Leadership styles and financial services performance

Abstract

This paper seeks to explore the relationship between leadership practices and organisational performance of financial leaders in Malaysia. It aims to investigate the existence of contemporary leadership styles such as transformational, transactional and leader–member exchange (LMX) in enhancing organisational performance particularly in financial services sector. Data was collected from financial services companies, comprising commercial banks, investment banks, unit trust management companies and insurance companies. SmartPLS 2.0 (M3) was applied to test the hypotheses that comprised both transformational and transactional leadership styles and also LMX on organisational performance and subsequently bootstrapping was conducted to investigate the standard error of the estimate and t–values. This research highlights the importance of leadership awareness as well as recognition of LMX as a valuable approach in achieving a better organisational performance. This study attempts to blend various leadership styles and organisational performance of financial services sector in Malaysia.