latent construct.It is generally more conservative than Chronbach’s a and should be 0.5 or above toestablish composite reliability of measures (Fornell and Larcker, 1981). As shown inthe last column of Table II, all the AVE are 40.50. Therefore, it can be concluded thatthe individual measurement items reliably measures related constructs.

According to Hair et al. (1995), measurement indicators can be evaluated forconvergent validity and discriminant validity .Generally, if the factor loadings of eachmeasurement item onto its construct is more than 0.7, the measurement item isconsidered valid (Chin et al., 2003). Factor loadings of more than 0.7 for eachmeasurement indicate the convergent validity as can be seen in Table II.

To evaluate discriminant validity, AVE can be used. The square root of AVE for eachconstruct should be greater than the correlations among constructs in order formeasures to be discriminantly valid. Table III shows the correlations among theconstructs and the values in the diagonal are the square roots of the AVE. Square-rootedAVEs were greater than all the other correlational coefficients. Thus, it can be concludedthat the measurement model demonstrated adequate discriminant validity.

An empirical analysis of the measurement model verified the appropriate level offactor loadings of five reflective sub-constructs for the “empowering leader”: leadingby example, participative decision-making, coaching, informing and showing concern.Also, the loadings of absorptive capacity by its reflective components (members’

Characteristics Category Sample Percentage

Age 20-29 163 51.730-39 130 41.340-49 22 7.0

Education Secondary 4 1.3Diploma 2 0.6University 188 59.7Postgraduate 121 38.4

Experience (years) o1 83 26.31-3 96 30.54-5 40 12.76-10 58 18.4More than 10 38 12.1Sum of respondents 315 100

Project size (persons) Less than 10 61 74.410-30 17 20.731-50 2 2.4More than 51 2 2.4

Project period (months) o3 8 9.83-6 20 24.47-12 32 39.013-24 15 18.3More than 24 7 8.5Sum of projects 82 100

Table I.Profile of characteristics

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ability and motivation) were found to be statistically significant. Measurement modelanalyses verified the reliability and validity of the measurement items for this study,and revealed no problem in proceeding to further analysis of structural model in focus.For the formative constructs, absolute item weights were examined to determine therelative contribution of items constituting each construct (Chin, 1998). We found thatall factor loading weights were accepted by standard of loading value (see Table II).

4.2 Structural modelProposed hypotheses were tested using a bootstrap significance test for inter-variablepaths using PLS. Results of PLS analysis is presented in Figure 2. Path coefficients arethe standardized b coefficients from the PLS analysis.

As expected, empowering leadership displayed a significant and positive relation toknowledge sharing (b¼ 0.453, po0.001). Thus, H1 was supported. Empoweringleadership was found to have significant positive relationship with project team’s

Construct Item Mean SD Factor loading Cronbach’s a CR ICC AVE

Leading by example LE1 4.000 0.818 0.870 0.897 0.928 0.681 0.764LE2 3.867 0.981 0.844LE3 3.863 0.908 0.879LE4 3.911 0.891 0.903

Participativedecision-making

PD1 3.908 0.994 0.856 0.873 0.913 0.626 0.723PD2 3.946 0.931 0.864PD3 3.749 1.027 0.841PD4 4.108 0.928 0.840

Coaching CO1 3.540 1.004 0.898 0.837 0.902 0.631 0.755CO2 3.654 0.989 0.880CO3 3.711 1.042 0.826

Informing IN1 3.797 0.956 0.891 0.849 0.909 0.650 0.768IN2 3.917 0.957 0.895IN3 3.663 0.938 0.843

Showing concern SC1 2.870 1.123 0.833 0.827 0.885 0.544 0.658SC2 3.571 0.995 0.795SC3 3.590 1.089 0.788SC4 3.756 0.938 0.829

Knowledge sharing KS1 3.829 0.929 0.719 0.884 0.920 0.655 0.745KS2 3.629 0.933 0.906KS3 3.670 0.913 0.913KS4 3.679 1.001 0.898

Member’s ability AB1 3.705 0.855 0.804 0.860 0.905 0.605 0.704AB2 3.702 0.845 0.865AB3 3.638 0.861 0.851AB4 3.581 0.842 0.834

