Influence of Transactional and Transformational Leadership on Human Capital Value:

An Empirical study of Pakistani Higher Educational Sector

MEHVESH JAVED
COMSATS Institute of Information Technology Wah Cantt
Department of Management Sciences
Mehwish.6i@gmail.com

SHANAWAR KHALID
COMSATS Institute of Information Technology Wah Cantt
Department of Management Sciences
shanawarkhalid@gmail.com

or administration of impersonal systems. Therefore, it makes sense to

Abstract
Purpose: The purpose of this study is to investigate the relationship
between transformational/transactional leadership and human capital
management. An empirical study of Pakistani higher educational sector
was conducted in this regard.
Methodology/Research Design: Adopting a quantitative approach, the
multi factor leadership questionnaire (MLQ-21 ITEM SCALE) was
utilized to allow research participants, in addition the most widely
acknowledged tool for measuring human capital value (Leapk, Snell;
2002) was also incorporated in this questionnaire. Survey of 192
respondents was conducted through systematic random sampling, while
institutions were selected by simple random sampling. Self-
administrated questionnaires were distributed across the selected
sample.
Analysis: SPSS 18 was used to analyze the data. Regression analysis
was held to test relationship.
Results: Positively significant relationship was found that predict the
influence of transformational and transactional leadership on human
capital value.
Implications: The findings have a practical relevance to both
educational sector and academic scholars who wish to further explore
the association of this study variable.
Key words: Transactional leadership, transformational leadership,
human capital value.
Paper type: Research Paper
Introduction
The field of organizational behavior has observed as a growing
attention in studies of “transformational leadership (TL) and human–
capital-enhancing” (or progressive) human resource management
(HRM). Both of these expansions signify essential disappearance from
preceding investigation. The association among leader and subordinate
was believed to be impersonal and based on an exchange or transaction
of rewards for services in organizations.
The focal point was on efficient utilization of resources within the area.
Methods for accomplishing these changes or transformations differ
greatly from previous administrative techniques. Here, the focus is on
the relationship of the leader to other organizational members as well as
the impact the leader has on others via such phenomena as charisma (or
idealized influence), inspiration, and vision. At the risk of
oversimplifying, we may say that the difference between traditional and
more recent leadership research is the difference between management
and leadership. Likewise, newer research in the area of human resource
management differs substantially from older research. Older research
focused on administrative issues of selection, performance appraisal,
compensation, training, and compliance with legal requirements.
Newer theorizing and research also looks at how the HRM function
may be used to serve the strategic interests of the organization and how
HRM may increase the capacity of organizational members. Much of
the transformational leadership literature stresses the cognitive and
affective relationship between leader and organizational members and
stresses the differences between leadership and traditional management
suppose that transformational leadership would have its primary effects
outside of the formal administrative system. In this case,
transformational leadership and human–capital enhancing HRM would
be independent inasmuch as human–capital-enhancing HRM is part of
the organizational administrative system. An alternative, which we
explore in the present research, is the somewhat less intuitively obvious
proposition that transformational leadership and human–capital-
enhancing HRM may work together to enhance individual and
organizational performance. Specifically, we propose that much of the
effect of transformational leadership is mediated by human–capital-
enhancing HRM, in addition to any direct effect of transformational
leadership on outcomes.
Purpose of the Study
The primary purpose of this research is to explore the associations
among “corporate leadership” and “human capital management” in
higher educational institutions of Pakistan. The growing significance of
human capital management and corporate leadership is open with fast
and growing velocity. This research is planned to study how “corporate
leadership” plays its role in setting good capital management within the
faculty working in higher educational institutes in Pakistan. In this
study selected member of the higher educational institutions were the
main focus of attention of the author. This study allows the organization
of higher educational institutes in Pakistan to generate good practices of
human capital management in employees through the “corporate
leadership”. At last “corporate leadership” and “human capital value”
will also be analyzed among hierarchical level of the organization.
Problem Statement (Broad Problem Area)
Emergent competencies of human resources are a major concern to be
focused by any organization that takes massive hard work to conquer
their competitors on product quality, customer service, and new product
development. Numerous researchers have focused a prototype
movement from human resources to human capital in organizations
with the purpose to uphold a competitive edge (McGregor et al., 2004;
Bontis and Fitz-enz, 2002). Bontis (2001, p. 5) defined human capital as
“the shared knowledge, skillfulness, creativity and capability of the
organization’s individual employees to meet the task at hand”.
According to Snell and Dean, (1992) to develop human capital in-house
or gain human capital from the external labor market, firms implement
human resource management (HRM) practices, predominantly, staffing,
training, performance appraisal, and rewards. These practices are
generally considered as the investments for human capital development
through which firms increase their economic value.
Through appropriate investments in human capital as supplement
financial performance and productivity of organizations (Acemoglu and
