Ijrcms 05 196
Ijrcms 05 196
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To cite this article: Bomanaziba Idiko and Obah Daddy Obah (2023). ACCELERATING ORGANIZATIONAL PERFORMANCE
THROUGH TRANSFORMATIONAL LEADERSHIP, International Journal of Research in Commerce and Management Studies
(IJRCMS) 5 (2): 67-81
1
Newcastle University, Upon Tyne
2
Department of Banking and Finance
Faculty of Management Sciences
Niger Delta University
DOI: https://doi.org/10.38193/IJRCMS.2023.5206
ABSTRACT
This study investigated the impact of transformational leadership on organizational performance: A
survey of all commercial banks in Yenagoa, Bayelsa State, Nigeria. The study employed simple
random sampling technique to collect data with 300 questionnaires administered to staffs and 150
were returned. The study adopts spearman rank-order correlation coefficient statistical technique with
the aid of SPSS IBM version 20 to examine the relationship the explanatory variable and predatory
variable using 5% level of significance to test the hypotheses. The study reveals that there is a positive
relationship between idealized influence, inspirational motivation, intellectual stimulation and
individualized consideration of transformational leadership and organizational performance.
Therefore, the study summarized that there is a positive link between transformational leadership and
organizational performance. The research recommends that, managers should develop of specific,
challenging and attractive vision that pay attention to self-efficacy; promote employees’ capabilities
and capacities via training and coaching that will enhance the well-being of employees and increase
productivity and commitment thereon.
INTRODUCTION
Nowadays, organization tend to struggle in a business environment that is characterized by uncertainty
and unpredictability as a result of constant technological, social, political and economic changes
(Desky et al., 2020; Muhdar et al., 2022) This has placed organizations in dynamic contexts which
demands constant adaptation (Didier and Jose, 2013; Haudi et al., 2022). This type of environment
needs effective leaders that will be able to respond to these uncertainties through changes that are
likely to become impactful to the organization. They need a vital transformation to reinvent themselves
(Desky et al., 2020; Jose, 2013; Sunarsi, 2020). In this sense, organizations require revamping their
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organizational cultures to affect the necessary changes. According to Chandan, (2001), leadership is
the art of influencing and inspiring subordinates to perform their duties willingly, competently and
enthusiastically for achievement of group objectives. Greenberg and Baron, (2000) added that,
without good leadership, organisations are confronted with difficulty in actualizing organisational
goals and difficulty to adapting to occurring changes within and outside the organisation
Similarly, leaders are seen as people that are capable of making changes in order to attain a high level
of performance (Desky et al., 2020; Kadiyono et al., 2020; Odumeru & Ifeanyi, 2013), they must be
able to create visions, develop strategies, and use his power to influence their subordinates positively
(Odumeru & Ifeanyi ,2013). In addition, leaders who possess these qualities are classified as
“Transformational Leaders” (Desky et al., 2020; Hater and Bass, 1988). Leaders have the ability to
equalize his future vision with that of his subordinates and heighten his subordinates’ needs (Kadiyono
et al., 2020; Hater & Bass, 1988).
According to Pawar and Eastman (1997), transformational leadership is leadership covering the
undertakings for the organisational changes and that transformational leaders are those who
establishes a dynamic organisational vision frequently required for creating innovation. This was
corroborated by Avolio and Bass, (2004) that transformational leadership refers to leaders that
transform the value, needs, aspirations, and followers’ priorities and motivates their followers to
exceed expectations. Transformational also refers to the ability that is possessed by leaders to
influence their subordinates to raise awareness on the importance of work results, prioritizing group
significance, and to raise the needs of their subordinates to a higher degree as to achieve better quality
of life (Kadiyono et al., 2020; Yukl, 2009).
Although, Bass and Avolio (1994) argued that there are four ways a leader could transform his
subordinates such as; Idealized Influence, Inspirational Motivation, Intellectual Stimulation and
Individualized Consideration. In line with the demand for change in organisations, there is a
significant role that the model of transformational is playing in organisational performance because
transformational leader can create vision in an environment which can motivates subordinates to
achieve results that exceeds expectations (Gelard et al., 2014; Indrawan et al., 2020; Birasnay et al.,
2013). Yukl (2009) suggested that transformational leadership could help in building the work, groups
and integrate individual towards achievement of organizational corporate goal.
