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Summary This experimental study examined the causal eects of transformational and transac-
tional leadership and the mediating role of trust and value congruence on follower
performance. A total of 194 student participants worked on a brainstorming task under
transformational and transactional leadership conditions. Leadership styles were
manipulated using two confederates, and followers' performance was evaluated via
three measures Ð quantity, quality, and satisfaction. Results, based on path analyses
using LISREL, indicated that transformational leadership had both direct and indirect
eects on performance mediated through followers' trust in the leader and value
congruence. However, transactional leadership had only indirect eects on followers'
performance mediated through followers' trust and value congruence. Implications of
these results for future research on leadership are provided. Copyright # 2000 John
Wiley & Sons, Ltd.
Introduction
Over the last two decades, there has been an emergence of a new genre of leadership theories and
models, oftentimes referred to as transformational and/or charismatic (Bryman, 1992).
Accumulated evidence indicates that transformational leadership aects followers' performance
in ways that are quantitatively greater and qualitatively dierent from the eects of other
leadership styles such as transactional (House and Shamir, 1993; Lowe et al., 1996). Yet, most of
the research linking transformational leadership to performance has been cross-sectional and
based on correlational analyses. This led to a call by Bass and Avolio (1993) to conduct more
controlled experimentation to examine the causal impact of transformational leadership on
performance.
Several major themes have evolved in research on transformational leadership that point to
some interesting research questions, which include the following: How do transformational
leaders develop, share and sustain a vision to elevate follower motivation to higher levels of
performance?; How do such leaders transform followers' personal values into a collective or
* Correspondence to: Dong I. Jung, Department of Management, College of Business Administration, San Diego State
University, San Diego, CA 92182-8238, USA.
shared sense of values that each follower can identify with over time?; and How do such leaders
gain followers' trust in the process of implementing signi®cant individual and organizational
changes?
Previous research has supported the positive role that value congruence and trust play in the
leadership process. For example, Meglino et al. (1989) reported that workers were more satis®ed
and committed when their personal values were congruent with the values of their supervisors.
Kirkpatrick and Locke (1996) conducted a laboratory experiment demonstrating that leaders
who articulated visions with more of an emphasis on quality, positively aected followers'
perceived congruence with beliefs and values communicated in the vision. However, despite these
encouraging results, there have been very few studies that have examined their potential mediating
role in the leadership process (Podsako et al., 1990). Based on Bass' (1985) original model, trust
and value congruence are particularly important variables to consider when evaluating the
impact of charismatic/transformational leadership on follower development and performance.
Speci®cally, he argued that transformational leaders motivate their followers by raising their
followers' level of awareness about the importance and value of designated outcomes, and by
transforming followers' personal values to support the collective goals/vision for their
organization. Thus, value congruence achieved through a value internalization process and
demonstrated trust in the leader, have been considered core mediating aspects of transforma-
tional leadership theory from its inception (Shamir et al., 1993).
The current study is a preliminary step towards addressing the gap between theoretical and
conceptual arguments and empirical support for the role of trust and value congruence
articulated in the literature concerning the impact of transformational leadership on
performance. We also examined the mediating eects of these variables on transactional
leadership (Bass, 1985). The following section provides the theoretical justi®cation and an
explication of the leadership model that will be tested in this study.
Theoretical Background
Transformational and transactional leadership
Burns (1978) argued that certain leaders he labelled transforming build more than exchange
relationships with their followers. Such leaders engage the emotional involvement of their
followers to build higher levels of identi®cation, commitment and trust in the leader and his or
her mission. Transformational leaders express the importance and values associated with desired
outcomes in ways that are easily understood, while communicating higher levels of expectations
for followers (Avolio and Bass, 1988; Conger and Kanungo, 1987). Several leadership researchers
have argued that developing a shared vision is one of the most integral components of the
transformational leadership process. Ful®lling a challenging vision necessitates that transforma-
tional leaders align followers' personal values and interests with the collective interests of the
group/organization (Bass, 1985). During the vision implementation process, transformational
leaders serve as role models for perseverance and self-sacri®ce, when necessary, to motivate
followers to realize the vision (Kouzes and Posner, 1995). As a result, followers typically come to
admire their leaders, want to identify with them, and demonstrate a higher degree of trust in them
in part for the commitment they personally demonstrate to achieving the vision (Conger and
Kanungo, 1987; Gardner and Avolio, 1998).
