Which Leadership Matters?: Comparison of the Effect of Transformational and Transactional Leadership and Relationship between Organizational Performance and Job Satisfaction

Which Leadership Matters?: Comparison of the Effect of Transformational and Transactional Leadership and Relationship between Organizational Performance and Job Satisfaction

(Purpose) Few studies have compared the effects of transformational and transactional leadership on the relationships between job satisfaction and organizational performance and between organizational performance and job satisfaction. This study compared the effect of transactional and transformational leadership on organizational performance and job satisfaction and explored the relationship between organizational performance and job satisfaction. (Design/methodology/approach) Using Korean government employee surveys adapted from the Organizational Assessment Survey Generic Form used by the Office of Personnel Management, we conducted a Structural Equation Modeling (SEM) and regression analysis. (Findings) The results supported the notion that transformational leadership has a stronger influence on job satisfaction and organizational performance than transactional leadership. Furthermore, the relationship between organizational performance and job satisfaction was inconclusive. (Research implications or Originality) This paper contributes to the organization theory on leadership and performance by comparing the effect of transformational and transactional leadership on organizational performance and job satisfaction, as well as by testing the relationship between organizational performance and job satisfaction.