The Impact of Transformational Leadership Style on Organizational Performance: Evidence from Jordan

Abstract

Transformational leadership has garnered considerable attention in the literature because of its potential implications for the performance of the organization. Research indicates that this type of leadership can collectively impact employee behavior and commitment leading to improvements in the work climate and knowledge sharing. When combined these changes can positively influence the performance of the organization. Using this as a foundation for investigation the current research considers the role of transformational leadership and its four components—idealized influence, inspirational motivation, intellectual stimulation, and individual consideration—and their influence on organizational performance in three banks operating in Jordan. A total of 249 surveys were distributed with 213 retuned and 171 eligible for use. The data was analyzed using multiple regression with a significance level of p < 0.05. The results indicate that while transformational leadership and three of its components—inspirational motivation, intellectual stimulation, and individual consideration—did contribute to 81.6 percent of the variance in organizational performance; idealized influence was not a significant factor contributing to this outcome. Leaders may need to focus on these elements of transformational leadership to improve outcomes for organizational performance.