Pischke, 1999), it is to be anticipated that these investments deliver
positive benefits to employees that represent human capital formation
among organizational members. Research work carried out in relation
to “leadership, particularly, Transformational leadership, knowledge
management (KM), and human capital Benefits” are need to get more
attention, this was one of the main reason of conducting this study. A
few studies explored the role of corporate leadership on individual
employee’s performance and organizational performance through
knowledge acquisition, knowledge creation, knowledge sharing, and
knowledge exploitation (Politis, 2001, 2002;Bryant, 2003) but not in the
context that have developed by the authors but research studies (Smith,
1998; Darroch, 2003) described the relationship between KM and
human capital, the effects of KM hierarchical structure on human
capital development.
The objective in this area of study has been the capability to
operationalization of corporate leadership” and “human capital
management”. The major progress of economic restructuring and social
dynamics in organizational development, “human resource
management” research and applications are all in great demand for
Pakistani organizations in these days. So, it is required to observe how
workforce in Pakistani higher educational institutions identified “human
capital management” that these institutions organization by
investigating some related variables and its usability in this sector
particularly. No studies had been developed at the time that expand, or
identify, the dimensions of “corporate leadership” of faculty working in
higher educational institutions especially in relation with the human
capital management, in short we can say that “corporate leadership”
should be implemented with its full requirements and not to be ignored
because of its incredible influence on organization’s growth and
financial performance”.
Research Objectives
The overall importance of the service sector to the Pakistani economy,
coupled with the rapid growth within the education industry
specifically, were strong contributing factors in formulating the aims of
this study. A review of human capital literature reaffirmed the critical
importance of this area at higher educational institution in highly
competitive markets, with many authors emphasizing the need to better
understand the complex dynamics associated with their roles. Research
work carried out in relation to “corporate leadership, and human capital
Benefits” are need to get more attention, this was one of the main
reason of conducting this study. An empirical approach to investigate a
range of issues related to human capital and teachers was developed
with the following broad aims:
1. Identify the different corporate leadership styles delivered to teachers
in Pakistani higher educational institutions.
2. Identify the attributes human capital through the corporate leadership
styles in Pakistani higher educational institutions.
In order to pursue these aims, following focal research questions were
developed and explored:
Research Questions
1 What are the corporate leadership styles?
2 How corporate leadership styles are influencing educational
institutions?
3 What is human capital management?
4 How human capital management is influencing educational
institutions?
5 How do corporate leadership styles impact on human capital
management?
Hypothesis
Ho1: There is a relationship between corporate leadership
styles and human capital management
Ha1: There is a no between corporate leadership styles and
human capital management
Significance of study
This study will contribute in three directions. First, this study tests
“corporate leadership styles and human capital management” in a new
framework, higher educational institutions. Second, it also tests a new
non-financial result variable that is human capital management through
corporate leadership styles. This research work will work it in a new
area -- higher educational institutions in Pakistan while discovering the
association “corporate leadership styles and human capital
management”. Third, this study will also offer some useful information
for human resource (HR) managers in higher educational institutions. It
will help HR managers in finding whether “corporate leadership styles”
helps to develop human capital among people teaching in educational
institutions. To the researcher’s understanding, no such work is
available that is combining to see how ““corporate leadership styles”
influences the human capital of organizations. This study can help HR
managers to formulate rules and policies to exceptional frame those
aspects most important to create more useful leadership styles for the
development of human capital.
Theoretical Framework
Idealized Influence
Transactional & Transformational
Inspirational Motivation
Intellectual Stimulation
Leadership
Delimitation
Human Capital Value
Individualized
This study was delimited to examining only one variables influence
Consideration
“corporate leadership”
Contingent Reward and its effect on human capital. Role of further
variables, such as occupational commitment, job involvement, and
supervisor’s roles might also be capable to clarify this concept more but
Management-by-exception
not included in this study.
Laissez-faire
Limitations of Leadership
the Study
This research has many limitations. First, measurement of the variables
of “corporate leadership styles, and human capital management” is all
based on perceptions and attitudes of participants of this study through a
questionnaire/survey. No peer evaluation, manager feedback, or actual
behaviors on those variables were analyzed. Thus, some possible
sources of error might exist in the data set. Second, all subjects in this
study worked for the higher educational settings. Therefore, the findings
cannot be generalized to other organizations. Finally, this study is
limited to describing, explaining, and predicting associations among
these variables. No cause and effect type of relationship among
variables was sought. But a causal relationship between “corporate
leadership styles, and human capital management” in higher educational
setting may exist in the real world.
Literature Review
Leadership
Leadership is although the most widely researched area in the field of
