Transactional and transformational leadership: a study of Indonesian managers

Purpose - Indonesia was chosen to be a site of study on leadership style due to its high economic growth potential. The primary objectives of this study are twofold. This paper aims to, first, explore the leadership styles of Indonesian managers and investigate whether the full range leadership theory by Bass (1985), i.e. transformational, transactional and laissez-faire leadership, is applicable in the Indonesian context and second, investigate whether there are differences in leadership styles among Indonesian managers, as Indonesian people are composed of over 300 ethnicities. Design/methodology/approach - Respondents were asked to rate their direct bosses on leadership and their perceived performance on an multifactor leadership questionnaire. In all, 425 Indonesian managers participated in the study. Multiple regression and t-test were used to address the above research questions. Findings - Results indicated that the full range leadership theory is applicable in the Indonesian context, in which Indonesian people generally rate their superiors who use transformational leadership higher than those who use transactional and laissez-faire leadership. Ethnic differences in leadership style were found between that of Padang and Javanese and of Padang and Chinese. Padang managers, whose cultural values are quite unique, seem to practice more transformational leadership and contingent reward, which is a positive reinforcement in transactional leadership. Research limitations/implications - Common method bias may occur due to the single source of data, i.e. subordinates. The confidentiality of the survey helps reduce the bias as subordinates could evaluate their bosses in a true manner. In addition, categorizing ethnicities among Indonesians is not an easy task. A finer distinction of ethnicities is certainly needed in future research. Practical implications - The results are useful for human resource department in selecting the potential leaders, as transformational leaders are generally more preferable. In addition, the findings shed some light on the effective leadership styles of Indonesian managers perceived by their subordinates. Originality/value - One major theoretical contribution of this study is a proof of the applicability of the full range leadership theory by Bass (1985) in Indonesian work setting. It confirms the extension of the theory’s universality. A unique theoretical contribution of this study is its being the first study that addresses the ethnic differences in leadership style in Indonesia.