Leadership Styles and Relationship Conflict in Pakistani Banks: Exploring the Moderating Roles of Trust, Emotion, and Clarity

Abstract

This study aims to explore the moderating impacts of cognitive trust, emotion regulation, and role clarity on the relationship between different leadership styles—transformational, transactional, and laissez-faire—and relationship conflict within the Pakistani banking sector. The objective is to understand how these moderating variables influence the dynamics between leadership approaches and interpersonal conflicts in a high-stress, compliance-driven environment. A quantitative research design was employed, targeting non-managerial staff across five major private banks in Pakistan. Data were collected through a self-administered survey using both digital and printed questionnaires. The survey assessed various constructs, including leadership styles, relationship conflict, cognitive trust, emotion regulation, and role clarity. SmartPLS 4 software was used to evaluate the measurement model and to test the hypothesized interactions between the variables. The analysis revealed that cognitive trust significantly moderated the relationship between transformational leadership and relationship conflict, suggesting that higher levels of trust can reduce conflicts in transformational leadership contexts. However, cognitive trust did not significantly moderate the effects of transactional and laissez-faire leadership on relationship conflict. Role clarity was found to be a critical moderating factor, effectively reducing relationship conflict across all three leadership styles, indicating its importance in providing clear expectations and reducing ambiguity in the workplace. Emotion regulation also played a significant moderating role in both transformational and transactional leadership, helping to mitigate relationship conflicts. However, it did not significantly moderate the relationship between laissez-faire leadership and relationship conflict. The findings underscore the importance of fostering cognitive trust, enhancing emotion regulation skills, and ensuring role clarity in organizational settings, particularly within the banking sector. By focusing on these moderating factors, organizations can better manage the adverse effects of different leadership styles on relationship conflicts, thereby improving overall team cohesion and productivity. This study provides valuable insights into the complex interplay between leadership styles and relationship conflict in a culturally specific context. It highlights the critical roles of cognitive trust, emotion regulation, and role clarity as moderating factors that can enhance leadership effectiveness and conflict management in the Pakistani banking sector.