Analysis of Mediating Role of Communication in Transactional and Transformational Leadership and Employee Behavior

Abstract

This study examines the mediating role of communication in the relationship between leadership styles of managers—transformational and transactional leadership—and employee behavior within Sri Lanka’s footwear industry. Using a quantitative research approach, data were collected from 384 respondents to assess the extent to which leadership styles impact employee behavior and the role of communication as a mediator. The findings reveal that transformational leadership has a significantly stronger positive influence on employee behavior compared to transactional leadership. Transformational leaders foster higher engagement, creativity, and job satisfaction by inspiring and motivating employees, while transactional leaders focus on structured rewards and compliance. Communication emerged as a key factor in strengthening the link between leadership styles and employee behavior. The study found that transformational leadership enhances communication effectiveness, which in turn positively impacts employee behavior. Similarly, although transactional leadership showed a moderate direct effect on employee behavior, its influence was also amplified through communication. The Sobel test confirmed the statistical significance of communication as a mediating variable in both leadership styles. The research underscores the critical role of leadership and effective communication in driving positive organizational outcomes, particularly in dynamic and competitive industries such as footwear manufacturing. It highlights that organizations should emphasize transformational leadership practices and foster open, clear communication channels to enhance employee motivation and productivity. The findings contribute to leadership and organizational behavior literature by offering insights specific to the Sri Lankan industrial context. The study suggests practical implications for business leaders, emphasizing the need for leadership training programs focusing on communication and employee engagement. Policymakers and industry stakeholders can also use these insights to develop strategies that enhance leadership effectiveness and organizational performance. Future research is recommended to explore leadership dynamics in other industries and cultural settings to further validate these findings.