Journal of Business and entrepreneurial
January March Vol. 6 - 1 - 2022
http://journalbusinesses.com/index.php/revista
e-ISSN: 2576-0971
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Leadership in the face of digital transformation in
an Ecuadorian manufacturing company in 2020.
El liderazgo frente a la transformación digital en una
empresa de manufactura ecuatoriana en 2020
Carlos Alberto Ortí Maldonado
*
María Belén Castillo Quintana *
ABSTRACT
The present research focused on determining the
predominant leadership style in the productive areas of an
Ecuadorian manufacturing company, and the level of digital
transformation during the year 2020. The study was
developed through cross-sectional descriptive research.
The multifactorial leadership questionnaire and key
performance indicators were used as instruments, which
were applied digitally using Google forms. The population
studied was 151 workers and the sampling technique was
probabilistic. The results allowed determining that 74% of
the transformational leadership guidelines are practiced,
77% of transactional leadership and 9% of laissez-faire. The
level of digital transformation had an increase of 19% in the
fourth quarter compared to the first quarter of the year,
evidencing in practice the implementation of automation
mechanisms, use of digital media and documents and
implementation of technology. It was concluded through
the literature and theoretical review that to face the
technological advance, the transformation leadership style
with all its dimensions is the most appropriate because it
promotes development, innovation and knowledge
management.
*
Master in Business Administration, Maintenance Engineer, Chaide y Chaide
S.A, Guayaquil, Ecuador, carlosalbertoorti@gmail.com,
https://orcid.org/0000-0001-5633-9351
* Master in Business Administration, Professor - Coordinator, Universidad
Internacional del Ecuador, Guayaquil, Ecuador, macastilloqu@uide.edu.ec,
belencastilloq@gmail.com, https://orcid.org/0000-0002-4480-7733
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Keywords: Leadership styles, Digital transformation,
Multifactor leadership questionnaire, Key performance
indicators.
RESUMEN
La presente investigación se centró en determinar el estilo de liderazgo predominante
en las áreas productivas de una empresa de manufactura ecuatoriana, y el nivel de
transformación digital durante el año 2020. El estudio se desarrolló mediante la
investigación descriptiva transversal. Se utilizó el cuestionario multifactorial de liderazgo
y los indicadores clave de rendimiento como instrumentos, mismos que fueron aplicados
digitalmente mediante formularios de Google. La población estudiada fue de 151
trabajadores y la técnica de muestreo fue probabilística. Los resultados permitieron
determinar se practican los lineamientos del liderazgo transformacional en un 74%, del
liderazgo transaccional en un 77% y 9% del laissez-faire. El nivel de transformación digital
tuvo un incremento de 19% en el cuarto trimestre comparado con el primer trimestre
del año, evidenciando en la práctica la implementación de mecanismos de
automatización, uso de medios y documentos digitales e implementación de tecnología.
Se concluyó a través de la revisión literaria y teórica que para afrontar el avance
tecnológico el estilo de liderazgo transformación con todas sus dimensiones es el más
adecuado ya que fomenta el desarrollo, innovación y gestión del conocimiento.
Palabras clave: Estilos de liderazgo, Transformación digital, Cuestionario Multifactorial
de liderazgo, Indicadores clave de rendimiento.
INTRODUCTION
The present research work aims to identify the leadership style that predominates in
the productive and administrative areas of an Ecuadorian manufacturing company in the
year 2020; as well as to determine the appropriate methodology to face the digital
transformation, linkage of new technology and incursion into the so-called Industry 4.0,
through a qualitative research. To achieve this, it seeks to conduct a thorough
preliminary analysis of the predominant leadership style in the organization through the
application of the Multifactor Leadership Questionnaire (MLQ) as a data collection tool,
once a preliminary study is executed, and after having determined the leadership style
as a starting point of this work, a measurement of the implementation and internal
progress of the digital transformation and technological changes is performed by
describing the organization's own key performance indicators in the short term. Finally,
through theoretical research, information on leadership theories is gathered to define
the components that encompass and determine the style that contains the
characteristics required to cope with the digital transformation.
