ORIGINAL RESEARCH

published: 17 March 2020

doi: 10.3389/fpsyg.2020.00314

The Impact of Transformational

Leadership on Employee Retention:
Mediation and Moderation Through
Organizational Citizenship Behavior
and Communication
Hongyun Tian 1 , Shuja Iqbal 1* , Shamim Akhtar 1 , Sikandar Ali Qalati 1 , Farooq Anwar 2 and
Muhammad Aamir Shafique Khan 1*
1
School of Management, Jiangsu University, Zhenjiang, China, 2 Lahore Business School, The University of Lahore, Lahore,
Pakistan

This study investigates the impact of transformational leadership on employee retention

in small- and medium-sized enterprises (SMEs) and probes the mediating role of
Edited by:
organizational citizenship behavior (OCB) and the moderating role of communication.
Massimiliano Barattucci, Data were collected using convenience sampling from 505 employees of SMEs.
eCampus University, Italy
A Smart PLS structural equation modeling (PLS-SEM) was used to estimate the
Reviewed by:
various relationships. The findings of the study reveal a positive and significant
Muhammad Usman,
COMSATS University Islamabad, relationship between transformational leadership and OCB. Similarly, this study finds
Pakistan a positive and significant relationship in OCB and employee retention. In addition,
Inam Ul Haq,
Monash University Malaysia, Malaysia
OCB had a positive mediating effect on the relationship between transformational
*Correspondence:
leadership and employee retention. Furthermore, communication positively moderates
Shuja Iqbal the transformational leadership– OCB and OCB–employee retention relationships.
shujaiqbal@163.com
Leaders at SMEs should implement the traits of transformational leadership such as
Muhammad Aamir Shafique Khan
aamirkhanju@yahoo.com developing a compelling vision for employees, focusing on goal achievement, having
problem-solving techniques, having a sense of purpose, and spending time on the
Specialty section:
training and development of the team to enhance OCB and employee retention.
This article was submitted to
Organizational Psychology, Keywords: transformational leadership, organizational citizenship behavior, communication, employee retention,
a section of the journal small- and medium-sized enterprises
Frontiers in Psychology
Received: 20 November 2019
Accepted: 10 February 2020 INTRODUCTION
Published: 17 March 2020
Citation: Small- and medium-sized enterprises (SMEs) face high levels of uncertainty and complexity
Tian H, Iqbal S, Akhtar S, concerning employee retention (ER) (Park et al., 2019). Leadership plays a vital role in retaining
Qalati SA, Anwar F and Khan MAS employees (Covella et al., 2017) and enhancing organizational citizenship behavior (OCB)
(2020) The Impact of Transformational (Ahmet, 2014). Several leadership styles, including transactional, instrumental, laissez-faire, and
Leadership on Employee Retention:
transformational leadership (TL), have been studied in recent years (Antonakis and House,
Mediation and Moderation Through
Organizational Citizenship Behavior
2014). TL inspires followers by attraction to advanced moral values and ideas (Burns, 1978a).
and Communication. In contrast to transactional leadership, TL significantly increases employee commitment within
Front. Psychol. 11:314. the organization (Deichmann and Stam, 2015). Against the background of Bass (1985), the TL
doi: 10.3389/fpsyg.2020.00314 theory best explains the model constructed for this study. The theory supports the idea that

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Tian et al. Impact of Transformational Leadership on Employee Retention

