Journal of Managerial Psychology

Self-esteem and transformational leadership

Kurt Matzler Florian Andreas Bauer Todd A. Mooradian
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Self-esteem and Transformational

leadership
transformational leadership
Kurt Matzler
Department of Strategic Management, Marketing and Tourism, 815
University of Innsbruck, Innsbruck, Austria
Florian Andreas Bauer Received 28 January 2013
Department of Management and Law, MCI Management Center Innsbruck, Revised 25 July 2013
4 February 2014
Innsbruck, Austria, and 18 March 2014
Accepted 7 July 2014
Todd A. Mooradian
School of Business, College of William and Mary,
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Williamsburg, Virginia, USA

Abstract
Purpose – The purpose of this paper is to investigate whether transformational leadership behavior is
a function of the leader’s own self-respect and his/her evaluation of being capable, significant, and
worthy (self-esteem). It is also tested whether transformational leadership is related to innovation
success.
Design/methodology/approach – Data were collected from 411 entrepreneurs and managing
directors of small- and medium-sized Austrian companies. The proposed hypotheses were tested using
structural equation modeling (PLS).
Findings – A strong and significant relationship between self-esteem and transformational leadership
was found. Furthermore, data analyses revealed that transformational leadership has a positive impact
on innovation success.
Originality/value – This study reveals the important but heretofore neglected role of self-esteem,
defined as a manager’s overall self-evaluation of his/her competences, as an important predictor of
transformational leadership.
Keywords Personality, Leadership, Self-esteem
Paper type Research paper

Introduction
Transformational leadership is one of the most influential contemporary leadership
theories (e.g. Judge and Bono, 2000; Felfe and Schyns, 2010; van Knippenberg and
Sitkin, 2013). In his seminal book, Bass (1985) contrasts transactional leadership, in
which leaders clarify expectations and reward followers for fulfilling them, with
transformational leadership, in which leaders are able to motivate followers to move
beyond self-interest and work for the collective good (Wang et al., 2011). Whereas the
outcomes of transformational leadership are well researched, insufficient research has
considered the antecedents of transformational leadership (Hu et al., 2012). Only recently, a
handful of studies have begun to explore personality bases that explain why some leaders
are more likely to engage in transformational leadership behaviors than others (e.g. Judge
and Bono, 2000; Khoo and Burch, 2008; Rubin et al., 2005; Hu et al., 2012; Resick et al., 2009).
The traits approach to leadership argues that the individual traits of the leader determine
his/her leadership behaviors (Northouse, 2010). Northouse (2010) concludes that the Journal of Managerial Psychology
important traits that characterize an effective leader are intelligence, determination, Vol. 30 No. 7, 2015
pp. 815-831
integrity, sociability, and self-confidence. Self-confidence appears to be requisite for the © Emerald Group Publishing Limited
0268-3946
initiation of leadership (Bono and Judge, 2004). DOI 10.1108/JMP-01-2013-0030
 JMP In this paper, we extend understanding of transformational leadership by proposing
30,7 that self-esteem (Rosenberg, 1965) is an important antecedent to transformational
leadership behaviors. In a work context, self-esteem is defined as “the degree to which
an individual believes him/herself to be capable, significant, and worthy as an organizational
member” and is labeled organization-based self-esteem (OBSE) (Pierce et al., 1989, p. 625).
OBSE has been shown to be related to job satisfaction, organizational commitment,
816 motivation, corporate citizenship behavior, in-role performance, turnover intentions, etc.
(Bowling et al., 2010; Pierce and Gardner, 2004). Transformational leaders articulate a
common vision, encourage followers to challenge assumptions, lead through an appropriate
model, provide intellectual stimulation, set high performance expectations, set
common goals, etc. (Podsakoff et al., 1990; Bass, 1985). Transformational leadership
requires followers to trust, admire, and identify with their leaders (Bass, 1985). We
argue that leaders with high self-esteem are more likely to transmit positivity and
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enthusiasm to their followers (Hu et al., 2012).

Innovation is a key factor necessary to sustain firm success and growth, and the
promotion of innovation is therefore of great interest to researchers and practitioners
(Damanpour and Schneider, 2006). However, the role of leaders is still under-researched
(Eisenbeiss et al., 2008), and there are numerous calls for more research, for example, on
how leadership contributes to sustain higher levels of innovation (Paulsen et al., 2013;
Pieterse et al., 2010). As innovation is an inherent characteristic of transformational
leadership behavior (Pieterse et al., 2010), we also test whether transformational
leadership is related to the success of innovation in a company.
In this study, we focus on entrepreneurs and managers in small- and medium-sized
enterprises (SME). SMEs play a major role in the European economy, where 99 percent
of the companies are SMEs. They also play a major role in innovation policy initiatives
to stimulate economic development (Lee et al., 2010). Thus, the question of how to
facilitate innovation in SMEs is of primary concern (Lee et al., 2010).
In owner-managed SMEs, the entrepreneur plays a pivotal role in innovation. Power
and decision making are concentrated in the entrepreneur (Varis and Littunen, 2010).
It is widely argued that in SMEs, the leadership role is more important than in large
organizations and is therefore crucial for innovation implementation in SMEs
(McAdam et al., 2010). Empirical studies show that the leader’s vision and drive (Pearce
and Ensley, 2004) must focus on innovation in order to effect product innovation and
performance, and that the leader’s or entrepreneur’s role is central to developing innovation
practices in SMEs (Wilson and Stokes, 2005). In the next sections we develop the
hypotheses and present the results of our empirical study.

