Abstract
This study investigates the impact of transformational leadership on employee retention in small- and medium-sized enterprises (SMEs) and probes the mediating role of organizational citizenship behavior (OCB) and the moderating role of communication. Data were collected using convenience sampling from 505 employees of SMEs. A Smart PLS structural equation modeling (PLS-SEM) was used to estimate the various relationships. The findings of the study reveal a positive and significant relationship between transformational leadership and OCB. Similarly, this study finds a positive and significant relationship in OCB and employee retention. In addition, OCB had a positive mediating effect on the relationship between transformational leadership and employee retention. Furthermore, communication positively moderates the transformational leadership– OCB and OCB–employee retention relationships. Leaders at SMEs should implement the traits of transformational leadership such as developing a compelling vision for employees, focusing on goal achievement, having problem-solving techniques, having a sense of purpose, and spending time on the training and development of the team to enhance OCB and employee retention.
Highlights
Small- and medium-sized enterprises (SMEs) face high levels of uncertainty and complexity concerning employee retention (ER) (Park et al, 2019)
The results show that transformational leadership (TL) has a positive correlation with organizational citizenship behavior (OCB) (0.533), TL and ER (0.557), and OCB and ER (0.457); communication and TL, OCB, and ER have positive correlations with values of 0.59, 0.659, and 0.547, respectively
The present study proposed and examined a mediation model of how TL impacts ER and a moderation model of how communication impacts the relationships of TL, OCB, and ER
Summary
Small- and medium-sized enterprises (SMEs) face high levels of uncertainty and complexity concerning employee retention (ER) (Park et al, 2019). Leadership plays a vital role in retaining employees (Covella et al, 2017) and enhancing organizational citizenship behavior (OCB) (Ahmet, 2014). Several leadership styles, including transactional, instrumental, laissez-faire, and transformational leadership (TL), have been studied in recent years (Antonakis and House, 2014). TL inspires followers by attraction to advanced moral values and ideas (Burns, 1978a). In contrast to transactional leadership, TL significantly increases employee commitment within the organization (Deichmann and Stam, 2015). Against the background of Bass (1985), the TL theory best explains the model constructed for this study.
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