Key Success Factors of MLM Leaders in the Philippines
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Transcript of Key Success Factors of MLM Leaders in the Philippines
Declaration
Abstract
Introduction
One can no longer argue the fact that network marketing is now the fastest growing type of
business (Koehn D 2001 Sparks Sparks J R amp Schenk J A 2001) and organization type (J R
amp Schenk J A 2001) It has experienced tremendous growth expansion worldwide during the
1990s partly due to the advent of Internet (Vander Nat P J amp Keep W W 2002) It is also one of
the most dynamic industry in the world (Dumitraş E H D (2011) and Forbes ranked it as one of
the top ten industries to join () Despite its rapid growth many journals and articles ignored their
existence The only time a news on MLM activity is out in the mass media is when there is
controversy (J R amp Schenk J A 2001) to talk about ―juicy scandals to report (Poe R 1995 cited
from King C W amp Robinson J W 2000) It is therefore not surprising to hear such
disinformation about this ―word-of-mouth marketing without advertising (Phillips M amp
Rasberry S 2008) because the truism is multilevel marketing (MLM) companies rarely used mass
media advertisement or retail outlets (Grayson K 1996) and therefore do not contribute revenue to
this (advertising and mass media) industry
Background of the Study
In the Philippine context multilevel marketing (MLM) is aka Network Marketing or Networking
(The terminology is interchangeable in this paper) It has been in business in the Philippines since
the early 70s (httpwwwdsapphabout-us1history-and-achievements-of-dsaphtml) This type of
marketing is the first truly revolutionary shift in marketing using what is known as word-of-mouth
(WOM) person-to-person one-to-one referral marketing or direct selling This business is
booming with over $100 Bn annual revenue worldwide and over 55 million people (worldwide)
already engaged and are part of this big business today () According to Robert Kiyosaki (Author of
best seller book Rich Dad Poor Dad) ―Network marketing is the fastest growing business model in
the world today David Bach () argued that it is ―all done for you and all you need to do is to find a
reputable company that offers a product or services you believe in and can get passionate about As
a part time home-based business it provides additional income transacted anywhere (home office
schools coffee shop internet etc) with low startup cost low-risk and high return which makes
direct selling MLM practical and accessible to millions of individuals to earn additional income
without quitting their job Whether part time or full time these entrepreneurs in this business are
tapping on the MLM companys resources such as IT training marketing materials regulation
business license etc On the other hand the networking companies are exploiting the advantage of
personalized network distribution from its members or independent distributors of consumer goods
and services that reaches down to the remote rural areas through personal recommendation at
minimal cost compared to traditional media advertising Instead of paying advertisers and celebrity
endorsersambassadors part of the earnings is returned back in a form of rebates and rewards on top
of the upfront commission or discounts to those who use love and enthusiastically talk about their
products and services
Despite of its stunning success and steady growth there are uncertainties in this booming business
These issues and challenges can be trace to its growth phenomena a victim of its own success ()
Its popularity is a favorite target of scam like pyramid scheme that stained the image of this
business model particularly affecting not only those registered members of the Direct Selling
Association of the Philippines (DSAP) but also other legitimate non-DSAP MLM companies
Despite the odds it is attracting not only startups but also established global companies like
Uniliver PampG and others are now getting onboard From the networkers perspective their
challenge is to identify the reputable and sustainable company or companies with the right products
or services they are passionate about and that meets their internal rate of return While the
challenges for the legitimate MLM businesses is to identify the major forces that shape their future
especially in the most popular and concentrated industry of beauty health and wellness products
and services
There are areas of improvement for those that have successful build their brand in MLM As
competition is gearing up new entrepreneurs are signing up with the most popular and successfully
MLM brand Is this the signal that MLM is heading towards maturity stage of the business cycle
With the traditional advertised brands like Uniliver PampG recently getting on the bandwagon is this
the confirmation Income for networkers will decline as the product reaches its maturity They will
seek to expand their portfolio by engaging in multiple networks This will post a challenge to the
traditional MLM companies to keep their distributors loyal There is also a need to explore other
issues and challenges to determine which of them are a growing concern competitive forces that has
shaped MLM in the past decades It is also important to identify other emerging forces that may
affect the competitiveness of MLM businesses in the future
Relevant theories and concepts on MLM
Most of the literatures written about MLM are bias and investigative in context Such literature are
ethical issues (Muncy J A 2004 Koehn D 2001) ethicality of internal consumption (Peterson R
A amp Albaum G 2007) pyramid and endless chain scheme (Koehn D (2001) cult that indulge in
mind control (Bhattacharya P amp Mehta K K (2000) marketing fraud (Vander Nat P J amp Keep
W W 2002) and variety of fraudulent business practice to name a few Peterson and Albaum
(2007) argued that MLM without doubt is controversial There has been few studies examining
these unusual organization (Sparks J R amp Schenk J A 2001) because majority of these
companies are privately owned therefore hard evidence of their activities are limited (Croft R amp
Woodruffe H 1996) Proponents on the other hand like Poe (1995) wrote about the exciting path
toward financial independence King amp Robinson (2000) did a scholar work describing MLM as the
next major profession while Biggart (1989) argued how these Direct Selling Organization (DSO)
builds entrepreneurial ideology and social stratification to become a very successful form of
distribution Sparks amp Schenk (2001) strongly suggest that an examination of this organizational
phenomenon is long overdue This dissertation embark on the positive side of the MLM and how
the insignificant percentage of successful MLM individuals or professionals representing a very
small fraction of the entire MLM industry will grow to a substantial number that will build its
credibility acceptable to the mainstream marketing mindset and catch the attention of academic
scholars Unofficial data source from Forever Living Product Philippines indicate that only about
1000 independent distributors receive payout cheques out of the 977 million expected population
by the end of 2013 according to Commission of Population (PopCom The Philippine Star updated
January 3 2013)
Without question MLM has its root in the field of Economics Marketing Social Network
Motivation and others just like the traditional Marketing field Despite their contribution to the
economy only few authors like the work of Bloch B (1996) examines multilevel marketing in the
light of the relationship between the upline and the prospective downline from its dark perspective
MLM in the light of Social Network
The discourse of social networks has become the central focus of current literature (Fernandez R
M amp Fernandez-Mateo I 2006) According to Hill Provost amp Volinsky (2006) network-based
activities takes into account other fields such as marketing Although they exclude network
marketing in their argument the modes of network-based marketing nonetheless are practice that
has already existed in network marketing world as the earliest from of distribution
Social capital has fast becoming a core concept in the business (Burt R S (2000) is similar to
human capital embedded in the social networks which is the focal points for analysis on how
individuals or group invest in social relations as collective assets and how they capture the
embedded resources to enhance group members life chances to generate a return (Lin N (1999)
The scope of this study is to review network marketing in the purview of ―network neighbor (Hill
S Provost F amp Volinsky C 2006)
The success of MLM individuals
Examining network marketing in the light of the success of independent distributors or sponsors
and the recruit or ―downline in the sponsor-recruit dyadic leader-follower relationships in MLMs
(Sparks J R amp Schenk J A 2001) Indeed the success of these independent distributors is built
in the principle of duplication system the very foundation of network marketing ideology where
success of an individual is aim to be replicated to the new independent business owners (IBO)
perceived to be the next successful leaders Ideally the process of duplication of leaders in the
MLM theoretically goes deeper and wider if sustainable success in this business is to achieved
Leadership in MLM is explained
No such dedicated leadership studies in the light of MLM that I have come across searching online
to support my research in the area of leadership landscape Best selling books proponent of MLM
business like ―Rich Dad Poor Dad ―The Business the like of ―21st Century ―How I Made My 1
st
Million in Direct Selling and How Can You Too and the rest are not founded by scientific
evidence and therefore descriptively the opinion of the authors that need to be tested Because of
the scarcity of materials in the subject of MLM the leadership and marketing theories and
hypothesis discourse in this paper is borrowed from extant theories available from literatures and
journals of different academic discipline
In the leadership studies the school of thought in this such an important emerging discipline is the
subject of debates and arguments both by practitioners in organization and researcher alike at
different organization and societies (Rost J C 1993a) Despite of so many research and studies yet
we are left with no clear understanding of what leaders is all about and how it is achieved (Graen
G B amp Uhl-Bien M 1995) However vague it is the reality is these leaders are much sought after
high valued commodity (Northouse PG 2010) which is the focal point and essential for any
organization to prosper (Kotler JP 1990 cited in Northouse PG 2010) Northouse (2010) argued
that leadership is not a trait rather it is a process that can be learn and available to everyone where
there exist a transactional event that occurs between the leader and his group of followers On the
other side of the coin Graen amp Uhl-Bien (1995) argued that there are evidence to show that trait do
matter Therefore I am taking the position that traits is relevant on my research
Leaders in the MLM just like in any successful corporation seek out people with leadership
potential and expose them in developing their leadership skills by helping them to create and align
their network of people they communicate their vision effectively through the relationships that can
accomplish the agenda and ensure that people will be influenced to actually do the job (Kotler JP
2010 cited in Northouse PG 2010) Influence which is the sine qua non of leadership entails
personal power in the form of referent power and expert influence (French J R amp Raven B
1959) Testimonials of emergent and successful MLM individuals who are also considered
entrepreneurs in this industry circle are being recognized and their earnings from commissions
rewards bonus etc are emphasized and magnified during conventions meetings events and rallies
MLM organization leverage on their success for stronger identification and to increase their referent
power over the followers that transcend beyond just merely expert influence As entrepreneurs they
have developed strategy in a niche segments that satisfy certain need of the market (Garfield 1986)
through identification and exploiting of risk taking opportunity (Peterson 1985) of being tag as
quacks (in the health and wellness products) scam associated with the financial pyramid scheme
etc
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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2013
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
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on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
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Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
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httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
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3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
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May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
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httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
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on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
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Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
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Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
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httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
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Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
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Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
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Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
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Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
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bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
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2013
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investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
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Access on 19 May 2013
