Examining the Effects of Dual-level Transformational Leadership, LMX, and Group Cohesiveness on Employee Service Performance

Abstract

In this study, we propose a multi-level theoretical framework within which we identify transformational leadership at dual levels as the primary source of the positive influence on employee service performance through the mechanism of leader-member exchange (LMX) and group cohesiveness. Data are obtained from 23 branches of a large commercial bank in central Taiwan, with the samples collected from both managers and employees forming 228 manager-employee dyads, and thereby avoiding common method variance. Our results reveal that both levels of transformational leadership and LMX have significantly positive effects on employee service performance, with LMX also playing a mediating role between individual-focused transformational leadership and service performance. Group-focused transformational leadership affects employee service performance through group cohesiveness. Interestingly, group cohesiveness is found to be an important moderator which also enhances the relationship between LMX and service performance. Our study includes a discussion of the theoretical and practical implications of our findings.