Effects of transformational leadership on turnover intentions in IT SMEs

Purpose - The purpose of this paper is to examine the impact of transformational leadership (TL) on building trust and hence, its influence on the commitment level of the employees to achieve the desired work outcomes. It also examined whether transformational leaders were able to psychologically empower employees so as to increase their commitment level and thus reduce the employee turnover intentions (TIs) in the small- and medium-sized (SME) IT companies operating in Delhi NCR, India. Design/methodology/approach - Data were collected from 420 employees (168 females and 252 males) of SME IT companies operational in Delhi NCR, India. They responded to questions about their leader’s TL and their own psychological empowerment (PE), commitment and trust. Findings - The findings of the study show that transformational leaders were able to create a higher level of PE and trust amongst their employees. Further, it was also found that this led to an increase in their commitment level and hence, a decrease in their TI. The findings of the study also suggest that trust, commitment and PE act as mediators. Research limitations/implications - Limited sample size is a possible limitation of the study. One more limitation of the study is the data collection method, i.e. through survey. It was self-reported, taking only the perspective of the employees; it may not be a completely accurate response. Practical implications - With TL, leaders can psychologically empower followers to do things in a better way and can develop trust in employees resulting in high commitment; highly committed employees in turn reduce the TIs. If followers do not have faith in their own capability, it may not be possible for them to complete their job effectively. Originality/value - This study adds to the existing literature; it clarifies the process by which transformational leaders enhance followers’ meaning in life through PE and develop trust resulting in high commitment.