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multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
booming with over $100 Bn annual revenue worldwide and over 55 million people (worldwide)
already engaged and are part of this big business today () According to Robert Kiyosaki (Author of
best seller book Rich Dad Poor Dad) ―Network marketing is the fastest growing business model in
the world today David Bach () argued that it is ―all done for you and all you need to do is to find a
reputable company that offers a product or services you believe in and can get passionate about As
a part time home-based business it provides additional income transacted anywhere (home office
schools coffee shop internet etc) with low startup cost low-risk and high return which makes
direct selling MLM practical and accessible to millions of individuals to earn additional income
without quitting their job Whether part time or full time these entrepreneurs in this business are
tapping on the MLM companys resources such as IT training marketing materials regulation
business license etc On the other hand the networking companies are exploiting the advantage of
personalized network distribution from its members or independent distributors of consumer goods
and services that reaches down to the remote rural areas through personal recommendation at
minimal cost compared to traditional media advertising Instead of paying advertisers and celebrity
endorsersambassadors part of the earnings is returned back in a form of rebates and rewards on top
of the upfront commission or discounts to those who use love and enthusiastically talk about their
products and services
Despite of its stunning success and steady growth there are uncertainties in this booming business
These issues and challenges can be trace to its growth phenomena a victim of its own success ()
Its popularity is a favorite target of scam like pyramid scheme that stained the image of this
business model particularly affecting not only those registered members of the Direct Selling
Association of the Philippines (DSAP) but also other legitimate non-DSAP MLM companies
Despite the odds it is attracting not only startups but also established global companies like
Uniliver PampG and others are now getting onboard From the networkers perspective their
challenge is to identify the reputable and sustainable company or companies with the right products
or services they are passionate about and that meets their internal rate of return While the
challenges for the legitimate MLM businesses is to identify the major forces that shape their future
especially in the most popular and concentrated industry of beauty health and wellness products
and services
There are areas of improvement for those that have successful build their brand in MLM As
competition is gearing up new entrepreneurs are signing up with the most popular and successfully
MLM brand Is this the signal that MLM is heading towards maturity stage of the business cycle
With the traditional advertised brands like Uniliver PampG recently getting on the bandwagon is this
the confirmation Income for networkers will decline as the product reaches its maturity They will
seek to expand their portfolio by engaging in multiple networks This will post a challenge to the
traditional MLM companies to keep their distributors loyal There is also a need to explore other
issues and challenges to determine which of them are a growing concern competitive forces that has
shaped MLM in the past decades It is also important to identify other emerging forces that may
affect the competitiveness of MLM businesses in the future
Relevant theories and concepts on MLM
Most of the literatures written about MLM are bias and investigative in context Such literature are
ethical issues (Muncy J A 2004 Koehn D 2001) ethicality of internal consumption (Peterson R
A amp Albaum G 2007) pyramid and endless chain scheme (Koehn D (2001) cult that indulge in
mind control (Bhattacharya P amp Mehta K K (2000) marketing fraud (Vander Nat P J amp Keep
W W 2002) and variety of fraudulent business practice to name a few Peterson and Albaum
(2007) argued that MLM without doubt is controversial There has been few studies examining
these unusual organization (Sparks J R amp Schenk J A 2001) because majority of these
companies are privately owned therefore hard evidence of their activities are limited (Croft R amp
Woodruffe H 1996) Proponents on the other hand like Poe (1995) wrote about the exciting path
toward financial independence King amp Robinson (2000) did a scholar work describing MLM as the
next major profession while Biggart (1989) argued how these Direct Selling Organization (DSO)
builds entrepreneurial ideology and social stratification to become a very successful form of
distribution Sparks amp Schenk (2001) strongly suggest that an examination of this organizational
phenomenon is long overdue This dissertation embark on the positive side of the MLM and how
the insignificant percentage of successful MLM individuals or professionals representing a very
small fraction of the entire MLM industry will grow to a substantial number that will build its
credibility acceptable to the mainstream marketing mindset and catch the attention of academic
scholars Unofficial data source from Forever Living Product Philippines indicate that only about
1000 independent distributors receive payout cheques out of the 977 million expected population
by the end of 2013 according to Commission of Population (PopCom The Philippine Star updated
January 3 2013)
Without question MLM has its root in the field of Economics Marketing Social Network
Motivation and others just like the traditional Marketing field Despite their contribution to the
economy only few authors like the work of Bloch B (1996) examines multilevel marketing in the
light of the relationship between the upline and the prospective downline from its dark perspective
MLM in the light of Social Network
The discourse of social networks has become the central focus of current literature (Fernandez R
M amp Fernandez-Mateo I 2006) According to Hill Provost amp Volinsky (2006) network-based
activities takes into account other fields such as marketing Although they exclude network
marketing in their argument the modes of network-based marketing nonetheless are practice that
has already existed in network marketing world as the earliest from of distribution
Social capital has fast becoming a core concept in the business (Burt R S (2000) is similar to
human capital embedded in the social networks which is the focal points for analysis on how
individuals or group invest in social relations as collective assets and how they capture the
embedded resources to enhance group members life chances to generate a return (Lin N (1999)
The scope of this study is to review network marketing in the purview of ―network neighbor (Hill
S Provost F amp Volinsky C 2006)
The success of MLM individuals
Examining network marketing in the light of the success of independent distributors or sponsors
and the recruit or ―downline in the sponsor-recruit dyadic leader-follower relationships in MLMs
(Sparks J R amp Schenk J A 2001) Indeed the success of these independent distributors is built
in the principle of duplication system the very foundation of network marketing ideology where
success of an individual is aim to be replicated to the new independent business owners (IBO)
perceived to be the next successful leaders Ideally the process of duplication of leaders in the
MLM theoretically goes deeper and wider if sustainable success in this business is to achieved
Leadership in MLM is explained
No such dedicated leadership studies in the light of MLM that I have come across searching online
to support my research in the area of leadership landscape Best selling books proponent of MLM
business like ―Rich Dad Poor Dad ―The Business the like of ―21st Century ―How I Made My 1
st
Million in Direct Selling and How Can You Too and the rest are not founded by scientific
evidence and therefore descriptively the opinion of the authors that need to be tested Because of
the scarcity of materials in the subject of MLM the leadership and marketing theories and
hypothesis discourse in this paper is borrowed from extant theories available from literatures and
journals of different academic discipline
In the leadership studies the school of thought in this such an important emerging discipline is the
subject of debates and arguments both by practitioners in organization and researcher alike at
different organization and societies (Rost J C 1993a) Despite of so many research and studies yet
we are left with no clear understanding of what leaders is all about and how it is achieved (Graen
G B amp Uhl-Bien M 1995) However vague it is the reality is these leaders are much sought after
high valued commodity (Northouse PG 2010) which is the focal point and essential for any
organization to prosper (Kotler JP 1990 cited in Northouse PG 2010) Northouse (2010) argued
that leadership is not a trait rather it is a process that can be learn and available to everyone where
there exist a transactional event that occurs between the leader and his group of followers On the
other side of the coin Graen amp Uhl-Bien (1995) argued that there are evidence to show that trait do
matter Therefore I am taking the position that traits is relevant on my research
Leaders in the MLM just like in any successful corporation seek out people with leadership
potential and expose them in developing their leadership skills by helping them to create and align
their network of people they communicate their vision effectively through the relationships that can
accomplish the agenda and ensure that people will be influenced to actually do the job (Kotler JP
2010 cited in Northouse PG 2010) Influence which is the sine qua non of leadership entails
personal power in the form of referent power and expert influence (French J R amp Raven B
1959) Testimonials of emergent and successful MLM individuals who are also considered
entrepreneurs in this industry circle are being recognized and their earnings from commissions
rewards bonus etc are emphasized and magnified during conventions meetings events and rallies
MLM organization leverage on their success for stronger identification and to increase their referent
power over the followers that transcend beyond just merely expert influence As entrepreneurs they
have developed strategy in a niche segments that satisfy certain need of the market (Garfield 1986)
through identification and exploiting of risk taking opportunity (Peterson 1985) of being tag as
quacks (in the health and wellness products) scam associated with the financial pyramid scheme
etc
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
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Grayson K (1996) Examining the embedded markets of network marketing organizations
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2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
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Hart C (1999) Doing a literature review Releasing the social science research imagination
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Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
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Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
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or services they are passionate about and that meets their internal rate of return While the
challenges for the legitimate MLM businesses is to identify the major forces that shape their future
especially in the most popular and concentrated industry of beauty health and wellness products
and services
There are areas of improvement for those that have successful build their brand in MLM As
competition is gearing up new entrepreneurs are signing up with the most popular and successfully
MLM brand Is this the signal that MLM is heading towards maturity stage of the business cycle
With the traditional advertised brands like Uniliver PampG recently getting on the bandwagon is this
the confirmation Income for networkers will decline as the product reaches its maturity They will
seek to expand their portfolio by engaging in multiple networks This will post a challenge to the
traditional MLM companies to keep their distributors loyal There is also a need to explore other
issues and challenges to determine which of them are a growing concern competitive forces that has
shaped MLM in the past decades It is also important to identify other emerging forces that may
affect the competitiveness of MLM businesses in the future
Relevant theories and concepts on MLM
Most of the literatures written about MLM are bias and investigative in context Such literature are
ethical issues (Muncy J A 2004 Koehn D 2001) ethicality of internal consumption (Peterson R
A amp Albaum G 2007) pyramid and endless chain scheme (Koehn D (2001) cult that indulge in
mind control (Bhattacharya P amp Mehta K K (2000) marketing fraud (Vander Nat P J amp Keep
W W 2002) and variety of fraudulent business practice to name a few Peterson and Albaum
(2007) argued that MLM without doubt is controversial There has been few studies examining
these unusual organization (Sparks J R amp Schenk J A 2001) because majority of these
companies are privately owned therefore hard evidence of their activities are limited (Croft R amp
Woodruffe H 1996) Proponents on the other hand like Poe (1995) wrote about the exciting path
toward financial independence King amp Robinson (2000) did a scholar work describing MLM as the
next major profession while Biggart (1989) argued how these Direct Selling Organization (DSO)
builds entrepreneurial ideology and social stratification to become a very successful form of
distribution Sparks amp Schenk (2001) strongly suggest that an examination of this organizational
phenomenon is long overdue This dissertation embark on the positive side of the MLM and how
the insignificant percentage of successful MLM individuals or professionals representing a very
small fraction of the entire MLM industry will grow to a substantial number that will build its
credibility acceptable to the mainstream marketing mindset and catch the attention of academic
scholars Unofficial data source from Forever Living Product Philippines indicate that only about
1000 independent distributors receive payout cheques out of the 977 million expected population
by the end of 2013 according to Commission of Population (PopCom The Philippine Star updated
