Are Transformational and Transactional Types of Leadership Compatible? A Panel Study of Work Motivation

Despite great interest in leadership, little attention has been paid to whether different leadership strategies are compatible with or undermine each other. This study examines the combined effects of transformational and... [ view full abstract ]

Despite great interest in leadership, little attention has been paid to whether different leadership strategies are compatible with or undermine each other. This study examines the combined effects of transformational and transactional leadership on employee work motivation, conceptualized as work engagement and intrinsic motivation. We differentiate between three types of transactional leadership (verbal rewards, material rewards, and sanctions) that may have different effects on work motivation. Moreover, we argue that these three types are not equally compatible with the exercise of transformational leadership. To gauge the causal effect of leadership while maintaining external validity, we conducted a large-scale panel study with survey responses from 385 leaders and 3,789 of their employees. Fixed effects panel analyses show positive effects on work motivation of especially transformational leadership, but this positive effect disappears when combined with contingent material rewards, indicating that transformational leadership is not compatible with all types of transactional leadership.