Theory development and hypotheses

Transformational leadership
The concept of transformational leadership was introduced by Bass (1985) to describe
how and why leaders are able to motivate people to do their best and to motivate followers
to overcome self-interest, strive for a higher purpose or vision, and thus perform beyond
expectations (Bass, 1985; Bass and Riggio, 2006; Eisenbeiß and Boerner, 2013). According
to Bass (1985), transformational leadership comprises four different behaviors. First,
transformational leaders develop and articulate a shared vision and set high expectations
that motivate, inspire, and challenge followers (“inspirational motivation”). Second,
transformational leaders serve as a role model and act in a way that is consistent with the
articulated vision (“idealized influence”). Third, transformational leaders stimulate
employees intellectually to question assumptions, reframe problems, and to contribute
 their own suggestions and ideas (“intellectual stimulation”). Fourth, they engage in Transformational
coaching and mentoring behavior and take followers individual needs into account, leadership
treating each employee as a unique individual (“individualized consideration”), and
thereby fostering followers’ trust and satisfaction (Podsakoff et al., 1990). Through these
transformational leadership behaviors, followers are motivated to perform at higher levels
(Wang et al., 2011).
The desirable effects of transformational leadership have been well documented. In 817
a recent meta-analysis, Wang et al. (2011) conclude that: transformational leadership
“exhibits a positive relationship with performance across several performance criteria,
including task, contextual, and creative performance,” “the relationship between
transformational leadership and individual performance holds across organizational
type, leader level, and geographic region,” and “transformational leadership has
positive effects on performance across levels of analysis (i.e. individual, team, and
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organizational levels)” (p. 249). Numerous studies found positive effects of transformational
leadership on job satisfaction, supervisory satisfaction, motivation, and organizational
citizenship behavior, as evidenced in Judge and Piccolo’s (2004) meta-analytical study.
Transformational leadership behavior is beneficial to the followers, to the group, and to the
organization.
Given the importance of transformational leadership, it is surprising to note the
paucity of research on the antecedents of transformational leadership; that is, on
questions of why some leaders are more likely to engage in transformational leadership
than others (Hu et al., 2012). Only recently have researchers begun to explore individual
differences as antecedents of transformational leadership behavior (Bass and Bass, 2008;
Hu et al., 2012). Judge and Bono (2000), for instance, studied the relationship between
personality (the Big Five set of traits) and transformational leadership, concluding that
only Extraversion and Agreeableness predict transformational leadership. In contrast, in
their subsequent meta-analysis, Bono and Judge (2004) found that only extraversion had a
small, but consistent, effect on transformational leadership. Other studies relate emotional
intelligence (e.g. Barbuto and Burbach, 2006), the “dark side of personality at work” (Khoo
and Burch, 2008), emotion recognition (Rubin et al., 2005), hope, optimism, and resiliency
(Peterson et al., 2009), and core-self-evaluations (CSEs) (Hu et al., 2012; Resick et al., 2009)
to transformational leadership. In this study, we hypothesize a relationship between
self-esteem, a construct introduced in the 1970s suggesting that an individual’s self-esteem
plays a significant role in determining employee motivation, work-related attitudes and
behaviors (Pierce and Gardner, 2004), and transformational leadership.