Member’s motivation MO1 2.975 1.114 0.846 0.872 0.913 0.630 0.723MO2 3.019 1.085 0.844MO3 3.073 1.040 0.876MO4 3.095 1.039 0.834

Team performance TP1 3.762 0.747 0.865 0.890 0.924 0.665 0.752TP2 3.737 0.784 0.847TP3 3.813 0.794 0.886TP4 3.578 0.956 0.871

Notes: AVE, average variance extracted; CR, composite reliability; ICC, intraclass correlation

Table II.Factor loadings and

Cronbach’s a

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absorptive capacity (b¼ 0.384, po0.001); as such, H2 was supported. Likewise,knowledge sharing had a significant positive relationship with project team’sabsorptive capacity (b¼ 0.384, po0.001). So, H3 was supported as well. RegardingH4, which deals with the relation between knowledge sharing and project teamperformance, the resulting coefficient provides support (b¼ 0.117, po0.05). Projectteam’s absorptive capacity maintains a positive impact on project team performance(b¼ 0.574, po0.001), supporting H5.

There are two paths, in the research model, from empowering leadership toabsorptive capacity: one direct and the other via knowledge sharing. A simple pathanalysis points that total effect of empowerment on absorptive capacity is (0.558):direct effect (0.397) plus indirect effect (0.149¼ 0.453 � 0.329). The direct effect ofempowering leadership on absorptive capacity is much higher than the indirect effectvia knowledge sharing. Meanwhile, in the impact of knowledge sharing on teamperformance, the indirect effect via absorptive capacity (0.227¼ 0.397 � 0.574) isfound to be stronger than the direct effect of knowledge sharing alone (0.117). It can be

Construct AB MO LE PD CO IN SC KS TP SZ DU TY

AB 0.839

MO 0.340 0.850

LE 0.322 0.277 0.874

PD 0.333 0.293 0.447 0.851

CO 0.425 0.327 0.579 0.660 0.869

IN 0.431 0.341 0.405 0.490 0.634 0.877

SC 0.423 0.374 0.440 0.628 0.630 0.536 0.811

KS 0.416 0.431 0.205 0.388 0.369 0.417 0.419 0.863

TP 0.613 0.382 0.315 0.402 0.419 0.387 0.414 0.400 0.867

SZ �0.081 �0.073 �0.040 �0.080 �0.109 �0.059 �0.067 �0.120 �0.028 naa

DU �0.051 0.021 0.116 �0.068 �0.076 �0.039 0.020 �0.054 �0.013 0.761 na*a

TY �0.131 �0.077 0.020 �0.142 �0.119 �0.109 �0.137 �0.109 �0.036 0.254 0.011 naa

Notes: LE, lead by example; PD, participative decision-making; CO, coaching; IN, informing; SC, showing concern;

KS, knowledge sharing; AB, member’s ability; MO, member’s motivation; TP, team performance; SZ, project size

(number); DU, project duration; TY, project type. aAVE is not calculated for single-item

Table III.Composite reliability,average varianceextracted anddiscriminant validity

AbsorptiveCapacity

(R2=0.384)

TeamPerformance(R2=0.402)

KnowledgeSharing

(R2=0.205)

EmpoweringLeadership

0.453***

0.574***

Lead byExample

ParticipativeDecision making

Coaching

Informing

ShowingConcern

0.397***

0.329***

0.117*

- Project Members (0.036)ns

- Project Duration (–0.042)ns

- Project Type (0.064)ns

Control Variables

0.244***

Notes: * = t>1.96; ** = t>2.58; *** = t>3.29 ns = insignificant at the 1.96 level

0.280***

0.235***

0.223***

0.270***

Figure 2.Results oftesting model

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inferred that the mediating effect of the absorptive capacity seems greater than initiallyanticipated. In IT service project teams, both knowledge sharing and empoweringleadership works through the absorptive capacity.

Squared multiple correlation (R2) for endogenous constructs are presented inFigure 2. R2 measures the percent of variance explained by independent constructsin the model. Independent constructs were found to explain substantial portion ofvariance in dependent constructs: project team performance (R2¼ 43.0). It is also foundthat empowering leadership explains 19.6 percent of variance in knowledge sharingand 40.9 percent of variance in absorptive capacity with knowledge sharing. Thechanges in variance explained in the model with control variables were statisticallyinsignificant.

