Transformational and Transactional Leadership, Idiosyncratic Deals, Follower Outcomes

Abstract

In recent years, idiosyncratic deals (i-deals) have become an increasingly popular method for motivating employees. As such, there is a strong need to develop more theories to understand how leadership styles affect employees’ i-deal experiences. Guided by Affective Events Theory, this study offers a leadership model that examines transformational and transactional leadership as predictors of employees’ receipt of i-deals, emotional reactions, and job behaviors. The proposed model also offers insights into the emotional and behavioral responses of employees who witness coworkers’ receipt of i-deals from their leaders. Data collected from 207 employees from mixed industries at four points over a one-year period largely support the proposed theoretical model. Specifically, transformational and transactional leadership predicts employees’ receipt of i-deals, which in turn predicts their gratitude and positive voice. However, employees’ receipt of i-deals is also positively related to witnessing coworkers’ i-deals, which in turn predicts their envy and negative voice. This relationship is even stronger when transactional leadership is higher. This research thus contributes to the literature by offering a leadership-event-emotion-behavior framework that encourages researchers to integrate the research on leadership and i-deals.