organizational learning, but yet it is little understood (Burns, 1978;
Yukl et al., 2002). Most of the study has paid attention to the features of
leaders by investigating the correlation between management behavior
and many indicators of leadership efficiency (Bass and Bass, 2008;
Yukl, 2006). Yukl et al. (2002) established a hierarchical nomenclature
to find out which performance classes are related and significant. For
this, they examined ten procedures of leadership performance,
consisting of the MLQ (Bass and Avolio, 1990), which give proof for
construct validity of the factor behaviors being examined. In accordance
with Den Hartog et al. (1997, p. 20) transactional leadership hypothesis
are “established on the thought that leader-follower relationships are
foundation of sequence of interactions or hidden negotiation between
leaders and followers”. Transformational leadership hypothesis are
based on a common image between leaders and followers to accomplish
company goals (Hater and Bass, 1988). The dynamics of
transformational leadership include powerful individual recognition
with the leader, combining in a common image of the prospect, or
departing afar from the self-centered replace of rewards for fulfillment.
So transformational leaders, aspire to reach followers’ expressive
drivers to attain results (Bass and Avolio, 1993).
Leadership and Organizational Outcomes
Leadership is one of the means to improve organizational performance.
Leaders, as the main decision-makers, establish the achievement,
expansion, and employment of firm resources, the transfer of these
resources into important products and services, and the deliverance of
importance to company’s stakeholders. Therefore, they are strong
sources of executive rents and hence continued competitive advantage
(Avolio, 1999; Lado, Boyd, & Wright, 1992; Rowe, 2001).
Transactional leadership assists companies to accomplish the existing
objectives more competently by connecting job performance to
appreciated rewards and by making certain that workers have the capital
required to get the job completed. Integration and interdependencies
which are required for the new job environment and worldwide
competition need leadership that is more than the fundamental
transactional styles, which include conditional strengthening and
management-by-exception, to techniques that are more rationally
motivating, encouraging, and charismatic (Avolio, Bass, & Jung, 1999;
Bass, 1997; Bass & Avolio, 1993). Moreover, transformational leaders
establish a planned vision, communicate that visualization via
structuring and use of symbol, model the visualization by walking the
chat and performing constantly, and construct assurance towards the
visualization (Avolio, 1999; McShane & Von Glinow, 2000). These
visions propose that transformational leadership give greater levels of
cohesion, loyalty, faith, inspiration, and performance in the new
organizational settings. Early empirical study showed that
transformational leadership has a useful effect on person performance
and outcomes of the organization (Howell & Hall-Merenda,
1999).Many investigations showed useful relationships between
transformational leadership and results at the person level and company
levels (Avolio, 1999; Kirkpatrick & Locke, 1996). A lot of relative
studies (e.g., Waldman, Ramirez, House, & Puranam, 2001) showed
that transformational leadership behaviors are more usefully related to
subordinate efficiency in different organizational environments than are
transactional performances.
The examination found out that transformational leadership leads to
increased levels of solidity, assurance, faith, inspiration, and
performance in the new company atmosphere. Earlier experimental
research showed that transformational leadership has a constructive
effect on the performance of individual and outcomes of the company.
(Howell & Hall-Merenda, 1999). Many studies revealed positive
relations between transformational leadership and its results,the level of
individual and organizational levels (Avolio, 1999; Kirkpatrick &
Locke, 1996).A lot of relative studies (e.g., Waldman, Ramirez, House,
& Puranam, 2001) have shown that transformational leadership
activities are more positively associated with secondary efficiency in
different organizational atmosphere than with transactional activities
Transactional Versus Transformational Leadership
By using the ideas of Burns (1978), Bass (1985) differentiated between
transactional leadership (TA) and transformational leadership (TF).
According to transactional leadership, principal-follower relationships
depend on a sequence of connections or negotiation between principals
and followers. These leaders can be efficient to the degree that they
simplify prospects and goals, but they usually ignore to develop long-
term prospective of followers. Bass (1985) recognized two factors as
creating transactional leadership. Principals can manage followers by
gratifying effort contractually, tuiding them how to get rewards,
punishing unwanted behavior, and giving extra response and
encouragement for good work. These transactions are called as
contingent reward (CR) leadership. Leaders can also manage followers
by superseding when followers diverge from prospects, giving poor
feedback for collapse to achieve standards. Such transactions are called
management-by exception. According to the timing of the leader’s
interference a difference lies between active and passive management-
by-exception (Bass & Avolio, 1993; Hater & Bass, 1988). In passive
management-by-exception (PM) leaders interfere when the standards
are not met. In active form of management-by-exception (AM) leaders
attempt to look forward to errors or troubles. The first aspect,
charismatic leadership (C) is exposed by leaders who perform as role
models, make a sense of recognition with a common vision, and
encourage satisfaction and trust in followers by defeating hurdles.
Inspiration (I) is described as motivating and authorizing followers to
passionately accept and pursue difficult objectives and a mission.
Individual consideration includes behaviors s like corresponding
personal esteem to followers by providing them particular attention, by
dealing every one individually, and by identifying each one’s
exceptional needs. Finally, principals who deem old troubles in latest
