Transformational Leadership, Transactional Contingent Reward, and Organizational Identification: The Mediating Effect of Perceived Innovation and Goal Culture Orientations

Purpose - The aim of this research was to investigate the effect of transformational leadership and transactional contingent reward as complementary, but distinct, forms of leadership on facets of organizational identification via the perception of innovation and goal organizational values. Design/methodology/approach – Three studies were carried out implementing either a measurement of mediation or experimental-causal-chain design to test for the hypothesized effects. Findings - The measurement of mediation study showed that transformational leadership had a positive direct and indirect effect, via innovation value orientation, on cognitive identification, whereas transactional contingent reward was more strongly related to affective, rather than cognitive, identification, and goal orientation was a mediator of their link. The findings of the two experimental-causal-chain studies further supported the hypothesized effects. Transformational leadership was found to lead subordinates to perceive the culture as more innovative compared to transactional contingent reward, whereas transactional contingent reward led employees to perceive the culture as more goal, than innovation, oriented. Finally, innovation, compared to goal, value orientation increased cognitive identification, while goal orientation facilitated affective, rather than cognitive, identification. Implications - The practical implications involve the development of strategies organizations can apply, such as leadership training programs, to strengthen their ties with their employees, which, in turn, may have a positive impact on in-role, as well as extra-role, behaviors. Originality/Value – The originality of this research concerns the identification of distinct mechanisms explaining the effect of transformational leadership and transactional contingent reward on cognitive and affective identification applying an organizational culture perspective and a combination of measurement and causal mediation designs.