January 3 2013)
Without question MLM has its root in the field of Economics Marketing Social Network
Motivation and others just like the traditional Marketing field Despite their contribution to the
economy only few authors like the work of Bloch B (1996) examines multilevel marketing in the
light of the relationship between the upline and the prospective downline from its dark perspective
MLM in the light of Social Network
The discourse of social networks has become the central focus of current literature (Fernandez R
M amp Fernandez-Mateo I 2006) According to Hill Provost amp Volinsky (2006) network-based
activities takes into account other fields such as marketing Although they exclude network
marketing in their argument the modes of network-based marketing nonetheless are practice that
has already existed in network marketing world as the earliest from of distribution
Social capital has fast becoming a core concept in the business (Burt R S (2000) is similar to
human capital embedded in the social networks which is the focal points for analysis on how
individuals or group invest in social relations as collective assets and how they capture the
embedded resources to enhance group members life chances to generate a return (Lin N (1999)
The scope of this study is to review network marketing in the purview of ―network neighbor (Hill
S Provost F amp Volinsky C 2006)
The success of MLM individuals
Examining network marketing in the light of the success of independent distributors or sponsors
and the recruit or ―downline in the sponsor-recruit dyadic leader-follower relationships in MLMs
(Sparks J R amp Schenk J A 2001) Indeed the success of these independent distributors is built
in the principle of duplication system the very foundation of network marketing ideology where
success of an individual is aim to be replicated to the new independent business owners (IBO)
perceived to be the next successful leaders Ideally the process of duplication of leaders in the
MLM theoretically goes deeper and wider if sustainable success in this business is to achieved
Leadership in MLM is explained
No such dedicated leadership studies in the light of MLM that I have come across searching online
to support my research in the area of leadership landscape Best selling books proponent of MLM
business like ―Rich Dad Poor Dad ―The Business the like of ―21st Century ―How I Made My 1
st
Million in Direct Selling and How Can You Too and the rest are not founded by scientific
evidence and therefore descriptively the opinion of the authors that need to be tested Because of
the scarcity of materials in the subject of MLM the leadership and marketing theories and
hypothesis discourse in this paper is borrowed from extant theories available from literatures and
journals of different academic discipline
In the leadership studies the school of thought in this such an important emerging discipline is the
subject of debates and arguments both by practitioners in organization and researcher alike at
different organization and societies (Rost J C 1993a) Despite of so many research and studies yet
we are left with no clear understanding of what leaders is all about and how it is achieved (Graen
G B amp Uhl-Bien M 1995) However vague it is the reality is these leaders are much sought after
high valued commodity (Northouse PG 2010) which is the focal point and essential for any
organization to prosper (Kotler JP 1990 cited in Northouse PG 2010) Northouse (2010) argued
that leadership is not a trait rather it is a process that can be learn and available to everyone where
there exist a transactional event that occurs between the leader and his group of followers On the
other side of the coin Graen amp Uhl-Bien (1995) argued that there are evidence to show that trait do
matter Therefore I am taking the position that traits is relevant on my research
Leaders in the MLM just like in any successful corporation seek out people with leadership
potential and expose them in developing their leadership skills by helping them to create and align
their network of people they communicate their vision effectively through the relationships that can
accomplish the agenda and ensure that people will be influenced to actually do the job (Kotler JP
2010 cited in Northouse PG 2010) Influence which is the sine qua non of leadership entails
personal power in the form of referent power and expert influence (French J R amp Raven B
1959) Testimonials of emergent and successful MLM individuals who are also considered
entrepreneurs in this industry circle are being recognized and their earnings from commissions
rewards bonus etc are emphasized and magnified during conventions meetings events and rallies
MLM organization leverage on their success for stronger identification and to increase their referent
power over the followers that transcend beyond just merely expert influence As entrepreneurs they
have developed strategy in a niche segments that satisfy certain need of the market (Garfield 1986)
through identification and exploiting of risk taking opportunity (Peterson 1985) of being tag as
quacks (in the health and wellness products) scam associated with the financial pyramid scheme
etc
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
toward financial independence King amp Robinson (2000) did a scholar work describing MLM as the
next major profession while Biggart (1989) argued how these Direct Selling Organization (DSO)
builds entrepreneurial ideology and social stratification to become a very successful form of
distribution Sparks amp Schenk (2001) strongly suggest that an examination of this organizational
phenomenon is long overdue This dissertation embark on the positive side of the MLM and how
the insignificant percentage of successful MLM individuals or professionals representing a very
small fraction of the entire MLM industry will grow to a substantial number that will build its
credibility acceptable to the mainstream marketing mindset and catch the attention of academic
scholars Unofficial data source from Forever Living Product Philippines indicate that only about
1000 independent distributors receive payout cheques out of the 977 million expected population
by the end of 2013 according to Commission of Population (PopCom The Philippine Star updated
January 3 2013)
Without question MLM has its root in the field of Economics Marketing Social Network
Motivation and others just like the traditional Marketing field Despite their contribution to the
economy only few authors like the work of Bloch B (1996) examines multilevel marketing in the
light of the relationship between the upline and the prospective downline from its dark perspective
MLM in the light of Social Network
The discourse of social networks has become the central focus of current literature (Fernandez R
M amp Fernandez-Mateo I 2006) According to Hill Provost amp Volinsky (2006) network-based
activities takes into account other fields such as marketing Although they exclude network
marketing in their argument the modes of network-based marketing nonetheless are practice that
has already existed in network marketing world as the earliest from of distribution
Social capital has fast becoming a core concept in the business (Burt R S (2000) is similar to
human capital embedded in the social networks which is the focal points for analysis on how
individuals or group invest in social relations as collective assets and how they capture the
embedded resources to enhance group members life chances to generate a return (Lin N (1999)
The scope of this study is to review network marketing in the purview of ―network neighbor (Hill
S Provost F amp Volinsky C 2006)
The success of MLM individuals
Examining network marketing in the light of the success of independent distributors or sponsors
and the recruit or ―downline in the sponsor-recruit dyadic leader-follower relationships in MLMs
(Sparks J R amp Schenk J A 2001) Indeed the success of these independent distributors is built
in the principle of duplication system the very foundation of network marketing ideology where
success of an individual is aim to be replicated to the new independent business owners (IBO)
perceived to be the next successful leaders Ideally the process of duplication of leaders in the
MLM theoretically goes deeper and wider if sustainable success in this business is to achieved
Leadership in MLM is explained
No such dedicated leadership studies in the light of MLM that I have come across searching online
to support my research in the area of leadership landscape Best selling books proponent of MLM
business like ―Rich Dad Poor Dad ―The Business the like of ―21st Century ―How I Made My 1
st
Million in Direct Selling and How Can You Too and the rest are not founded by scientific
evidence and therefore descriptively the opinion of the authors that need to be tested Because of
the scarcity of materials in the subject of MLM the leadership and marketing theories and
hypothesis discourse in this paper is borrowed from extant theories available from literatures and
journals of different academic discipline
In the leadership studies the school of thought in this such an important emerging discipline is the
subject of debates and arguments both by practitioners in organization and researcher alike at
different organization and societies (Rost J C 1993a) Despite of so many research and studies yet
we are left with no clear understanding of what leaders is all about and how it is achieved (Graen
G B amp Uhl-Bien M 1995) However vague it is the reality is these leaders are much sought after
high valued commodity (Northouse PG 2010) which is the focal point and essential for any
organization to prosper (Kotler JP 1990 cited in Northouse PG 2010) Northouse (2010) argued
that leadership is not a trait rather it is a process that can be learn and available to everyone where
there exist a transactional event that occurs between the leader and his group of followers On the
other side of the coin Graen amp Uhl-Bien (1995) argued that there are evidence to show that trait do
matter Therefore I am taking the position that traits is relevant on my research
Leaders in the MLM just like in any successful corporation seek out people with leadership
potential and expose them in developing their leadership skills by helping them to create and align
their network of people they communicate their vision effectively through the relationships that can
accomplish the agenda and ensure that people will be influenced to actually do the job (Kotler JP
2010 cited in Northouse PG 2010) Influence which is the sine qua non of leadership entails
personal power in the form of referent power and expert influence (French J R amp Raven B
1959) Testimonials of emergent and successful MLM individuals who are also considered
entrepreneurs in this industry circle are being recognized and their earnings from commissions
rewards bonus etc are emphasized and magnified during conventions meetings events and rallies
MLM organization leverage on their success for stronger identification and to increase their referent
power over the followers that transcend beyond just merely expert influence As entrepreneurs they
have developed strategy in a niche segments that satisfy certain need of the market (Garfield 1986)
through identification and exploiting of risk taking opportunity (Peterson 1985) of being tag as
quacks (in the health and wellness products) scam associated with the financial pyramid scheme
etc
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
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Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
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2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
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httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
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via consumer networks Statistical Science 256-276 Available from
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Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
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Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
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httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
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Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
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Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
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Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
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Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
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2013
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investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
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on 31 May 2013
human capital embedded in the social networks which is the focal points for analysis on how
individuals or group invest in social relations as collective assets and how they capture the
embedded resources to enhance group members life chances to generate a return (Lin N (1999)
The scope of this study is to review network marketing in the purview of ―network neighbor (Hill
S Provost F amp Volinsky C 2006)
The success of MLM individuals
Examining network marketing in the light of the success of independent distributors or sponsors
and the recruit or ―downline in the sponsor-recruit dyadic leader-follower relationships in MLMs
(Sparks J R amp Schenk J A 2001) Indeed the success of these independent distributors is built
in the principle of duplication system the very foundation of network marketing ideology where
success of an individual is aim to be replicated to the new independent business owners (IBO)
perceived to be the next successful leaders Ideally the process of duplication of leaders in the
MLM theoretically goes deeper and wider if sustainable success in this business is to achieved
Leadership in MLM is explained
No such dedicated leadership studies in the light of MLM that I have come across searching online
to support my research in the area of leadership landscape Best selling books proponent of MLM
business like ―Rich Dad Poor Dad ―The Business the like of ―21st Century ―How I Made My 1
st
Million in Direct Selling and How Can You Too and the rest are not founded by scientific
evidence and therefore descriptively the opinion of the authors that need to be tested Because of
