Although transactional leadership is known to be the most common style of leadership in organizations, meta-analytic work has yet to fully uncover the relationship between transactional leadership and one of the most focal leadership outcomes: follower performance. Moreover, little is known about the mechanisms that explain why transactional leadership predicts follower performance. To address these gaps, the current article meta-analytically tests a model based on social exchange theory and self-determination theory in which transactional leadership is theorized to affect follower performance sequentially through leader–member exchange (LMX) and psychological empowerment. Specifically, we argue that although some leadership behaviors (e.g., contingent reward) may benefit performance via positive contributions to the leader–follower social exchange, some leadership behaviors (e.g., contingent reward) may simultaneously exhibit negative effects on performance via reduced empowerment. Our results demonstrate that transactional leadership displays both positive and negative indirect effects on follower performance. Furthermore, the pattern of these effects generalizes to two types of performance: task performance and contextual performance. These findings suggest that transactional leadership is a “double-edged sword” when predicting follower performance (e.g., contingent reward fosters LMX but hinders empowerment, whereas management by exception fosters empowerment but hinders LMX). We discuss how leaders can benefit from these findings, including modifying one’s delivery of transactional leadership approaches.
- leader–member exchange