Effect of Transformational Leadership on Organizational Performance of Micro Finance Institutions in Kenya

Abstract

Transformational leadership has attracted extensive attention in management research. Theinfluence of transformational leadership on organizational performance is an important aspect.Given the background where greater attention is being paid to transformational leadership in thebanking industry, this research aimed to establish the degree of the influence of transformationalleadership on organizational performance of micro finance institutions in Kenya. Questionnaireswere used for data collection. They were analyzed via structural equation modeling. The findingsreveal that organizational performance is positively influenced by transformational leadership(β= 1.505; p < 0.05). These findings remind managers of the need to pay close attention totransformational leadership, to cultivate organizational performance, and thereby to eventuallyimprove employee’s sustainable performance.