transformational leaders modify the behavior of subordinates mediation role of OCB on ER. Previous studies on TL mainly
(Burns, 1978a), resulting in a higher ER (Sow et al., 2016). examined the mediation role of OCB on sustainable employee
Furthermore, TL increases the intellectual ability of employees performance (Jiang et al., 2017), creativity, and ER (Khokhar
(Fletcher et al., 2019). Past research shows that several of the and Zia-ur-Rehman, 2017). However, we examine the mediating
world’s most successful companies have achieved their goals by role of OCB on ER in Chinese SMEs. Furthermore, previous
implementing the TL process (Sow et al., 2016; Dedaj, 2017; Jiang studies on TL examined the positive effects of communication
et al., 2017; Maaitah, 2018). on employee output and efficacy (Hills, 2015; Luthra and Dahiya,
Employee retention is essential if organizations are to achieve 2015; Sadia et al., 2016). Moreover, effective communication
and maintain success (Das and Baruah, 2013; Arachchillage by leaders was observed as a significant antecedent of OCB
and Senevirathna, 2017; Paul and Vincent, 2018). ER has (Yildirim, 2014; Herfina and Rubini, 2015; Diebig et al., 2017),
always been a significant concern for organizations because but the moderating role of communication on TL, OCB, and
experienced employees make vital contributions to the success ER was overlooked. We examine the moderation mechanism of
of an organization (Das and Baruah, 2013). Additionally, ER communication. Finally, our study enriches the literature about
fundamentally impacts the longevity of organizations, even TL, OCB, and ER.
though it is a challenging task in this age of intense competition
(Das and Baruah, 2013; Arachchillage and Senevirathna, 2017;
Kaur, 2017; Nelms, 2018; Sulamuthu and Yusof, 2018). Scholars THEORETICAL BACKGROUND AND
have discussed two levels of retention: individual and group HYPOTHESIS
turnover (Muir and Li, 2014). Therefore, leaders must eliminate
the reasons for low ER with the help of the human resource Past research has examined employees’ behavior predicted by
management department (Deshwal, 2015; Juneja, 2015). Some several factors, such as the creation of a positive organizational
scholars argue that TL plays a vital role in ER (Khan, 2015; climate to stimulate safe work behavior in employees (Smith-
Kossivi et al., 2016; Nasir and Mahmood, 2016; Gyensare Crowe et al., 2003). Employees’ behavior, including OCB, was
et al., 2017) and achievement of personal and organizational positively affected by the ethical climate through the social
goals (Sow et al., 2016; Gyensare et al., 2017). Dimensions identity approach (Pagliaro et al., 2018). Ethical climates such as
of TL, including “idealized influence, inspirational motivation, friendship utilizing the social identity approach projected better
intellectual stimulation, and individualized consideration,” affect behaviors and attitudes of employees concerning many outcomes
employee performance and retention (Jiang et al., 2017). including turnover intention (Teresi et al., 2019). Studies also
It is essential to note that leaders’ effective communication found that organizational justice theory impacts the effects on
and motivation enhance employee satisfaction (Sergeeva, 2018), OCB through perceived restorativeness (Bellini et al., 2019).
OCB (Yildirim, 2014; Herfina and Rubini, 2015; Chan and Lai, However, studies on TL have examined TL theory and its four
2017), which significantly affects ER (Paillé et al., 2015; Popescu dimensions significantly affecting OCB (Jiang et al., 2017) and ER
et al., 2015; Olendo and Muindi, 2017). There is evidence that (Adekanbi, 2016; Sow et al., 2016). It is based on the view that
employees show OCB when they are in an optimistic mood, and transformational leaders transform their followers by changing
this finding has been further tested by relational mechanisms their insights, ambitions, morals, and potential (Bass, 1985). The
(Nohe and Hertel, 2017). The relationship between TL and qualities of leaders stimulate change, and they interconnect and
OCB is based on the trust between leaders and employees establish ways of change to achieve the desired results (Burns,
(Nohe and Hertel, 2017). Owing to the direct and indirect 1978b). The original theory of Burns says that leaders can
impacts of interlinked behaviors, the effects of OCB on the ER change the life of the subordinates by changing their ambitions,
cannot be ignored. Individual OCB affects ER in a way that the insights, values, and expectations. Based on the Bass (1985)
more the employees show individual OCB and a macrointerest theory, the independent variable TL in this study is linked to four
in an organization, the less they will leave the organizations. factors, including individual consideration (IC), which refers to
Moreover, organizational factors such as helping, civic virtue, the concept that the needs of the members of the team are focused
and sportsmanship affect the OCB of employees, further affecting and prioritized. The leader serves as an exemplar, counselor,
ER (Paillé et al., 2015). Past studies on TL have examined the organizer, and trainer to encourage an employee to take part
mediating role of OCB on sustainable employee performance in team activities and exhibit OCB. Intellectual stimulation (IS)
(Jiang et al., 2017), creativity, and ER (Rashid et al., 2018). includes support and encouragement provided by managers or
However, this study aims to examine the mediating role of OCB leaders to members of the team, to generate innovative ideas
between TL and ER. The lower level of ER in SMEs can be on how to change existing procedures or orders in order to
managed with proper communication, which leads to higher produce effective results; this, in turn, helps to boost ER. Leader
ER and SME performance (Ugbam et al., 2012; Effiong et al., inspiration (LI) involves helping followers to pursue a goal.
2017). However, there is little research investigating the main Leaders establish and convey a vision or objective that they want
reasons for high turnover in SMEs: that turnover is mainly due the team to achieve, and the team is inspired to achieve that
to their spending fewer resources on the well-being of employees goal thanks to the leader’s explanation of the reasons for doing
compared with large organizations (Bilau et al., 2015). so. The leaders help and coach their team members to proceed
This study has the following contributions. Our approach in achieving their tasks. Idealized influence (II) includes setting
takes a more inclusive perception to indulge the complex a practical example as a leader and exhibiting the qualities of