ways, communicate these notions, and support followers to reorganize
their predictable practice and such ideas are called intellectually
stimulating (IS).
Transformational leaders pay concentration to person and personal
distinction in needs expansion and development and offer essential
resources to assist supporters to comprehend their imaginings.
Encouraging human resource management techniques like recruitment,
training, performance appraisal, and reward systems are the ways used
by leaders to express their individual contemplation of workers.
Transformational leaders pay attention to supporters’ needs for
accomplishment and enlargement by performing as advisers or trainers,
by establishing efficient or human–capital improving HRM, and by
persuading followers to take on accountability to expand their potential
(Avolio, 1999; Bass & Avolio, 1994; Bryman, 1992). In this regard,
company workers praise leaders and companies that give chance for
liberty, challenges, accountability, significance, contact, and self-
government. Most probably they respond their organizations haviny
more commitment than workers in more conventional organizations
(Wayne, Liden, & Sparrowe, 2000).
Identification of Transformational Leadership Qualities
Newly, leadership growth programmes have started to include the
viewpoint following transformational leadership model (Avolio & Bass,
1991, 1995; Barling et al., 1996; Bass & Avolio, 1990; McCauley &
Hughes-James, 1994; McElroy & Stark, 1992; Pile, 1989; Popper,
Landau, & Gluskinos, 1992). Normally, these programmes are led
towards best and use of the complete variety of leadership styles.
Specifically, the goal of training is often to prepare target leader to
show new active transactional and transformational leadership
elements, as compared to passive transactional and laissez-faire
leadership. The recognition of leadership characteristics is a
fundamental component of these transformational leadership expansion
programmes.For identifying the qualities and drawbacks of the target
leaders, the MLQ is spread to their supporters or colleagues. The co-
workers should then found out the frequency by using which the
leadership tactics and events are prompted by the target leaders. Such
investigation, which is done monthly earlier to the actual training
seminar, gives a base profile for every target leader (Avolio & Bass,
1991, 1995). Due to this MLQ profile, the leader creates individual
ideas for self-improvement, draws learning procedures, and formulates
developmental assignments.
Definition of Human Capital
With the increase of service wealth, the significance of human capital
also increases. (Ulrich1998), Human capital consists of talent of an
employee that assists to meet up the job. It refers to collective
knowledge, expertise, modernization and capability of the company’s
persons (Bontis, 2001). Human capital is also described by Van Buren
(1999) like awareness, talent, and proficiency of individuals in the
company. For a company to make use of understanding as a source or
competence, it should build up absorptive ability —a conception by
Cohen and Levinthal (1990)signifying the capability to worth,
incorporate, and to relate knowledge to generate new information. In
accordance with Gold et al. Nehapiet and Ghoshal (2001; 1998)
generating new understanding need the existence of human capital. In
the framework of knowledge management, the notion of human capital
theory refers to the societal relations of people that become a source of
developing and accumulating combined knowledge (Nahapiet and
Ghoshal 1998).In view of of human capital theory, Grant (1996)
commented that the company’s combined knowledge assets that are
connected, linked, and conveyed to company describe firm structure
resources.
Human Capital and Employment
Lepak and Snell (1999) found that human capital is thought to be centrl
to the organization. Due of its worth, the workers are capable of
contributing strategic objectives of company. When human capital
includes both features like value and uniqueness valuable, it shows the
knowledge foundation using which the companies establish their plans
(Snow & Snell, 1993; Stewart, 1997). These employees are most
expected to symbolize a company’s knowledge employees—those
“people who make use their brain more as compared their hands to
create value” (Horibe, 1999, p. xi). In these regards, companies are
mostly rely on a knowledge-based employment method that
emphasizes on internal growth and lasting employee loyalty for their
internal workers.
Human–Capital-Enhancing HRM and Organizational Outcomes
Now- a- days, human capital is included as an element of intellectual
resource. Edvinsson (1997) describes intellectual capital as ‘the
ownership of understanding, functional experience, organizational
expertise, customer associations and practical skills’. Human capital is
one of the elements of intellectual capital. In accordance with Bontis et
al. (2001) merely, human capital symbolizes the understanding level of
an individual about the organization stock as shown by its workers.
Roos et al. (1998) commented that workers gain intellectual capital via
their capabilities, their thoughts and their intellectual quickness.
Similarly, Hudson (1993) describes human capital as a blend of:
hereditary, learning, knowledge and feelings regarding life and
business. As a consequence of organizing intellectual capital, some
organizations mainly in Scandinavia, have printed intellectual capital
reports as a method to prompt the worth of their intellectual capital.
Organizations have initiated revealing intellectual capital, the
indefinable assets of expertise and understanding in their monetary
reports (Stewart, 1994).
In accordance with Harrison and Sullivan (2000), by 1994, a lot of
companies in the world were busy in the active drawing out of profits
from the intellectual capital.
Human capital, value creation
Scholars in the area of HRA like Hermanson (1964) and Flamholtz
(1999) promote that HRs is a balance sheet item. They proposed that
HR investment be capitalized and pay back in procession with other
capital, with the objective of sharing HR value to outer stakeholders.
Scarpello and Theeke (1989) found that a suitable technique for
measuring HR value in financial terms is still uncertain. It is difficult to
