Transformational leadership and

organizational sustainability with psychological empowerment as the mediator

Background

In this competitive world like today, sustainability is critical.  Manufacturing and private enterprises are challenged to be an effective, efficient, and powerful organization that can sustain in the competitive world.  Every organization needs to sustain, however, not every organization can be sustainable. Many variables played important roles in this journey, and two of those variables are leadership and people.  Consequently, high force organization should have a style of leadership that encourages and fosters flexibility and agility. One of the famous style of leadership during organizational change and transformation is transformational leadership, as a transformational leader with his style of leadership will inspire, motivate and empower their followers. As a result, a transformational leader can influence followers and enable them to develop as well as develop the organization. Meanwhile, psychological empowerment of a person is a result of interaction between a characteristic of the individual and organization and work environment, including the leader-member relationship, or it concludes that transformational leadership can influence psychological empowerment of a person.  There are quite a few studies about transformational leadership, and psychological empowerment, however studies about transformational leadership, organizational sustainability, and psychological empowerment is still very limited.  Based on that, this research is to study the relationship between transformational leadership on organizational sustainability with psychological empowerment as the mediator, through model testing.  The research question as follow: Does transformational leadership have a positive impact on organizational sustainability with psychological empowerment as the mediator? The objective of this paper is to test the model about the role of transformational leadership on organizational sustainability, through psychological empowerment as a mediator.

The Methods

The study was conducted at one of manufacturing enterprise with 350 respondents, with the criteria as follows: the level of education is minimum senior high school graduates, permanent staffs, and worked at least 2 (two) years. To collect the data, the researcher was using three questionnaires, namely transformational leadership, psychological empowerment and organizational sustainability.  Those four scales translated into Bahasa Indonesia and were checked is reliability and validity. For data analysis  Statistical Equation Methods (SEM) is used.

Results:

The SEM results showed that transformational leadership had a direct and indirect impact on organizational sustainability and psychological empowerment act as a partial mediator for the relationship between transformational leadership and organizational sustainability. The findings also showed that meaning (at work) is the highest indicator of psychological empowerment.  Meanwhile, operational capital is the top indicator of organizational sustainability. Further, the study also showed that the five dimensions of transformational leadership namely: Individualized Consideration; Intellectual Stimulation; Inspirational Motivation;  Idealized Influence Attribute; and Idealized Influence Behavior, have the same value as indicators of transformational leadership. These results enhanced the role of transformational leadership and psychological empowerment on organizational sustainability.  Results also showed that transformational leadership has a stronger impact on organizational sustainability compares to psychological empowerment.

Conclusions

The results showed that transformational leadership is important in developing organizational sustainability, and transformational leadership also can have an impact on organizational sustainability through psychological empowerment.  The implication of the study for management and organizational psychologist practitioners is in relation to developing organizational sustainability, it showed that both transformational leadership and psychological empowerment of the employees are important, however transformational leadership is stronger and through transformational leadership and psychological empowerment organization can achieve organizational sustainability.

Keywords: Transformational Leadership, Organizational Sustainability, Psychological Empowerment.