By actively engaging in and developing their followers' self-concepts, such leaders are expected
to have a strong, positive in¯uence over time on followers' personal values (Gardner and Avolio,
1998; Shamir, 1995). Shamir and his colleagues (1993) suggested that one of the main reasons
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LEADERSHIP STYLES AND PERFORMANCE 951
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952 D. I. JUNG AND B. J. AVOLIO
vision, and possibly through their own willingness to sacri®ce for the good of their group
(Kirkpatrick and Locke, 1996).
It is the transformational leader's frequent empowerment and encouragement of followers to
make their own decisions that can also build followers' trust in their leader (Avolio and Bass,
1995). By being a role model and showing respect for their followers, transformational leaders
become more admired, respected and trusted over time (Bass and Avolio, 1990). Shamir et al.
(1993) argued that a charismatic leader's role modelling provides followers with vicarious
learning whereby followers come to emulate their leader's success, values and con®dence. If this
emulation process results in success, followers would be expected to have higher levels of trust in
their leader. Taken together, we expected that transformational leadership would have a positive
impact on follower's trust in the leader.
In contrast, transactional leaders tend to acquire what might be termed `conditional' trust from
followers through a reliable execution of contracts and exchanges (Bass, 1985; Meyerson et al.,
1996). As indicated earlier, the transactional leader motivates followers based on contingent
reinforcement. As long as the transactional leader consistently recognizes followers' performance
and provides appropriate rewards, he or she is likely to be conditionally trusted for at least being
consistent. Shamir (1990) argued that transactional leaders build followers' trust by showing
consistent behavior in honoring agreements with them. Podsako et al. (1990) reported a positive
relationship between the leader's use of contingent reward behavior and followers' trust in the
leader. Yet, we are unsure that trust will mediate the impact of transactional leadership on
performance. It is possible that trust is an outcome of performance being equitably rewarded
versus being an input in the leadership process. Results reported by Podsako et al. (1990)
concerning transactional leadership, may simply indicate that over time followers came to trust
their leaders because they were fairly rewarded for their performance.
Value congruence
The topic of shared values between employees, supervisors and/or within the organization's
culture has been investigated by a number of organizational researchers, who have typically
reported a positive relationship between the level of congruence and performance at various
levels in organizations. For example, Chatman (1991) reported that value congruence between
employees and organizational culture had a positive relationship with level of employee
commitment. Meglino et al. (1989) explained the positive eect of value congruence on
individual outcomes, suggesting that individuals with similar personal values tend to share
certain aspects of the way they process information, and thus these similarities foster smoother
communication (Meglino and Ravlin, 1998).
Transformational leadership addresses followers' motives by encouraging them to consider the
moral and ethical consequences of their actions and goals, above and beyond satisfying their self-
interests (Avolio and Bass, 1995). When follower's values are congruent with the transforma-
tional leader's values, they are expected to shift motivation from focusing on self-interests to
considering the more collective interests of the group or organization. By providing and
articulating a desirable vision, charismatic leaders are able to aect followers' views of their
positive role in achieving the mission/vision, and mobilizing higher levels of commitment to a
common set of goals for the group.
Through the transformational leader's eective communication and articulation of a desirable
vision, followers are expected to come to accept and internalize their leader's personal values and
vision (Avolio and Bass, 1988). Indeed, Klein and House (1995) argue that if followers hold
personal values that are compatible with the leader's, the impact of a charismatic leader on
follower eort and performance would be enhanced over time. Shamir (1995) also argues that the
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LEADERSHIP STYLES AND PERFORMANCE 953
in¯uence of a leader's vision is especially powerful when it is congruent with followers' personal
values. Thus, we expect that transformational leadership would have a positive impact on the
level of perceived leader±follower value congruence, and that higher value congruence would
positively aect follower performance.
