Impact of Transformational and Transactional Leadership Styles on Organizational Commitment Work Engagement as Moderator

Abstract

The research question of this study is how transformational and transactional leadership styles influence organization commitment with work engagement as a moderator. In modern organizational contexts, leadership has become a key factor that defines the attitude of employees, their behaviour and the general performance of the organization. Although transformational and transactional leadership styles have been extensively studied in the previous studies, there has been little empirical interest in the combined impact of these two leadership styles on the organizational commitment in the developing economies, especially when the work engagement factor is used as a mediating variable. To fill this gap, this paper will present a detailed analysis in the setup of Khyber Pakhtunkhwa (KP), Pakistan by looking at two different but important sectors: higher education and banking.
The research design applied in the study is quantitative and cross-sectional research. Structured questionnaires were used to gather data in two independent samples; 556 members of the faculty of the universities of the private sector and 386 employees of the banks of the private sector in KP, Pakistan. Measurement scales that were predefined and tested, such as Multifactor Leadership Questionnaire (MLQ) used to evaluate transformational and transactional leadership styles, Organizational Commitment Scale created by Meyer and Allen (1997), and the Utrecht Work Engagement Scale (UWES) were used to assess work engagement. Statistical Package of Social Sciences (SPSS) and Analysis of Moment Structures (AMOS) were used to analyze the collected data. Methods of analysis were descriptive statistics, reliability and validity testing, correlation analysis, multiple regression analysis and moderation analysis in terms of interaction.
The study results indicate that transformational leadership produces significant and statistically significant positive influence on organizational commitment in both samples. Transformational leaders are those who have inspirational motivation, intellectual stimulation, individualized consideration and idealized influence, which are more likely to promote emotional attachment and loyalty among employees. These leadership behaviors make employees identify themselves with organisational goals and thus enhance their commitment. Conversely, transactional leadership also shows a positive and significant correlation to organizational commitment albeit with a smaller effect size. Transactional leadership founded on contingent rewards and corrective actions would help in commitment by setting of clear expectations, reinforcing of performance standards, and organizational stability.
The strength and applicability of the results are also brought out in the comparative analysis of the education and banking sectors. Although the organizational structures, job roles, professional expectations differ, the relationships between the leadership styles, work engagement, and organizational commitment are similar in both sectors. This shows that the model suggested has a great explanatory value in various organization contexts in Pakistan.
The research has a number of theoretical and practical implications. In theory, it adds value to the body of knowledge by incorporating the concepts of leadership styles and work engagement into a single framework, which is based on the Social Exchange Theory. In practice, the results indicate that organizations ought to invest in the ability to develop transformational leadership skills and should also create the working environment that will increase the engagement of the employees. Leadership development programs, employee recognition programs and supportive organizational policies can be very effective in enhancing organizational commitment.
To sum it up, this research shows that leadership and involvement are crucial factors in influencing employee commitment. It is an eye opener by showing how work engagement can moderate the outcomes of organizations in developing economies such as Pakistan.