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International Journal of Research and Innovation in Social Science (IJRISS) |Volume V, Issue VIII, August 2021|ISSN 2454-6186
An Analysis of the Concepts of Transformational
Leadership and Transactional Leadership: The Way
Forward?
Agbarakwe, Chineme Beatrice1, Amah, Edwinah (PhD) 2, Okocha, Belemenanya Friday (PhD) 3
1Doctoral Candidate, Ignatius Ajuru University of Education, Nigeria
2Professor of Entrepreneurship & Management, University of Port Harcourt, Nigeria
3
Researcher, University of Port Harcourt, Nigeria
Abstract: Transactional and transformational leadership styles Bono 2000, Odumeru & Ogbonna, 2013). Burns (1978) was
have been adopted by most organizations, but there exists a the first to introduce these two themes when researching
controversy as to which of the two leadership styles is the most political leaders. This was further developed and enlarged by
appropriate and acceptable for organizational effectiveness and Bass and Avolio (1979) to encompass the whole range model
competitiveness. A survey of pertinent research on transactional of leadership, and it is now widely used in organizational
and transformational leadership styles is included in this study. psychology and management (Jung & Sosik, 2002).
According to the findings, transformational leadership is more
important than transactional leadership in specific situations. Transformational leadership is a management style that
Transactional leadership has been demonstrated to have a encourages employees to try new things and give their all so
considerable positive impact on organizational performance in that the organization can exceed the competition. By defining,
different circumstances. As a result, both leadership styles were expressing, and explaining the vision, as well as inspiring
shown to be useful to businesses and could be used separately or individuals to work toward the organization's goals, the leader
in combination, depending on the context of the organization and reorganizes the teams and the company (Amah, 2006). On the
the task at hand. other side, transactional leadership occurs when leaders aid
Keywords: Leadership, Transactional leadership, organizations in attaining their immediate goals while making
Transformational leadership no attempt to change the course of events. Employees are
I. INTRODUCTION given the resources they need to complete their
eadership is defined as a process that encourages others to responsibilities, and performance is linked to rewards. This is
give their all in order to achieve a specific goal. It is a the leadership perspective adopted by contingency and
L behavioral theories, which focuses on leaders' conduct to
manager's ability to accept and aggressively encourage others increase employee performance and satisfaction (Godwin et
to act in a desired and different manner in order to achieve the al, 2011).
organizational goal (Armstrong, 2009 & Certo, 2002). Amah
(2006) defined leadership as a process in which a conducive The majority of authors and researchers feel that both
environment or circumstance is created for people who are leadership styles differ in idea and practice, while others
motivated to work with zeal to attain the organization's goals. believe that transformational leadership outperforms
One of the most important aspects of corporate performance transactional leadership by allowing individuals and
and competitiveness is leadership. organizations to attain high levels of performance. Lowe et
al., 1996; Howell & Avolio, 1993; Bass & Avolio, 1994;
Every organization is created with the intention of achieving Howell & Avolio, 1993; Bass & Avolio, 1994; Howell &
specific objectives. As a result, a leader must persuade Avolio, 1993). According to Weihrich et al. (2008),
members of the organization to willingly devote their energies transactional leadership is a "Subset" of transformational
to achieving such goals. According to Fasola et al (2013), leadership. Furthermore, both leadership styles are claimed to
leaders are the creators of vision, corporate ethics, and have a positive impact on organizational productivity,
citizenship behavior, which they utilize to change companies employee performance, employee happiness and commitment,
by encouraging subordinates to perform at higher levels in and organizational performance (Hartog et al.,1977).
order to boost organizational productivity and performance. This study therefore is aimed at analyzing the
Many theories have been proposed to explain effective transformational and transactional leadership styles to
leadership styles, with transformational and transactional ascertain the most adaptable and acceptable and right way
leadership theories being two of the most famous (Judge & going forward for organizations.
