Transformational Leadership and Employee Engagement: The Roles of Leader-Member Exchange, Psychological Empowerment,and Psychological Safety

Although the relationships between leaders’ transformational behaviors and employee attitude have been well studied, the mechanisms through which transformational leadership can bring about positive employee attitude have received insufficient attention. The study employs the need theory of motivation and conceptualizes psychological empowerment as a high-level motivation and psychological safety as a low-level motivation to examine their mediating roles in the relationship between transformational leadership and employee engagement. The study also employs the social exchange theory to examine the moderating effect of leader-member exchange (LMX) on the relationship between transformational leadership and the two motivational constructs. Based on a sample collected from managers and their direct subordinates with a dyadic approach in Mongolia, the results show that transformational leadership is positively related to both psychological empowerment and psychological safety, and the two motivational factors are positively related to employee engagement. Nonetheless, the mediating hypotheses are not supported. Moreover, LMX does not show a moderating effects, it produces a direct effect on the two motivational factors. The study contributes to the transformational leadership literature by identifying critical psychological and social factors that can convert leadership behaviors into employees’ beneficial attitudinal outcomes. Implications are discussed.