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Tian et al. Impact of Transformational Leadership on Employee Retention

innovative thinking, trust, uprightness, faith, interest, pride, and and implementing a reward system to retain employees
effective communication (Bass, 1985). These factors significantly (Adekanbi, 2016). TL increases ER (Abouraia and Othman, 2017;
affect ER in SMEs. Gyensare et al., 2017; Jiang et al., 2017) and reduces turnover
intention (Maaitah, 2018).
Transformational Leadership Transformational leadership influences the retention choices
Transformational leadership focuses on real-time problems, of employees (Sulamuthu and Yusof, 2018). Furthermore,
defines new benchmarks, builds understanding, and motivates the theory of transformational leaders strongly supports the
and shapes the behavior of subordinates to achieve organizational relationship between TL and ER (Amankwaa and Anku-Tsede,
goals effectively (Manshadi et al., 2014; Nagy and Edelman, 2014; 2015; Khan, 2015). This study proposes that employees show
Middleton et al., 2015; Jiang et al., 2017; Matwally and El Zarka, higher levels of retention when leaders exhibit individualized
2017; Arif and Akram, 2018). Studies suggest that the role of influence, IS, inspirational motivation, and individualized
every manager in the organization is to be a leader instead of only influence. Past studies have examined the relationship between
a manager (Hall et al., 2015). Organizational success improves TL and ER through TL theory (Adekanbi, 2016; Sow et al., 2016).
through the enhanced effects of TL (Sun and Henderson, 2017; Therefore, we have proposed the second hypothesis, as follows:
Maaitah, 2018). TL also enhances employee performance in Hypothesis 2: TL has a positive and significant impact on ER.
groups/teams (Amin et al., 2016). Past research has shown that TL
plays a critical role in the success of Chinese SMEs (Lin and Sun,
2018). Chinese employees prefer leaders who exhibit the traits of Organizational Citizenship Behavior
TL (idealized consideration, IS, LI, and II), for instance, acting The concept of OCB first appeared in the early 1980s and
as a role model, selflessness (Farh and Cheng, 2000), avoiding initially described the specified behavior of employees within the
the use of abusive power, setting a good example, and working organizations. Scholars described “organizational commitment
for employee well-being (Dunfee and Warren, 2001; Cheng et al., and individual traits” as factors to enhance OCB (Emami et al.,
2004; Xiaoxia and Jing, 2006; Chen et al., 2012; Lin and Sun, 2018; 2012). Voluntary behaviors of employees to prove themselves
Su et al., 2019). as good citizens of the organization are called OCB (Tambe,
During the past decade, there has been extensive research on 2014). Similarly, an organization’s success is critical without
TL and its relationship to multiple outcomes. TL significantly OCB (Obiora and Okpu, 2014). The positive effects of OCB’s
affects OCB (Rodrigues and Ferreira, 2015; Sarwar et al., 2015; three dimensions, namely, public benefits, sportsmanship, and
Ismaeelzadeh et al., 2016; Saif et al., 2016; Cofie, 2018; Hassi, self-sacrifice, on employee well-being increase ER (Tambe and
2018). Additionally, employees exceed their assigned duties Shanker, 2015; Yurcu et al., 2015). Additionally, OCB refers
when a TL style is used (OCB, 2018). Within SMEs, all four to the behaviors that employees exhibit outside of their formal
dimensions of TL play a vital role in cultivating OCB (Jiang responsibilities. Leaders can help employees enhance OCB
et al., 2017). Past research examined the positive effect of TL and benefit the organization (Pickford and Joy, 2016; Yaylaci,
traits on OCB (Emami et al., 2012; Pickford and Joy, 2016; 2016; Zeyada, 2018). Furthermore, OCB refers to discretionary
Majeed et al., 2017; Cofie, 2018). Bass (1985) explained that behavior, which is not directly or explicitly recognized by
the qualities of transformational leaders such as individualized the formal reward system. However, such behaviors promote
consideration, IS, inspirational motivation, and individualized the effective functioning of the organization (Majeed et al.,
influence enhance OCB in employees; for instance, Jiang et al. 2017). OCB enhances both individual and team performance
(2017) examined positive impacts of TL dimension on OCB. The (Mehdizadeh et al., 2018; OCB, 2018). Few studies have also
following relationship has been established for this study: examined a negative relationship between OCB and turnover
intention (Islam et al., 2012). A higher level of OCB significantly
Hypothesis 1: TL has a positive and significant impact on OCB. affects ER (Dash and Pradhan, 2014; Paillé et al., 2015; Pivi and
Hassan, 2015; Anvari et al., 2017; Olendo and Muindi, 2017;
Employee Retention Mittal and Kaur, 2018). This relationship will be analyzed in
There is a considerable amount of literature on ER, highlighting Chinese SMEs with the following hypothesis:
its importance for all types of firms. The cost of losing employees
Hypothesis 3: OCB has a positive and significant impact on ER.
is much higher than retaining them through compensation plans
(Carter et al., 2019). To investigate this issue, many factors have
been considered, such as the control variables of age, education, Mediation Effect of Organizational
experience, sex (Deshwal, 2015), peer support (Ali et al., Citizenship Behavior
2017), recruitment and selection, job preview, organizational Scholars have argued that OCB plays a critical role in SMEs’
culture, employee relations, awards and recognition, work–life success in China (Farh et al., 2004). TL affects ER in
balance, and training and development (Olendo and Muindi, Chinese SMEs, both directly and indirectly (Sun and Wang,
2017). Leadership equally benefits employees and organizations, 2017). Furthermore, OCB was found to partially mediate the
and specifically, TL affects ER (Amankwaa and Anku-Tsede, relationship between internal corporate social responsibility and
2015), both directly and indirectly (Khan, 2015; Nohe and intention to quit (Rashid et al., 2018). Jiang et al. (2017) found
Hertel, 2017). Transformational leaders improve subordinates’ that OCB mediated more than half of the effects of TL on
performance by achieving organizational goals (Sow et al., 2016) sustainable employee performance. Saoula and Johari (2016)

