The Effectiveness of Transformational Leadership on Turnover Intention : A Comparison between Korean and US Employees

Abstract

To maintain local subsidiary employees, it is important for managers of a multinational corporation to understand the mechanism of appropriate local leadership styles. Based on the social exchange theory, this study analyzes the mechanism by which transformational leadership affects employees’ turnover intention across cultures using both Korean and US samples. Further, to investigate leader-subordinate relationship, this study examines whether the effectiveness of transformational leadership is contingent on leader-subordinate rank differences by examining the moderating role of hierarchical rank distance in the organization. Based on 507 Korean and US employees, the results show that affective commitment partially mediates the relationship between transformational leadership and subordinates’ turnover intention both in Korea and the US. Additionally, it confirms that the moderating effect of hierarchical rank distance strengthens the effectiveness of transformational leadership on affective commitment in diminishing employees’ turnover intention in both countries. Specifically, the negative effect of rank distance on turnover intention is stronger for the higher power distance culture (Korea) than for the lower one (The US). This study highlights the universal role of affective commitment as it translates transformational leadership into negative turnover intention in both Korean and US employees. Also, it emphasizes that leader-subordinate relation is particularly critical for Korea where high power distance and collectivism is prevalent cultural norms. According to the results, theoretical and practical implications of this study are suggested.