Maslow’s hierarchy of needs also build on transformational leadership by highlighting that, lower
income employee needs basic physiological needs such as food, water, warmth and rest, security and
safety (Kadiyono et al., 2020) While the esteem needs of the middle-income employees can be fulfilled
by practicing transactional leadership (Muhdah et al., 2020). On the other hand, to fulfil a higher-level
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employee needs which has to do with dignity and self-actualisation can be only possible by practicing
transformational leadership (Armstrong, 2002). Also, that the notion of performance is a very
fundamental concept in business as it indicates how well or badly an organisation operates. Bryman
(2012) referred the term as the result from a person’s effort, ability and task perception. This effort is
the outcome of motivation, satisfaction and organisational commitment that shows the amount of
energy (physical and mental) used by an individual in initiating a task. Although effort is an
individual’s characteristics in doing a task, it is usually not directly influenced on short-term period.
However, Robbins (2003) argued that, employee performances are notes of achievements which
resulted from a certain task in a certain period of time. These can be seen from output, product quality,
productivity, cost management, safety and health, employees’ relationship and development
(Armstrong, 2002; Desky et al., 2020).
According to Ahmad et al., (2014), transformational leadership plays a very crucial role in an
organisation in the sense that, it brings about positive change in the followers; it enhances the
motivation, morale and performance, through idealized influence, intellectual stimulation, individual
consideration and inspirational motivation and that its relevance and contribution to organisational
performance cannot be undermined.
The above shortcomings tend to adversely affect performance within the organization over the years
and as such need’s urgent attention. This is so because any organization that lacks effective leadership
will definitely lack competitive advantage. Therefore, the study was set out to determine the extent to
which transformational leadership characteristics such as: idealized influence, inspirational
motivation, intellectual stimulation, and individualized consideration affect organizational
performance (Arif et al., 2022).
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LITERATURE REVIEW
Leadership is the process whereby an individual influences subordinates towards the attainment of
organizational goals (Muhdar et al., 2022; Indrawan et al., 2020). It is also the process of influencing
and inspiring subordinates to perform their duties willingly, competently and enthusiastically for the
achievement of group objectives (Chandan, 2001: cited in Mathotaarachchi, 2013). Weihrich, Cannice
and Koontz, (2008) postulated that leadership is one of the most important aspects of management
because it is seen as a major factor which contributes immensely to the wellbeing of the organization.
Most management writers agree that, leadership is the process of influencing the activities of an
individual or a group in efforts towards goal achievement in a given situation (Arif et al., 2022;
Rattanaborworn and Ussahawanitchakit 2015). This argument provided evidence that leadership is
an essential ingredient in organizational success. With successful leadership, organization can grow,
prosper, compete and can smoothly achieve its mission ((Arif et al., 2022; Kamani, 2013).
According to Burns (1978), transformational leadership is a process in which leaders and followers
promote each other to higher levels of morality and motivation (Kadiyono et al., 2020). Also, Simola
et al., (2012) states that transformational leadership is a type of leadership in which interactions among
interested parties are organized “around a collective purpose” in a manner that; transform, motivate,
and enhance the actions and ethical aspirations of followers. Geib and Swenson (2013) argued that
transformational leadership seeks to transform their followers through structural and strategy
innovation of the organization. It is also seen as a leader who stimulates and inspires (transform)
followers to achieve extraordinary outcomes with attention given to the developmental needs of
individual followers (Desky et al., 2020; Muhdar et al., 2022; Robbins and Coulter, 2007). These sets
of leaders tend to show an organization a new route for improvement and progress via new ideas and
perspectives. Transformational leaders also try to mobilize the organization by motivating managers
and employees for radical changes and transform organizational pillars to achieve idealized
organizational performance (Arif et al., 2022; Muhdar et al., 2022; Sanjaghi, 2000).