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Tian et al. Impact of Transformational Leadership on Employee Retention

studied the positive mediation of OCB between the relationship

of perceived organizational support and turnover intention.
Similarly, Khokhar and Zia-ur-Rehman (2017) examined the
positive and significant mediating role of OCB between TL,
creativity, and ER. Selamat and Ran (2019) found that OCB
significantly mediates the relationship between organizational
justice and performance within SMEs in China. Chiang and FIGURE 1 | Research framework.
Hsieh (2012) found that OCB partially mediated the relationship
between perceived organizational support and job performance.
The four traits of Bass’s (1985) theory, including individualized
Hypothesis 5: Communication positively moderates the relationship
influence, IS, inspirational motivation, and individualized
between TL and OCB.
consideration, develop specific leadership skills in leaders.
Transformational leaders help to develop OCB in their followers Hypothesis 6: Communication positively moderates the relationship
(Emami et al., 2012; Majeed et al., 2017; Cofie, 2018), further between OCB and ER.
leading to ER (Adekanbi, 2016; Sow et al., 2016). However,
this relationship with the perspective of Chinese SMEs has
not been extensively explored. We propose that OCB plays a
mediating role in the relationship between TL and ER. Therefore, MATERIALS AND METHODS
we develop the following relationship to check the mediation
of OCB: Sample and Procedure
Employees of manufacturing SMEs in Jiangsu Province Mainland
Hypothesis 4: OCB positively mediates the relationship between TL China participated in this study. A sample size of 505 was
and ER. obtained using random sampling technique. A total of 600
employees were contacted personally and online to distribute the
questionnaires. Out of the 516 questionnaires received, 11 were
Moderation Effect of Communication rejected owing to missing information/incomplete responses.
Communication is critical to motivate employees, measure A total of 505 (84.16%) response rates were recorded for further
success, deliver products and services to customers (Conrad, examination. A total of 406 male and 98 female participants
2014; Nwata et al., 2016), and enhance the performance accounted for 80 and 20%, respectively. Participants in the
of employees (Femi, 2014). Effective communication between 20–30 (210), 31–40 (231), 41–50 (42), and 51–60 (21) age
leaders and employees significantly increases employee output groups accounted for 41.5, 46, 8, and 4%, respectively. Similarly,
and efficiency (Hills, 2015; Luthra and Dahiya, 2015; Sadia 56 participants had intermediate (high school) education, 210
et al., 2016) and employee commitment (Marchalina and participants had bachelor’s degrees, 210 participants had master’s
Ahmad, 2017). Therefore, through effective communication, degrees, and 28 participants had Ph.D. degrees, accounting for
employees feel valued, motivated, and rewarded for their efforts 11, 41.5, 41.5, and 5.5%, respectively. Twenty-eight participants
toward organizational success (Kukla, 2017), and individual had less than 1 year of work experience, 196 participants had
and organizational betterment (Sergeeva, 2018). According to 1–5 years, 182 participants had 6–10 years, 77 participants had
scholars, “communicators have finally started putting a greater 11–15 years, and 21 participants had more than 15 years of work
focus on the development of leadership and management experience, accounting for 5.5, 39, 36, 15, and 4% of the total
communication” (Gatehouse, 2018). participants, respectively (Table 1).
Scholars have argued that effective communication by leaders
increases OCB (Yildirim, 2014; Herfina and Rubini, 2015). Diebig
Measures
et al. (2017) studied the positive moderation effect of direct
Transformational Leadership
communication on TL and daily team cooperation. Garnett
This study examined the TL (e.g., “My leader articulates a
et al. (2008) studied communication as a moderator between
compelling vision”) by five-item scale (α = 0.931, Table 2),
organizational culture and public organizations’ performance.
developed by Bass and Avolio (1995).
Pettit et al. (1997) studied the moderation of communication
between job performance and satisfaction. Similarly, Villegas
and Cerveny (2004) also found communication to mediate Organizational Citizenship Behavior
between job satisfaction and absenteeism positively. On the Five items adapted from Lee and Allen (2002) were used to
basis of the discussion above, we propose that communication measure OCB (e.g., “I show genuine concern and courtesy toward
could be considered a moderator between the relationships of colleagues,” α = 0.897, Table 2).
TL, OCB, and ER. Bass’s (1985) theory supports the idea that
leaders must effectively convey the vision and mission they have Employee Retention
for the organization. This study explores the relationship in This study measured ER (e.g., “My work gives me satisfaction
SMEs in China. All the constructed relationships are presented in this company”) by five-item scale (α = 0.926, Table 2),
in Figure 1. developed by Kyndt et al. (2009).

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Tian et al. Impact of Transformational Leadership on Employee Retention

