International Conferenceon Education, Psychology and Society
December 19,-21, Hong Kong

According to Direct Selling Association (2012), the estimated retail sales of USD31.63 billion for the direct selling channel were up 5.9% in the USA, from USD 29.87 billion in 2011.
The number of people involved in direct selling in the USA increased 1.9% to 15.9 million in 2012 from 15.6 million in 2011. A direct selling company may use a multilevel plan or a single-level plan or both to compensate direct sellers. Multi-level marketing (also known asnetwork marketing) refers to the use of channeling, selling, and supplying goods and servicesthrough independent agents. However, little research has been conducted on MLMorganizations and few studies have examined the effects of leadership in MLM contexts(Sparks & Schenk, 2001).
In MLM organizations, the key leadership relationships are those between the distributorsand their sponsors who recruited them into the organization. The hierarchical leadersubordinaterelationship found in most organizations does not exist in the MLM structure.Although sponsors are expected to provide leadership to recruits, they have no formalauthority over them as in the traditional leader-subordinate sense. This situation raisesquestions about the relevance of leadership theories to MLM businesses.
Using a sample of 123 MLM distributors in Hong Kong / China, this study empirically
examines the relationship between transformational leadership and transactional leadershipand performance as well as the mediating effects of higher-order goals, self-efficacy and trustin the leader. The main results are as follows. First, the effects of transactional leadership onthe mediators were non-significant when considered concurrently with transformationalleadership. Second, transformational leadership and transactional leadership were nonsignificantpredictors of the performance of MLM distributors in terms of commission earned.Third, self-efficacy and trust in the leader mediated the relationship between transformationalleadership and performance. Finally, when predicting commission by concurrently usingtransformational leadership, transactional leadership, higher-order goals, trust in the leaderand self-efficacy, only self-efficacy was a significant predictor.

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