place HRs on the balance sheet regarding current financial accounting
frames which that balance sheet identification is based on potential
economic gains being articulated in financial terms (ASB Statement of
Principles; Financial Reporting Standard 10; International Accounting
Standard 38). As a result, some scholars at the time emerged to run far
from the idea of HRA as a balance sheet item. Roslender and Dyson
(1992) transmitted an alteration in course to emphasize on how HRs
establishes worth relatively by how much. It was gained via, what
Roslender (1997) conditions, the application of flexible accounting
information in contrast with rigid balance sheet numbers.
Research methodology
Research Design
Research is a disciplined investigation technique to the study the
problems (Gay & Airasian, 2003), for that reason, research should be “a
careful and systematic means of solving problems” (Tuckman, 1999, p.
4). Since there are diverse kinds of problems, and diverse form of
research approaches are needed to solve these problems. Academic
research in social sciences is typically divided into two extensive types:
quantitative and qualitative research.
Hopkins, (2000) proposed that quantitative research work as connecting
numbers of variables. Approaches to quantitative research are the use of
statistical tools and data collected from various well-controlled settings.
Ary et al., (2002) proposed there are two types of quantitative research:
non-experimental and experimental. In a non-experimental study, no
effort is made to modify behavior or conditions; researchers measure
things as they are (Hopkins, 2000). Some of the types of non-
experimental researches are survey research (Survey research is used to
measure the uniqueness of different groups or to measure their attitudes
and view toward some issue) correlation studies (correlation research is
done to determine relationships among two or more variables from the
same group of people and to examine the strength and direction of
relationships among variables), and causal-comparative studies (It
should be noted that causal-comparative research does not establish a
causal relationship among the variables, because it does not manipulate
the independent variable that has already occurred naturally). In this
study quantitative research approach is used in form of surveys.
Research study may first investigate theories or concepts with the help
of quantitative method, followed by a qualitative method linking
thorough exploration of a few cases or individuals (Creswell, 2002).
Typically, qualitative results are utilized to help in explaining and
interpreting the findings of a primarily quantitative study, and are very
useful when unanticipated and astonishing outcome arise from a
quantitative study (Morse, 1991).Considering the definition presented
above, this present study should be identified as a correlation study.
Typically, the rationales of a correlation study are (a) to find
connections among various variables, or (b) to utilize these connections
to forecast probable results (Gay & Airasian, 2003). This study was
conducted to determine the relationships between one “independent
variables” and one “dependent variable” from the same group of people
– faculty teaching at higher educational institutions in Pakistan.
Sampling Procedure
The main survey was conducted through respondents entering into their
offices in chosen randomly in the city of Islamabad (capital city of
Pakistan) where the faculty of institutions acting as respondents to the
survey. To guarantee that specific groups within a population were
adequately represented in the sample and to improve efficiency by
gaining greater control on the composition of the sample, stratified
sampling was used and authors selected approximately equal numbers
of respondents for each chosen institution. To maintain randomness
among the cases, the third member entering in office was approached
with the exit questionnaire using systematic sampling.
Sampling Procedure
Institution Simple Random Sampling
Respondents systematic sampling (third member entering in office)
Table No 1: sampling procedure
Sample Size
To study the relationship between the variables, the total respondents
for this research were selected in between 200 and 250. Self-
administered questionnaires were distributed and 198 received, among
them 6 contains incomplete information and remaining 192 were taken Data Analysis
as the respondents of this study.
Demographic Descriptive
Study of Variables
Fifty two (27.1%) out of 192 were between 25 and 30, ninety (46.9%)
The variables will be examined in this study were: were between 31 and 35, twelve (6.3%) were 36-40,nine (4.7%) were
1) Demographic (control): Age, gender, and years of working at the 41-45 and twenty nine (15.1%) were 46 and over. Eighty two (42.7%)
organization, type of institution, education level and marital status. out of 192 were having bachelor degree, twenty two (11.5%) were
2) Independent: “Transformational and Transactional Leadership”. masters, forty (20.8%) were having MS/M.Phil., twenty five (13%)
3) Dependent: “Human Capital Value”. were PhD and twenty three(12%) were having other educational
backgrounds.one hundred and twenty eight (66.7%) out of 192 were
Measurement of Variables working as lecturers, twenty nine (15.1%) were assistant professors,
seven (3.6%) were associate professors eleven (5.7%) were professors
Both (independent and dependent variables) were measured according and seventeen (8.9%) were working on other designations. twenty
to the following pattern. (10.4%) out of 192 subjects had been working for the organization
between 16 and 20 year, five (2.6%) subjects between 11 and 15 years,
Measurement of Variables thirty eight (19.8%) subjects between 6 and 10years, eighty eight (44.8)
subjects between 1 and 5. Thirty nine (20.3%) out of 192 were earning
Constructs Scale
Source Items 30000-40000 rupees per month, forty nine (25.5%) were 41000-50000,
measure
fifty two (27.1%) were 51000-60000, thirty eight (19.8%) were between
Idealized Influence
61000-70000 and fourteen (7.3%) were earning more than 71000 per
month. One hundred and seventy three (90.1%) out of 192 were
Inspirational Motivation
identified themselves as male, and nineteen (9.9) as female. forty
Bass & Avolio (1997)

