Are transformational and transactional types of leadership compatible? A two‐wave study of employee motivation
| Date | 01 June 2019 |
| Author | Lotte Bøgh Andersen,Stefan Boye,Poul Aaes Nielsen,Christian Bøtcher Jacobsen,Ann‐Louise Holten |
| DOI | http://doi.org/10.1111/padm.12574 |
| Published date | 01 June 2019 |
ORIGINAL ARTICLE
Are transformational and transactional types of
leadership compatible? A two-wave study of
employee motivation
Poul Aaes Nielsen
1
| Stefan Boye
2
| Ann-Louise Holten
3
|
Christian Bøtcher Jacobsen
2
| Lotte Bøgh Andersen
2
1
Department of Political Science and Public
Management, University of Southern
Denmark, Odense, Denmark
2
Department of Political Science, Aarhus
University, Aarhus, Denmark
3
Department of Psychology, University of
Copenhagen, Copenhagen, Denmark
Correspondence
Poul Aaes Nielsen, Department of Political
Science and Public Management, University of
Southrn Denmark, Odense, Denmark.
Email: aaes@sam.sdu.dk
Transformational and transactional leadership strategies have
become prominent in public administration research, but it is
unclear whether they are compatible or whether they could under-
mine each other. We examine the combined and interactive effects
of transformational and three types of transactional leadership
(contingent verbal rewards, material rewards, and sanctions) on
employee work motivation, conceptualized as work engagement
and intrinsic motivation. Panel analyses using repeated measures of
385 leaders and 3,797 employees show that transformational lead-
ership and contingent verbal rewards increased employee motiva-
tion. However, simultaneous use of contingent material rewards
undermined the benefits of transformational leadership. Thus, the
motivational potential of service- or community-oriented visions
was undercut when leaders also appealed to extrinsic material
motives. This could help explain why financial incentives do not
always have the expected benefits in public organizations. We
therefore argue that research and practice should pay more atten-
tion to how different leadership strategies work in combination.
1|INTRODUCTION
Transformational and transactional leadership have been central concepts in both public and private sector leadership
research (Judge and Piccolo 2004;Van Wart 2013). Yet, little empirical work has focused on the extentto which trans-
formational and transactional types of leadership should be implemented in combination, and whether it is a problem
that they buildon different motivationallogics. As pointed out by Vogeland Masal (2015), leadership research in public
administration has paid little attention to the interaction betweendifferent leadership types. As public managersoften
exercise different types of leadership simultaneously (Van Wart2013), studying their effects separately may conveyan
incompleteor even incorrect picture. Wright et al. (2012,p. 207), for example, argue thattransformational leadership is
Received: 23 October 2017 Revised: 29 October 2018 Accepted: 9 November 2018
DOI: 10.1111/padm.12574
Public Administration. 2019;97:413–428. wileyonlinelibrary.com/journal/padm © 2018 John Wiley & Sons Ltd 413
particularly motivating in public organizations with strong service- and community-oriented missions, and the use of
material incentives might prevent this effect because the emphasis on prosocial contributions inherent in transforma-
tional leadership contrastwith the transactionalappeals to employee self-interest.
According to the full range leadership theory and the augmentation hypothesis (Burns 1978; Bass et al. 2003),
transformational and transactional leadership can and should be combined to obtain the benefits of both. Some exist-
ing work finds that each type of leadership explains unique variance in desired outcomes (Bass and Avolio 1993;
Wang et al. 2011; Oberfield 2014), but this type of augmentation effect follows an additive or cumulative logic,
which does not take into account the potential interplay between the two types of leadership. Consequently, it does
not address whether transformational and transactional leadership reinforce or reduce each other’s effects.
In this article, we argue that the augmentation effect depends on how well the application of one type of leader-
ship behaviour matches the application of other leadership behaviours exercised by the same leader. House (1996),
for example, proposed that the transactional use of contingent rewards oriented at employee self-interest would
negatively moderate the effect of transformational leadership by undercutting simultaneous appeals to a value-based
orientation. Existing research on this question, however scarce, shows mixed findings and fails to distinguish between
the different types of transactional leadership (Schriesheim et al. 2006; Vecchio et al. 2008). In this study, we argue
that transactional leadership behaviours that apply direct incentives to motivate employees, that is, contingent mate-
rial rewards and sanctions, risk undermining the effects of transformational leadership. We further argue that the use
of contingent verbal rewards is better aligned with the attempts of transformational leaders to inspire and convey an
appealing vision to their employees.
To examine how the combination of transformational and transactional leadership affects employee motivation,
we focus on two central motivation constructs, work engagement and intrinsic motivation. Both constructs are asso-
ciated with various positive outcomes including employee performance and lower sickness absence (Gagné and Deci
2005; Schaufeli et al. 2009; Christian et al. 2011). We respond to recent calls in public administration research to use
longitudinal designs to study how perceptions and attitudes develop overtime (Stritch 2017) by repeatedly surveying
the same leaders and their employees. This allows the use of employee fixed effects to control for time-invariant
observables and non-observables, which has clear causal advantages compared to most existing work. The findings
confirm existing results regarding both the direct and cumulative motivational effects of leadership. More impor-
tantly, however, we find that the positive effects of transformational leadership are undermined when combined with
contingent material rewards. This negative moderation of transformational leadership is not found for the use of con-
tingent verbal rewards.
In the following, we first present the study’s two motivation constructs and define the concepts of transforma-
tional and transactional leadership. We then turn to our hypotheses regarding the interaction between transforma-
tional and transactional leadership before describing the longitudinal design, measures, and estimation methods.
Next, we present the findings and proceed to discuss their theoretical and practical implications in terms of the com-
patibility of transformational and transactional leadership behaviours.
2|THEORY AND EXPECTATIONS
2.1 |Work engagement and intrinsic motivation as central expressions of employee
motivation
To study the motivational effects of leadership, we focus on work engagement and intrinsic motivation. These con-
structs are theorized and operationalized as two separate motivational state constructs, both of which have been
applied and validated in psychological research. They capture work-related motivational states that are not focused
on any particular object, event, or behaviour, but on work in general for a given employee. We employ both con-
structs to obtain a broad and robust examination of the motivational effects of leadership.
414 NIELSEN ET AL.
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