Further, Transformational leaders encourage follower to do more than required (Desky et al., 2020;
Indrawan et al., 2020; Sosik, Potosky, and Jung, 2002), and are proactive in helping followers to attain
unexpected goals. According to Bass (1999), they move followers away from immediate self-
gratification. These set of leaders are also seen as leaders who engage in a particular set of behavior
(Muhdar et al., 2022) According to Pierce and New storm, (2008); Bass, (1985), these set of leaders
are seen as models of integrity and fairness, they set clear goals, and they have high expectations,
provide support and recognition, stir the emotions and passions of people, and get people to look
beyond their self-interest to reach for the improbable.
Burns (1985) reiterated the fact that, transformational leaders have a vision and challenge others to do
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extraordinary works. He further reaffirmed that transformational leaders are those who able to draw
new necessary routes for modern organizations because that they are the source of change and they
have complete influence over organizational changes (Gelard et al., 2014; Indrawan et al., 2020)
Idealized Influence
This is also known as Charismatic Influence. It is the propensity to which a leader behaves in
admirable ways and displays convictions and takes stands that cause followers to identify with the
leader who has a clear set of values and acts as a role model for the followers (Odumeru and Ifeanyi,
2013).It shows the capability of trust making and understanding the leadership by followers. It is a
radical factor in accepting changes in the organization that drives organization to achieve its corporate
goal and objectives (Jandanghi and Matin, 2009). Also, “Charismatic leaders” are those leaders who
are special and stimulate others to follow their own perspectives (North house, 2001). Similarly,
leaders with idealized influence are respected and trusted because such leaders "perform right works"
and possess high human and moral behaviors. These set of leaders do not use their leadership power
and capacity for personal aggrandizement but try to achieve organizational objectives by conducting
and guiding their followers (Arif et al., 2022)
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Individualized Consideration
Individualized consideration deals with the propensity to which a leader attends to each individual
follower's needs and acts as a mentor or coach by giving respect to and appreciating the individual's
contribution to the team (Odumeru and Ifeanyi, 2013). Thus, individuals are seen to be supported by
leaders, while leaders are concern about their personal feelings and needs (Podsakoff, MacKenzie and
Bommer, 1990). Furthermore, spending time in teaching and coaching, behaving others as persons not
just group members, paying attention to others as persons who are the owner of different needs,
capabilities, dreams and wishes, helping others to develop and grow their own capabilities, listening
to others demands and interests, developing individuality and facilitating individuals' growth are
product of individualized consideration (Moghali, 2002).
Theoretical Framework
Different Management literatures have discussed various Leadership theories with a review of
beginning with the “Great Man” and “Trait” theories to “Transformational” leadership (Bolden, 2003).
Whilst early theories tend to focus upon the characteristics and behaviors of successful leaders,
contemporary theories tend to consider the role of followers and the contextual nature of leadership.
However, this research work is anchored it theoretical foundation on James Macgregor Burn’s theory
of Transformational Leadership.
This leadership theory which developed in the 20th century by Burns (1978) and later enhanced by
Bass (1985, 1998) and others (Avolio and Bass, 1988; Bass and Avolio, 1994; Bennis and Nanus,
1985; Tichy and Devanna, 1986) has attracted the attention of many researchers in the field of
organizational leadership over the past three decades.
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This theory focuses on the leader’s ability to motivate the follower to accomplish beyond what the
follower planned to accomplish (Krishnan, 2005). Transformational leadership has four components:
idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration
(Bass, 1985). Burns (1978) characterized transformational leadership as a leadership style that “occurs
when one or more persons engage with others in such a way that leaders and followers raise one
another to higher levels of motivation and morality”. Burns (1978) argued that transformational
leaders inspire followers to accomplish more by concentrating on the follower’s values and helping
the follower to align these values with organizational values. Burns (1978) draws upon the humanistic
psychology movement in his writing upon ‘transforming leadership’ by proposing that the
transforming leader shapes, alters, and elevates the motives, values and goals of followers by
achieving significant change in the process. He further added that there is a special power entailed in
transforming leaders that are “armed with principles that may ultimately transform both leaders and
followers into persons who jointly adhere to moral values and end-values.
Bass (1985) contributed to the work of Burns (1978) by viewing a leader as someone who motivates
others to do more than they originally expected to do by encouraging them to go beyond self-interest
for the good of the team or the organization. Tichy and Devanna, (1986) also contribute to the work
of Burns (1978) and Bass (1985) and described the hybrid nature of transformational leadership as not
due to charisma but a behavioral process capable of being learned.