Self-esteem
Self-esteem is defined as an individual’s overall self-evaluation of his/her competences
(Rosenberg, 1965). An individual with high self-esteem (Rosenberg, 1979): “has
self-respect, considers himself a person of worth. Appreciating his own merits, he
nonetheless recognizes his faults [“Low self-esteem”] means that the individual lacks
respect for himself, considers himself unworthy, inadequate, or otherwise seriously
deficient as a person” (Rosenberg, 1979, p. 54). Self-esteem is understood as a
hierarchical construct, manifest at different levels of specificity including global, task,
and situation-specific self-esteem (Simpson and Boyle, 1975; Pierce and Gardner, 2004).
Pierce et al. (1989) introduced the construct of OBSE as “the degree to which an
individual believes him/herself to be capable, significant, and worthy as an organizational
member” (p. 625). Determinants of self-esteem include: signals from the environmental
structures to which one is exposed, messages received from others in one’s social
 JMP environment, and one’s feelings of efficacy and competence derived from his/her experiences
30,7 (Pierce and Gardner, 2004). These three forces affect global self-esteem, and – in a work
context – the same forces, grounded in one’s work and organizational experience, influence
OBSE (Pierce et al., 1989). Bowling et al. (2010) found in their meta-analysis that OBSE is
positively related to attitudes and behaviors such as job satisfaction, organizational
commitment, job involvement, in-role job performance, and organizational citizenship
818 behavior. Self-esteem is one trait of the broader construct of CSE.
Judge et al. (1997) proposed a theoretical framework to explain dispositional
influences on job satisfaction. Based on Packer’s (1985) observation that individuals
make general, metaphysical evaluations of themselves that subconsciously affect their
appraisals of people and events, Judge et al. (1997) introduces the construct of CSEs that
refers to those fundamental appraisals that individuals make of their own self-worth,
competence, and capabilities: “ […] because they are fundamental, core evaluations are
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implicit in all lesser and more specific evaluations” (p. 157). CSE influences outcomes
through four processes (Judge et al., 1997; Chang et al., 2012): emotional generalization,
wherein positive self-views spill over to influence other outcomes; through cognitions
people possess and appraisals they make; through influencing the actions individuals
engage in; and by moderating relations between variables (e.g. reactions are influenced
by how worthy one views oneself to be).
Transformational leadership requires that leaders develop and articulate a shared
vision and set high expectations that motivate, inspire, and challenge followers
(inspirational motivation). Shamir et al. (1994) argue that, in order to paint such a
positive picture of the future and gain follower’s trust, leaders need to be free of anxiety
(i.e. neuroticism). House and Howell (1992) found that the leader’s self-esteem is a trait
that differentiates personalized from socialized charismatic leaders and that the leader’s
confidence and assuredness are sources of psychological comfort for the followers (Resick
et al., 2009). Hu et al. (2012) contend that an overall positive evaluation of self-worth is
necessary that leaders transmit positivity and enthusiasm to their followers. We argue
that in order to formulate a compelling vision of the future and to inspire followers, leaders
need to believe him/herself to be capable, significant, and worthy.
A second component of transformational leadership is to serve as a role model and
act in a way that is consistent with the articulated vision and the values (idealized
influence). Transformational leaders influence followers through powerful emotions
when describing their values and ideals, which leads followers to internalize these
values and ideals (Ashkanasy, 2003). The leaders’ “idealized” values and ideals become
relevant to the followers’ own values and ideals (Ilies et al., 2012). Arguing that leaders
must be “authentic” in order to become transformational leaders, Spitzmuller and Ilies
(2010) believe that leaders need to have a strong belief in their values coupled with high
self-esteem. Without self-esteem and a strong belief in their own values, leaders are less
likely to express powerful emotions.
A third characteristic of transformational leaders is that they intellectually stimulate
employees to question assumptions, reframe problems, and to contribute their own
suggestions and ideas (intellectual stimulation). Leaders that view themselves as competent,
capable, and in control of their work are more motivated to actively seek new challenges and
to find new ways to conduct work which influences their intellectual stimulation behaviors
(Hu et al., 2012). Finally, leaders with a high confidence in their own competences also instill
a sense of confidence in their followers (Hu et al., 2012), which leads them to higher
performance and personal goals, and they are more sensitive to their follower’s contributions
to the collective goals.
 Hence, we believe that leaders with a higher self-esteem are more likely to engage Transformational
in transformational leadership behavior. Rosenberg operationalized self-esteem as a leadership
ten-item scale (five positive items and five negative items) with scores ranging along a
continuum of low self-esteem to high self-esteem (Rosenberg, 1965). This conceptualization
and Rosenberg’s self-esteem scale is the most widely used self-report instrument to
measure self-esteem (Ang et al., 2006; Marsh, 1996). Hence, we conceptualize self-esteem as
a two-factor construct and hypothesize: 819
H1. Positive self-esteem is positively related to transformational leadership.
H2. Negative self-esteem is negatively related to transformational leadership.

Transformational leadership and innovation success

Innovation is a key source of competitive advantage and sustained success (Rosenbusch
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et al., 2011) and a constitutive element of entrepreneurship (Schumpeter, 1987; Lumpkin