Conceptual Framework
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International Journal of Research and Innovation in Social Science (IJRISS) |Volume V, Issue VIII, August 2021|ISSN 2454-6186
Idealized Influence
Transformational Leadership Inspirational Motivation
Intellectual Stimulation
Individualized Consideration
Transactional Leadership Contingent Rewards
Management- By Exception-Active
Management-By Exception- Passive.
Laissez-Faire
II. LTERATURE REVIEW also transformed IBM company from a money-losing
Leadership computer hardware company to a powerful servicing firm
(McShane, 2008). As previously stated, good leaders improve
"A process through which employees in an organization are organizational performance, and bad leaders reduce
motivated, inspired, or encouraged to be productive toward performance. Continental Airlines, for example, had gone
the achievement of organizational goals," Yukl and Lepsinger through 10 CEOs in as many years and was looking for a
(2005) describe leadership. Leadership not only function as an good leader until Gordon Bethune came along and made a
inspirational process, but is particularly involved in creating substantial contribution to the airline's success. Bad leaders,
the organizational vision, corporate values and ethics which on the other hand, have a tendency to drain the "economic
are geared towards the organization [Amah, 2006]. value" of the firm. AI Dunlop, popularly known as "Chainsaw
Effective Leadership AI," was a tough boss who took a hard line to cut expenses,
causing Sunbeam to go bankrupt in less than two years,
Effective leadership is defined as a leader's capacity to get his exhibiting bad leadership (McShane, 2009).
subordinates to perform better over time [McShane, 2009]. Researchers have attempted to discover successful leadership
Effective leadership encourages the adoption and practice of styles that can contribute to positive organizational results
organizational ethics and good workforce management which over the years. Two of the leadership perspectives that will be
in turn leads to improved performance. As a result of effective discussed in this study are transformational and transactional
leadership, subordinates are motivated, committed, and top leadership styles.
performers. Effective leaders focus mainly on the vision,
mission and goals of the organization and insist on the Transformational Leadership
workers doing the right things, while managers are concerned Transformational leadership is defined as "leaders' behaviors
about doing things right. They promote change and challenge that transform and drive followers to achieve beyond
situations as they arise (Bennis, 1989). expectations while transcending self-interest for the sake of
The impactful efforts of successful managers (leaders) on the company" (Avolio et al., 2009). Transformational leaders
workers improve organizational performance. Example of are noted for re-energizing and leading ailing businesses in
such leaders was Gordon Bethune who transformed new directions by changing operational processes,
Continental Airline that went bankrupt in 1994, restored it to a organizational design, and culture (Bass, 1990). In addition, a
number one on-time airline of that decade. Louis Gerstner transformational leader, according to Zaleznik (1977),
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International Journal of Research and Innovation in Social Science (IJRISS) |Volume V, Issue VIII, August 2021|ISSN 2454-6186
concentrates on changing the organizational context, changing being and how he behaves as a mentor or coach to
tactics, and changing culture to meet the operating him.
environment. In today's world of technological advancements Transformational leadership happens when leaders impact
and developments, many businesses face fierce competition their employees in three ways, according to Jones & George
from competitors in order to get a larger market share and a (2006):
competitive advantage over their competitors. To survive in
such a challenging situation, organizations require exceptional 1) Transformational leaders teach their people the value
leaders who can re-strategize the organizational structure and of their work and the importance of giving it their all
activities. Louis Gerstner was an example of a to achieve the organization's goals.
transformational leader who re-engineered and repositioned 2) Transformational leaders make it apparent to their
IBM, which had lost billions of dollars in 1991 while subordinates that they must grow, develop, and
domineering the market with mainframe computers, into a succeed in their jobs.
none-to-equal; whereas new organizations such as Dell 3) Transformational leaders inspire their employees to
Computers, Microsoft, and Intel made a technological shift to work hard not just for their own personal benefit, but
personal computers, which drew large crowds (McShane, for the sake of the company as a whole.
