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Transformational and Transactional Leadership: a Meta-Analytic Test of Their Relative Validity

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Journal of Applied Psychology Copyright 2004 by the American Psychological Association 2004, Vol. 89, No. 5, 755–768 0021-9010/04/$12.00 DOI: 10.1037/0021-9010.89.5.755 Transformational and Transactional Leadership: A Meta-Analytic Test of Their Relative Validity Timothy A. Judge and Ronald F. Piccolo University of Florida This study provided a comprehensive examination of the full range of transformational, transactional, and laissez-faire leadership. Results (based on 626 correlations from 87 sources) revealed an overall validity of .44 for transformational leadership, and this validity generalized over longitudinal and multisource designs. Contingent reward (.39) and laissez-faire (Ϫ.37) leadership had the next highest overall relations; management by exception (active and passive) was inconsistently related to the criteria. Surprisingly, there were several criteria for which contingent reward leadership had stronger relations than did transformational leadership. Furthermore, transformational leadership was strongly correlated with contingent reward (.80) and laissez-faire (Ϫ.65) leadership. Transformational and contingent reward leadership generally predicted criteria controlling for the other leadership dimensions, although trans- formational leadership failed to predict leader job performance. In the past 20 years, a substantial body of research has accu- stimulation, and individualized consideration. Charisma, or ideal- mulated on transformational–transactional leadership theory. ized influence, is the degree to which the leader behaves in admi- Burns (1978) first introduced the concepts of transformational and rable ways that cause followers to identify with the leader. Char- transactional leadership in his treatment of political leadership. As ismatic leaders display conviction, take stands, and appeal to Conger and Kanungo (1998) noted, to Burns the difference be- followers on an emotional level. Inspirational motivation is the tween transformational and transactional leadership is in terms of degree to which the leader articulates a vision that is appealing and what leaders and followers offer one another. Transformational inspiring to followers. Leaders with inspirational motivation chal- leaders offer a purpose that transcends short-term goals and fo- lenge followers with high standards, communicate optimism about cuses on higher order intrinsic needs. Transactional leaders, in future goal attainment, and provide meaning for the task at hand. contrast, focus on the proper exchange of resources. If transfor- Intellectual stimulation is the degree to which the leader chal- mational leadership results in followers identifying with the needs lenges assumptions, takes risks, and solicits followers’ ideas. of the leader, the transactional leader gives followers something Leaders with this trait stimulate and encourage creativity in their they want in exchange for something the leader wants (Kuhnert & followers. Individualized consideration is the degree to which the Lewis, 1987). To Burns, transactional leadership is more common- leader attends to each follower’s needs, acts as a mentor or coach place than is transformational leadership, if less dramatic in its to the follower, and listens to the follower’s concerns and needs. consequences. Apart from its central role in transformational leadership theory, Bass (1985) based his theory of transformational leadership on charismatic leadership has been the basis of its own distinct Burns’s (1978) conceptualization, with several modifications or literature. Weber (1921/1947) was the first to discuss the implica- elaborations. First, Bass did not agree with Burns that transforma- tions of charismatic leadership for organizations. House’s (1977) tional and transactional leadership represent opposite ends of a theory of charismatic leadership was the first to use the concept in single continuum. Bass argued that transformational and transac- contemporary organizational research. Since that time, there have tional leadership are separate concepts, and further argued that the been many studies of charismatic leadership (e.g., House, Spang- best leaders are both transformational and transactional. Second, ler, & Woycke, 1991; Howell & Frost, 1989; Shamir, Zakay, Bass elaborated considerably on the behaviors that manifest trans- Breinin, & Popper, 1998). As we note later, it is clear that trans- formational and transactional leadership. Although the theory has formational leadership and charismatic leadership theories have undergone several revisions, in the most recent version there are much in common, and in important ways, each literature has four dimensions of transformational leadership, three dimensions contributed to the other. of transactional leadership, and a nonleadership dimension. The three dimensions of transactional leadership are contingent The four dimensions of transformational leadership are cha- reward, management by exception—active, and management by risma or idealized influence, inspirational motivation, intellectual exception—passive. Contingent reward is the degree to which the leader sets up constructive transactions or exchanges with follow- ers: The leader clarifies expectations and establishes the rewards Timothy A. Judge and Ronald F. Piccolo, Department of Management, for meeting these expectations. In general, management by excep- Warrington College of Business, University of Florida. Correspondence concerning this article should be addressed to Timothy tion is the degree to which the leader takes corrective action on the A. Judge, Department of Management, Warrington College of Business, basis of results of leader–follower transactions. As noted by How- University of Florida, P.O. Box 117165, Gainesville, FL 32611-7165. ell and Avolio (1993), the difference between management by E-mail: [email protected] exception—active and management by exception—passive lies in 755 756 JUDGE AND PICCOLO the timing of the leader’s intervention. Active leaders monitor however, the validities for charisma and individualized consider- follower behavior, anticipate problems, and take corrective actions ation were far from trivial, and they generalized across studies. before the behavior creates serious difficulties. Passive leaders A “fundamental” (Bass & Avolio, 1993, p. 69) proposition of wait until the behavior has created problems before taking action. transformational–transactional leadership theory that has been of- A final form of leadership, actually nonleadership, is laissez- ten discussed but little tested is the augmentation effect, which faire leadership. Laissez-faire leadership is the avoidance or ab- stipulates that transformational leadership adds to the effect of sence of leadership. Leaders who score high on laissez-faire lead- transactional leadership. Bass (1998) described the augmentation ership avoid making decisions, hesitate in taking action, and are effect as the degree to which “transformational leadership styles absent when needed. Although laissez-faire leadership bears some build on the transactional base in contributing to the extra effort resemblance to management by exception—passive leadership, and performance of followers” (p. 5). Bass (1999) went even researchers have argued that laissez-faire leadership, because it further in commenting “the best leaders are both transformational represents the absence of any leadership (transformational or trans- and transactional” (p. 21). Howell and Avolio (1993) agreed with actional), should be treated separately from the other transactional this viewpoint, stating that transformational leadership comple- dimensions (Avolio, 1999; Bass, 1998). Accordingly, we treat ments transactional leadership and that effective leaders often laissez-faire leadership as separate from transformational and supplement transactional leadership with transformational transactional leadership (while also reporting on the relationships leadership. between laissez-faire leadership and these other leadership Implicit in this argument is the view that transformational lead- dimensions). ership must be built on the foundation of transactional leadership. Since their introduction and delineation, transformational and Indeed, Bass (1998) argued “transformational leadership does not transactional leadership have been investigated in scores of re- substitute for transactional leadership” (p. 21). The very term search studies. Transformational leadership has proven to be par- augmentation, meaning amplification or extension, suggests that ticularly popular. A search of keywords in materials published there is something to amplify or extend. Avolio (1999) commented from 1990 to 2003 in the PsycINFO database revealed that there “transactions are at the base of transformations” (p. 37). In Bass’s have been more studies on transformational or charismatic lead- (1985) conceptualization, transactional leadership results in fol- lowers meeting expectations, upon which their end of the bargain ership than on all other popular theories of leadership (e.g., least is fulfilled and they are rewarded accordingly. To motivate fol- preferred coworker theory, path-goal theory, normative decision lowers to move beyond expectations, according to Bass (1998), theory, substitutes for leadership) combined. Studies have been transformational leadership is required. This suggests that without conducted in the lab (Jung & Avolio, 1999) and in the field the foundation of transactional leadership, transformational effects (Yammarino, Dubinsky,
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