In the last twenty years the Internet has considerably transformed the lifestyle of human
beings, habits and the way in which personal and work activities are carried out, as well
as allowing the development of important areas such as engineering, medicine and
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education. Currently, the fourth industrial revolution, the globalized, connected world
and the "Internet of things" allow communication and relationship between thousands
of people and objects in real time regardless of distance. In the same way, the digital
transformation has significantly influenced people and the skills they must develop,
especially if they are to take on challenges such as being business leaders.
Business models have also been adapting and in turn the value chains, most sectors point
to technological change, data analysis and real-time information to predict changes that
in the past were considered stable and today by the reality of the environment are
complex and volatile. In a study that deals with digital transformation strategies in the
business framework, Matt, (2015) mentioned that the transformation from practically
manual processes to digitized and more autonomous processes require following an
appropriate leadership strategy, which influences and impacts from its implementation
and in the long term.
The people in charge of leadership management generally do not have the technical
knowledge or the capacity to supervise such technological change, so it is necessary that
this process, which involves acquiring new knowledge, be flexible in order to give it
significance and to avoid increasing execution costs. In addition, they must acquire new
skills and knowledge in the process or this change can lead to significant cost overruns
and poor execution. On the other hand, if the leadership style is not aligned with the
digital transformation or the strategy is not effective, the organization may be affected
by problems that will arise the process and mark it for years to come (Allio, 2015, p.
34).
Within the above context, this Ecuadorian company dedicated to manufacturing, has
always sought to maintain at the technological forefront the forms of production and
management. To achieve its prospect of being an outstanding, prosperous and prepared
company for the technological advances that are coming with the so-called industry 4.0,
it has opted for the use of fully automated machinery, the development and
implementation of monitoring, control and data acquisition systems, as well as embedded
computer systems in the different productive and administrative areas. Roles within the
company have also been adapting to the technology implemented, considerably
improving production times, ergonomics in work activities, quality control, internal
communication and compliance with objectives.
Leadership has been a little explored topic despite the organizational changes that have
been experienced, as is the case of personnel recruitment, which has marked a significant
generational difference among employees, as well as the implementation and
socialization of computer tools for management administration. Therefore, it is
important for the organization to have a clear view of the predominant leadership style
in the operational and administrative areas and to establish the objectives of digital
transformation for the year 2020 in order to properly determine a strategy that allows
developing the synergy between technological change and leadership methodology to
manage the company, taking into account the perspective of employees and the
recommendation established by the theoretical foundation.
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In this way, it will be possible to have more control and empowerment of workers,
further develop and ingrain organizational values, preparing employees to face the
technological and generational challenge through the standardization of areas in terms
of leadership, as well as the familiarization of digital tools that can be implemented in the
company in the short term. Sow, (2018) mentioned that the digital transformation
process needs the company to be prepared for changes and interruptions in its routine
activities and processes during short periods of time and that could even take several
months, which entail the migration of information to database systems, optimization and
automation processes to improve efficiency indexes and development of activities that
will benefit the internal environment.
Based on the above premises, this research seeks to determine the leadership styles that
predominate in the productive and administrative areas of an Ecuadorian manufacturing
company, to measure the internal progress of digital transformation that the company
is experiencing through key performance indicators and to relate this internal perception
of the organization with the theoretical foundation to define the optimal leadership
model that can effectively address the technological and digital changes of today.
MATERIALS AND METHODS
The research design constitutes a systematic process, whose methodology is oriented
to find the solution of problems or questions, which are satisfied through the production
of new knowledge. For the present study, it is proposed to follow the quantitative type
of research, using the Multifactorial Leadership Questionnaire as instruments for
collecting information and through the analysis of Key Performance Indicators applied
to all the productive areas of the company. Abreau (2012) mentioned that, the objective
of implementing this design and type of research is not limited only to data collection,
but also characterizes, defines and analyzes in depth aspects such as behavior, customs,
activities and dominant characteristics in a social environment, in the same way, it allows
issuing predictions and relationships between various phenomena. In addition,
quantitative research has been beneficial because it allows to approach social issues and
problems from other perspectives, using computer technology for data collection and
analysis.