5. Discussions and conclusionsThis study proposed an empirical research model explicating the impact ofempowering leadership on the team performance via knowledge sharing andabsorptive capacity in IT service environment. These constructs are adopted fromprior research results in related areas and relations among these constructs aretheorized also based on prior research on knowledge and team management. A surveyinstrument was constructed from the items in this research, and empirical datacollected from 315 subjects across 82 different IT service projects.

Empowerment has been discussed as important in fostering creativity andautonomy of individuals, leading to effective performance as a team. Empoweringleadership has been emphasized in many fields including business administration,public administration and politics. However, not many studies have been conductedconcerning the mechanisms of empowerment, dealing with its consequences. As weprogress into knowledge based society in which autonomy and creativity of individualbecomes more important, it seems appropriate for empowerment to take a leading rolein increasing performance of teams conducting knowledge-based tasks. IT serviceproject is one of those knowledge intensive environments in which the sharing ofknowledge among team members with different expertise are critical and higher levelof absorptive capacity of the team will make a difference in terms of performance(Faraj and Sambamurthy, 2006).

This study attempted to demonstrate the impact of a team leader’s empoweringleadership on knowledge sharing among team members in team-based activitiesleading to the heightened level of absorptive capacity to effective team performance,especially in IT service project environment. In other words, we advanced and verifieda theory that empowering leadership facilitates knowledge sharing and boosts theteam’s absorptive capacity, and consequently the sharing of knowledge and thedevelopment of absorptive capacity may raise the level of project team performance.Analysis results of the proposed research model empirically supports the argumentthat knowledge sharing does not always lead to team performance, but a team’sabsorptive capacity is actually plays an important mediating role along withknowledge sharing in improving team performance. Empowering leadership of theteam leader can also be effective only via raising the level of absorptive capacity ofteam members to reach out for the actual performance.

These findings have implications primarily for IT service project management. Foracademics, this study fills the research gap, dealing with knowledge sharing andabsorptive capacity of a team, simultaneously. Previous studies of IT service team havedealt with knowledge sharing and absorptive capacity, but separately, not together as

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mediators for empowering leadership. Also, not many studies have dealt withempowering leadership in IT services, especially at the project team level.

Liao et al. (2007) proposed and empirically tested that absorptive capacity actuallyplays a key role between knowledge sharing and innovation capability at the firmlevel. However, this study pushes the research envelope by adding empoweringleadership as a leading antecedent in modeling for team performance. Hypothesizedtheoretical relation from empowering leadership via knowledge sharing andabsorptive capacity toward the team performance, in IT service project teams, areonce empirically tested here.

For practitioners, the findings of this study implies the importance of empoweringleadership in IT service environment. Empowering leadership explains more that40 percent of the variance in the absorptive capacity of the team. In all practical sense,it seems important for IT project managers to exhibit and use empowering leadershipfor the project to be successful. It seems that, in the knowledge intensive tasks such asIT services in which people with different expertise collaborate, empowering worksbetter than any other method of project leadership. It should be noted here forpractitioners that primary components of empowerments consists of five subcomponents: leading by example, participative decision making, coaching, informingand showing concern. Leadership training programs for IT service project teamleaders need to provide them with education and training in empowering techniques inreal-life situations.

Other implication is related to the direct and indirect relation among the constructsof interests. Though knowledge sharing at a team level maintains direct effect onimproved team performance, but the indirect path via absorptive capacity toward theteam performance is found to be stronger. This indicates that knowledge sharingproduces greater effects through absorptive capacity, suggesting that in the actualpractice of team management, emphasis should be placed on raising the absorptivecapacity rather than forcing to share knowledge.

Limitations and further studiesFirst of all, this study employed a cross-sectional survey as a primary researchmethod, although it is a study of leadership development processes. In embodyingthe leadership, as a matter of fact, the sharing of knowledge and the developmentof absorptive capacity are the processes of transformation that take place in alongitudinal manner with a team. Nevertheless, project participants (or surveyrespondents) were asked to recall such processes and their results and give responsesto the questionnaire. This indicates that the collected data is retrospective and maynot be accurate. In order to confirm and expand the findings of this study, futurestudies need to measure and monitor the process of empowering leadership and thefluctuations in knowledge sharing and absorptive capacity together throughoutIT projects.