the scarcity of materials in the subject of MLM the leadership and marketing theories and
hypothesis discourse in this paper is borrowed from extant theories available from literatures and
journals of different academic discipline
In the leadership studies the school of thought in this such an important emerging discipline is the
subject of debates and arguments both by practitioners in organization and researcher alike at
different organization and societies (Rost J C 1993a) Despite of so many research and studies yet
we are left with no clear understanding of what leaders is all about and how it is achieved (Graen
G B amp Uhl-Bien M 1995) However vague it is the reality is these leaders are much sought after
high valued commodity (Northouse PG 2010) which is the focal point and essential for any
organization to prosper (Kotler JP 1990 cited in Northouse PG 2010) Northouse (2010) argued
that leadership is not a trait rather it is a process that can be learn and available to everyone where
there exist a transactional event that occurs between the leader and his group of followers On the
other side of the coin Graen amp Uhl-Bien (1995) argued that there are evidence to show that trait do
matter Therefore I am taking the position that traits is relevant on my research
Leaders in the MLM just like in any successful corporation seek out people with leadership
potential and expose them in developing their leadership skills by helping them to create and align
their network of people they communicate their vision effectively through the relationships that can
accomplish the agenda and ensure that people will be influenced to actually do the job (Kotler JP
2010 cited in Northouse PG 2010) Influence which is the sine qua non of leadership entails
personal power in the form of referent power and expert influence (French J R amp Raven B
1959) Testimonials of emergent and successful MLM individuals who are also considered
entrepreneurs in this industry circle are being recognized and their earnings from commissions
rewards bonus etc are emphasized and magnified during conventions meetings events and rallies
MLM organization leverage on their success for stronger identification and to increase their referent
power over the followers that transcend beyond just merely expert influence As entrepreneurs they
have developed strategy in a niche segments that satisfy certain need of the market (Garfield 1986)
through identification and exploiting of risk taking opportunity (Peterson 1985) of being tag as
quacks (in the health and wellness products) scam associated with the financial pyramid scheme
etc
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
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bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
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2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
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Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
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May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
subject of debates and arguments both by practitioners in organization and researcher alike at
different organization and societies (Rost J C 1993a) Despite of so many research and studies yet
we are left with no clear understanding of what leaders is all about and how it is achieved (Graen
G B amp Uhl-Bien M 1995) However vague it is the reality is these leaders are much sought after
high valued commodity (Northouse PG 2010) which is the focal point and essential for any
organization to prosper (Kotler JP 1990 cited in Northouse PG 2010) Northouse (2010) argued
that leadership is not a trait rather it is a process that can be learn and available to everyone where
there exist a transactional event that occurs between the leader and his group of followers On the
other side of the coin Graen amp Uhl-Bien (1995) argued that there are evidence to show that trait do
matter Therefore I am taking the position that traits is relevant on my research
Leaders in the MLM just like in any successful corporation seek out people with leadership
potential and expose them in developing their leadership skills by helping them to create and align
their network of people they communicate their vision effectively through the relationships that can
accomplish the agenda and ensure that people will be influenced to actually do the job (Kotler JP
2010 cited in Northouse PG 2010) Influence which is the sine qua non of leadership entails
personal power in the form of referent power and expert influence (French J R amp Raven B
1959) Testimonials of emergent and successful MLM individuals who are also considered
entrepreneurs in this industry circle are being recognized and their earnings from commissions
rewards bonus etc are emphasized and magnified during conventions meetings events and rallies
MLM organization leverage on their success for stronger identification and to increase their referent
power over the followers that transcend beyond just merely expert influence As entrepreneurs they
have developed strategy in a niche segments that satisfy certain need of the market (Garfield 1986)
through identification and exploiting of risk taking opportunity (Peterson 1985) of being tag as
quacks (in the health and wellness products) scam associated with the financial pyramid scheme
etc
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
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Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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Burt R S (2000) The network structure of social capital Research in organizational behavior 22
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Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
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on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
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French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
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Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
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May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
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on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
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Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
One of the main issue of concern in this paper is whether successful leadership is replicable or not
Though leadership is replicable Sherif (1967) argued that its empirical results have been less than
compelling In this papers both review of successful leaders (in general) and survey approach will
be utilized to pinpoint what these individuals have that non-leader do not possess that made them
great in their respective MLM business The outcome is to understand what common ground to look
for when replicating their success (Grint K 2000) This research will also find out whether
successful individuals possess what Rost (1991) described as multidirectional influence relationship
of a leader
Leadership and Management in the MLM Context
There are two facets of leaders in the MLM organization One from the organization directly under
their control which I refer to in this paper as the management The other aspect of leaders are the
independent distributors The management of the MLM organization is under the jurisdiction
upheld by the company who possess positional power over their staffs as described by French amp
Raven (1959) While independent distributors on the other hand do not have such positional power
The boundary between the MLM management and the independent leaders is shown in the diamond
framework conceptualized by Josiah Go (2010) a successful practitioner and educator in the MLM
business in the Philippines It is also noteworthy to look at the quality of leadership in the
diamond framework along with the quality of effort and time as the direct interface with
management side of the MLM organization which is much more in the influence and control of
the company The quality of prospect is under the full control of the independent distributor and
the company does not have direct link to them it is directly under the full control of the
distributors or leaders
The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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2013
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Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
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Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
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Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
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httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
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Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
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httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
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on 19 June 2013
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King C W amp Robinson J W (2000) The new professionals Prima Soho
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Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
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The focus in my study is on the leadership side of the framework The result after talking to my
direct line (the line that compasses up the line and down the line of my genealogy) majority prefer
quality of prospects who they target to be their next leader who will bring in income in the form of
direct commission royalty income or percentage of every sales produced by the downline up to
certain levels down the line etc Usually the prospects they preferred has existing network The
upline perceived them as quality of prospect when successfully sponsored into the business can
easily adapt to the new company and presumable acquainted with the MLM business process
The MLM companys responsibilities include providing exclusive company-provided training to
those who are sponsored in to the business as they move up the levels in the hierarchy of the
companys distributors ranking thereby converting them to new qualified leaders Most of the
coaching product demos and business opportunity meetings (BOM) are performed by the uplines
andor crosslines who are on top of the hierarchal structure They are also independent distributors
usually holding senior ranking position and well experienced leaders in the company Result of the
survey shows that majority x of the respondents prefer to look for prospect who are already
leaders In the MLM lingo leaders are distributors who made if financially in their respective MLM
business Profiling a leaders is beyond financial success and there must be something in them that
need to be dissected to find out those factors and duplicable them This paper aims to point out
these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
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xwY4EAtXLFkJscholargooglecomampots=gb-
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2013
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Group amp Organization Management 6(4) 439-455 Available from
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Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
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Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
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on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
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Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
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domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
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Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
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Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
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Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
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Access on 17 May 2013
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2013
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Access on 19 May 2013
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May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
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Access on 24 June 2013
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these key success factors (KSF) utilizing different extant leadership theories available
The frame shows the transfer of risk from the management to the distributor whereby principal-
agent theory is reduced on the aspect of sales and marketing of the MLM products and services
From the perspective of the distributor the inventory risk by purchasing only the amount of stocks
required Most of the MLM companies have switched to direct fulfillment as deployment e-
commerce is available to the distributors and efficiency of courier services as a result of good
transportation around the country () The risk of unethical behavior of distributor is minimize due to
the fact that distributor with stockist status is already taken out of the marketing plan
Literature Review Different Leadership Theories
Despite the fact that leadership is a multi-discipline it is not inter-discipline (Rost J C (1993a)
therefore leadership in other organization have different set of skill behavior and experience that
may not be relevant in another organization I will use selective leadership theories that fits the
profile based on my observation and data gathered in the course of the survey to evaluated
leadership in the MLM using from tripartite perspective (Northhouse PG 2010 Graen G B amp
Uhl-Bien M 1995)
Leader-based domain (birds eye view) using the following approaches traits (personal
characteristics) skills (skills and abilities that can be learned and develop) and style
(behavior)
Follower-based perspective (worms eye view) and its context using situational leadership
contingency theory and path-goal theory
Relationship-based approach (mans eye view) between leaders and followers in a dyadic
relationship model of the Leader-Member Exchange (LMX) theory
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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2013