Given the nature of the study, it has been established that the design to be followed
corresponds to that of a cross-sectional descriptive research. Abreau (2012) mentioned
that this type of research, also known as diagnostic research, commonly used to study
social phenomena, allows characterizing the situational state, highlighting the most
relevant and differentiating aspects. It follows a deductive logic, since it aims to establish
the relationship between leadership and digital transformation over a period of time,
which are currently necessary aspects for organizational development.
The variables under study affect all 151 people, so it is considered, to select the sample,
to apply the probability sampling technique. Considering that the population
corresponds to the 151 workers, the totality has been selected to be able to study in
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them, the components previously mentioned where each individual has the same
opportunity to be selected.
The validity of the aforementioned instruments is based on their application since they
were proposed in 1985. Molero (2010) mentioned that, the Multifactorial Leadership
Questionnaire has been implemented in different continents and in different languages,
adding up to the date of his study a total of 182 instruments applied in research on
leadership-oriented topics. On the other hand, Suarez (2017) demonstrated the validity
of the instrument in the Ecuadorian scenario that, in addition to having been reviewed
by experts, its implementation and results showed consistency with the environment
and the reality studied. The reliability of the information and instruments used in the
research lies mainly in the impartiality of the study since, by analyzing the organization
and its collaborators from an external perspective, there is no influence or manipulation
of the information collected through the questionnaires and performance indicators.
Likewise, the instruments comply with the guidelines established for their
implementation. For authors such as Diazy, Berrecoso (2020); Diaz-Martín et al (2019)
and Corral (2008) mentioned that the questionnaire has a well-defined purpose, has a
clear objective, the questions have been structured and validated by previous studies,
ensuring objectivity in its resolution and analysis.
The reliability of the instrument, which has been applied in several investigations, is
verified. According to, Vega (2004) mentioned in his research on the adaptation of the
Multifactorial Leadership Questionnaire of Bass and Avolio, the instrument was
submitted to verification whose reliability indicator, Cronbach's Alpha, has a value equal
to 0.9 which, according to his interpretation, indicates that the instrument is reliable and
homogeneous. For his part, Suarez (2017) submitted the instrument to reliability
verification in his leadership study applied to the Ecuadorian reality, obtaining a similar
result. Using the IBM SPSS statistical analysis tool, it was determined that the Cronbach's
Alpha coefficient of the multifactor leadership questionnaire is 0.89 and, when
contrasted with the aforementioned studies, the questionnaire is reliable.
On the other hand, the use of key performance indicators, called KPIs, have been used
to study Ecuadorian companies in approximately 4200 researches present in digital
repositories. In the research about Digital Maturity in manufacturing companies, Haro
(2019) mentioned that, to validate the instrument, the judgment of two to twenty
experts is required, who in such research corroborate the validity to measure digital
transformation maturity. Similarly, key performance indicators have been used in the
company to measure the percentage of digital transformation as part of one of the
strategic components.
RESULTS
The study universe is made up of 151 employees who are part of the payroll of the
Ecuadorian manufacturing company. Through the probabilistic technique described in
previous sections, each individual has the same opportunity to be selected for the study.
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The collaborators are contacted through a verified e-mail address provided by the
Human Resources area, who periodically update this information. This ensures that the
study sample receives the instrument for measuring the variables of leadership and digital
transformation.
The Multifactorial Leadership Questionnaire is a tool that allows to quantitatively know
through its application the dimensions of leadership practiced in the different productive
areas of the organization. The answers to the 45 proposed questions are weighted with
values between 0 and 4 according to the Likert frequency. Once the questionnaire is
applied, the answers of the 151 employees of the company are recorded and grouped
in frequency tables to be analyzed through statistical tools.
The modal distribution is a tool that allows the statistical analysis of frequency tables in
such a way that, from a set of values, it is possible to determine the most representative
one, that is, the one with the highest frequency or repetition. There can be several types
of mode according to the number of times the data is repeated, so it can be: unimodal,
bimodal or multimodal. The advantage of using this statistical tool lies in the fact that the
results obtained from the application of the questionnaire are subjective to the
perception of each collaborator, so it is important that the representative values of a set
of data are not affected by isolated extremes of the individual results, but on the
contrary, to determine the one that represents, through its frequency, the set of
individuals studied. To achieve this, the SPSS statistical analysis software is used to collect
the information and perform the programming to determine the statistical results.