Bass and Avolio (1995), in their writing connected the theory to the organizational setting. They
highlighted that “Transformational leadership is a prototype of leadership that everyone have in mind
when asked to describe their ideal leader, and it is more likely to provide a role model with which
subordinates want to identify”. According to the scholars, transformational leaders try to influence
subordinates by motivating and inspiring them to achieve organizational goals. They also seek to help
subordinates imagine appealing future outcomes related to the organization. This expanded and
refined version of Burn’s transformational leadership theory has been utilized in organizations since
the 1980s (Bass, 1985; Bass, Waldman, Avolio, and Bebb, 1987; Tichy and Devanna, 1986).
Notwithstanding, research has also shown that transformational leaders influences organizational
outcomes such as organizational citizenship behavior, organizational commitment, job satisfaction,
effort, and in-role performance (Nguni, Sleegers, and Denessen, 2006). Thus, the application of this
theory concentrated on the link between leaders and followers within an organization.
Empirical Studies
Several empirical studies in the past has investigated the link between transformational leadership and
organizational performance in both developed and developing countries. Although the result show
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with mixed result. One of the popular study that shown a direct connection between transformational
leadership and the following organizational citizenship behaviors was conducted by Podsakoff,
Mackenzie, Moorman and Fetter (1990). They investigated transformational leader behavior and their
effects on followers’ trust in leader, satisfaction, and organizational citizenship behaviors. The study
identifies that the effect of transformational leader behaviors on citizenship behaviors are indirect,
rather direct (Arif et al., 2022)
Barnes, Christensen and Stillman (2013), also examine the organizational leadership and subordinate
effect in Utah’s certified public accounting Profession by adopting the maultifactor leadership
questionnaires of bass and Avalio (2004). The result shows that transformation leadership has stronger
positive correlation than transactional on subordinate perceptions of workplace efficiency. A similar
study was also conducted by Kamani (2013) on the impact of transformational and transactional
leadership behaviours on employees’ trust and their organizational commitment for non-teaching staff
of the Sri Lankan Universities. He found that there is a positive impact of leadership of bosses on
employees’ trust. The result further show that transformational leadership behaviors has strong
positive correlations while transactional leadership demonstrate weak positive correlation with the
different types of organizational commitment. This is keeping with finding of Barnes, Chrsitensen and
Stillman (2010).
Dvir, Eden, Avolio, and Shamir (2002) also study the impact of transformational leadership on
follower development and performance using a field experiment. The showed that transformational
leaders had a direct impact on followers’ empowerment, morality, and motivation. In another
experimental study was also conducted by Barling, Webber, and Kelloway (1996) on the effects of
transformational leadership training on attitudinal and financial outcomes. The result show that
training has significant impact on subordinates’ perceptions of leaders transformational leadership and
enhance subordinates organizational commitment and transcend to financial performance (Muhdar et
al., 2022)
Another similar study was also conducted in Thailand by Rattanaborworn and Ussahawanitchakit
(2015) on the link between transformational leadership and firm performance. the study shows that
transformational leadership in some dimensions have a positive influence on transformational
leadership’s consequences. It also revealed that organizational innovation and organizational
efficiency have a positive influence on firm performance. The study further identified environmental
pressure as a determinant influence on transformational leadership (Gelard et al., 2014; Kadiyono et
al., 2020)
Other studies were also documented on the relationships between transformational leadership and
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personal outcomes such as satisfaction, performance, and commitment (see: Bycio, Hackett, & Allen,
1995; Fuller, Patterson, Hester, & Stringer, 1996; Koh, Steers, & Terborg, 1995). The result of the
above studies also showed positive relationships between transformational leadership and personal
outcomes such as satisfaction, performance, and commitment. They further identified that
transformational leaders create a great degree of trust and loyalty on the part of the followers to the
extent that followers are willing to identify with the leader and the organization through the deposition
of respect and confidence in their followers (Desky et al., 2020; Muhdar et al., 2022).