TABLE 1 | Demographic information. Teo et al., 2008). The study met the standard, as results
were found in the range of 0.343 to 0.736 (Table 3). The
Controls Variance
discriminant validity results are presented in Table 4, which
Gender Male 406 (80%) shows a significant value of 0.84 for C, 0.879 for ER, 0.842 for
Female 98 (20%) OCB, and 0.886 for TL. Moreover, the results show that TL has
Age 20–30 years 210 (41.5%) a positive correlation with OCB (0.533), TL and ER (0.557),
31–40 years 231 (46%) and OCB and ER (0.457); communication and TL, OCB, and
41–50 years 42 (8%) ER have positive correlations with values of 0.59, 0.659, and
51–60 years 21 (4%) 0.547, respectively.
Career level Entry level 119 (23.5%)
Middle level 294 (58%) Assessment of Structural Model
High level 91 (18%) This study measured collinearity and common method bias issues
Education High school 56 (11%) through the VIF. VIF is defined as the reciprocal of tolerance.
Bachelors 210 (41.5%) As suggested by the scholars Kock (2015) and Hair et al. (2011),
Masters 210 (41.5%) this study was considered bias-free with no values equal to or
Ph.D. 28 (5.5%) lower than 3.3 (Table 5). Furthermore, Harman’s single factor test
Experience <1 year 28 (5.5%) (suggested by Podsakoff et al., 2003) indicated that the maximum
1–5 years 196 (39%) variance that is explained by a single factor is 38.4%. Henceforth,
6–10 years 182 (36%) we conclude that this dataset does not suffer from common
11–15 years 77 (15%) method bias (Kock, 2015).
>15 years 21 (4%) According to previous studies, R2 measures the model’s
predictive power (Sarstedt et al., 2014). The value of 0.418
indicates that 41.8% of variations in ER occurred because of
Communication independent variables (0.75 = substantial, 0.5 = moderate, and
Five items adapted from Roberts and O’Reilly (1974) were used 0.25 = weak, as suggested by Henseler et al., 2009; Hair et al.,
to measure communication (e.g., “It is very important for me to 2011). Additionally, Cohen (2013) noted that the values of 0.02,
progress upward in my present organization,” α = 0.895, Table 2). 0.15, and 0.35 represent small, medium, and significant effects,
respectively. If the value of f 2 is <0.02, it indicates that there is
Data Analysis no effect. The results of the study shown in Table 5 show that
The statistical software SmartPLS was used to analyze data. First, there was an effect.
measurement model techniques were used to test the Cronbach Predictive relevance is an indicator of the model’s out-
alpha, heterotrait–monotrait (HTMT) ratio, composite reliability of-sample predictive power or predictive relevance given by
(CR), and average variance extracted (AVE). Second, this Stone and Geisser’s Q2 value (Geisser, 1974; Stone, 1974). In
study used discriminant validity and correlation to analyze the SEM, Q2 values larger than zero for a specific reflective
the theoretical model. Third, the study assessed the structural endogenous latent variable indicate the path model’s predictive
