The Effects of Transformational Leadership on Sales Performance in a Multilevel Marketing Organization

Despite the rapid growth of multilevel marketing (MLM), there is little research that examines distributor performance in this unique organizational setting. The present study focused on the relationships between individual distributors and the people who recruited them into the organization (i.e., their sponsors). Given the unique structure of MLM organizations and the importance of sponsor-recruit relationships, it has previously been proposed that sponsors should employ a transformational leadership style. This study investigated transformational leadership as a predictor of performance, which was defined using both objective and subjective measures. Participants were 479 distributors at an MLM organization who were instructed to assess the degree to which their sponsors demonstrated key transformational leader behaviors. While transformational leadership positively predicted the subjective performance outcomes, it was unable to predict the objective performance outcomes. However, experimental design limitations threaten the interpretation of these results. These limitations, along with suggestions for future research, are discussed