In contrast, transactional leaders do not actively engage followers' values, nor do they attempt
to realign followers' values according to their personal ones. The transactional leader motivates
followers based on followers' immediate personal needs (Bass, 1985). So long as a transactional
leader clari®es the role and task requirements for followers, they are expected to proceed in
completing their task if they believe that rewards are contingent on performance. Therefore,
followers' value congruence was expected to have little if any mediating eects on performance
under transactional leadership.
Therefore, we advanced the following hypotheses to test the indirect eect of transformational
and transactional leadership, mediated through trust and value congruence on follower
performance.
H2a: Transformational leadership will have an indirect positive eect, mediated through trust
and value congruence on follower performance.
H2b: The eect of transactional leadership on follower performance will not be mediated
through followers' trust and value congruence.
Figure 1. Direct and indirect eects of leadership on performance and mediating variables
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954 D. I. JUNG AND B. J. AVOLIO
Second, it is possible the eects of both leadership styles on follower performance are indirect,
mediated through the type of process variables discussed above (H2a). For example, Kouzes and
Posner (1995) made a strong argument that followers' trust in the leader may be a necessary, but
not sucient condition for transformational leaders to positively in¯uence their followers' level
of eort and performance. Finally, the eect of leadership on follower performance could be
both direct and indirect, mediated by the two variables discussed above (see Figure 1).
Methods
Participants
A total of 194 students from upper business courses at a public university in the Northeastern US
participated in the current study (mean age 21.2; 54 per cent were male). They agreed to
participate in the study in exchange for course credits. They were told the primary purpose for
this project was to solicit their input for the School's eort to improve the quality of education
based on guidelines provided by the American Assembly of Collegiate Schools of Business. This
was an actual project sponsored by the business school and relevant to the accreditation process.
Procedure
Each session ran for about two hours. When students came into the experimental setting, they
were greeted by a confederate leader who was trained to exhibit verbal and non-verbal behaviors
associated with either transactional or transformational leadership. Each leader ®rst began by
introducing himself to the participants, followed by an explanation of the overall purpose of the
project. Participants then received an information package that described the project. They were
asked to read through the package carefully, and raise any questions they might have. Students
then participated in a ®ve minute training exercise designed to acquaint them with the
brainstorming task. Following this exercise, students spent 35 minutes generating as many high
quality ideas to help improve the quality of education as possible. Two trained confederates
created the transformational and transactional leadership conditions manipulated in the current
study (see following section).
None of the participants had any prior interaction with either of the two confederates. In any
experimental session, only one confederate was present. The leadership condition was
randomized so that manipulated leadership styles were balanced out across the two confederates.
As a check on the leadership manipulation, participants completed a post-task questionnaire
assessing their confederate leader. Participants also completed measures of trust and value
congruence. All variables in the study were measured at an individual level. Subsequently,
analyses were performed using individual level data.
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LEADERSHIP STYLES AND PERFORMANCE 955
extensive training in order to portray the two leadership styles as consistently as possible. The
training included reviewing materials describing the verbal and non-verbal behaviors associated
with each leadership style, individual coaching of the confederate leaders, videotaped feedback,
and a booster session to assure the confederate's style was fully understood and well-practiced.
Throughout all sessions, they portrayed the same core behaviors associated with transforma-
tional or transactional leadership, using a script adapted from a training programme developed
by Bass and Avolio (1997). For example, in the transformational leadership condition, the
confederate: (1) emphasized the importance of the task and its broader contribution to the vision
for future management education; (2) presented optimistic expectations to inspire students'
performance; and (3) suggested new and creative methods to analyse current problems in the
School. In the transactional leadership condition, the confederate: (1) emphasized what needed
to be done to accomplish the desired task outcomes; (2) assured tangible outcomes would be
derived from accomplishing the task; and (3) provided the speci®c goals that needed to be
achieved.
Measures
Seventeen items (11 items for transformational and 6 items for transactional leadership), adapted
from the Multi-factor Leadership Questionnaire (MLQ) (Avolio et al., 1999), were used to assess
transformational and transactional leadership. All items used a 5-point scale (1 strongly
disagree to 5 strongly agree). Sample items for transformational leadership were `My project
leader talked enthusiastically about what needs to be accomplished' and `My project leader got
me to look at the task from many dierent angles'. Sample items for transactional leadership
were `My project leader made clear what he expected from us in terms of our performance' and
`My project leader told me what to do to be rewarded for my eorts'. Although there have been
concerns raised about the construct validity of the MLQ survey, some recent work by Avolio et
al. (1999) have addressed some of the main criticism of the survey. Moreover, the MLQ is
considered the most well-validated measure of transformational leadership (Awamleh and
Gardner, 1999; Conger, 1999).