Additionally, to avoid biases in the statistical analysis, a contrast with the arithmetic
mean, an analysis of the standard deviation and kurtosis is performed.
Below are the statistical values resulting from the analysis of the dimensions and
leadership styles, which are then transformed into values that show the percentage level
of belonging and implementation of leadership in each productive area of the company.
Table 1 summarizes the modal value, arithmetic mean, standard deviation and kurtosis
determined for the set of questions that make up the Transformational Leadership
dimensions corresponding to the company studied globally. It can be seen that the value
of the arithmetic mean is close to that of the mode and in turn the analysis of the
standard deviation and kurtosis confirm that the results of the survey are accumulated
between the aforementioned values.
Table 1. Statistical results of the Transformational Leadership dimensions.
Idealized
Influence
Inspirational
Motivation
Intellectual
Stimulation
Individual
Consideration
N. answers
150
150
150
150
Media
3.12
3.41
2.91
2.13
Fashion
4
4
3
2
Standard
deviation
1.01
0.77
1.05
1.18
Kurtosis
0.71
1.75
0.81
0.77
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Table 2 presents the statistical results of transactional leadership, where by interpreting
the standard deviation and kurtosis the data are concentrated around the mean.
Table 2 . Statistical results of the Transactional Leadership dimensions.
Management
by active
exception
N. answers
150
Media
2.43
Fashion
3
Standard
deviation
1.34
Kurtosis
-0.79
The dimensions corresponding to Laissez-Faire leadership are analyzed in a generalized
manner in Table 3, where the values of the responses representing the company are
determined through the mode and the arithmetic mean. The results of the standard
deviation and kurtosis confirm that the responses revolve around the mean and mode.
Table 3 . Statistical results of the Laissez-Faire Leadership dimensions.
Direction by
passive
exception
Laissez-faire
N. answers
150
150
Media
0.65
0.78
Fashion
0.00
0.00
Standard
deviation
0.97
1.02
Kurtosis
6.32
1.35
Subsequently, a percentage analysis is performed in such a way that the sum of the
maximum frequency of each of the questions corresponding to a leadership dimension
or style corresponds to 100% of belonging to that leadership practice. And by means of
the mathematical establishment of a proportionality relation, the percentage value of
belonging can be determined according to the results obtained corresponding to the
group of questions belonging to a leadership dimension.
The percentage values of belonging to the dimensions of transformational leadership are
summarized in Table 4.
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Table 41. Percentage of productive areas belonging to the dimensions of transformational
leadership.
Area / Dimension
of Leadership
Idealized
influence
Inspirational
motivation
Intellectual
stimulation
Individual
consideration
Administration
90.62%
100%
93.75%
56.25%
Feeding
87.5%
81.25%
75%
43.75%
Pillows
59.37%
81.25%
68.75%
68.75%
Distribution
81.25%
93.75%
81.25%
50%
Assembly
71.87%
87.5%
68.75%
43.75%
Foam
68.75%
81.25%
81.25%
31.25%
Linings
78.12%
87.5%
68.75%
37.5%
Maintenance
84.37%
100%
81.25%
56.25%
Operations
87.5%
87.5%
68.75%
75%
Panels
81.25%
93.75%
68.75%
50%
Human Resources
78.12%
93.75%
81.25%
62.5%
Cutting
Workshop
75%
93.75%
43.75%
37.5%
Upholstery
75%
100%
68.75%
37.5%
Sales
90.62%
100%
68.75%
43.75%
In the same way, Table 5 shows the percentage of productive areas belonging to the
dimensions: contingent reward and management by active exception, typical of
transactional leadership.
Table 5 . Percentage of productive areas belonging to the dimensions of transactional
leadership.
