The Impact of Transformational Leadership on Organizational Performance: The Mediating Role of Organizational Justice

Abstract

This research paper explores the association between transformational leadership and organizational performance where organizational justice is the intermediary variable. With a quantitative research design, a sample of 342 employees in various organizations in the service industry was used to collect data by way of structured questionnaires. The hypothesized relationships were tested using structural equation modeling. Results indicate that transformational leadership has a positive impact on organizational performance (b = 0.67, p = 0.001). Moreover, organizational justice partly mediates this relationship as it quantifies 34 percent of the overall effect. The research adds to the body of knowledge on leadership by revealing the process by which transformational leaders improve organizational performance. Practical implications indicate that organizations ought to strive towards building transformational leadership skills and also provide equitable treatment and perception of fairness amongst employees. The results confirm the social exchange theory and give evidence on the indirect influence of leadership on performance by the mechanisms of justice.

Keywords: Transformational Leadership, Organizational Performance, Organizational Justice, Mediation Analysis, Structural Equation Modeling