A study on the Influence of Leadership Approach on Organizational Performance in the Revenue Sector in Ethiopia

Abstract

The overarching purpose of this study was to critically evaluate the impact of leadership styles on employee work engagement and organizational performance in the revenue sector. The findings revealed that leadership in the Ministry of Revenue (MoR) predominantly aligns with a transactional approach. While transformational leadership behaviors were observed under specific circumstances, they were not as prominent or consistently applied as transactional leadership practices. Moreover, the study found that transformational and transactional leadership styles significantly predict employee work engagement and organizational performance. The study further demonstrated that employee work engagement played not only a partial mediation role between leadership style and organizational performance but also uniquely contributed to explaining the change in organizational performance by itself. Among the two leadership styles, however, transformational leadership makes a relatively greater contribution in explaining the extent of employee work engagement and organizational performance at the MoR. This study thus recommends that the MoR should develop and apply transformational leadership skills in addition to some transactional leadership abilities to create a productive workplace, an engaged workforce that can function in a constantly changing economy, and generate enough revenue to support the nation's growth and development initiatives.