Trust in the leader was assessed using three items adapted from Podsako et al. (1990)
(sample item: `I feel quite con®dent that my leader will always try to treat me fairly').
Value congruence was measured using three items adapted from Posner (1992). Since
Posner's measure of value congruence was originally developed to assess person±
organization value congruence, the items were modi®ed for the present study to measure
the congruence between leader±follower values (sample item: `I really support the intent of
the core values of my leader'). Both trust and value congruence were measured using a 5-
point scale (1 strongly disagree, 5 strongly agree).
Objective performance was measured using the quantity and quality of recommendations
generated by participants. Speci®cally, quantity was measured by having two research assistants
independently count the total number of parsed, unduplicated recommendations generated by
each participant. The initial agreement rate was 93 per cent. Quality of recommendations was
rated using a 5-point scale. The scale assessed the degree to which recommendations were
innovative and long-term oriented. Considering the fact that one of the major purposes of the
current brainstorming task was to determine how to improve the quality of management
education oered to students, the innovative and long-term nature of recommendations was
considered adequate criteria to evaluate the quality of students' output. Following Diehl and
Stroebe's (1991) guidelines, the two raters' evaluations were considered in agreement when their
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956 D. I. JUNG AND B. J. AVOLIO
ratings fell within one point of each other. The aggregated inter-rater agreement level was 89 per
cent.
In addition to these two objective performance measures, four items assessed participant's
satisfaction with the leader (sample item: `I am very satis®ed with my leader') as a subjective
measure of performance. Satisfaction with the leader has frequently been used in prior research
as an immediate performance outcome of eective leadership (Yukl, 1998).
Results
We ®rst tested whether there were any dierences between each confederate's portrayal of the two
respective leadership styles using Hotelling's t tests. Results indicated that ratings of
transformational (3.85 versus 3.77, t(192) 0.97, n.s.) and transactional (3.45 versus 3.58,
t(192) 1.20, n.s.) leadership were not signi®cantly dierent. Additional Hotelling's t tests were
run to determine whether participants perceived the intended leadership style in each leadership
condition as expected. Results indicated they perceived their confederate more transformational
(M 3.80) than transactional (M 3.35) in the transformational leadership condition
(t(192) 3.72, p 5 0.001). They also rated their confederate more transactional (M 3.96)
than transformational (M 3.53) in the transactional leadership condition (t(192) 3.53,
p 5 0.001).
Descriptive statistics
Table 1 shows descriptive statistics for each construct measured in this study, including means,
standard deviations, and standardized coecient alphas. All of the scales had adequate levels of
reliability. Table 1 also shows the inter-correlation among the various scales.
Variable M SD Correlations
1 2 3 4 5 6 7
Note: All scales except the quantity performance measure were based on a 5-point scale.
P 5 .05
P 5 .01
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LEADERSHIP STYLES AND PERFORMANCE 957
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958 D. I. JUNG AND B. J. AVOLIO
each leadership style and performance. The mediating eects were estimated by comparing
models A through F described below.
Model A depicted in Figure 1 is a fully saturated model. This model includes all the direct and
indirect eects of leadership on the various measures of performance. Model B is identical to
Model A except the direct eect of leadership on performance was omitted (i.e., path 1 was
omitted in Figure 1). The chi-square dierence between Models A and B is an overall test of the
direct eects of leadership on performance.