Area /
Dimension of
Leadership
Management
by active
exception
Administration
75%
Feeding
43.75%
Pillows
62.5%
/Distribution
62.5%
Assembly
62.5%
Foam
87.5%
Linings
75%
Maintenance
75%
Operations
75%
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Panels
62.5%
Human
Resources
62.5%
Cutting
Workshop
62.5%
Upholstery
81.25%
Sales
87.5%
Finally, the statistical evaluation corresponding to the laissez-faire leadership style is
shown in Table 6.
Table 6 . Percentage of productive areas belonging to the dimensions of laissez-faire
leadership.
Area /
Dimension of
Leadership
Direction
by passive
exception
Laissez-
Faire
Administration
6.25%
0%
Feeding
18.75%
6.25%
Pillows
25%
37.5%
Distribution
6.25%
12.5%
Assembly
6.25%
0%
Foam
12.5%
18.75%
Linings
6.25%
6.25%
Maintenance
0%
12.5%
Operations
0%
12.5%
Panels
12.5%
6.25%
Human
Resources
12.5%
12.5%
Cutting
Workshop
6.25%
12.5%
Upholstery
6.25%
12.5%
Sales
0%
0%
Once the results of belonging to each of the leadership dimensions have been analyzed,
we proceed to determine the percentage value of the leadership styles that are practiced
in the different productive areas specifically and the value considering the totality of the
manufacturing company located in Ecuador. Table 7 shows the percentage results
obtained.
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Table 7 . Percentage of belonging of the productive areas of the company to the leadership
styles.
Area/ Leadership style
Transformational
Transactional
Laissez-faire
Administration
87.5%
93.75%
3.12%
Feeding
73.43%
84.37%
12.5%
Pillows
73.43%
59.37%
31.25%
Distribution
75%
68.75%
9.375%
Assembly
73.43%
78.12%
3.125%
Foam
67.18%
81.25%
15.625%
Linings
65.62%
71.87%
6.25%
Maintenance
81.25%
81.25%
6.25%
Operations
79.68%
81.25%
6.25%
Panels
75%
75%
9.375%
Human Resources
79.68%
71.87%
12.5%
Cutting Workshop
62.5%
68.75%
9.375%
Upholstery
73.43%
84.37%
9.375%
Sales
75%
87.5%
0%
Total
74.44%
77.67%
9.6%
As for, the digital transformation of the company is evidenced in the comparison of the
statistical indicators of the percentage of tasks that require a technological or digital
component compared to the total daily activities that are performed in the workplaces
corresponding to each productive area, information that can be visualized in Table 8.
The measurements of the indicators were made during the first and last semester of the
2020 period in order to establish a comparison of the initial and final state of the
company in the mentioned time. Table 8 below shows the percentage of digital
transformation of both measurements and the variation between the time periods.
Table 8 . Percentage of digital transformation in the productive areas of the Ecuadorian
manufacturing company during the first and last quarter of 2020.
Area/ Period
1st
quarter
4th
quarter
Variation
Administration
60%
80%
20%
Feeding
33%
67%
33%
Pillows
50%
57%
7%
Distribution
43%
57%
14%
Assembly
36%
45%
9%
Foam
60%
73%
13%
Linings
50%
60%
10%
Maintenance
11%
70%
59%
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Operations
67%
83%
17%
Human
Resources
63%
88%
25%
Panels
36%
45%
9%
Cutting
workshop
56%
67%
11%
Upholstery
20%
30%
10%
Sales
33%
83%
50%
Total
44%
63%
19%
In the productive areas of the manufacturing company located in Ecuador, different
dimensions of leadership are rooted in different proportions. Among the most
outstanding are: inspirational motivation, which is characterized by generating
confidence, enthusiasm and adequately managing communication in order to enhance
the vision of the organization. Goh and Richards (1997) considered that the vision and
motivation shared between the leader and the followers allows establishing a preception
of the current situational state and clarifying the necessary activities to be developed to
reach the desired goal, thus fostering the need to improve and learn. Secondly, idealized
influence, which is part of the transformational leadership style, is directly related to the
personality of the team leader. Goleman (2004) considered that the leader is capable of
transmitting security, generating self-confidence among collaborators, promoting a
culture open to learning, motivation, efficiency and personal effectiveness due to the
great capacity to manage his or her own emotions, attitudes reflected in the leader's
own charisma towards the group.