(20.8%) out of 192 were married and remaining 69.2% were unmarried
5 point likert scale Strongly agree

Intellectual Stimulation while among 192 eighty two (42.7%) were working in public
20 items

institutions/ universities and one hundred and ten (57.3%) were working
To Strongly disagree

Individualized Consideration in private institutions/ universities.

Contingent Reward

Management-by-exception

Laissez-faire Leadership
Snell, 2002
Lepak and

9 items

Human Capital Management

Table 2: Measurement of variables

Demographic Descriptive
Age 25-30 31-35 36-40 41-45 46 and over
Frequency 52 90 12 9 29
Percent 27.1 46.9 6.3 4.7 15.1
Education Bachelor Master MS/MPhil PhD Other
Frequency 82 22 40 25 23
Percent 42.7 11.5 20.8 13 12
Designation Lecturer Assistant Professor Associate Professor Professor Other
Frequency 128 29 7 11 17
Percent 66.7 15.1 3.6 5.7 8.9
Experience 1-5 6-10 11-15 16-20 More than 20
Frequency 88 38 5 20 43
Percent 44.8 19.8 2.6 10.4 22.4
Income Level 30000-40000 41000-50000 51000-60000 61000-70000 Other
Frequency 39 49 52 38 14
Percent 20.3 25.5 27.1 19.8 7.3
Gender Male Female
Frequency 173 19
Percent 90.1 9.9
Marital Status Married Unmarried
Frequency 40 152
Percent 20.8 69.2
Institution Public Private
Frequency 82 110
Percent 42.7 57.3
Table No 3: Demographics Descriptive
 Intellectual Stimulation
Frequencies Frequency Percent
strongly disagree 96 50
Inspirational Influence disagree 37 19.2
Frequency Percent neutral 28 14.6
strongly disagree 84 43.8 agreed 27 14.1
disagree 82 42.7 strongly agreed 4 2.1
neutral 18 9.4 Total 192 100.0
agreed 7 3.6 Table No: 6 Intellectual Stimulation
strongly agreed 1 0.5
Total 192 100.0
Table No: 4 Inspirational Influences