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
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analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
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on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
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Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
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French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
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httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
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May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
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httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
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Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
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Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
Scope of leadership study
MLM business has two aspects of sales the retailing of products and services and the selling the
idea of business opportunity to the prospect Since the validity of the style approach using empirical
evidence is weak and sporadic in the sales context (Donaldson B 2007) this approach therefore
will be not useful in this study Furthermore styles models are mostly for management and
administration and have little significant in the leadership () While path-goal theory is not
appropriate for groups or work units as well as it does not concern with most of the organization
settings like emergent-informal leadership (House R J 1996) the study will not touch on the
theory of path-goal on leadership
This research will only reckon leadership approaches that can be learn and trasferable for the sole
purpose of duplication Innate traits attributes behavior and relationship are difficult to reproduce
is not going to be useful in the MLM duplication process therefore it is beyond the scope of this
research
Different perspective view
The birds eye view is seen from the perspective of the person studying leadership and from the
upline view of his or her downline leaders Although this is applicable as well from the viewpoint of
the management of the MLM organization the study will not take this route The worms eye view
is solely from the perspective of the downlines what the downline see feel and observed about his
or her uplines Again the management of the MLM organization is excluded The mans eye view is
the unilevel view between upline and downline Unilevel in the MLM lingo is a type of
compensation plan as the name suggests only enables upline (the would-be seller) to sponsor one
line of distributors therefore everyone the upline sponsor is on his or her frontline In the mans
perspective view the study will look at the relationship between the uplines and the downlines The
the business world has a shift its emphasis as a fresh development in the study of leadership has
culminated and such transformation theory has given both researchers and practitioners fresh insight
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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2013
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
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analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
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on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
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Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
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httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
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Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
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httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
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3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
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Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
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httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
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on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
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Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
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httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
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King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
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Economic Anthropology 31 217-239 Available from
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Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
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Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
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Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
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Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
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Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
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2013
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investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
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May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
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on 31 May 2013
to the understanding leadership No matter what new development has in store for us the
identification however of these charismatic leaders and their associated behaviors still boils down to
the use of trait-spotting (Huczynski A amp Buchanan D A 2007) In this paper I will point this as
the first steps towards identification to leadership development the framework to leadeship
development continuum
The subject of this investigation
The target of this research are those so called MLM leaders who have socially benefited from the
products or services at the same time they have made it financially in their respective MLM
business Their lives had literally has been transformed not to mention the product value they
benefited from using the them its effectivity and efficacy Grints (2000) qualitative constitutive
approach discussed the leaders proactive affair who actively persuade followers about the truth of
the environment the challenges the goals the competition the strategy and the tactics He further
ague that these leaders can be evaluated using alternative measure rather than the use of scientific
approach Leadership is a complex process with multiple dimension (Northouse PG 2010)
Qualitative measures such as being transformational trained and possess a command to direct his
group he leads
I Birds Eye View Leader-based Domain
A The Trait Approach to Leadership
Profile of the leaders can be identified by mere observation using descriptive theories such as
personality trait approach to distinguish leaders from non-leader Kirkpatick amp Locke (1991) argued
that traits is a pre-condition to successful business leaders but not a guarantee for success and those
that possess it must take actions to be successful they are relevant in a situation in which the leader
is functioning however no traits were universally associated with effective leadership They
claimed evidence to show certain core or other traits (non hereditary) such as industry
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
knowledge are dependent on experience and learning which significantly contributes to business
leaders success while it is less clear that charisma creativity and flexibility have any
contribution (to their success)
The core traits though the finding are extremely broad what is more relevant to this research
are the following
Drive (Kirkpatick amp Locke 1991) which includes achievement (Stogdill R M 1974 cited
from Northhouse PG 2010)
Motivation (Kirkpatick amp Locke 1991 Zaccaro S J Kemp C amp Bader P 2004) which is
the desire to lead but not to seek power integrity and more importantly
Knowledge (Kirkpatick amp Locke 1991) and willingness to learn the business
Although these traits are usually fixed psychological structure that is not easy to change
(Northhouse PG 2010) these can be used to profile a potential leaders that will initially help
both the management and distributor to whom to focus their quality effort and time based on
their subjective experience Due to the limitation of trait approach other theories can be
utilized in searching for the link between leadership and outcomes or their performance as the
key success factors of successful leaders which is his or her ability to spot potential leaders and
bridge him or her to the resources available at his or her disposal
B The Skill Approach to Leadership
Another leadership approach is the skills model Though less precise in explaining leadership
performance and weak in predicting value (Northhouse PG 2010) it can be used as tool to
examine the relationship between leaderships capabilities (knowledge and skills) and leaders
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
performance (Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A
2000) The skills approach is a leader-centered capability model that has its strength on the learned
skills placed at the center of effective leadership performance as Northhouse (2010) argued Since
this capabilities according to him can be developed over time through education and experience
anyone can concluded that knowledge and skills are transferable to individuals aspiring to become
leader Katz (1955) argued that his three-skills approach - supervisor middle and top management -
are required at various levels of leadership in the organization hierarchy He further claimed that
leadership depends on three basic skills personal technical and conceptual Using the relevant
features of the skills approach helps identify leaderships strength and weakness and the goal of
(this) research aims to understand the underlying elements of effective performance the key success
factors that create exemplary performance (though less precise) based on the premise that many
people have the potential for leadership (Northhouse PG 2010)
II Worms Eye View Follower-based Perspective
From the perspective of the followers which I coined as worms eye view of the leader followers
must be convinced by the leader that he or she is not misled and that the leader is not only
transmitting (simple) knowledge but superior knowledge of what they are doing as (Hermalin
1997) From economist point of view which it is presumed that in leading by example Hermalin
(1997) argued that subordinates follow because it is their interest to follow that is the pride of
being associated from the organization or institution is set by the leadership based on what majority
are doing (Blake R R amp Mouton J S 1981) Situational and contingency theory of leadership is
best suited in studying the behavior of leaders
A Situational Approach to Study Leaders Behavior
Different situation demands different kind of leadership that is directives and supportive style
This lead me to evaluate another leadership theory which is situational approach to study leaders
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Higher Education 46(2) 167-193 Available from
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Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
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0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
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xwY4EAtXLFkJscholargooglecomampots=gb-
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2013
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Group amp Organization Management 6(4) 439-455 Available from
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Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
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Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
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Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
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on 30 May 2013
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httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
behaviors It is therefore important for leaders to know how to adjust their directive or supportive
leadership style as to where and when to use each one to meet the needs of their subordinates
situation they are in (Northhouse PG 2010) Situational approach provides a general overview how
to use flexible leadership style and incorporate it into any business The leadership style of this
situational approach includes the directive (task) behaviors and supportive (relationship)
behavior which is divided into four distinct categories S1- directing S2 ndash coaching S3 ndash
supporting and S4 - delegating The models second major part concerns the development level
of followers which is the degree on which subordinates competence and commitment is required
and has mastered the skills and develop a positive attitude to accomplish the task (Northhouse
PG 2010) This model demonstrates how leaders will diagnose competency and commitment of
individuals to determine where they are in the development continuum and adjust their style that match the
level to the individual This model ascribe to both the leader and the followers
B Contingency Theory of Leadership
Leadership style in the contingency theory can be described by two kinds of motivation the task
motivated and the relationship motivated (Fiedler F R E D 2005) The task motivator in this
theory is insignificant in conditions where leaders do not possess absolute control over their
subordinate or followers despite leaders primary concerns is to reach a goal while the
relationship-motivated leader concerns with the developing interpersonal relationship with its
followers (Northhouse PG 2010)
The situation within the domain group is classified into three factors leaders positional power
structure of the task and leader-member interpersonal relationship (Fiedler F R E D 2005)
Position power which is the third situational variable in Fiedler (2005) contingency theory is the
legitimate authority the leader acquire as a result of his or her position held in the company