model by analyzing collinearity/common method bias [variance relevance for a particular dependent construct. The results of
inflation factor (VIF)], coefficient of determination (R2 ), F 2 , this study show medium predictive importance (0.02 = small,
predictive relevance (Q2 ), and standardized root mean square 0.15 = medium, and 0.35 = immense, as suggested by Geisser,
residual (SRMR). Finally, this study performed structural 1974; Stone, 1974).
equation modeling (SEM) to test the hypothesis. Standardized root mean square residual is the absolute
measure of fit, and a value of zero indicates the perfect fit. SRMR
is defined as “the root mean square discrepancy between the
RESULTS observed correlations and the model-implied correlations.” The
results show a significant value of 0.065 (Table 5), and if the
Measurement Model value of SRMR is less than 0.08, it is generally considered a good
The reliability of the scales was determined by Cronbach’s fit (Hu and Bentler, 1998). This study satisfies and ensures the
alpha (CA) test. The validity of the measurement scales was goodness of fit.
found to be significant, with values of 0.895 for C, 0.926
for ER, 0.897 for OCB, and 0.931 for TL. Adequate CR Structural Equation Modeling
or internal consistency reliability measured in the present This study conducts the PLS-SEM to test the theoretical model.
study ranged between 0.923 and 0.948 (equal or above 0.7, The findings show (H1) that TL had a positive and significant
as suggested by Bagozzi and Yi, 1988; Hair et al., 2011). direct impact on OCB (β = 0.169, t = 4.737, p < 0.000). The
Moreover, the present study met the threshold of convergent direct effects of TL on ER (H2) were also positive and significant
validity (AVE) of at least 0.50 (Fornell and Larcker, 1981; (β = 0.356, t = 6.479, p < 0.000). Similarly, the direct impact of
Chin, 1998; Table 2). OCB or ER (H3) was positive and significant (β = 0.179, t = 2.203,
According to scholars, the HTMT, to assess multicollinearity p = 0.033). OCB as a mediator (H4) had a positive and significant
within the data, should not be higher than 0.9 (Gold et al., 2001; direct impact on the relationship between TL and ER (β = 0.030,

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Tian et al. Impact of Transformational Leadership on Employee Retention

TABLE 2 | Measurement model.

Construct Item code Loading p-value CA CR AVE

Transformational leadership 0.931 0.948 0.785

TL1 0.886 <0.000

TL2 0.888 <0.000
TL3 0.911 <0.000
TL4 0.881 <0.000
TL5 0.863 <0.000

Employee retention 0.926 0.944 0.772

ER1 0.846 <0.000

ER2 0.875 <0.000
ER3 0.894 <0.000
ER4 0.904 <0.000
ER5 0.873 <0.000

Organizational citizenship behavior 0.897 0.924 0.709

OCB1 0.859 <0.000

OCB2 0.849 <0.000
OCB3 0.907 <0.000
OCB4 0.850 <0.000
OCB5 0.737 <0.000

Communication 0.895 0.923 0.705

C1 0.846 <0.000
C2 0.880 <0.000
C3 0.815 <0.000
C4 0.846 <0.000
C5 0.810 <0.000

CA, Cronbach’s alpha; CR, composite reliability; AVE, average variance extracted.

