Leading Teams in an International Project Context : The Effectiveness of Transformational and Transactional Leadership

Abstract

Several scholars have argued that the effects of transformational leadership vary according to the context in which it is executed. In this study, we examined the effectiveness of transformational and transactional leadership on job satisfaction and team performance, and the effectiveness of transformational and transactional leader behaviors in different levels of environmental dynamism. We also tested tolerance for ambiguity as a moderator on the relationship between transformational leadership and work adjustment. All results were collected from international assignees working in multinational project teams in the oil and gas industry. Results from multiple hierarchical regression analyses (N = 286) revealed a strong, direct effect of both transformational and transactional leadership on job satisfaction and team performance. Simple slope analyses showed that both leadership dimensions were effective in low, medium, and highly dynamic work environments. Transformational leadership was a moderately strong predictor of work adjustment, while tolerance for ambiguity showed a weak, but significant positive relation with work adjustment. Team members’ tolerance for ambiguity did not have an impact on the effectiveness of transformational leadership on work adjustment. Our results provide support for the applicability and effectiveness of transformational and transactional leader behaviors in a variety of work environments. One implication from this study is that multinational corporations should develop transformational and transactional leadership skills among team leaders on international assignments.