Unraveling the Relationship between Transformational Leadership and Employee Performance: Value Fit and Public Service Motivation as Mediators?

Clarifying the ways in which transformational leadership affects performance remains an important topic for scholars and researchers alike. Value fit and public service motivation (PSM) has been considered key mediating... [ view full abstract ]

Clarifying the ways in which transformational leadership affects performance remains an important topic for scholars and researchers alike. Value fit and public service motivation (PSM) has been considered key mediating processes but no comprehensive theoretical account for their distinct effects have been offered so far and existing studies predominantly rely on cross-sectional research designs. This paper outlines theoretical arguments for value fit and PSM as distinct ways for transformational leadership to increase performance in public service organizations. A multilevel panel data set of 844 public service employees distributed on 153 organizations is used to assess whether transformational leadership indeed aligns employees’ personal values with those of the organization and stimulates PSM over time, and whether changes in value fit and PSM correlate with changes in employee performance. The study finds evidence of a mediating effect of value fit but no clear evidence for PSM as a mediator of the transformational leadership-performance relationship. Future research is encouraged to test the robustness of these findings using panel data from other empirical settings and preferably combined with experimental induced variation in leadership to draw up firm conclusions on the ways transformational leadership can affect performance.