RESEARCH METHODOLOGY
The study adopted descriptive research design. The total population of the study consists of all the
commercial banks in Yenegoa, Bayelsa State, Nigeria both senior and junior staff. The total population
is 1200 with a sample size of 300. This sample size was estimated through use of the Taro Yamen
methods. The study adopted both primary and secondary data. The study adopted test-retest approach
to test for the reliability of the data. The hypothesized statements were tested using the parametric
statistical tool of spearman rank-order correlation coefficient (r).
DATA FINDINGS
This section shows the result of the correlation between transformational leadership and organizational
performance.
Correlations
Idealized Organization
Influence al
Performance
Correlation
Spearman's rho Idealized Influence 1.000 .955**
Coefficient
Sig. (2-tailed) . .000
N 150 150
Organizational Correlation
.955** 1.000
Performance Coefficient
Sig. (2-tailed) .000 .
N 150 150
**. Correlation is significant at the 0.05 level (2-tailed).
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Correlations
Inspirational Organization
Motivation al
Performance
Correlation
Spearman's rho Inspirational Motivation 1.000 .764**
Coefficient
Sig. (2-tailed) . .000
N 150 150
Organizational Correlation
.764** 1.000
Performance Coefficient
Sig. (2-tailed) .000 .
N 150 150
**. Correlation is significant at the 0.05 level (2-tailed).
Correlations
Intellectual Organization
Stimulation al
Performance
Correlation
Spearman's rho Intellectual Stimulation 1.000 .928**
Coefficient
Sig. (2-tailed) . .000
N 150 150
Organizational Correlation
.928** 1.000
Performance Coefficient
Sig. (2-tailed) .000 .
N 150 150
**. Correlation is significant at the 0.05 level (2-tailed).
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Correlations
Individualize Organization
d al
Consideration Performance
Individualized Correlation
Spearman's rho 1.000 .889**
Consideration Coefficient
Sig. (2-tailed) . .000
N 150 150
Organizational Correlation
.889** 1.000
Performance Coefficient
Sig. (2-tailed) .000 .
N 150 150
**. Correlation is significant at the 0.05 level (2-tailed).
DISCUSSION OF FINDINGS
The result of the analysis in (table 1) shows a correlation value of 0.955 signifying a positive
relationship between that idealized influence of a transformational leader and organizational
performance. The R2 of 92.4% (calculated) shows that the explanatory variable (idealized influence)
affect 92.4% of organizational performance. While the remaining 7.6% variation in the dependent
variable were explained by other variables not included in the model, which is taken care off by the
stochastic term. The investigation on the relationship between inspirational motivation and
organizational performance from the result (Table 2) reveal a correlation value of 0.764 indicating a
positive relationship between inspirational motivation and organizational performance. The R2 of
89.9% (calculated) reveals that the explanatory variables explained 89.9% of the variation in the
dependent variable while the remaining 17% variation in the dependent variable were explained by
other variables not included in the model. The empirical result of the Spearman Correlation Coefficient
(Table 3) show a value of 0.928 showing a positive relationship between intellectual Stimulation of a
transformational leader and organizational performance. The R2 of 98% (calculated) shows that the
explanatory variables (intellectual Stimulation of a transformational leader) accounted for 98%
variation in the dependent variable while the remaining 1% variation in the dependent variable were
explained by other variables not included in the model.
Finally, the empirical result of the Spearman Correlation Coefficient (Table 4) show a value of 0.889
showing a positive relationship between individualized Consideration of a transformational leader and
organizational performance. The R2 of 99% (calculated) reveals that that the explanatory variables
(individualized Consideration of a transformational leader) explained 99% of the variation in the
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dependent variable while the remaining 1% variation in the dependent variable were explained by
other variables not included in the model.
The overall implication of the result shows that there is positive relationship between transformational
leadership traits (idealized influence, inspirational motivation, intellectual Stimulation and
individualized Consideration) and organizational Performance. The findings of the study is also
keeping with the findings of previous studies (See: Podsakoff, Mackenzie, Moorman and Fetter (1990;
Kamani (2013 Barnes, Chrsitensen and Stillman (2010; Dvir, Eden, Avolio, and Shamir (2002; Weber
and Kelloway, 1996; Rattanaborworn and Ussahawanitchakit (2015) on the link between
transformational leadership and firm performance.
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