The above table indicated that four (2.1 %) out of 192 responses were
strongly agreed from the Intellectual Stimulation, twenty eight
The above table indicated that eighty two (42.7 %) out of 192 responses (14.6%) were neutral, ninety six (50%) were strongly disagree, twenty
were disagree from the Inspirational Influence, eighteen (9.4%) were seven (14.1 %) were agreed while thirty seven (19.2%) out of total 192
neutral, eighty four (43.8%) were strongly disagree, seven (3.6 %) were respondents were disagreed
agreed while one (0.5%) out of total 192 respondents were strongly
agreed. Individualized Consideration
Frequency Percent
Inspirational Motivation strongly 90 46.9
Frequency Percent disagree
strongly disagree 83 43.2 disagree 45 23.4
disagree 10 5.2 neutral 22 11.5
neutral 9 4.7 agreed 31 16.1
agreed 30 15.6 strongly agreed 4 2.1
strongly agreed 60 31.3 Total 192 100.0
Total 192 100.0 Table No. 7 Individualized Consideration

Table No: 5 Inspirational Motivations

The above table indicated that four (2.1 %) out of 192 responses were
strongly agreed from the Individual Consideration, twenty two
(11.1%) were neutral, ninety (46.9%) were strongly disagree, thirty
(16.1 %) were agreed while remaining forty five (23.4%) out of total
The above table indicated that sixty (31.3 %) out of 192 responses 192 respondents were disagreed.
were strongly agreed from the Inspirational Motivation, nine (4.7%)
were neutral, eighty three (43.2%) were strongly disagree, thirty (4.7
%) were agreed while remaining ten (5.2%) out of total 192
respondents were disagreed.
 Contingent Reward Human Capital Value
Frequency Percent
strongly disagree 79 41.1 Frequency Percent
disagree 15 7.8 strongly disagree 33 17.2
neutral 3 1.6 disagree 36 18.8
agreed 8 4.2 neutral 59 30.7
strongly agreed 87 45.3 agreed 54 28.1
Total 192 100.0 strongly agreed 10 5.2
Table No: 8 Contingent Reward Total 192 100.0
Table No:11 Human Capital Value

The above table indicated that seventy nine (41.1%) out of 192
responses were strongly disagreed from the Contingent Reward,
fifteen (7.8%) were disagree, three (1.6) were neutral, eight (4.2 %)
were agreed while remaining eighty seven (45.3 %) out of total 192
respondents were strongly agreed.

Management-by-exception The above table indicated that ten (5.2%) out of 192 responses were
Frequency Percent strongly agreed from the Human Capital Value, fifty nine (8.3%) were
strongly disagree 12 6.3 neutral, thirty-three (8.3%) were strongly disagree, fifty four (28.1 %)
disagree 30 15.6 were agreed while remaining thirty-six (10.9%) out of total 192
neutral 56 29.2 respondents were disagreed.
agreed 74 38.5
strongly agreed 20 10.4 Scale Properties – Reliability and Validity
Total 192 100.0
Table No: 9 Management-by-exception Usually, reliability coefficients should be “at least .70 and the higher the
better” (Fraenkel & Wallen, 1996, p. 163). Furthermore, as suggested
by Churchill (1979), if a scale item were to exhibit an item-to-total
The above table indicated that twenty (10.4 %) out of 192 responses correlation of .25 or less, that item should not be included in further
were strongly agreed from the Management-by-exception, fifty six analyses. The reliability coefficients were all higher than 0.70.
(29.2%) were neutral, twelve (6.3%) were strongly disagree, seventy Therefore, reliability tests showed that the internal consistency of each
four (38.5 %) were agreed while remaining thirty (15.6%) out of total variable was very good. Cronbach’s alphas were calculated to examine
192 respondents were disagreed. the reliability of each variable of the study. Cronbach’s alpha for used
scale was .759.
Laissez-faire Leadership
Frequency Percent Regression Analysis
strongly disagree 7 3.6
disagree 17 8.9 Model Summary
neutral 29 15.1 Model R Adjusted R Std. Error of the
agreed 74 38.5 R Square Square Estimate
strongly agreed 65 33.9 1 .501a .251 .222 1.02469
Total 192 100.0 a. Predictors: (Constant), AL.L, AII, AME, ACR, AIS, AIC,
Table No: 10 Laissez-faire Leadership AIM
Table No: 12 Model Summary
The above table indicated that sixty five (33.9 %) out of 192 responses
were strongly agreed from the Laissez-faire Leadership, twenty nine In the first column R is the value of multiple correlation coefficient
(15.1%) were neutral, seven (3.6%) were strongly disagree, seventy between the predictor and the outcome. When “transactional and
four (38.5%) were agreed while remaining seventeen (8.9%) out of transformational leadership” is used as a predictor, the value of R is
total 192 respondents were disagreed. .501. The next column is R square, which measured the variability in
the result is accounted for by the predictor for Model-1, the value is
.251, which means that “transactional and transformational
leadership” accounts for 25.1% of the variation in human capital
value. The adjusted R square gives an idea how well the model
generalizes, the value of adjusted R square is very close to the value
of R square, and the difference of Model-1 is (.251-.222=.029 or .2%).
Model summary table shows that there is 25.1% impact of
“transactional and transformational leadership” on human capital
value of the people teaching in academic intuitions of Pakistan.
 “transactional and transformational leadership” rather than the negative
relationship as proposed at the beginning of the study. It is good news
ANOVAb for the organization since employees can still provide “transactional and
Model Sum of transformational leadership” when they remain in the organization
Squares df Mean Square F Sig. whether because there are no other job options or because of the high
1 Regression 64.718 7 9.245 8.805 .000a cost of leaving the job. In order to explain the result correctly and
Residual 193.198 184 1.050 clearly, HR managers need more information on what affects
Total 257.917 191 “transactional and transformational leadership” and combine other
a. Predictors: (Constant), AL.L, AII, AME, ACR, AIS, AIC, AIM findings from the present study. HR managers may want to collect
b. Dependent Variable: AHC information through informal talks with employees in order to make
Table No: 13 ANOVA reasonable judgments before taking any HR action.