and Gregory, 1996). Smaller companies, which are the focus of this study, benefit more
from innovation than their larger rivals, as they are more agile, have no hierarchies, and
have rapid decision making (Nooteboom, 1994; Vossen, 1998).
The literature distinguishes three types of innovations as antecedents of firm
performance: innovation orientation, inputs to innovation processes (e.g. R&D expenditures),
and innovation output (e.g. new products, patents) (Rosenbusch et al., 2011). In this study, we
focus on innovation output (i.e. product and process innovation). Innovation success is
defined as the output of the innovation process (i.e. how efficient and effective a company
is in the innovation of products and processes) and should not be confused with
“innovativeness,” which refers to a company’s openness to new ideas (Baker and
Sinkula, 2009).
Leadership is seen as one of the strongest predictors of innovation (Mumford et al.,
2002), whereby transformational leadership has been “most strongly” related to
innovation (Rosing et al., 2011). It is argued that “innovation is central to the thinking
about transformational leadership” (Pieterse et al., 2010, p. 611), as the whole concept
was developed around leaders that consistently strive at transforming the existing
state of affairs (Bass, 1985). Bass (1985) theorizes that transformational leaders are
more innovative, have more novel ideas, and stimulate more change than transactional
leaders; transformational leadership centers on the processes of transformation and
change (Bass and Riggio, 2006). By articulating an inspiring vision, serving as role
models consistent with the vision, stimulating followers to question the status quo, and
by allowing individual development and growth, transformational leaders stimulate
the follower’s innovative behavior (Pieterse et al., 2010). Empirical research found that
transformational leaders put more emphasis on innovation than transactional leaders
(Church and Waclawski, 1998; Howell and Higgins, 1990), who focus more on in-role
behavior and less on the stimulation of novel activities (Pieterse et al., 2010), clarifying
expectations, being perceived as more controlling and demotivating and therefore
causing less innovative behavior (Deci and Ryan, 1987).
Several studies found a positive relationship between transformational leadership and
innovative behavior. In their meta-analysis, Wang et al. (2011) confirm a positive
relationship between transformational leadership behavior and the creative performance
of the followers, arguing that leaders encourage and intellectually stimulate followers to
challenge the status quo, question prevailing assumptions, take risks, suggest innovative
ideas and also to engage in divergent thinking (Bass, 1985). Followers are also encouraged
to experiment among different options without the fear of failure (Wang et al., 2011).
 JMP A number of studies find a relationship between transformational leadership and
30,7 organizational innovation (e.g. Mumford et al., 2002; Jung et al., 2003; Matzler et al., 2008).
Gumusluoglu and Ilsev (2009) argue that transformational leadership influences both
individual creativity and organizational innovation (both directly and indirectly through
individual creativity), and confirm these hypotheses empirically. Building on the extant
work on the relationship between transformational leadership and innovation, we argue:
820 H3. Transformational leadership is positively related to innovation success.

Method
Sample
We collected data from 411 entrepreneurs and the managing directors of small- and
medium-sized companies in Austria. An online questionnaire was sent to 1,500
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addressees. They were asked to complete the questionnaire and they were informed
that the results would be presented at an annual conference, where the sponsor invites
all respondents to participate for free. In total, 461 questionnaires were completed, of
which 411 were usable. This corresponds to a return rate of 27.4 percent. Non-response
bias was tested by comparing early and late respondents (Armstrong and Overton,
1977). Non-response bias is not a problem. The item non-response bias was tested using
Berdie and Anderson’s item response-rate index (Berdie and Anderson, 1976).
The maximum number of missing values for one item was 18. Hence, item non-response
bias is not a problem. Table I contains the descriptive statistics of the sample.

Measures
Transformational leadership. Transformational leadership was measured with the
German version of Podsakoff et al. (1990, 1996) Transformational Leadership Inventory,
translated and tested by Heinitz and Rowold (2007). The German version contains 26
items and measures seven dimensions of transformational leadership (see Table II).
Self-esteem. We used Rosenberg’s self-esteem scale (Rosenberg, 1965). This scale is
the most widely used self-report scale to measure global self-esteem (Roth et al., 2008).
In literature, self-esteem is understood as a hierarchical construct and it can exist on
different levels of specificity: global, task, and situation-specific self-esteem (Simpson
and Boyle, 1975; Pierce and Gardner, 2004). As the Rosenberg scale measures global

Sex (%) Industry (%)

