The impact of transformational and transactional leadership styles on employee's satisfaction and performance: an empirical test in a multicultural environment

This study tests the transformational leadership theory among managers at functional levels in United Arab Emirates (UAE) international companies. The UAE business sector was chosen due to its significance in the regional economy and its sizable contributions as the UAE continues to lead its neighboring countries in business development and technological advancements. More specifically, the UAE economy depends very heavily on expatriate workers and professionals, which creates a rich yet challenging environment for leadership models. The paper examines the effects of both transformational and transactional leadership styles of managers/supervisors on employees' satisfaction and self-perceived performance. Self-esteem and leadership disposition (Romance of Leadership) of employees are hypothesized to act as moderators. The impact of cultural origin, gender, age, and job experience are also examined. Data was collected from employees working in international companies operating in the UAE. Results revealed a strong effect for transformational leadership on satisfaction. Importantly, results do challenge the view that both leadership styles are necessary conditions for leadership to be operationalized. Cultural and demographic factors showed strong impact on the dependent variables as did RLS and self-esteem. All findings are discussed and future research directions outlined.