The last column illustrates the goodness of fit of the model. The lower Conclusion
the number, the better is the fit. Typically if “Sig” is less than 0.05, we
conclude that our model best fit the data. The table reports the This study extended the concepts of the learning culture beyond the
ANOVA result for the four models, they are all significant. The borders of the United States to suggest that it is not a “Western”
ANOVA table shows that “transactional and transformational experience. It can also apply to the “Eastern” setting like in Pakistan.
leadership” predict the best fit with human capital value. This research work put correlated variables together based on preceding
researches and originates “transactional and transformational
Coefficients a leadership” can elaborate more of the variance in “human capital value”
Model Unstandardized Standardized comparative to other probable aspects. Learning in organizations is
Coefficients Coefficients considerable in workplace of today environment (e.g., Pakistan) where
B Std. Error Beta t Sig. people repeatedly shift their jobs. Findings in this research work
1 (Constant) 1.925 .362 5.320 .000 showed that it is valuable to provide in building up a grooming culture
AII .109 .164 .076 .667 .505 because of its potentially good connection with peoples’ “human capital
value”.
AIM -.183 .082 -.281 -2.239 .026
AIS .057 .094 .058 .604 .547
Recently, authors have concentrated more to “transactional and
AIC .340 .108 .349 3.147 .002 transformational leadership” due to its effect on the organization’s
ACR -.161 .066 -.263 -2.442 .016 growth and profits. Organizations also are required to find out in terms
AME .310 .076 .282 4.095 .000 of the human capital value and its management system, then with
AL.L -.020 .072 -.018 -.275 .783 appropriate instruments, such as a tool for measuring “human capital
a. Dependent Variable: AHC value. Therefore, higher educational institutions in both Eastern and
Table No: 14 Coefficients Western countries are able to be utilized the techniques revealed in the
research work and results offered in this study to design strategic tactics
Coefficients reveal the magnitude and direction of relationship between for improving “human capital value”.
dependent variable and independent variable. The above table shows
that in Model-1 there is positive relationship (t = 5.320, p< .01) of
“transactional and transformational leadership with human capital
value.

Discussion

The primary purposes of this study were to examine the relationships

among “transactional and transformational leadership” and human
capital value in a higher education setting in Pakistan. Specifically, this
study was conducted to find out which factor has the greatest influence
on human capital value. The instruments used in this study were all
determined to be reliable and valid through various testing before and
after data collection. Questionnaires were finalized after review by
experts. Cronbach’s alpha for the scale was .759. The results indicated
that the internal consistency of each scale was very good. Further, the
item-to-total correlations suggested that the items were measuring the
constructs they were intended to measure. Thus, it appears that the data
collected from the instrument was reliable and validity. The Pakistani
Education industry has been developing quickly since the educational
reforms in 1990s. Therefore, HR managers need to think about how to
keep their talented faculty members, especially the younger ones. A
high-quality learning culture, to some level, can help an employee to
create a higher human capital value. A good learning culture will not
only help employees to participate in human capital value but also keep
those good employees in the organization.HR should also realize that
“transactional and transformational leadership” must become part of the
organization’s culture. Learning is a process, not a program.
Sometimes, employees may not want to share their knowledge with
others since they believe it harms their success (Marsick & Watkins,
2003) but it is not a case in educational institutions. As a result, HR
manager should also encourage constant learning opportunities for
individual workers and keep watching the learning culture and
environment within the organization and change it accordingly. There is
a positive and strong relationship between human capital values and