Impact of transformational leadership on employees' reactions to change and mediating role of organizational trust: Evidence from service companies in Hungary

Abstract

In the context of organizational change, employees can have different reactions, where some of them accept and engage with it, and others completely refuse and resist it. Hence, companies should permanently settle for the best and introduce a fruitful leadership style along with a good change management strategy to ensure the company's prolonged survival and prosperity. This investigation aims to examine the influence of transformational leadership on employees' affective commitment and intention to support change. Both were chosen to constitute the main dimensions of employees' reactions toward organizational change and highlight the importance of organizational trust as a mediator in that correlation. To confirm the hypotheses subtracted from the literature review, a quantitative study was managed by a survey devoted to 428 employees working for diverse service companies in Hungary and going through different change cases. Structural equation modeling (SEM) was then applied to hold out the favorable findings, which reveal that transformational leadership is a booster for employees' intention to support change but not for affective commitment. It was also found that organizational trust firmly mediates the relationship between transformational leadership and employees' reaction to change. This statement justifies that both transformational leadership and organizational trust are able to reduce change complexity and lead to its acceptance, openness, and support.