Models C through F examine the indirect eect of leadership on performance. Model C is
identical to Model B except the eect of leadership on trust was omitted (i.e., path 2 was omitted
in Figure 1). The chi-square dierence between Model B and Model C is an overall test of the
direct eects of leadership on trust. Model D is identical to Model B, except the eect of
leadership on value congruence was omitted (i.e., path 3 was omitted). Thus, the chi-square
dierence between Models B and D indicates an overall test of the direct eect of leadership on
value congruence. Model E is identical to Model B except the eect of trust on performance was
omitted (i.e., path 4 was omitted in Figure 1). The chi-square dierence between Models B and E
is an overall test of the direct eects of trust on performance. Finally, Model F is identical to
Model B, except the eect of value congruence on performance was omitted (i.e., path 5 was
omitted in Figure 1). Thus, the chi-square dierence between Models B and F indicates an overall
Transformational leadership
A Full model None 39.7 4 0.94 0.90 ± ±
B Full model w/o a path from TF to 1 84.0 7 0.87 0.78 3 44.3
Performance
C Full model w/o a path from TF to Trust 2 140.6 8 0.83 0.62 1 56.6
D Full model w/o a path from TF to Value 3 155.5 8 0.82 0.58 1 71.5
congruence
E Full model w/o a path from Trust to 4 99.8 10 0.87 0.73 3 15.8
Performance
F Full model w/o a path from Value 5 170.5 10 0.82 0.54 3 86.5
congruence to performance
Transactional leadership
A Full model None 78.8 4 0.90 0.71 ± ±
B Full model w/o a path from TA to 1 85.0 7 0.89 0.69 3 6.2
Performance
C Full model w/o a path from TA to Trust 2 92.1 8 0.88 0.66 1 7.1
D Full model w/o a path from TA to Value 3 104.2 8 0.87 0.62 1 19.2
congruence
E Full model w/o a path from Trust to 4 100.8 10 0.88 0.64 3 15.8
Performance
F Full model w/o a path from Value 5 171.5 10 0.82 0.37 3 86.5
congruence to performance
The null model chi-square used to calculate the normed ®t index (NFI) was 374.4 for transformational and 273.6 for
transactional leadership (df 15 for both leadership conditions).
P 5 .01
P 5 .001
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LEADERSHIP STYLES AND PERFORMANCE 959
test of the direct eect of value congruence on performance variables. We also summarized these
dierent models and the respective path omitted in each model in Table 2.
By comparing the direct and indirect eects of transformational and transactional leadership
on performance, we can examine the mediating eect of trust and value congruence on
performance (Podsako et al., 1990). Speci®cally, it can be argued that the direct eect of
leadership on follower performance is present if the chi-square dierence between Models A and
B is signi®cant. Alternatively, it can be argued that transformational leadership has an indirect
eect mediated through trust when both a path from leadership to trust ( path 2 in Figure 1), and a
path from trust to performance ( path 4) are each signi®cant.
Results of these model comparisons are summarized in Table 2. As hypothesized,
transformational leadership had both direct and indirect eects on followers' performance.
The chi-square dierence between Models A and B was signi®cant, which indicated a strong
direct eect from transformational leadership to performance. As shown in Table 2, the chi-
square dierences between both Models B and C and Models B and E also were statistically
signi®cant for trust, which indicated a strong indirect eect from transformational leadership to
performance, mediated through trust. Finally, the chi-square dierences between both Models B
and D and Models B and F also were statistically signi®cant for value congruence, which
indicated a strong indirect eect from transformational leadership to performance, mediated
through value congruence. Therefore, H2a was fully supported in the present study.
The bottom half of Table 2 summarizes results of the path analyses for transactional
leadership. H2b proposed that transactional leadership would have only direct eects on
performance. The results did not provide support for H2b. As shown in Table 2, transactional
leadership had only indirect eects on performance that were mediated by follower's trust and
value congruence.
Discussion
Our path analysis results revealed several interesting patterns. First, as hypothesized,
transformational leadership had both direct and indirect eects on followers' performance.
However, transactional leadership mainly had indirect eects on performance mediated by
followers' trust and value congruence. The latter result concerning transactional leadership was
interesting given the attention that transactional leaders supposedly allocate to getting the task
done. However, as we explain below, it is possible that given the ambiguity of the student's task
and its short duration, that some feelings of trust and value comparability were needed to
motivate students to take the task seriously in the transactional leadership conditions.