Another limitation is that this study didn’t take the task characteristics intoconsideration. Faraj and Sambamurthy (2006) demonstrated the importance of taskuncertainty as a variable mediating the impact of empowering leadership.Empowering leadership may play a critical role in complex tasks but not in simpleand routine tasks. IT service projects are rather complex and knowledge intensive ingeneral compared to other project, but project can be differentiated based oncomplexity and knowledge intensity involved. For example, developing innovativeprocess management systems would be more complex than data porting projects from

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one version to another. However, this study analyzed a number of different projectssampled without taking into account the different characteristics of projects. Datapoints collected from 82 different projects are insufficient for split sample analysis fordifferent complexity. Further studies need to address and include the differentcomplexity of projects that may lead to different level of knowledge intensity in term ofjobs and tasks.

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Appendix. Measurement itemsEmpowering leadershipLeading by example

(1) My team leader [y] sets high standards for performance by his/her own behavior

(2) Works as hard as he/she can

(3) Works as hard as anyone in my project team

(4) Sets a good example by the way he/she behaves

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Participative decision-makingMy team leadery

(1) Encourages project team members to express ideas/suggestions

(2) Listens to my project team’s ideas and suggestions

(3) Uses my project team’s suggestions to make decisions that a affect us

(4) Gives all project team members a chance to voice their opinions

CoachingMy team leadery

(1) Suggests ways to improve my project team’s performance

(2) Encourages project team members to solve problems together

(3) Provides help to project team members

InformingMy team leadery

(1) Explains sponsor (such as top management) decisions/comments

(2) Explains project team goals

(3) Explains rules and expectations to my project team

(4) Explains his/her decisions and actions to my project team

Showing concern/interacting with the project teamMy team leadery

(1) Takes the time to discuss project team members’ concerns patiently

(2) Shows concern for project team members’ success

(3) Gets along with my project team members

(4) Knows what work is being done in my project team

Knowledge sharing

(1) Members in our team share their special knowledge and expertise with one another

(2) If someone in our team has some special knowledge about how to perform the team task,he or she is not likely to tell the other member about it (R)

(3) There is virtually no exchange of information, knowledge, or sharing of skills amongmembers (R)

(4) More knowledgeable team members freely provide other members with hard-to-findknowledge or specialized skills

Absorptive capacity

Ability of project members

(1) Project members are equipped with excellent professional knowledge.

(2) Project members can acquire quickly and thoroughly new knowledge required.

(3) Project members have better working skills than members of other projects.

(4) Project members have the ability to use and organize acquired knowledge.

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Motivation of project members

(1) Project members strive to acquire working skills and knowledge for their own careermovement.

(2) Knowledge acquisition behavior of project members positively helps increasing workingefficiency.

(3) Project rewards are designed to encourage members’ to acquire working skills.

(4) Project members obtain fair rewards for their progress in learning compared tomembers of other projects.

Project team performance

(1) This team was efficient in project operations.

(2) This team maintained good adherence to project schedule.

(3) This team maintained good adherence to project budget.

(4) This team produced good quality work.

About the authors

Jungwoo Lee is currently a Professor of Information Systems and the Director of the Center forWork Science at the Yonsei University, Republic of Korea. He received his PhD in ComputerInformation Systems from the Georgia State University in 1998. His research interests arefocussed primarily around social and organizational changes incurred by information andcommunication technologies.

Hyejung Lee is a Researcher in the Center for Work Science at the Yonsei University, Republic ofKorea. She received BBA from the Korea University, and MS in Digital Content from the YonseiUniversity. Between BBA and MS, she worked as a Researcher at the National Information SocietyAgency in Korea. Her research interests include web service quality, smart work of the future andIT service related issues.

Dr Jun-Gi Park is a Senior Researcher in IT Policy & Strategy Research Institute at the YonseiUniversity. He earned PhD in Information Systems at the Yonsei University. His researchinterests include knowledge sharing in organizational and team settings, project management,behavioral aspects of IT services, and service marketing. Dr Jun-Gi Park is the correspondingauthor and can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints

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