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
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Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
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Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
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Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
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on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
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Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
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Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
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xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
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Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
(Northhouse PG 2010 French J R amp Raven B 1959) In the context where legitimate
authority is absent the task motivated leadership style is very difficult to enforce over
subordinate because of weak positional power the leader holds The only relevance of the third
variable is to the leaders himherself or to the couple who leads their business together who
does not have position power Such leaders must be discipline to enforce the position power over
himherself partner or spouse In the discussion section I will argue whether self enforcement
constitute one of the key success factor observed from these successful entrepreneur who has
sustained their MLM business over the years In the light of structured task as the second
situational variable Northhouse (2010) argued that in the absence of clear structured task
leaders control and influence is lessen over the individuals they lead While in the first situational
variable in the contingency theory leader-member relationship factor consisting of group
atmosphere and the degree of confidence loyalty and attraction that the followers feel about
their leaders (Fiedler FE 1967 cited from Northouse PG 2010 Fiedler F R E D 2005)
With the three factors or situational variables using goodpoor highlow strongweak combination
respectively produced an octant combination group into two leadership style the task
accomplishment and the good interpersonal relationship The least preferred coworker (LPC) was
adapted and summarized into low and high LPC Those with low LPC correlated to task
accomplishment are effective in any favorable and unfavorable situation High LPC on the other
hand are people who are relationship motivated Developing close interpersonal relationships is
desirable () in leading the team to his or her desired success which is another key success factor I
am considering
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
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Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
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Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
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Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
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on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
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Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
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xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
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Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
III Mans Eye View Relationship-based Approach
A Leader-Member Exchange (LMX) Theory
It is to the best interest of the organization and the leaders as well to coach and develop individuals
who will contribute to their success Maturity approach through LMX theory is another worthwhile
prescriptive leadership theory that can provide more clarity how to develop maintain and combine
into collectivities of effective leadership structures that is developed a mature leader-member
relationship (partnership) in the context of dyads in groups and networks (Graen G B amp Uhl-Bien
M 1995) Something unique about LMX theory is its expanded taxonomy beyond the leader
perspective or domain discuss above in the previous theories of leadership This theory now include
levels involving the three domains of leadership ndash leader follower and the dyadic relationship
between the actors of this relationship (Rost JC 1993) which is trust respect mutual obligation
The Stage 3 development of LMX theory is the leadership-making In here the focus is the linkage
or behavior of expanded and negotiated role responsibility of dyads of in-group defined as extra-
role that extend over and above the define role of a formal job description quality of relationship
between leader-member leadership making as prescriptive approach and the creation of network of
partnership (Northouse PG 2010) The theory considers leadership at the maturity model can be
understood from the three stage life cycle of leadership relationship-based maturity which develops
over time (Graen G B amp Uhl-Bien M 1995) The stages is summarized into Stage 1 ndash Stranger
Stage 2 ndash Acquaintance and Stage 3 ndash Partnership
The features of leadership maturity model is that effective leaders encourage followers growth The
leader investment though with their limited resources focus on individuals who has clearly
aspiration to take up extra-role and challenges and integrate them to a cohesive team within the
collaborative networks of competent group who can provide assistance whenever necessary
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
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Higher Education 46(2) 167-193 Available from
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Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
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Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
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Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
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on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
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Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
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0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
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Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
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xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
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Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
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another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
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Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
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investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
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May 2013
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Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
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Access on 24 June 2013
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Printed Access Card) South-Western Pub Available from
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on 31 May 2013
The Transformation Leadership
Modern leaders can be categorized as transactional leaders by their behavior in two factors
initialing and organizing work which focus and concentrates on accomplishing the tasks and
showing consideration for employees through satisfying the self-interest of those who do good work
(Bass BM 1990) This practices may take the form of management-by-exception either leader
actively monitors the followerrsquos performance and takes corrective action if the follower fails to
meet standards or by passively waiting for problems to arise before taking corrective (Bass B M
1999) They see the relationship with the followers a kind of trade swaps or bargain (Buchanan D
A amp Huczynski A 2007) and they as well induced only limited or basic exchange with the
followers (Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Transformational leader on the other hand inspires intellectually stimulates and is individually
considerate of them requiring higher moral development and is recognized universally as a concept
() The changes in the marketplace and workforce requires leaders to become more transformational
and less transactional to remain effective (Bass B M 1999)
Transformational leadership viewed as charismatic by virtue of visionary approach and exceptional
characteristics that change and transform people enjoy personal loyalty from followers (Bryman A
1993 Northhouse P G 2010) Charisma should not be confused with personal trait (Bryman
(1993) This theory has wide range of relevance from one-to-one to a very broad attempt to
influence the entire organization and its culture (Northhouse P G 2010)
Charismatic leadership exhibit a specific kind of behavior or characteristic (Bryman A 1993)
pointed out that
Someone who is regarded as exceptional
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
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on 27 June 2013
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European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
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Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
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0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
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Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
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xwY4EAtXLFkJscholargooglecomampots=gb-
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2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
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Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
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Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
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Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
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malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
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investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
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Access on 19 May 2013
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Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
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101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
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Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
Regarded as visionary
Attracted high committed followers
Transformation leadership promote followers for achievement growth and development
Transactional and empower their followers by developing them which has four basic components
or ldquofour Irdquo of transformation leadership (Bass amp Avolio 1990) or five first-order factor
(Antonakis J Avolio B J amp Sivasubramaniam N 2003)
Idealized influence (charisma)
Individual consideration
Intellectual stimulation
Inspiration motivation
Summary Framework of Leadership Study
In summary leadership study will be review as depicted on the diagram below
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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xwY4EAtXLFkJscholargooglecomampots=gb-
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2013
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Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
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malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
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121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
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2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
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ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
Research Methodology Samples and Data Collection
The goal of this research is to rely on the participants views of the situation being studied from the
ontological constructivism perspective (Creswell J W (1994) Network marketing continues to
evolve and now a new form of marketing force that combines sales and entrepreneur activity so
powerful than traditional way of distribution of products and services using advertising are now
adopting the best features of MLM in their business operation (King C W amp Robinson J W
(2000) an effective marketing without advertising (Philips M amp Resberry S 2008) In this
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
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Higher Education 46(2) 167-193 Available from
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Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
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Questionnaire The leadership quarterly 14(3) 261-295 Available from
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Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
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Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
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on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
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Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
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Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
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Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
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xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
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Group amp Organization Management 6(4) 439-455 Available from
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Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
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Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
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04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
