Explaining the effects of transformational leadership: an investigation of the effects of higher-order motives in multilevel marketing organizations

Multilevel marketing organizations (MLMs) are a rapidly growing organizational type enlisting nearly 10 million members and producing over 20 billion dollars in sales annually. Despite their remarkable recent growth, few studies have examined these unusual organizations, and none of these have addressed issues of transformational leadership. In MLMs, the key leadership relationships are those between individual member distributors and the members who recruited them into the organization (i.e., their 'sponsors'). Although sponsors are expected to provide leadership to the members they recruit, they possess no direct supervisory resulting-authority in an uncertain 'quasi-leadership' role. Using a sample of 736 female MLM members, the present study empirically tests an important explanatory component of transformational leadership theory: that belief in the higher purpose of one's work is a mechanism through which transformational leadership achieves its positive outcomes on cohesion, satisfaction, effort, and performance. The results offer support to the notion that transformational leadership indeed 'transforms' followers by encouraging them to see the higher purposes in their work. Additionally, the results show positive relationships between belief in a. higher purpose (if one's work and job satisfaction, unit cohesion, and effort. Copyright (C) 2001 John Wiley & Sons, Ltd.