Second, contrary to ®eld study results reported by Podsako et al. (1990), the direct eect of
transformational leadership on performance was not aected by the mediating variables
examined in the current study. However, followers' trust and value congruence had mediating
eects on the relationship between transformational leadership and various measures of
performance, which was consistent with results reported by Podsako et al. This dierence may
be due to the fact we measured in-role behaviors and performance with a leader that participants
had met for the ®rst time and had no future interactions planned. Podsako et al. assessed extra-
role behaviors (e.g., organizational citizenship behaviors) with leaders and followers that had a
history of interactions. Followers may need extra incentives, time and/or motivation before they
are willing to go beyond the call of duty to engage in extra-role behaviors. Also, it may be
necessary for transformational leaders to foster trust among their followers, if they expect to
mobilize followers' eorts for extra-role behavior. Clearly, future research might shed more light
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960 D. I. JUNG AND B. J. AVOLIO
on this issue by examining the direct and indirect eects of transformational leadership on both
in- and extra-role behaviors in controlled laboratory and ®eld settings that extend the interactions
between leader and followers over time.
The current study expanded the work by Podsako et al. (1990) showing the importance of
followers' values being congruent with their leader's values in terms of mediating the impact of
transformational and transactional leadership on performance. Results of the path analyses
showed that transformational leadership was mediated through value congruence in terms of its
impact on performance. This result is in line with the importance assigned to building consensus
around core values suggested by many scholars, who have written about the transformational
leadership processes. For example, Shamir (1995) argued the in¯uence of the leader's vision is
especially powerful when it is congruent with followers' personal values. Kuhnert and Lewis
(1987) take a similar position suggesting that a transformational leader's strong commitment
toward working to internalize their values in their followers' values set, should result in a higher
level of value congruence and commitment to implementing the leaders' vision and mission. The
present study provided some preliminary evidence to support these arguments.
Another interesting ®nding is that transactional leadership had only indirect eects on
performance mediated through followers' trust and value congruence. This result contradicts
those reported by Podsako et al. (1990), who found a direct positive eect of transactional
leadership on organizational citizenship behaviors. In our study, it can be inferred that the
confederate transactional leader was able to build some trust among followers when he speci®ed
his expectations for the task and performance. This is in line with Shamir's (1995) argument
discussed earlier, that by clarifying expectations and being consistent the leader may be able to
build conditional trust with followers.
It is also possible that the demand characteristics of the experiment may partially account for
our results. Speci®cally, students had not been previously asked for formal input into creating the
School's vision or mission of education. A designated school leader making such a request may
have built greater initial respect for the leader that could have mediated the eects of leadership
on follower performance.
Finally, it is important to note that transformational leadership had a strong positive eect on
performance quality, while having a strong negative eect on quantity. The negative relationship
between transformational leadership and performance quantity may have been due to the
leader's use of intellectual stimulation. By using intellectual stimulation, the transformational
leader was encouraging followers to think of their recommendations using a more innovative and
long-term perspective, thus potentially causing them to trade o quantity for quality. Indeed,
previous research has shown a negative relationship between transformational leadership and
quantity performance with a short duration task similar to the one used in the present study.
Sosik (1995; unpublished doctoral dissertation) reported a negative relationship between
transformational leadership and performance in a short experimental session involving
participants in an idea generation task. Sosik indicated the introduction of transformational
leadership might have produced con¯icting goals. The con¯ict created was between generating a
greater number of total ideas in a short time span versus high quality ideas.
Podsako et al. (1990) reported a negative relationship between a transformational leader's
intellectual stimulation and follower's trust in and satisfaction with the leader. They argued that
intellectual stimulation likely creates role con¯ict, ambiguity, and stress that require a cognitive
reappraisal of one's current ways of thinking. As such, participants may have chosen to forfeit
quantity to meet increased demands for quality ideas emphasized by the transformational
leader's intellectual stimulation and setting of high performance expectations for creating a `new'
vision for management education. The confederate transformational leader made statements
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LEADERSHIP STYLES AND PERFORMANCE 961
such as `Let's challenge our assumptions about good business education' and `I am con®dent that
you will be able to generate a number of useful ideas which can help us achieve re-accreditation
next year.' Such statements may have motivated participants to focus on quality over quantity
when they generated their recommendations.
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962 D. I. JUNG AND B. J. AVOLIO
future research is needed to gain insight on the leadership process in temporary-team based
organizations.
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