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httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
research an inductive process is adopted to uncover emerging social behavior of the participants in
the MLM organizations The methodology ultilzied is a combination of observations that are in
constant state of revision drawing from the constructionist position (Bryman A and Bell E 2007)
The method of data collected from the qualitative research questionnaires and the non-structured
interviews aims to align their social behavior of the selected participants subjected by structured
observation The blend of these methodologies (Mintzberg H 1979) will use cross-sectional
research design to determine some pattern of association (Bryman A and Bell E 2007) to
determine the success of the so called leaders who are MLM distributors From the epistemological
interpretivist viewpoint the important outcome is to determine a possible theory that may lead to a
framework of determining ―the success of MLM leaders business in the Philippine context and be
able to find the variables that are duplicable to other individuals who will be the next leaders in this
industry
The research strategy employed is through the dissemination of the survey questionnaire leveraging
on my network of friends relativerelationship acquaintance neighbors and
siblingssweetheartsuitor(FRANS) upholding the MLM methodology of reaching to my direct
recruits (or sponsored) down to to the 3rd
level or even deeper that some respondents who I no
longer know personally Next leaders on my network who agreed to participate in the distribution
of the questionnaires to their respective downlines and FRANS where brief and made to understand
the purpose of the research and the etymology behind the topic in question The 49 survey question
form aims to find out certain interesting patterns and behaviors emerging in the course of this
research and investigation using the Burrell and Morgans framework
Interview was conducted with the successful leaderships to understand the process of success they
have gone through in executing their business in the MLM landscape
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
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Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
To further understand the network marketing industry in the Philippines the author is taking a
subjectivist approach Burrell and Morgan (1979) argued that social experience ―can be understood
from the point of view of the individuals who are directly involved in the activities (Bryman A amp
Bell E 2007 p 26) while Hassard J (1991) coined this as ―participant-in-action
In the participant-in-action methodology the author signed up with key network marketing
companies who are members of Direct Selling Association of the Philippines (DSAP) as well as
those startup MLM who are non-DSAP employing binary compensation plan the most prominent
compensation plan of non-DSAP members There are also some non-DSAP who utilized uni-level
compensation as their marketing plan but they are rare In the Philippine context compensation and
marketing plan are interchangeable
To make this a real life social experience the author actively participated in this industry by signing
up with five different MLM businesses joined their events PEP rally (peoples event program)
trainings business opportunity meetings (BOM) orientations spent time in the business centers to
get to know cross-line downlines up-lines and no-lines (those who are still prospects and have not
sign up) to name a few engagement This approached is necessary to expand the reach of my
network in the industry that I do not have much contacts Surprising enough this approach has open
an avenue for unsolicited information flow on what is happening in this industry in the Philippines
Nonetheless this method entails out-of-my-pocket investment in order to acquire knowledge that is
significant to my business investigation Understanding the industry from this opportunistic journey
a much more interesting insight sprung out ideas that are consistent for my analysis (Alvesson M
2003) thus increasing the likelihood of getting close and relevance to the answers of my compelling
business questions ―how to increase the chances of success in the MLM business
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
Alvesson M (2003) Methodology for close up studiesndashstruggling with closeness and closure
Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
The outcome of the scientific method is then compared to an extant framework of leadership
available in the published literatures Using the body of knowledge and evidence objective outcome
will be reached (Zikmund W G Carr J C amp Griffin M 2012) Using a ―comparative design
(Bryman A amp Bell E 2007 p 66) the author will adopt extant framework from different
leadership discipline a bench mark to determine the key success factor (KSF) of distributors in the
network marketing business
Research Findings
Discussions
In the MLM industry there is a high chance that followers may drop out when the leadership style does not
match the followers expectation Some MLM organization allows switching of one up line to another
provided certain conditions are met Situationals construct revolves around the premise that individuals
move forward and backward of the development continuum which is related to competency and
commitment The same applies to new distributors in the MLM organization who are low in competency
but excited and high in commitment representing the D1 level of the development level of the followers
As these followers continues to D2 there is a high tendency that they will drop out as they start to acquire
some competency but now became low in commitment as a result of rejection from their FRANS As
MLM distributor move to D3 level of the development continuum with moderate to high competency their
commitment becomes low because the promised income and their financial goals in the running the
business does not match their expectation The rate of personal attrition to the business becomes high
therefore more drop outs was also observed Finally individuals who are successful exhibit a very high
degree of competence as well as high degree of motivation to be successful and they fits the D4 These
individuals who are successful leaders in the MLM business are those who has gone through some sort of
transformational experience (retrenched business running bankrupt financial woes and so on) although
there is no such empirical evidence according to Avolio (2007) this ldquocertain types of event can trigger
leadership emergence and nurture its developmentrdquo (page 28) that transforms their lives and have left them
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
Alvesson M (2003) Methodology for close up studiesndashstruggling with closeness and closure
Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
no option but to make MLM business as the last resort to bring back their life on the their feet About 80
per cent successful leaders who where interviewed follows similar pattern of leadership emergence While
20 relied on their success due push up by the success of their downlines who work hard to reach their
leadership status and thereby observed to follow the D4 pattern
Couples represent 90 of the successful individuals in the MLM business The data observed from the
respondents affirmed Buchanan amp Huczynskis (2007) argument that (see 718)
Duplication process
Backup arguments and ideas
Analogy and inference of leadership
Everyone is born with an innate leadership tendency just like everyone is born with mobility
emotion aptitude and so like any normal person we go through this growth life cycle we learn we
fall we rise up and so on Our fate is molded by our environment we grew up and the surroundings
we are exposed to People who are born without this normal function are considered inborn
impotent or disabled They represent very small fraction of the society Others become incapacitated
as a result of accident inborn genetic disorder that becomes prominent as the person grows others
is due to mental condition and so on Inference to leadership the same applies to the general
population where people have the inborn capacity to lead The ability now depends on situation or
environment they are in In some individuals special trait which all of us and no doubt agree very
few are gifted with divine talents over and above everyone else The gifted person in one aspect
may not have the same superior skills in another area Least to say everyone is unique and has the
potential in a particular aspect and weak in other area
This is an accepted reality as a human being born in this world in a particular generation in a
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
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Higher Education 46(2) 167-193 Available from
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Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
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Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
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Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
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0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
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xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
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Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
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Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
particular location and condition To draw an analogy similar person say in Europe or America may
exhibit certain trait and become very successful but the same person applying the same special
inborn skill will not necessarily become successful elsewhere in the globe The change in variable
can be generalized to point to environment that is weather political available resources culture
and so on Although I would consider trait as special inborn skills that is over and above the norm
of the general population this trait can be developed further through application of different skill
technics in given situation where the individual is in the environment they are in the people they
interact the tools and equipment they have the amount of education process they go through and so
on This truism depict in the world of the sports Talented sports man must still go through trainings
and discipline in order to be the top sportsman in his or her category
The measuring these human phenomena is very subjective Academic yardstick is the de facto
universal system standard everyone has to go through In sport they are measured in speed agility
team etc In financial it is the success measured based on wealth and power In political no of
votes political machinery affiliation trust rating etc Unfortunately in leadership measuring gauge
is ambiguous Financial result is no longer the trusted instrument of measurement Corporate
expansion diversity and MampA also do not paint the true picture of the real success story of if its
change initiator and agents
Recruitment process by MLM distributors
In mainstream mindset an ordinary person with low education will not succeed in life other than
hard work and education Without proper education one will not land a good high paying job
successful career and a happy family being provisioned and taken care of This paradigm according
to investment guru and author Robert Kiyosaki is true as long as you were born prior to 1930 (cited
from King C W amp Robinson J W 2000)
Research on this discipline is scares and does not really represent the true side of this revolutionary
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
Alvesson M (2003) Methodology for close up studiesndashstruggling with closeness and closure
Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
business now is slowly being integrated by major companies in their regular marketing capabilities
in a trial run () It was found that the benefit of using referrals lower monitoring cost particularly
those high wage jobs (Kugler AD 2003) FRANS top on the list of new distributor to approach
to sponsor followed by referrals then public service (events gathering etc) very similar to the
referral scheme in the traditional company Similarly network factors according to Fernandez RM
and Fernandez-Mateo I (2006) could lead to less access to desirable jobs with less pay The same
holds for joining the desirable Network Marketing company Prospect who is near kins has to be
objective in joining a Network Marketing organization The successful distributors must show proof
of consistent earnings to attack any of his FRANS
Direct Selling Organization (DSO) according to Biggart N W (1989 page 3) violates most of the
business practice of todays organization Not only it does with the acceptable tenets of management
practice it also infringe the normative mindset that most of us by default think that success is
associated with good education The MNL industry has made a lot of success stories of ordinary
individuals whos lives were changed No empirical studies were conducted to measure the success
of these individuals Their testimonials become an inspiration for others regardless of their social
status New sponsors now strive to break these record and achieve beyond the income they can ever
imaging ―When it comes to the quest for time freedom network marketing remains light-years
ahead of traditional employment and business ownership Helping people regain control of their
lives and allowing them to better balance the competing priorities of career and family is a major
attraction to and contribution of modern network marketing King C W amp Robinson J W
(2000)
Most of the literature on multilevel marketing purview between the DSO and the distributors ()
Little or hardly can you find empirical study between successful members and sponsors or
downlines Pratt M G (2000) focus his studies on how members in the organization of distributors
in Amway view themselves in relation to the organization Although Biggart N W (1989) wrote
about the social relationship between them she did not provide theoretical framework how to study
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
Alvesson M (2003) Methodology for close up studiesndashstruggling with closeness and closure
Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
the social behavior that will lead to a scholarly work in identifying a critical success factor (CSF)