TABLE 3 | HTMT (heterotrait–monotrait ratio). TABLE 4 | Discriminant validity (latent variable correlation and square root of AVE).

C ER OCB OCB*C TL C ER OCB TL

ER 0.597 C 0.84
OCB 0.736 0.49 ER 0.547 0.879
OCB*C 0.616 0.253 0.685 OCB 0.659 0.457 0.842
TL 0.643 0.596 0.591 0.471 TL 0.590 0.557 0.553 0.886
TL*C 0.527 0.353 0.567 0.658 0.572
AVE, average variance extracted. The values in italics show the square root of AVE,
which is greater than the correlation in the latent variable.

t = 2.169, p = 0.000). Similarly, the impacts of communication as

TABLE 5 | Structured model results.
moderator on the relationship of TL and ER (H5), OCB, and ER
were found to be positive and significant (β = 0.183, t = 5.035, Construct R2 Adj. R2 F2 Q2 VIF SRMR
p = 0.000), and H6 was noted to be negative but statistically
ER 0.418 0.413 0.274 0.065
significant (β = −0.181, t = 3.373, p = 0.001) (Table 6 and
OCB 0.504 0.501 0.024 0.309 2.268
Figure 2). The results were also supported by previous studies
C 0.104 2.152
(Jiang et al., 2017; Khokhar and Zia-ur-Rehman, 2017; Majeed
OCB*C 0.055 1.855
et al., 2017; Olendo and Muindi, 2017; Cofie, 2018; Maaitah, 2018;
TL 0.131 1.661
Mittal and Kaur, 2018; Sulamuthu and Yusof, 2018).
Figure 3 shows the interaction of communication on VIF, variance inflation factor; SRMR, standardized root mean square residual.
the relationship between ER and OCB. The lines on the
graph show that if there is highly effective communication the Figure 4 shows the moderation effect in the relation
in SMEs, the moderation effect of communication will be of OCB and TL. ER will be increased in SMEs with
higher, and the ER will be increased by OCB. Similarly, effective communication.

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Tian et al. Impact of Transformational Leadership on Employee Retention

TABLE 6 | Hypothesis constructs.

Effects Relations β Mean SD t-value p-value Decision

Direct
H1 TL → OCB 0.169** 0.168 0.036 4.737 0.000* Supported
H2 TL → ER 0.356** 0.359 0.055 6.479 0.000* Supported
H3 OCB → ER 0.179** 0.177 0.081 2.203 0.033* Supported
Indirect or mediating
H4 TL → OCB → ER 0.030** 0.029 0.014 2.169 0.000* Supported
Indirect or moderating
H5 TL*C → OCB 0.183** 0.184 0.036 5.035 0.000* Supported
H6 OCB*C → ER −0.181** −0.183 0.054 3.373 0.001* Supported

*p-value < 0.05, **p-value < 0.1.

FIGURE 2 | Partial Lease Square SEM model.

DISCUSSION development. This study also examined the complex moderation

process of TL’s influence on OCB and OCB’s influence on ER.
The present study proposed and examined a mediation model
of how TL impacts ER and a moderation model of how Theoretical Implications
communication impacts the relationships of TL, OCB, and ER. First, the findings extend the research of TL. This study confirms
Consistent with this study’s predictions, the TL has a positive that the ability of the leaders to articulate a compelling vision,
and significant effect on ER through the mediation of OCB. skills at expressing confidence in goal achievement, innovative
Specifically, TL enhances ER and OCB through compelling perspectives on problem solving, spending time on the training
vision, goal achievement, problem solving, and training and and development of the team, and specifically having a strong

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Tian et al. Impact of Transformational Leadership on Employee Retention

the relationships of TL, OCB, and ER. Unlike other studies, this
study reveals the positive impacts of OCB as a mediator in TL and
ER. The primary implication of this study is the crucial mediating
role of OCB and the moderating component of communication;
these findings contribute significantly to the existing literature.

