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IIMB Management Review

Journal of Indian Institute of Management Bangalore

IIM Bangalore offers Degree-Granting Programmes, a Diploma Programme, Certificate Programmes and Executive Education Programmes and specialised courses in areas such as entrepreneurship and public policy.

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About IIMB

The Indian Institute of Management Bangalore (IIMB) believes in building leaders through holistic, transformative and innovative education

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DOES TRANSFORMATIONAL LEADERSHIP INFLUENCE ORGANISATIONAL CULTURE AND ORGANISATIONAL PERFORMANCE: EMPIRICAL EVIDENCE FROM AN EMERGING COUNTRY

Transformational leadership is a strong mechanism for improving organisational performance and strengthening competitive advantage. However, understanding transformational leadership and the influence of its components on firm performance is still limited and has not been investigated clearly. Besides, although organisational culture is a powerful means to achieve desired organisational outcomes, the evidence for this effect is mixed. In addition, understanding the effects of transformation leadership, particularly with its’s sub-dimensions, on organisational culture as well as on organisational performance are important because they are considered as the key driving forces for improving performance in organisations. This study, therefore, aims at examining the relationship between transformational leadership and organisational cultural, as well as the joint effect of both on organisational performance. Also, it studies the impact of organisational culture as a mediator between transformational leadership and organisational performance.  

A survey was conducted to collect data from 903 employees working in the manufacturing sector over a period – July 2019 to September 2019. To test the hypotheses, we used covariance-based structural equation modeling (SEM) to examine how well-established theories fit reality. Further, the bootstrapping method was used for testing both direct and indirect effects simultaneously with the support of SPSS 26.0 and AMOS 24.0. The results showed that transformational leadership has a significant positive relationship with organisational culture. The results concluded that organizational performance has a positive significant relationship with transformational leadership. However, these effects differ from individual components of transformational leadership. The study showed that organisational culture influences organisational performance directly and partially mediated the contribution of transformational leadership to organisational performance. The study also extends research on transformational leadership (idealized influence, inspirational motivation, intellectual stimulation, individualised consideration) and organisational performance relationships in connection with organisational culture. The research provides implications for managers and scientists.