Effect of Transformational Leadership on Firm Performance: Mediating Role of Employee Self-Efficacy and Work Engagement

Abstract

This study aims to analyze the impact of transformational leadership on the performance of private banks located in Hyderabad, Pakistan. Additionally, it examines how employee self-efficacy and work engagement act as mediators in this relationship. Through non-probability convenience sampling, 156 participants from private banks were selected and data was collected using a Likert scale questionnaire. Structural equation modeling (SEM) was used for data analysis through Smart PLS software. By exploring the effects of transformational leadership on firm performance and the mediating roles of employee self-efficacy and work engagement, this study contributes new insights to the existing literature on leadership and firm performance. The findings have practical implications for managers and leaders in the private banking sector in Pakistan, highlighting the importance of transformational leadership in enhancing firm performance. Notably, they underscore the indispensable role of transformational leadership in fostering organizational success and offer actionable insights to enhance performance within this context. Furthermore, this study contributes to a deeper understanding of the intricate interplay between leadership styles, employee attitudes, and organizational outcomes, thus paving the way for future research avenues in this domain.