Practical and Managerial Implications

This study offers a few practical implications on how TL facilitates
the increase in ER. Specifically, it is essential to understand that
the traits of TL develop skills in managers to retain employees.
SMEs should train leaders to develop TL characteristics in them.
Accordingly, leaders should try to implement the skills of TL such
as developing a compelling vision for employees, focusing on goal
achievement, having problem-solving techniques, having a sense
of purpose, and spending time on the training and development
FIGURE 3 | Interaction diagrame of C between ER and OCB.
of the team to enhance ER.
Furthermore, leaders should pay attention to develop OCB
in subordinates. Importantly, when leaders want to increase
OCB, they should practice traits of TL to help and support the
employee in achieving their goals, practice different problem-
solving methods and train employees to enhance OCB. Moreover,
leaders should not neglect the importance of communication
with their employees to communicate the responsibilities clearly,
to listen to the problems and issues in task performance, and to
manage them accordingly.

Limitations and Future Research

Suggestions
This study has a few limitations associated. First is the time limit
bounded to obtain the maximum number of responses. This
study is based on cross-sectional data, and more longitudinal
FIGURE 4 | Interaction diagrame of C between OCB and TL. studies are required to develop in-depth knowledge and to
capture the relationships between variables as well as to check for
differences in results if longitudinal data are used instead of cross-
sectional data. The data for this study were gathered from 505
sense of purpose (Bass and Avolio, 1995) impact OCB (Rodrigues
employees of SMEs in China, the sample size can be increased,
and Ferreira, 2015; Ismaeelzadeh et al., 2016; Saif et al., 2016;
and comparative analysis of the same model in private and
Majeed et al., 2017; Cofie, 2018) and ER (Amankwaa and Anku-
public sector organizations can be checked. Moreover, the present
Tsede, 2015; Khan, 2015; Jiang et al., 2017; Maaitah, 2018). This
study is exclusively focused on SMEs in China. Applying these
study illustrates the complexity of the relationship between OCB
results to different cultural contexts and populations may require
and ER. Results show that employees of SMEs express genuine
appropriate alterations. Future research may include the study
courtesy toward coworkers, even under the most tiring business
of other mediating variables, such as job satisfaction, deviant
or personal situations, which helps to enhance OCB. Moreover,
workplace behavior, and supervisor conflicts. Furthermore, there
this study elaborates that if employees willingly help coworkers,
are multiple approaches to analyzing the relationships between
defend the organization’s name, and express loyalty toward the
the direct and indirect paths of the model.
organization, ER increases (Pickford and Joy, 2016; Olendo and
Muindi, 2017; Mittal and Kaur, 2018).
Second, the results suggest that OCB has a decisive mediation DATA AVAILABILITY STATEMENT
role between TL and ER. The results show that transformational
leaders can help increase ER more effectively if employees The datasets generated for this study are available on request to
exhibit OCB (Jiang et al., 2017; Khokhar and Zia-ur-Rehman, the corresponding author.
2017). This study has examined that communication, including
the importance (to employees) of moving upward in the
organization, the streams of information they communicate ETHICS STATEMENT
to their immediate boss, and their feelings about how their
boss can help their career growth. This study has uniquely This study was carried out in accordance with the
examined the effects of communication as a moderator between recommendations of the Ethical Principles of Psychologists and

Frontiers in Psychology | www.frontiersin.org 8 March 2020 | Volume 11 | Article 314

Tian et al. Impact of Transformational Leadership on Employee Retention

Code of Conduct by the American Psychological Association’s the analysis. FA, SQ, and SI: drafting the manuscript. SA and MK:
(APA). All participants gave written informed consent in critical revision of manuscript.
accordance with the Declaration of Helsinki. The protocol
was approved by the employee’s council of the participating
organizations as well as the ethics committee of Jiangsu FUNDING
University, Zhenjiang. The patients/participants provided their
written informed consent to participate in this study. This work was supported by the National Social Science
Foundation of China (14BGL024): Research on the open
innovation mechanism and promotional policy of small and
medium-sized enterprises from the perspective of Network
AUTHOR CONTRIBUTIONS Embeddedness, and the National Natural Science Foundation of
China (71774071): Research on low carbonization transition path
HT, SI, and MK: conception and design of the study. SA, SI, and of high carbon industry in China based on knowledge spillover of
FA: acquisition of data and data analysis. MK and HT: performed global value chain.

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Frontiers in Psychology | www.frontiersin.org 11 March 2020 | Volume 11 | Article 314