2009). Heinrich Von PIERER, a CEO of a German Company Elements of Transformational Leadership
Siemens in the 1990s, transformed the enterprise that suffered
stiff competition globally due to their organizational culture According to McShane (2009), transformational leadership
that was conservative and perfectionist and so did not allow consists of seven elements:
innovation and creativity. But as Von Pierer became CEO in 1) NEW VISION: To begin with, transformational
1992, he created an atmosphere that encouraged leaders, as previously said in this work, have a new
subordinates‟interaction, critique, training and innovation vision for the organization that involves changes in
which gained the organization a competitive advantage culture, strategy, and organizational design, as well
(Evans, 1970). as the adoption of new norms and values. According
According to Schuster (1994), transformational leadership to Jones & George (2006), transformational
aims to increase employee engagement while also improving managers are charismatic in their behavior and have
their quality of life. Transformational leaders, according to a vision of how things should be done in teams and
Fasolaet al (2013), have empathy for their subordinates' in the company that is considerably different from
developmental needs, which motivates them to act on their the norm. Such a vision allows for significant gains
own needs as well as the needs of others and the group as a in group and organizational performance (Jones &
whole. Employees who work for transformative leaders are George, 2006).
more civic-minded and take part in workplace decision- 2) COMMUNICATE VISION: Transformational
making (Barling et al, 1996). The following transformational leaders constantly convey their new vision to
leadership outcomes on subordinates were identified by subordinates through simple and unambiguous
Pounder (2008): a) the leader's ability to motivate phrases, images, and symbols in order to persuade
subordinates to work hard, b) the subordinates' understanding them to accept it and educate them on how to carry it
and belief in the leader's efficacy, and c) the subordinates' out (Conger, 1991).
contentment with the leader. Dixon (1998) identified four 3) MODEL DESIRED BEHAVIOR: Transformational
primary intrinsic characteristics that influence a leader's leaders set an example by living by the ideals they
behavior, including self-confidence, integrity, honesty, and preach in order to attain their goals. This was a
personal ideals, based on his research. Burns outlines four strategy used by Lee Iacocca, when he took over as
major characteristics of transformational leadership: idealized CEO of Chrisyler Company which was at the verge
influence, inspiring drive, intellectual stimulation, and of going bankrupt. In the struggle for the company's
customized concern (1978). survival, his decision to take a one-dollar-a-year
1) Idealized Influence: This refers to how much the salary pending the company's return to profitability
subordinates admire the leader's actions, which sent a message of togetherness to the employees
causes them to identify with him. (McShane, 2009).
2) Inspirational Motivation: This metric reflects how 4) EMPOWER EMPLOYEES: Transformational
much the leader's stated vision appeals to and leaders empower their subordinates in a number of
motivates followers to be optimistic about future ways to carry out the new vision's initiatives. For
goals while remaining focused on the current work. example, in his appeal to subordinates to help and
3) Intellectual Stimulation: This demonstrates the enhance Continental Airlines, Gordon Bethune
leader's ability to question assumptions, take risks, offered them a part of the company's profits.
and get feedback from subordinates. 5) MEANINGFUL CHANGES: To gain employee
4) Individualized Consideration: This demonstrates how support, transformational leaders implement
concerned the boss is about each subordinate's well- significant and significant changes in the
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International Journal of Research and Innovation in Social Science (IJRISS) |Volume V, Issue VIII, August 2021|ISSN 2454-6186
organization's activities, control, incentive systems, when certain goals are fulfilled on time or ahead of
and architecture. Continental Airline's CEO achieved schedule. Contingent negative reinforcement is employed
this by tying employee bonuses to improved when set goals are not met, tasks are not finished, or
customer service. performance is poor. According to Fasola et al (2013),
6) LEAD WITH INTEGRITY: Transformational dependent rewards are given to the subordinates group
leaders have a high reputation for being dependable, based on the achievement of defined goals on time, ahead
honest, and fair, but they are firm in their decisions. of schedule, or promoting good working speed to job
They conduct business in an ethical, transparent, and completion. They further noted that group punishments
honest manner. are meted on the group like suspension, salary cuts or
7) CREATE AN ENDURING ORGANIZATION: extension of work hours where assigned goals or tasks are
Transformational leaders build and manage not achieved or production quality or quantity fell below
organizations that will continue to function standard.
