Transactional Theory Of Leadership Style

Leadership can be defined as an interaction process between leaders and their employees, whereby leaders attempt to inspire employees to fulfill shared goals (Northouse, 2010; Yukl, 2005). Leadership style is the manner and method of motivating people, providing direction and achieving goals (Amirul & Daud, 2012). Style can either encourage or discourage employees’, which can in turn lead to increasing or decreasing performance levels (Belonio, 2012). However, leadership has been of interest to many researchers, who have planned numerous leadership theories and models. According to Doyle and Smith (1999), leadership theories can be divided into four categories: trait, behavioral, contingency, and the transformational and transactional theories.

Transformational leadership arises when a leader raises the level of cognizance about the value of desired results and expands subordinates’ wants and needs (Bass, 1985). According to Schepers et al., (2005), transformational leaders permit subordinates to think creatively, analyze problems from different angles and provide improved resolutions by using technology. Gill et al. (2006) claimed that organizations can diminish job strain and burnout by adopting a transformational leadership style. Many studies have specified that transformational leadership has positive effects on followers' efforts and satisfaction (Bycio et al., 1995; Kirkpatrick & Locke, 1996; Parry, 2000). Compared with other styles, transformational leadership is deemed beneficial in developing leaders and enhancing subordinates' faithfulness, faith and self-esteem (Barling et al., 1996; Northouse, 2009). Therefore, transformational leadership is the most effective form of leadership, where the leaders are closely involved with, and motivate their subordinates to attain beyond their transactional agreements (Panagopoulous & Dimitriadis,

Bass and Avolio (1995) further developed the theory. According to them, transformational leadership has four components; charismatic role modeling, individualized consideration, inspirational motivation, and intellectual stimulation. Using charisma, the leader inspires admiration, respect, and loyalty, and emphasizes the importance of having a collective sense of mission. By individualized consideration, the leader builds a one-to-one relationship with his or her followers, and understands and considers their differing needs, skills, and aspirations. By inspirational motivation, the leader articulates an exciting vision of the future, shows the followers how to achieve the goals, and expresses his or her belief that they can do it. By intellectual stimulation, the leader broadens and elevates the interests of his or her employees (Bass, 1990b), and stimulates followers to think about old problems in new ways (Bass,