Transformational leadership in a crisis: Dimensional analysis with psychological capital

Abstract

Previous research attests to the benefits of transformational leadership (as a unitary construct) for various employee outcomes. Less is known about how specific dimensions of transformational leadership relate to outcomes during crisis. In the present paper, we investigate how each dimension of transformational leadership, namely, intellectual stimulation, individualized consideration, inspirational motivation, and idealized influence relate to employees' psychological capital in a crisis, specifically the COVID-19 pandemic. A cross-sectional study was conducted where employees from 301 small and medium sized enterprises in Kenya completed a survey containing the variables of interest. Quantitative data analysis using partial least squares structural equation modelling was utilized to test the study hypotheses using Smart PLS 4 software. Results showed that only two of the four transformational leadership dimensions had a positive and significant impact on employees' psychological capital: Intellectual stimulation and individualized consideration. In terms of the theorized hypotheses, fear of COVID-19 moderated the relationship between (a) idealized influence, (b) intellectual, and (c) individualized consideration, and employees’ psychological capital. However, only intellectual stimulation reached a significant effect size. The present study reveals the varied relevance of transformation leadership dimensions to psychological capital in a crisis. A new condition (emotional assessment of a crisis) for assessing this relationship was proposed. We discuss theoretical and practical implications, strengths, limitations, and suggestions for future studies.