Female 22.4 Banking and insurance 2.7
Male 77.6 Wholesale and retailing 21.5
Information and consulting 19.0
Manufacturing 7.3
Highest education (%) Tourism and leisure industry 23.6
Primary school 1.0 Transport and logistics 5.6
Apprenticeship 7.3 Artisanry 20.4
Professional school 27.3
High school 30.9 Number of employees (%)
University 33.6 o10 63.0
11-29 17.5
Position in company 30-50 7.3
Table I. Owner/entrepreneur 51.1 51-100 6.6
Descriptive statistics Managing director 48.9 W100 5.6
 Transformational
Constructs and items Loading
leadership
Positive self-esteem (5 items, CR ¼ 0.86, AVE ¼ 0.58)
As an entrepreneur/as a leader […]
1. I feel that I have a number of good qualities 0.83
2. On the whole, I am satisfied with myself 0.67
3. I take a positive attitude toward myself 0.81
4. I feel that I am a person of worth, at least on an equal plane with others 0.80 821
5. I am able to do things as well as most other people 0.71
Negative self-esteem (4 items, CR ¼ 0.86, AVE ¼ 0.62)
As an entrepreneur/as a leader […]
1. I certainly feel useless at times 0.79
2. At times, I think I am no good at all 0.78
3. All in all, I am inclined to feel that I am a failure 0.77
4. I wish I could have more respect for myself 0.79
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Transformational leadership
Identifying and articulating a vision (3 items, CR ¼ 0.83, AVE ¼ 0.62)
1. I am always seeking new opportunities for the organization 0.73
2. I inspire others with my plans for the future 0.79
3. I paint an interesting picture of the future for our organization 0.83
Providing an appropriate model (2 items, CR ¼ 0.70, AVE ¼ 0.57)
1. I lead by “doing,” rather than simply by “telling” 0.46
2. I lead by example 0.96
Fostering the acceptance of group goals (3 items, CR ¼ 0.86, AVE ¼ 0.66)
1. I get the group to work together for the same goal 0.84
2. I develop a team attitude and spirit among employees 0.85
3. I foster collaboration among work groups 0.75
High performance expectations (3 items, CR ¼ 0.77, AVE ¼ 0.53)
1. I insist on only the best performance 0.80
2. I will not settle for second best 0.56
3. I show the employees that I expect a lot from them 0.80
Providing individual support (single item)
1. I show respect for the feelings of my employees
Intellectual stimulation (3 items, CR ¼ 0.83, AVE ¼ 0.63)
1. I challenge employees to think about old problems in new ways 0.79
2. I stimulate employees to rethink the way they do things 0.71
3. I have ideas that challenge employees to reexamine some basic assumptions […] 0.86
Contingent reward (3 items, CR ¼ 83, AVE ¼ 0.68)
1. I personally complement employees when they do outstanding work 0.82
2. I always give positive feedback when employees perform well 0.78
3. I frequently acknowledge employee’s good performance 0.87
Innovation success (3 items, CR ¼ 0.82, AVE ¼ 0.60)
Compared to our competitors […] Table II.
1. We are more efficient in the introduction of new products or services 0.79 Psychometric
2. We are more innovative in the development of new products or services 0.76 properties of
3. We are faster and better in process innovation 0.77 the scales

self-esteem, we adapted the Rosenberg scale to measure self-esteem in a leadership

context. We reformulated the items in such a way that they captured self-esteem in this
context. The questions started with “As an entrepreneur/as a leader […]” (e.g. “As an
entrepreneur/as a leader, I feel that I have a number of good qualities”). The German
version of the scale tested by Ferring and Fillip (1996) was used. The scale consists of
five positively and five negatively formulated items.
 JMP Innovation success. Innovation success was measured with three items. Respondents
30,7 were asked to indicate their degree of innovation success based on three items (see
Table II), compared to their competitors, using a five-point Likert scale (each ranging
from 1 ¼ much worse to 5 ¼ much better).

