The Role of Transformational and Transactional Leadership Approaches on Environmental and Ethical Aspects of CSR

Abstract

Corporations’ accountabilities to implement socially responsible actions towards stakeholders are essential as organizations keep participating in competitive industries. Recently, applying leadership approaches has been the emphasis of both scholars and practitioners, but the concern has not been comprehensively examined. The purpose of this study is to investigate the influence of transformational and transactional leadership styles on environmental and ethical features of Corporate Social Responsibility (CSR), in financial services companies located in the United Kingdom (UK). The moderating factor of employees’ years of employment in their respective companies is also examined. Offering contributions through an empirical appraisal of leadership and CSR is aimed. 384 employees working in the financial services companies in the UK were given a structured questionnaire to test our model. The employees offered viewpoints on the leaders, their selves, and the company. Suggested hypotheses were tested through Structured Equation Modelling (SEM). The study concluded that both transformational and transactional leadership approaches had positive impacts on the environmental and ethical aspects of CSR. Additionally, the moderating variable only had an impact on the relationship between transformational leadership and ethical CSR. The study proposes that complementary implementation of transformational and transactional leadership approaches can lead to enhanced socially responsible actions in organizations.