Commitment in the German Banking and Consulting Industry: Influence of Different Leadership Styles on Employee Commitment

Abstract

Purpose: The success of a firm often largely depends on its employees. Therefore, we propose and test the possibility of influencing affective and normative commitment by transactional, transformational, and passive leadership styles. Implications: Demographic change is progressing slowly but steadily; here lies the crucial point. Our results show that only transformational leadership influences the commitment dimensions positively. That can help make the best use of scarce human resources to remain competitive in the long term. Originality/Value: The article provides new information concerning the relationship between transformational and transactional leadership style and their influence on commitment within the banking and consulting sector of the German service industry. It highlights the need for further research into this topic across industries and demographics. For cross-cultural (USA-Germany) comparisons, the article might help to understand differences and trends within globalization. Methodology: To address this question, we conducted interviews with 197 employees of the financial service sector in Germany to confirm the relationship between leadership styles and employee commitment. In order to verify and extend previous research, we planned an explanatory study. We used the multiple regression analysis to examine this relationship. Findings: The results provide new evidence for German participants, which show (1) that transformational leadership is the “optimum” to facilitate commitment and is completely decoupled from the other leadership styles. (2) Preliminary studies revealed a preference toward transactional leadership, which correlated positively with affective and normative commitment. The present study cannot confirm this correlation. (3) Passive leadership correlates negatively with commitment, which indicates that the avoidance of passive leadership is essential. In sum, the correlation for different leadership styles (except transactional leadership style) is higher than in the preliminary studies. This indicates that the relationship between leadership styles and affective and normative commitment is exceeding the assumptions.