Leadership in Turbulent Times: The Role of Transformational, Transactional, and Laissez-faire styles in Sustaining Employee Commitment During Economic Crises

Abstract

The 2022/2023 economic crisis in Sri Lanka highlighted systemic vulnerabilities, severely impacting organisations and industries. This study examines how transformational, transactional, and laissez-faire leadership styles influence employee commitment in Sri Lanka’s IT sector during the crisis. Using Avolio and Bass’s Full Range Leadership Model, the research analysed data from 200 software engineers in a leading IT company. The Multifactor Leadership Questionnaire (MLQ) and Organizational Commitment Questionnaire (OCQ) were used, and statistical methods such as Pearson’s correlation and regression analysis were applied to assess relationships between leadership styles and commitment. Findings indicate that transformational leadership significantly enhances affective and normative commitment, fostering emotional bonds and loyalty. Transactional leadership had limited impact, while laissez-faire leadership negatively affected commitment, increasing employee insecurity. The study emphasises the critical role of transformational leadership in maintaining workforce stability during crises and recommends leadership development programs to enhance resilience and retention in volatile economic conditions. These insights are vital for IT managers and policymakers navigating economic uncertainty