The impact of transformational leadership on organizational performance: empirical evidence from Islamic culture

Abstract

While transformational leadership (TL) has been widely studied, how it translates into organizational performance remains insufficiently explained, particularly through multiple, sequential psychological and behavioral mechanisms. Accordingly, the purpose of this study is to examine the relationship between TL and organization performance through the mediating roles of knowledge innovation, intrinsic motivation and employee performance in the health sector in the UAE. This study is grounded in self-determination theory (SDT), which explains how TL satisfies employees’ basic psychological needs, enhances intrinsic motivation, and subsequently fosters knowledge innovation, employee performance, and organizational performance. Based on a cross-sectional design, data were collected from 107 participants from the Department of Health located in Abu Dhabi, UAE. The data collection involved an online questionnaire that incorporated validated scales. Partial least square structural equation modeling (PLS-SEM) was used to perform the data analysis. Findings revealed a direct positive association between TL and organizational performance in the public health sector. The results also showed that knowledge innovation, intrinsic motivation and employee performance significantly mediated the relationship between TL and organizational performance. It is crucial to examine how Islamic values and TL interact in an organizational context within the framework of Islamic Arabian culture. This study significantly adds to the literature on TL by examining the indirect effects of TL on organizational performance through knowledge innovation, employee performance, and intrinsic motivation in the Islamic context. By integrating knowledge innovation, intrinsic motivation, and employee performance as mediators, the study advances leadership theory by unpacking the black box between leadership style and organizational outcomes, TL, health sector, knowledge innovation and Islamic culture.