This study aims to identify the distributors CFSs from the data gathered and draw an inference
duplicate the transferable skills and behavior in order to increase the success of the distributors in
the the MLM business
Many people get into this business without the necessary skills to make this business successful
and what lessons can we learn from these successful network marketing practices (David Teten amp
Scott Allen ND aboutcom Entrepreneur) that we can duplicate and increase the chances of
success of the networkers leading their MLM business King C W amp Robinson J W (2000) refer
the as the
Something unique in this industry is that distributors who are leaders are proactively searching to
sponsor someone and turn himher to be a leader This observation is unusual in the secular
organization where utility theory of the manager who is also a leader is profound Now in the MLM
industry the principal-agent theory is very low
Organizations must not only cope with objective performance demands and the bottom line they
must recognize the unique needs of the people who comprise the subsystems (Mumford M D
Zaccaro S J Harding F D Jacobs T O amp Fleishman E A 2000)
States (in the US) that people promoting multilevel marketing praise it as an opportunity of a
lifetime with no catch Claims that there is indeed a serious catch the conventional process of
promoting this so-called opportunity to friends and virtually everyone else in someonersquos circle of
acquaintance is for the most part unacceptable in western society Maintains that truly determined
sellers may well make money but most will not capitulating rather in the face of rejection ranging
from disinterest to serious disapproval and resentment of the matter having been raised at all Shows
the conventional defenses raised by proponents of multilevel marketing to be seriously flawed if not
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
Alvesson M (2003) Methodology for close up studiesndashstruggling with closeness and closure
Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
quite spurious
Appendices
Appendix A Survey Questionnaire Form
Appendix B Survey Questionnaire Response
Appendix C List of MLM DSAP Members
Appendix D Top MLM Companies in the Philippine
Appendix E Euromonitor Data on Direct Selling Companies in the Philippine
References and Bibliography
Alvesson M (2003) Methodology for close up studiesndashstruggling with closeness and closure
Higher Education 46(2) 167-193 Available from
httplinkspringercomarticle101023A3A1024716513774 Access on 30 May 2013
Antonakis J Avolio B J amp Sivasubramaniam N (2003) Context and leadership An
examination of the nine-factor full-range leadership theory using the Multifactor Leadership
Questionnaire The leadership quarterly 14(3) 261-295 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
httpwwwsciencedirectcomsciencearticlepiiS1048984303000304 Accessed on 28 June 2013
Avolio B J (2007) Promoting more integrative strategies for leadership theory-building American
Psychologist 62(1) 25 Available from
httpwwwuicedusphphtpgContentReading20RoomArticlesIntegrative20strategies20for
20leadership20theory20buildingpdf Accessed on 28 June 2012
Bass B M (1990) From transactional to transformational leadership Learning to share the vision
Organizational dynamics 18(3) 19-31 Available from
httpwwwstrandtheoryorgimagesFrom_transactional_to_transformational_-_Basspdf Accessed
on 27 June 2013
Bass B M (1999) Two decades of research and development in transformational leadership
European Journal of Work and Organizational Psychology 8(1) 9-32 Available from
httpwwwtandfonlinecomdoipdf101080135943299398410 Access on 28 June 2013
Bass B M amp Avolio B J (1990) Developing transformational leadership 1992 and beyond Journal of
European industrial training 14(5) Available from
httpwwwemeraldinsightcomjournalshtmissn=0309-
0590ampvolume=14ampissue=5amparticleid=836676ampshow=pdf Accessed on 27 June 2013
Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult
behavior Journal of Socio-Economics 29(4) 361-374 Available from
httpwwwsciencedirectcomsciencearticlepiiS1053535700000792 Accessed on 28 May 2013
Biggart N W (1989) Charismatic capitalism Direct selling organizations in America University
of Chicago Press Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=kFhyyoSeJGUCampoi=fndamppg=PR9ampdq=related
xwY4EAtXLFkJscholargooglecomampots=gb-
GhfapyMampsig=cwQuLot_D_TQ9X1HTQoubofZfnEv=onepageampqampf=false Access on 31 May
2013
Blake R R amp Mouton J S (1981) Management by Gridreg principles or situationalism Which
Group amp Organization Management 6(4) 439-455 Available from
httpgomsagepubcomcontent64439 Access on 19 June 2013
Bloch B (1996) Multilevel marketing whatrsquos the catch Journal of Consumer Marketing 13(4)
18-26 Available from httpwwwemeraldinsightcomjournalshtmarticleid=856231 Access on
28 May 2013
Boote D N amp Beile P (2005) Scholars before researchers On the centrality of the dissertation
literature review in research preparation Educational researcher 34(6) 3-15 Available from
httpedrsagepubcomcontent3463 Access on 31 May 2013
Brodie S Stanworth J amp Wotruba T R (2002) Comparisons of salespeople in multilevel vs
single level direct selling organizations The Journal of Personal Selling and Sales Management
67-75 Available from httpwwwjstororgstable40471869 Accessed 26052013 2010
Bryman A (1993) Charismatic leadership in business organizations Some neglected issues The
Leadership Quarterly 4(3) 289-304 Available from
httpwwwsciencedirectcomsciencearticlepii104898439390036S Accessed on 27 June 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
Buchanan D A amp Huczynski A (2007) Organizational behaviour Sixth edition Harlow
Prentice Hall
Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann
Available from
httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_
analysispdf Access on 29 May 2013
Burt R S (2000) The network structure of social capital Research in organizational behavior 22
345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091
Access on 09 June 2013
Bryman A amp Bell E (2007) Business research methods Oxford University Press USA
Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from
httpwwwstiba-
malangcomuploadbankpustakaRMRESEARCH20DESIGN20QUA20QUANpdf Access
on 30 May 2013
Croft R amp Woodruffe H (1996) Network marketing The ultimate in international distribution
Journal of Marketing Management 12(1-3) 201-214 Available from
httpwwwtandfonlinecomdoipdf1010800267257X19969964409Ua2CepWQxFI Access on
04 June 2013
Brodie S Stanworth J amp Wotruba T R (2002) Direct selling business of significant importance
Donaldson B (2007) Sales Management Principles Process and Practice Palgrave Macmillan
Daniel D Ronald Management information crisis Harvard Business Review 395 (1961) 111-
121
Dumitraş E H D (2011) Studies And Researches Regarding The Management of Multi-Level
Marketing Systems (Doctoral dissertation Faculty of Machine Building Technical University of
Cluj) Available from
httpwwwutclujrodownloaddoctoratRezumat_Horatiu_Dan_Dumitraspdf Accessed on 04 June
2013
Fernandez R M amp Fernandez-Mateo I (2006) Networks race and hiring American
Sociological Review 71(1) 42-71 Available from httpasrsagepubcomcontent71142 Access
on 02 June 2013
French J R amp Raven B (1959) The bases of social power Studies in social power 150 167
Available from
httpwwwcommunicationcachecomuploads108810887248the_bases_of_social_power_-
_chapter_20pdf Access on 15 June 2013
Fiedler F R E D (2005) Contingency theory of leadership Organizational Behavior I 232-
55Available from
httpfarshadfaezy3persiangigcommanagementOrganizational20Behavior20I2020Essent
ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
Graen G B amp Uhl-Bien M (1991) The transformation of professionals into self-managing and
partially self-designing contributors Toward a theory of leadership-making Management
Department Faculty Publications 16 Available from
httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-
redir=1ampreferer=http3A2F2Fscholargooglecomsg2Fscholar3Fq3Dthe2Btransforma
tion2Bof2Bprofessional2Binto2Bself2Bmanaging2Bcontribution26btnG3D26hl
3Den26as_sdt3D0252C5search=22transformation20professional20into20self20
managing20contribution22 Accessed on 25 June 2013
Graen G B amp Uhl-Bien M (1995) Relationship-based approach to leadership Development of
leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-
domain perspective The Leadership Quarterly 6(2) 219-247 Available from
httpwwwsciencedirectcomsciencearticlepii1048984395900365 Access on 24 June 2013
Grayson K (1996) Examining the embedded markets of network marketing organizations
Networks in marketing 325-41 Available from
OrganizationshttpkentgraysoncomGrayson20Archiveembeddedchppdf Accessed on 19 May
2013
Gummesson E (1987) The new marketingmdashdeveloping long-term interactive relationships Long
range planning 20(4) 10-20 Available from
httpwwwsciencedirectcomsciencearticlepii0024630187901518 Access on 02 June 2013
Hart C (1999) Doing a literature review Releasing the social science research imagination
SAGE Publications Limited Available from
Hassard J (1991) Multiple paradigms and organizational analysis A case study Organization
Studies 12(2) 275-299 Available from httposssagepubcomcontent122275 Access on 29
May 2013
Herbig Paul and Rama Yelkurm A Review of the Multilevel Marketing Phenomenon Journal of
marketing Channels 61 (1997) 17-33 Available from
httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013
Hermalin B (1997) Toward an economic theory of leadership Leading by example Available at
SSRN 15570 Available from http128118178162epsmicpapers96129612002pdf Accessed
on 19 June 2013
Hill S Provost F amp Volinsky C (2006) Network-based marketing Identifying likely adopters
via consumer networks Statistical Science 256-276 Available from
httpwwwjstororgstable27645754 Access on 01 June 2013
House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The
Leadership Quarterly 7(3) 323-352 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984396900247 Accessed on 24 June 2013
Katz R L (1955) Skill of an administrator Harvard Business Review [online] Available from
httphbrorg197409skills-of-an-effective-administratorarpr Access on 17 June 2013
Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
Lin N (1999) Building a network theory of social capital Connections 22(1) 28-51 Available
from httpwwwinsnaorgPDFConnectionsv221999_I-1-4pdf Accessed on 09 June 2013
Luca N (2011) Multi-Level Marketing At the Crossroads of Economy and Religion Research in
Economic Anthropology 31 217-239 Available from
httpwwwemeraldinsightcombookshtmchapterid=1959277 Access on 03 June 2013
Maslow A H (1987) Maslows hierarchy of needs Salenger Incorporated
Mintzberg H (1979) An emerging strategy of direct research Administrative science quarterly
24(4) 582-589 Available from httpwwwjstororgstable2392364 Accessed 28052013
Mumford M D Zaccaro S J Harding F D Jacobs T O amp Fleishman E A (2000)
Leadership skills for a changing world Solving complex social problems The Leadership
Quarterly 11(1) 11-35 Available from
httpwwwsciencedirectcomsciencearticlepiiS1048984399000417 Access on 17 June 2013
Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just
another Pyramid Scheme Marketing Education Review 14(3) 47-53 Available from
httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf
Access on 17 May 2013
Peterson R A amp Albaum G (2007) On the ethicality of internal consumption in multilevel
marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from
httpwwwjstororgstable40472110 Access on 19 May 2013
Phillips M amp Rasberry S (2008) Marketing without advertising Nolo [Available from
httpscholargooglecomsgscholarhl=enampq=marketing+Without+AdvertisingampbtnG=] Access
on 22 May 2013 Pratt M G (2000) The good the bad and the ambivalent Managing identification among Amway
distributors Administrative Science Quarterly 45(3) 456-493 Available from
httpwwwjstororgstable2667106 Accessed on 31 May 2013
Rost J C (1993b) Leadership development in the new millennium Journal of Leadership amp
Organizational Studies 1(1) 91-110 Available from httpjlosagepubcomcontent1191
Accessed on 15 June 2013 Rost J C (1993a) Leadership for the twenty-first century Praeger Publishers Available from
httpbooksgooglecomsgbookshl=enamplr=ampid=-
bM7E8ORH7QCampoi=fndamppg=PR11ampdq=Leadership+for+the+twenty-
first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June
2013
Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an
investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
of Organizational Behavior 22(8) 849-869 Available from httpwwwjstororgstable3649575
Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
httpwwwjstororgstable30000715seq=1ampuid=2ampuid=4ampsid=21102067834263 Access on 19
May 2013
Vroom V H amp Yetton P W (1973) Leadership and decision-making (Vol 110) University of
Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013
Zaccaro S J Kemp C amp Bader P (2004) Leader traits and attributes The nature of leadership
101-124 Available from httpwwwcorwincomupm-data5014_Antonakis_Chapter_5pdf
Access on 24 June 2013
Zikmund W G Carr J C amp Griffin M (2012) Business Research Methods (with Qualtrics
Printed Access Card) South-Western Pub Available from
httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access
on 31 May 2013
from httphbrorg197409skills-of-an-effective-administratorar1 Access on 15 Jun 2013
Kirkpatick S A amp Locke E A (1991) Leadership do traits matter The Executive 5(2) 48-60
Available from httpwwwjstororgstable4165007 Access on 17 June 2013
Kotter J P (2001) What leaders really do Harvard Business Review 79(11) 85-98 Available
from
httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf
Access on 14 June 2013
King C W amp Robinson J W (2000) The new professionals Prima Soho
Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of
Business Ethics 29(1-2) 153-160 Available from
httpwwwjstororgstable25074449 Access on 17 May 2013
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investigation of the effects of higher‐ order motives in multilevel marketing organizations Journal
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Access on 19 May 2013
Vander Nat P J amp Keep W W (2002) Marketing fraud An approach for differentiating
multilevel marketing from pyramid schemes Journal of Public Policy amp Marketing 139-151
Available from
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May 2013
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