successfully and efficiently long after they have left 2) MANAGEMENT-BY-EXCEPTION - ACTIVE:
the company. Transformational leaders who are great Management by exception occurs in transactional
build strong organizations consolidate it and develop leadership when the leader intervenes when there are
employees who will continue after they are gone. deviations from the rules and regulations, anticipates
Transactional Leadership problems or stated performance levels are not met, and
Employees are driven by a "exchange of rewards, initiates measures to correct and resolve the problems to
compliments, and incentives," according to transactional improve subordinate performance, according to Hackman
leadership (Fasola et al., 2013). Bass (2008), noted that (2009).
3) MANAGEMENT-BY-EXCEPTION – PASSIVE:
transactional leaders lead by means of „social exchange‟. Leaders who manage by exception – passively, according
Transactional leadership, according to Ivey and Kline (2010), to Odumeru and Ifeanyi (2013), do not become involved
involves characteristics of 'leader-follower exchanges,' in in resolving problems; instead, they stand by until the
which leaders exchange valuable products with subordinates problems become too serious, at which point they act.
in the interest of each other's 'agenda.' Furthermore, 4) LAISSEZ - FAIRE: According to Robbin & Coulter
transactional leaders, according to Scareset al (1992) and (2007), leaders avoid making judgments and taking
Armstrong (2009), "sell money, jobs, and security for responsibility in this strategy. Instead, leaders delegate
subordinates to follow directions." In other words, using total responsibility, freedom, and influence over work
rewards and power-influence to motivate high-performing decisions to subordinates (Chaudhry & Javed, 2012).
subordinates, reinforce desired behaviors, and reprimand and
penalize low-performing subordinates. Transactional leadership, according to Khalil et al., (2016),
Transactional leadership, often known as management comprises an exchange process in which followers obtain
leadership, is responsible for supervisory, organizational, and immediate and tangible rewards for obeying the leaders'
group performance. According to Odumeru and Ifeanyi directions. Rewards and incentives have a critical role in
(2013), transactional leadership is a subset of transformational employee engagement in transactional leadership, according
leadership, and both are linked to organizational success. This to Burns (1978), as cited by Khalil et al., (2016). According to
type of leadership is most effective in times of crisis and Johnson (2017), transactional leadership managers provide
emergency, as well as when projects must be performed assignments to employees and reward or punish team
precisely and meticulously. Transactional leaders, according members based on performance. Transactional leadership,
to Hargris et al. (2010), are more concerned with monitoring according to Ingram (2019), can be defined as "arrow hit the
subordinates' work efforts and procedures, as well as target" since leaders are more concerned with tasks being
deviations, than with thinking about the future. This is to completed easily and on time rather than traditional
imply that transactional leaders lead in an action-oriented organizational tactics.
manner. They put a greater emphasis on lower-level needs by Instead of imagining an exciting and challenging future,
focusing on individual task performance. Transactional transactional leaders frequently maintain the status quo and
leaders, according to Durbrin (2004), should concentrate on control their employees. Because transactional leadership is
clarifying duties and tasks, which he agrees with. based on risk aversion and protecting the status quo, it is
Bass & Avolio (1994), noted that transactional leadership has thought to be anti-entrepreneurial because it discourages
four components: employees from seeking out and exploiting chances.
Followers of this leadership style tend to limit themselves to
1) CONTINGENT REWARD: Odumeru & Ifeanyi (2013), following the leaders' orders and doing exactly what they've
pointed out two types of contingent reward: been taught (Moses & Ritossa, 2007; Ryan & Tipu, 2013).
Contingent positive reinforcement and Contingent According to Jung (2001), transactional leaders are primarily
negative reinforcement. Continuous positive concerned with operational effectiveness and process
reinforcement in the form of praise or reward is delivered efficiency within the limits of existing systems. Subordinates
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