The leadership of this Ecuadorian manufacturing company also has a transactional style
component, which is based on supervision of employees, performance measurement and
reward for meeting objectives. The dimension of this leadership style corresponds to
contingent rewards. According to Mendoza (2006), this dimension of leadership is typical
of leaders who orient their practices to recognize achievements after having clearly
established the intended objectives. As it is an exchange between leaders and
collaborators, it constitutes a transaction by way of a reward that seeks to motivate
each of the members after having performed the tasks, obligations and objectives set. In
the same context, there are areas whose transactional leadership consists of the
dimension called management by active exception. This dimension is characteristic of
leaders whose thinking is oriented to the correction of failures. Molero (2010) in his
research mentioned that this dimension of leadership seeks to correct deviations
through continuous supervision to achieve the objectives and expected levels of
performance.
In general, the productive areas of the company share characteristics of transactional
and transformational leadership in the proportions described above; however, in certain
divisions of the organization there are dimensions of laissez-faire leadership. This
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dimension of leadership is characterized by a passive leader, who does not get fully
involved with his team and delegates important decisions without major supervision.
In conclusion, it was determined that the manufacturing company located in Ecuador
demonstrates 77% of transactional leadership and 9% of the characteristics established
by the laissez-faire style.
In terms of digital transformation, through the key performance indicator analyzed
individually for each productive area, it was determined that it is in an advanced stage,
since in the period analyzed corresponding to the year 2020, most of the activities
carried out at the administrative and productive levels have a technological component,
with 63% of the tasks that are currently carried out on a daily basis involving
technological, digital, automated or at least semi-automated processes, 19% more than
in the first quarter of 2020.
The digital processes and automation of jobs with booming technology such as: robots,
RPA, artificial intelligence, machine learning, software and computational algorithms have
allowed humanizing tasks in a certain way, as those considered repetitive, dangerous or
involving physical effort have been replaced by technology, improving efficiency and
quality of life of workers. The technological incursion requires a degree of digital literacy
to understand and coexist with this emerging reality that affects both workers and the
way the company is managed.
Similarly, the effects of the pandemic on the production environment and jobs during
the second and third half of the year forced the company to carry out its operations
remotely in order to ensure the development of the plant. This is why the health factor
and the mobilization restriction are considered among the main triggers for the digital
transformation experienced by the company under study.
CONCLUSIONS
The Ecuadorian manufacturing company is characterized by the formation of human
talent and leaders so that, according to the model of leadership levels proposed by
Collins (2001), leaders can be formed through its passage through 5 levels, where they
can be able to develop and acquire skills and abilities that allow them in the first instance,
understand the basis of the organization and the processes that allow them to develop
their economic activity, to subsequently establish a synergy between humility, will and
knowledge to achieve organizational objectives, to be resilient to changes and to be able
to face complex challenges such as technological, innovation, generational and
environmental changes.
Through the present research, the application of the multifactorial leadership
questionnaire and the statistical analysis, it was possible to determine that, in the
different productive areas, several leadership styles are practiced simultaneously in
different proportions. Thus, in general, 74% of the fundamentals established by the
transformational leadership style are put into practice, approximately 77% of
transactional leadership and at least 9% of the laissez-faire leadership style.
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On the other hand, the company has experienced an increase in terms of digital
transformation in 2020, since through the quantitative analysis of key performance
indicators it was determined that, in the first quarter of the year, 44% of activities
contained a digital, technological or automation component while, in the last quarter of
the same period, it was determined that the digital transformation rate was 63%. The
organization has digitally transformed its activities by approximately 19% over the course
of 2020.
The research revealed that the most outstanding leadership styles are transformational
and transactional leadership, so that, according to the study, the theoretical foundation
and the internal reality of the company, transformational leadership is the most
appropriate style to cope with the development and digital and technological
transformation. Therefore, through the different dimensions, the leader is able to
establish motivational and inspirational practices and encourage the development of
trust, commitment and creativity through individualized monitoring, emotional and even
intellectual stimulation to properly manage knowledge.
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