The influence of transformational leadership on job satisfaction

Abstract

PurposeThe purpose of this paper is to demonstrate the influence of transformational leadership (TL) on job satisfaction by using the business perspective of the balanced scorecard.Design/methodology/approachThe paper is based on an empirical study of the top four life insurance firms in Taiwan – Cathay, Nan Shan, Shin Kong, and Cumshaw Post Company – that held more than 50 percent of Taiwan's overall market share. The sales employees of these four firms were selected for empirical testing, since in these firms, emphasis is placed on leadership and on how the employees' job satisfaction is reflected in the reduction of internal process costs.FindingsConsistent with earlier predictions, the authors attained significant results, but they did find that group maintenance, group goal achievement behaviors, and their complementarity truly helped enhance employee job satisfaction. This suggests that group maintenance and group goal achievement behaviors, including their complementarity, will provide a more accurate prediction of the relation between intrinsic and extrinsic components of employee job satisfaction and achieving the objective of an internal business advantage.Research limitations/implicationsOnly four firms have been examined in this study. It would be worthwhile to see whether the inclusion of other firms would show similar results. When these four firms are placed in a dynamic environment, TL is a key source for providing an internal business advantage: employee capability to react positively to change provides a very important advantage. Although the integration of both TL and change‐oriented action by the TL and employees to provide employee job satisfaction has not been tested before, it would be useful for future researchers and practitioners to do so.Originality/valueThis paper is of both theoretical and empirical value. Theoretically, it has tried to make use of the business perspective of the BSC. Empirically, this paper has demonstrated the influence of TL in gaining an internal business advantage. There is a dearth of research on how firms successfully integrate the business perspective of the BSC to gain an internal business advantage. The paper investigated the effects on intrinsic and extrinsic components of employee job satisfaction of group direct behaviors as motivated by transformational leadership (TL), including examining group maintenance, group goal achievement, and the interaction between the two (their complementarity).