Key Success Factors of MLM Leaders in the Philippines

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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., & Schenk, J. A. 2001) and organization type (J. R., & 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., & 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., & Schenk, J. A. 2001) to talk about ―juicy scandals‖ to report (Poe, R. 1995 cited from King, C. W., & Robinson, J. W. 2000). It is therefore not surprising to hear such disinformation about this ―word-of-mouth marketing without advertising‖ (Phillips, M., & 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 a.k.a. Network Marketing or Networking. (The terminology is interchangeable in this paper.) It has been in business in the Philippines since the early 70's (http://www.dsap.ph/about-us1/history-and-achievements-of-dsap.html). 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

description

Key Success Factors of MLM Leaders in the Philippines - PROF. ERWIN M. GLOBIO, MSIT

Transcript of Key Success Factors of MLM Leaders in the Philippines

Page 1: 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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Higher Education 46(2) 167-193 Available from

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on 27 June 2013

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Bhattacharya P amp Mehta K K (2000) Socialization in network marketing organizations is it cult

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2013

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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

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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

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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

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

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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

Page 2: Key Success Factors of MLM Leaders in the Philippines

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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leader-member exchange (LMX) theory of leadership over 25 years Applying a multi-level multi-

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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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on 19 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

Available from httpwwwjstororgstable4165007 Access on 17 June 2013

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httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf

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Koehn D (2001) Ethical issues connected with multi-level marketing schemes Journal of

Business Ethics 29(1-2) 153-160 Available from

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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

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Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just

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httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf

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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

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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first+centuryampots=DJCDnwJhBIampsig=D3e-JMLN1LxP5cQn3V-buvHGb2w Accessed on 26 June

2013

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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

Page 3: Key Success Factors of MLM Leaders in the Philippines

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 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

Page 4: Key Success Factors of MLM Leaders in the Philippines

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 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

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3Den26as_sdt3D0252C5search=22transformation20professional20into20self20

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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-

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

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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

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

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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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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

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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

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Muncy J A (2004) Ethical Issues in Multilevel Marketing Is It a Legitimate Business or Just

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httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf

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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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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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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

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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

Page 5: Key Success Factors of MLM Leaders in the Philippines

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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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-

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2013

Sparks J R amp Schenk J A (2001) Explaining the effects of transformational leadership an

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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

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httpwwwcengagebraincoukcontentzikmund80704_1439080704_0201_chapter01pdf Access

on 31 May 2013

Page 6: Key Success Factors of MLM Leaders in the Philippines

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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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

Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from

httpwwwstiba-

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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-

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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

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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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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

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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

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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

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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

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

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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

Page 7: Key Success Factors of MLM Leaders in the Philippines

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

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

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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

httpwwwstiba-

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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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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_-

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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

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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

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House R J (1996) Path-goal theory of leadership Lessons legacy and a reformulated theory The

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Katz R L (1974) Skills of an effective administrator Harvard Business School Press Available

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httpmindsetmatterscomauPortals0doxwhat20leaders20really20do20j20kotterpdf

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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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2013

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May 2013

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Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013

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on 31 May 2013

Page 8: Key Success Factors of MLM Leaders in the Philippines

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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Higher Education 46(2) 167-193 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

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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

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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

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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

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

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httpwwwtandfonlinecomdoipdf101300J049v06n01_02 Access on 28 May 2013

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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

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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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Economic Anthropology 31 217-239 Available from

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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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httpfilesmeetupcom1331500Network20Marketing20-20Academic20Publicationpdf

Access on 17 May 2013

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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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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

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on 31 May 2013

Page 9: Key Success Factors of MLM Leaders in the Philippines

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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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

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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

Creswell J W (1994) Research design Thousand Oaks CA Sage publications Avialable from

httpwwwstiba-

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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-

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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

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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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Department Faculty Publications 16 Available from

httpdigitalcommonsunleducgiviewcontentcgiarticle=1015ampcontext=managementfacpubampsei-

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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

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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

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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

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=-

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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

Page 10: Key Success Factors of MLM Leaders in the Philippines

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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Higher Education 46(2) 167-193 Available from

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on 27 June 2013

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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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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

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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

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

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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

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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

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

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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

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on 31 May 2013

Page 11: Key Success Factors of MLM Leaders in the Philippines

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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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

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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

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

Page 12: Key Success Factors of MLM Leaders in the Philippines

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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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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Bass B M (1999) Two decades of research and development in transformational leadership

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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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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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Journal of Marketing Management 12(1-3) 201-214 Available from

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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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ial20Theories20Of20Motivation20And20LeadershipJohn20B2020Minerpdf Accessed on 27 June 2013

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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

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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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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

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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

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

Page 13: Key Success Factors of MLM Leaders in the Philippines

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

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

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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

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

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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

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

Page 14: Key Success Factors of MLM Leaders in the Philippines

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

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

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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

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

Page 15: Key Success Factors of MLM Leaders in the Philippines

(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

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

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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

Page 16: Key Success Factors of MLM Leaders in the Philippines

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

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

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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

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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

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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

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

Page 17: Key Success Factors of MLM Leaders in the Philippines

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

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

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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

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marketing Journal of Personal Selling and Sales Management 27(4) 317-323 Available from

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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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May 2013

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Pittsburgh Press Available from httpwwwwaysinternationalcomLeadership_Decisisonpdf Accessed on 26 June 2013

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Access on 24 June 2013

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on 31 May 2013

Page 18: Key Success Factors of MLM Leaders in the Philippines

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

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

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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

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

Page 19: Key Success Factors of MLM Leaders in the Philippines

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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Prentice Hall

Burrell G amp Morgan G (1994) Sociological paradigms and organisational analysis Heinemann

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httpsonifypsychgatechedu~benreferencesburrell_sociological_paradigms_and_organisational_

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Burt R S (2000) The network structure of social capital Research in organizational behavior 22

345-423 Available from httpwwwsciencedirectcomsciencearticlepiiS0191308500220091

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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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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

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

Page 20: Key Success Factors of MLM Leaders in the Philippines

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

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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

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

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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

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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

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

Page 21: Key Success Factors of MLM Leaders in the Philippines

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

Page 22: Key Success Factors of MLM Leaders in the Philippines

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

Page 23: Key Success Factors of MLM Leaders in the Philippines

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

Page 24: Key Success Factors of MLM Leaders in the Philippines

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

Page 25: Key Success Factors of MLM Leaders in the Philippines

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

Page 26: Key Success Factors of MLM Leaders in the Philippines

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

Page 27: Key Success Factors of MLM Leaders in the Philippines

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

Page 28: Key Success Factors of MLM Leaders in the Philippines

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

Page 29: Key Success Factors of MLM Leaders in the Philippines

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

Page 30: Key Success Factors of MLM Leaders in the Philippines

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

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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

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

Page 31: Key Success Factors of MLM Leaders in the Philippines

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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

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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

Page 32: Key Success Factors of MLM Leaders in the Philippines

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