Results
822 Test of the measurement model
The relationships among the constructs were examined with structural equation modeling,
using SmartPLS (Ringle et al., 2005). First, validity and reliability analyses of each of the
measures of the model were conducted. Second, the structural model was tested (Hulland,
1999). The reliability and validity of the constructs were tested using composite reliability
(CR), average variance extracted (AVE), and the Fornell-Larcker-Criterion (Fornell and
Larcker, 1981) and cross-loadings were used to measure discriminant validity. Table II
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shows the results. Eight items on the transformational leadership scale were excluded due
to low loadings, leaving only one item reflecting individual support.
In line with previous literature (e.g. Bass et al., 2003; Carless, 1998; Pieterse et al.,
2010), transformational leadership was treated as a second-order construct consisting
of seven factors. All seven factors loaded significantly on the second-order construct
(loadings between 0.50 and 0.79) and reliabilities of the second-order construct were
acceptable (CR ¼ 0.85, Cronbach’s α ¼ 0.79, AVE ¼ 0.45).
Self-esteem was measured with ten items, five worded positively and five worded
negatively (Rosenberg, 1965). There is an extensive discussion regarding whether the
scale is one dimensional or two dimensional (Greenberger et al., 2003; Pullmann and
Allik, 2000; Roth et al., 2008; Richardson et al., 2009), finding evidence for both.
Therefore, we conducted an exploratory factor analysis with the first half of the sample
and a confirmatory factors analysis with the second half of the sample. The exploratory
factor analysis yielded two factors (explaining 59.2 percent of the variance, and
yielding a Cronbach’s α of 0.82 for positive self-esteem and a Cronbach’s α of 0.76 for
negative self-esteem). The confirmatory factor analysis suggested that we exclude one
item “I feel I do not have much to be proud of due to a low loading.” The fit indices were
acceptable (AGFI ¼ 0.94, GFI ¼ 0.97, CFI ¼ 0.97, RMSEA ¼ 0.06), confirming those
studies that identified one factor consisting of the positively formulated items (referred
to as positive self-esteem) and one factor consisting of the negatively formulated items
(referred to as negative self-esteem).
Discriminant validity was measured using the cross-loadings-criterion (as shown in
the Appendix) and the Fornell-Larcker-Criterion (Fornell and Larcker, 1981). Table III
shows the correlation analysis. As square roots of AVEs (on the diagonal) are greater
than the correlations among the constructs and the cross-loadings-criterion is fulfilled,
discriminant validity is given.
As having used self-report questionnaires, common method bias could be a problem.
To work against a potential common method bias, we implemented some procedural
remedies as suggested by Podsakoff et al. (2012). As respondents we chose entrepreneurs
and managing directors that have the knowledge and ability to answer our questions.
To decrease the motivation of respondents to answer stylistically, we reversed some
items with regards to the wording and we separated some items to eliminate proximity
effects. We also separated criterion and predictor variables with regards to their
placement in the questionnaire (Podsakoff et al., 2012).
To test for a potential common method bias, we analyzed our data with the ad hoc
approach suggested by Podsakoff et al. (2003) and followed the guidelines for assessing
 1 2 3 4 5 6 7 8 9 10 Transformational
leadership
Appropriate model (1) 0.75
Contingent reward (2) 0.37 0.82
Group goals (3) 0.43 0.59 0.81
Performance expectations (4) 0.29 0.19 0.28 0.73
Individual support (5) 0.25 0.45 0.49 0.09 Single
item 823
Innovation success (6) 0.20 0.17 0.24 0.28 0.09 0.77
Negative self-esteem (7) −0.35 −0.27 −0.28 −0.17 −0.12 −0.22 0.78
Positive self-esteem (8) 0.36 0.35 0.34 0.26 0.21 0.19 0.44 0.76
Vision (9) 0.35 0.33 0.43 0.34 0.19 0.37 0.31 0.49 0.78
Intellectual stimulation (10) 0.42 0.36 0.55 0.35 0.32 0.29 0.27 0.52 0.60 0.79 Table III.
Note: Square root of AVE is on the diagonal Correlation matrix
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in PLS developed by Liang et al. (2007). The ratio from method variance and substantive
variance is 89 to 1, and thus we conclude that common method variance or bias is not a
serious problem.

Test of the hypothesized relations

Figure 1 shows the estimations obtained from PLS structural equation modeling.
The Stone-Geisser criterion shows that the empirical data are able to reconstruct the
theoretical model, as all values fall above the recommended value of Q2 W 0 (Tenenhaus
et al., 2005; Fornell and Cha, 1994). According to Wetzels et al. (2009), the goodness of fit
(GoF) value of our research model, at 0.34, indicates an acceptable GoF.
The analysis shows that positive self-esteem is significantly related to transformational
leadership (β ¼ 0.50***), supporting H1. Also H2 was supported, as negative self-esteem
was negatively related to transformational leadership (β ¼ −0.11**). Self-esteem
explained 29 percent of the variance of transformational leadership. H3 suggests
that transformational leadership is positively related to innovation success. This
relationship also was supported: transformational leadership explained 13 percent of
the variance of innovation success (β ¼ 0.36***).
We hypothesized two main effects in our model: a positive relationship between
self-esteem and transformational leadership, and a positive relationship between

Positive self-
esteem

0.50***

Trans-
0.36*** Innovation
formational
success
leadership 2
R = 0.13
R 2 = 0.29

–0.11**
Figure 1.
Negative self-
Self-esteem,
esteem transformational
leadership, and
innovation success
Notes: **p < 0.01; ***p < 0.001
 JMP transformational leadership and innovation success. To test for a possible mediation
30,7 of transformational leadership, we used bootstrapping-based mediation tests, as they
are free of distributional assumptions (Preacher and Hayes, 2008). We calculated the
latent variable scores in SmartPLS and run the procedures for estimating mediation
effects in SPSS as suggested by Preacher and Hayes (2004). We run a regression
analysis from positive self-esteem on innovation success. Positive self-esteem was
824 positively related to innovation success (B ¼ 0.2186, t(409) ¼ 4.0731; p ¼ 0.0001; c-path)
and positive self-esteem was positively related to transformational leadership (B ¼ 0.5749,
t(409) ¼ 11.9580; p ¼ 0.0000; a-path). The path from transformational leadership on
innovation success was positive and significant (B ¼ 0.3217; t(409) ¼ 6.0768; p ¼ 0.0000;
b-path). As both paths were significant, we tested for the mediation using the bootstrapping
method with bias-corrected confidence estimates (Preacher and Hayes, 2004; MacKinnon
et al., 2004) and applied a 95% confidence interval with 5,000 bootstrap resamples (Preacher
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and Hayes, 2008). The mediation analysis confirmed the mediating role of transformational
leadership (B ¼ 0.1849; CI ¼ 0.1246-0.2570; ab-path). Additionally, the direct effect from
positive self-esteem on innovation success (c'-path) was no longer significant (B ¼ 0.0337,
t(409) ¼ 0.5639; p ¼ 0.5731). We found a significant direct relationship between negative self-
esteem and innovation success (B ¼ −0.1517; t(409) ¼ −3.5315; p ¼ 0.0005), a significant
relationship with transformational leadership (B ¼ −0.2800; t(409) ¼ −6.6242; p ¼ 0.0000),
and a significant relationship between transformational leadership and innovation success
(B ¼ 0.3149; t(409) ¼ 6.5821; p ¼ 0.0000). The mediation analysis confirmed the mediating
role of transformational leadership for negative self-esteem. The direct relationship between
negative self-esteem and innovation success disappears (B ¼ −0.0635; t(409) ¼ 1.4766;
p ¼ 0.1406), indicating a full mediation.

