Leadership style and employee turnover intentions: a social identity perspective

Abstract

PurposeThe purpose of this research is to study how an approach of culturally‐specific human resource management (HRM) should moderate the relationship between leadership style and employee turnover.Design/methodology/approachQuestionnaire data were collected from firms in both Shenzhen and Hong Kong. The subjects are 190 leader/member dyads (111 (58 percent) were from mainland China (i.e. Shenzhen), and 79 (42 percent) were from Hong Kong). Hierarchical regression model is adopted to test the hypotheses.FindingsCollecting empirical data from firms in different regions of China, it was found that a leadership style, i.e. leader‐member exchange (LMX), can have a significant effect on employee turnover. Moreover, the effect of LMX can be moderated by the C‐HRM‐oriented HRM (C‐HRM) approach. The paper concludes with a discussion of the implications of the findings to academic researchers and practitioners. There exist both the direct effect and interactive effect of LMX on employees' organization identity, which in turn affects their turnover. Moreover, collectivism‐oriented HRM (C‐HRM) moderates the relationship between LMX and employees' organization identity. Other conditions being equal, the higher the C‐HRM, the stronger is the positive relationship between LMX and organization identity.Originality/valueIntegrating prior research on LMX, C‐HRM, organization identity and employee retention, this study examines the relationships among LMX, organization identity and employee retention. This is the first study testing these relationships. The findings have several important implications. For instance, this study documents both the direct and moderating effects of C‐HRM on employees' performance for the first time, which will be helpful for the development of new studies on human resource management and cross‐cultural management.