Transformational Leadership Style

Traditional approaches to leadership focus on Transactional leadership while, the more recent studies are now focusing on Transformational leadership style. Transactional leaders are those who motivate their followers by clarifying task requirements and work role. Transactional leadership style may be considered a common management style that involves a chain of command and defined structure where subordinates are expected to do what their supervisor tells them to do. Forms of motivation include rewards and punishments, such as bonuses or termination. Thus, transactional leaders clarify to their followers about what must be done in order to receive those rewards (either explicit or implicit).

On the other hand, Transformational leaders are
those who look beyond their self-interests and act for the betterment of the organization. In 1978, Burns proposed the concept of transformational leadership and defined it as a process in which leaders and followers engage in a mutual process of 'raising one another to higher levels of morality and motivation.' According to Bass (1985) there are four basic elements that underlie transformational leadership: intellectual stimulation, inspirational motivation, idealized influence and individualized consideration.

Impact of Transactional and Transformational Leadership
According to Bass (1985), the two leadership styles impact the followers differently.
Transactional leadership, which is based on rewards and punishment, results in followers achieving the negotiated level of performance. According to Homans (1961) this relationship will continue so long as the leader and follower find the exchange mutually beneficial. Various researchers (Sims, 1977; Hunt & Schuler, 1976; Reitz, 1971) have concluded that followers’ performance and satisfaction is positively impacted by leadership behavior based on contingent rewards.

According to Bass (1985), followers led by transformational leaders tend to perform beyond expected levels due to the influence of the leaders. This may be due to the extra effort they put in as a result of their commitment to the leader, the sense of purpose or mission that drives them or their high levels of intrinsic motivation. In a research carried out by Carless (2000), it was found that followers of transformational leaders tend to be more productive and satisfied workers than followers of transactional
leaders.

Moral decision-making
According to Carlson et al.
(2002) moral decision-making is “a process by which individuals use moral rules to determine whether an issue is right or wrong”. According to Rest (1986), 4 processes influence a moral act: a) Realizing the moral issue, b) making a moral judgment, c) establishing moral intention, and, d) taking moral action. Rest also pointed out that being successful in one moral stage might not lead into the next stage. In 1991, Jones elaborated upon the Rest’s model, introducing a factor called ‘issue contingencies’ as a being significant in the decision-making process. In other words, moral issues vary across situations and cause individuals to react
differently.

Moral identity

Moral intensity
Reynolds (2006) defined moral intensity as “the extent to which an issue, event, or act has the characteristics that make it subject to moral consideration, moral judgment, or moral action”. As proposed by Leitsch (2006) issues of high intensity capture the individual’s attention more often than issues of low-intensity. Jones’s issue-contingent model proposes that moral intensity impacts all stages in the moral decision-making process.