Discussion
Self-esteem is positively related to transformational leadership. We found empirical support
for this hypothesis and contribute to the relatively sparse literature on the antecedents of
transformational leadership behaviors (e.g. Judge and Bono, 2000; Khoo and Burch, 2008;
Rubin et al., 2005; Hu et al., 2012; Resick et al., 2009). We introduce a variable that helps
to explain why some leaders are more likely to engage in transformational leadership
than others.
We also address lingering ambiguity regarding the dimensionality of the Rosenberg’s
self-esteem scale (e.g. Greenberger et al., 2003; Richardson et al., 2009; Roth et al., 2008;
Marsh et al., 2010). We conducted an exploratory factor analysis which yielded two
factors (positive and negative self-esteem) also found in previous studies, and we treated
self-esteem as a two-dimensional construct. Positive self-esteem was related directly and
significantly to transformational leadership, whereas negative self-esteem was related
inversely to transformational leadership.
We also hypothesized and confirm empirically that transformational leadership is
positively related to innovation success. This result confirms previous studies (e.g.
Mumford et al., 2002; Jung et al., 2003; Gumusluoglu and Ilsev, 2009). Numerous studies
have found that transformational leadership influences employee creativity (e.g. Herrmann
and Felfe, 2014; Wang et al., 2011; Eisenbeiß and Boerner, 2013). As found in some studies
(e.g. Gumusluoglu and Ilsev, 2009), transformational leadership influences organizational
innovation through mediating variables (individual creativity). The inclusion of these
mediating variables and some potential moderators of the relationship (see, for instance,
García-Morales et al., 2008) in future research will gain a better understanding of the
impact of transformational leadership on innovation success.
 There is abundant literature on the positive effects of transformational leadership Transformational
(e.g. Herrmann and Felfe (2014); Wang et al., 2011), but little research on the antecedents leadership
(Resick et al., 2009; Hu et al., 2012). With this study we have shown that the leader’s
self-esteem is related to transformational leadership behavior. This has some
important managerial implications. The literature has identified a number of
dispositional antecedents to organizational self-esteem (e.g. Pierce and Gardner, 2004;
Bowling et al., 2010), e.g. general self-esteem, emotional stability, or general 825
self-efficacy. In selecting leaders, these dispositional factors could be considered.
Second, meta-analytical studies (e.g. Bowling et al., 2010) have identified situational
predictors of organizational self-esteem (e.g. job complexity, autonomy, social and
organizational support, psychological ownership, role ambiguity, role overload).
This literature offers guidance on how to improve the self-esteem. Future research should
test whether and how these dispositional and situational factors can be considered and
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used to influence transformational leadership behavior.

Felfe and Schyns (2010), building on similarity (Shamir et al., 1993), social identity (Tajfel
and Turner, 1986), and social projection (Schyns and Sanders, 2007), argue that “similarity
in terms of leader-typical characteristics leads to the perception of leader-typical attributes
in general and enhances the acceptance of leaders that fit the leader prototype” (p. 396). In a
similar vein, Felfe and Schyns (2006) conclude that when a follower’s personality is similar
to a leader’s personality, they are more likely to perceive and accept transformational
leadership. Building on this stream in the literature, one could also expect that there is a
relationship between the leader’s and the follower’s self-esteem with regard to the perception
of transformational leadership. This could be an interesting focus for future research.
As all empirical work, this study is not free of limitations. We collected data from a
single source using self-evaluations. To avoid any related biases, collecting data from
various sources (e.g. follower’s perception) should be the focus of future studies. Second,
generalizability issues exist. Our sample consists of entrepreneurs and managing directors
in small- and medium-sized companies. In the future, it should be tested whether the same
relationships are found in large organizations and among leaders in lower positions of the
organization, where managers might have less power and influence. Third, innovation
success was measured as perceived by managers. The use of objective performance data
(e.g. patents or patent citations, new product introductions) would be preferable. Fourth,
we had to purify the transformational leadership scale. One construct (providing
individual support) was measured with a single item only, for which reliability cannot be
measured. However, all other measures show acceptable reliabilities, and conclusions
about the nature of the construct relationships can be drawn.

