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CEO transformational leadership and firm performance: A moderated mediation model of TMT trust climate and environmental dynamism

Author

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  • Hao-Chieh Lin

    (National Sun Yat-sen University)

  • Trang Thi Ha Dang

    (National Cheng Kung University)

  • Yu-Sheng Liu

    (Institute of Labor, Occupational Safety and Health, Ministry of Labor)

Abstract

This study examines the role of top management team (TMT) trust climate in the relationship between CEO transformational leadership (TFL) and firm performance under dynamic environments. The research results based on a sample collected from firms in Vietnam show that TMT trust climate is a key mediator which can convert CEO TFL into better performance outcomes. Moderated-mediation analyses further reveal that the mediating effect of TMT trust climate is more significant in less dynamic environments. Our study contributes to the TFL theory by identifying a critical mechanism that intervenes in the relationship between CEO-level TFL and firm performance. We reveal how CEOs exert leadership influence on subsequent TMT dynamics and performance outcomes by navigating external environments. Moreover, our study offers insights with regard to the trust theory by uncovering TMT-level intragroup trust as a mediator, and thus complements most of prior examinations that focus on the moderating role of trust in workplace team contexts.

Suggested Citation

  • Hao-Chieh Lin & Trang Thi Ha Dang & Yu-Sheng Liu, 2016. "CEO transformational leadership and firm performance: A moderated mediation model of TMT trust climate and environmental dynamism," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 981-1008, December.
    • Handle: RePEc:kap:asiapa:v:33:y:2016:i:4:d:10.1007_s10490-016-9468-x
    DOI: 10.1007/s10490-016-9468-x
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    5. Chen, Jian-Xun & Sharma, Piyush & Zhan, Wu & Liu, Li, 2019. "Demystifying the impact of CEO transformational leadership on firm performance: Interactive roles of exploratory innovation and environmental uncertainty," Journal of Business Research, Elsevier, vol. 96(C), pages 85-96.
    6. Miguel A. Mañas-Rodríguez & Eleonora Enciso-Forero & Carmen M. Salvador-Ferrer & Rubén Trigueros & José M. Aguilar-Parra, 2020. "Empirical Research in Colombian Services Sector: Relation between Transformational Leadership, Climate and Commitment," Sustainability, MDPI, vol. 12(16), pages 1-16, August.
    7. Jianfeng Jia & Huanxin Liu & Tachia Chin & Dongqing Hu, 2018. "The Continuous Mediating Effects of GHRM on Employees’ Green Passion via Transformational Leadership and Green Creativity," Sustainability, MDPI, vol. 10(9), pages 1-18, September.
    8. Sicheng Luo & Hao-Chieh Lin, 2022. "How do TMT shared cognitions shape firm performance? The roles of collective efficacy, trust, and competitive aggressiveness," Asia Pacific Journal of Management, Springer, vol. 39(1), pages 295-318, March.
    9. Tingting Liu & Yahui Chen & Chenhong Hu & Xiao Yuan & Chang-E Liu & Wei He, 2020. "The Paradox of Group Citizenship and Constructive Deviance: A Resolution of Environmental Dynamism and Moral Justification," IJERPH, MDPI, vol. 17(22), pages 1-15, November.
    10. Lu Jiao & Graeme Harrison & Maria Cadiz Dyball & Jinhua Chen, 2017. "CEO values, stakeholder culture, and stakeholder-based performance," Asia Pacific Journal of Management, Springer, vol. 34(4), pages 875-899, December.
    11. Bello Taofik Abidemi & Dauda Adamu Abubakar & Ismail Alhaji Suleiman & Auwal Mohammad Salihu, 2020. "The Impact of Market Orientation and Performance Using Environmental Turbulence as a Moderator," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(1), pages 127-133, March.
    12. Pascal Back & Andreas Bausch, 2019. "Not If, But How CEOs Affect Product Innovation: A Systematic Review and Research Agenda," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 16(03), pages 1-52, May.
    13. Matemilola, B.T. & Bany-Ariffin, A.N. & Azman-Saini, W.N.W. & Nassir, Annuar Md, 2018. "Does top managers’ experience affect firms’ capital structure?," Research in International Business and Finance, Elsevier, vol. 45(C), pages 488-498.

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