Conclusion
Transformational is one of the most influential contemporary leadership theories. It has not
only received enormous attention in research but has also influenced leadership practice.
As we have shown in our study, not all individuals hold the pre-dispositions required to
become a transformational leader. Inspiring and challenging followers, acting as a role
model, intellectually stimulating employees, and instilling a sense of confidence in their
followers, requires a certain degree of self-esteem. We hope that this finding inspires future
research in this domain. How can self-esteem be fostered in an organizational or leadership
context? Are there any moderating variables that reinforce or weaken the role of self-esteem
for transformational leadership? Is there an optimum level of self-esteem and are there
potential negative effects of overconfidence? What is the role of the follower’s self-esteem?
These are some of the questions we find particularly interesting for future research.
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Corresponding author
Dr Kurt Matzler can be contacted at: kurt.matzler@uibk.ac.at
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Positive Negative Vision Appropriate Group Individual Intellectual Contingent

Indicators Innovation self-esteem self-esteem model goals Performance support stimulation reward

Appendix
Innovation_1 0.79 0.17 0.09 0.28 0.13 0.20 0.25 0.07 0.22 0.13
Innovation_2 0.76 0.11 0.07 0.28 0.15 0.17 0.20 0.13 0.20 0.13
Innovation_3 0.77 0.18 0.19 0.30 0.20 0.20 0.21 0.03 0.24 0.14
Positive self-esteem_1 0.15 0.83 0.19 0.39 0.31 0.28 0.20 0.16 0.47 0.26
Positive self-esteem_2 0.10 0.66 0.24 0.28 0.22 0.23 0.15 0.19 0.26 0.26
Positive self-esteem_3 0.19 0.81 0.33 0.43 0.32 0.34 0.24 0.20 0.42 0.38
Positive self-esteem_4 0.18 0.80 0.16 0.39 0.29 0.23 0.18 0.16 0.35 0.24
Positive self-esteem_5 0.13 0.71 0.08 0.36 0.17 0.20 0.26 0.10 0.36 0.17
Negative self-esteem_1 0.12 0.20 0.79 0.15 0.13 0.10 0.05 0.00 0.10 0.11
Negative self-esteem_2 0.08 0.27 0.79 0.16 0.25 0.17 0.06 0.06 0.13 0.20
Negative self-esteem_3 0.14 0.16 0.76 0.18 0.20 0.23 0.10 0.04 0.13 0.14
Negative self-esteem_4 0.12 0.21 0.80 0.15 0.19 0.18 0.04 0.11 0.10 0.15
Vision_1 0.24 0.36 0.12 0.73 0.27 0.27 0.26 0.10 0.52 0.17
Vision_2 0.31 0.36 0.21 0.83 0.30 0.45 0.27 0.24 0.47 0.37
Vision_3 0.33 0.43 0.16 0.79 0.25 0.30 0.30 0.12 0.40 0.22
Appropriate model_1 0.20 0.36 0.29 0.35 0.92 0.40 0.31 0.24 0.40 0.37
Appropriate model_2 0.09 0.12 0.03 0.14 0.57 0.22 0.08 0.15 0.21 0.13
Group goals_1 0.24 0.28 0.23 0.39 0.42 0.83 0.28 0.41 0.53 0.44
Group goals_2 0.20 0.29 0.19 0.39 0.34 0.84 0.24 0.42 0.42 0.49
Group goals_3 0.15 0.27 0.12 0.31 0.28 0.78 0.21 0.38 0.43 0.54
Performance_1 0.25 0.20 0.01 0.26 0.20 0.15 0.75 0.05 0.18 0.14
Performance_2 0.17 0.08 −0.02 0.13 0.10 0.05 0.51 0.00 0.19 0.02
Performance_3 0.21 0.26 0.13 0.32 0.28 0.34 0.86 0.12 0.38 0.22
Individual support 0.10 0.21 0.07 0.20 0.26 0.49 0.10 1 0.35 0.46
Intellectual stimmulation_1 0.20 0.37 0.13 0.43 0.36 0.49 0.31 0.33 0.83 0.34
Intellectual stimmulation_2 0.20 0.28 0.03 0.38 0.28 0.46 0.26 0.35 0.77 0.30
Intellectual stimmulation_3 0.27 0.53 0.18 0.59 0.36 0.40 0.30 0.16 0.79 0.25
Contingent reward_1 0.18 0.19 0.14 0.22 0.29 0.48 0.15 0.36 0.27 0.85
Contingent reward_2 0.04 0.37 0.16 0.29 0.31 0.49 0.15 0.33 0.34 0.77
Contingent reward_3 0.21 0.31 0.18 0.32 0.30 0.51 0.21 0.44 0.31 0.86
Transformational
leadership

Cross loadings
Table AI.
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