The impact of transformation leadership on organizational creativity with job stisfaction as a mediating variable: a case study of FGV Holdings Berhad

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The impact of transformation leadership on organizational creativity with job stisfaction as a mediating variable: a case study of FGV Holdings Berhad

Hassiba Hadouga, Dr. ofEconomics, Lecturer

ofEconomics Department, Faculty of Economic Sciences,

AbdelhamidMehri Constantine 2 University, Algeria

Abstract

The aim of the study is to determine the impact of transformational leadership on organizational creativity with such a mediating variable as job satisfaction. The significance of the differences in the responses of FGV Hodings Berhad employees has been proven to the degree of practicing transformational leadership, practicing organizational creativity and job satisfaction that demonstrated by a sample consisting of one hundred permanent employees selected randomly by electronic response. This study uses a quantitative approach using a questionnaire, data testing method, Partial Least Squares (PLS) method which is part of Structural Equation Modeling (SEM) and Sobel test for testing the mediation effect. Using a quantitative approach allows you to test a theory through research variables, using calculations and statistical analysis as indicators to determine whether there is an effect or qualitative relationship between variables when testing hypotheses. The independent variable in this study is transformational leadership (X) and the dependent variable is organizational creativity (Y), while the mediating variable is job satisfaction (Z). Based on the results of analysis and testing the hypotheses that were made in this study, we concluded that there is an acceptable level of practicing transformational leadership behavior in the studied organization, and this allows it to meet the modern requirements of external environment and gain competitive advantages through to its human resources, because it encourages all officials to take initiatives that contribute to the change process within the organization by acquiring transformational leadership behavior. It is proved that in the studied organization there is an acceptable level of measurement of organizational creativity, which allows achieving excellence in productivity for leadership ensuring. The results of the study at FGV Hodings Berhad showed a high level of transformational leadership behavior.

Keywords: transformational leadership; organizational creativity; job satisfaction.

Хасіба Хадуга, доктор економіки, викладач кафедри економіки, факультет економічних наук, Університет імені Абдельхаміда Мехрі Костянтина

Вплив трансформаційного лідерства на організаційну креативність із задоволеністью працею як посередницькою змінною: приклад FGV Holdings Berhad

Анотація

Метою дослідження є визначення впливу трансформаційного лідерства на організаційну креативність із такою посередницькою змінною як задоволеність роботою. Доведено значущість відмінностей у відповідях співробітників FGV Hodings Berhad щодо ступеня практики трансформаційного лідерства, практики організаційної креативності та задоволеності роботою, що демонструє вибірка, яка складалася із ста постійних співробітників, відібраних випадковим чином за допомогою електронної відповіді. У цьому дослідженні застосовано кількісний підхід із використанням опитувальника, метод тестування даних, метод часткових найменших квадратів (PLS), який є частиною моделювання зі структурними рівняннями (SEM) і тест Собела для перевірки ефекту посередництва. Використання кількісного підходу дозволяє перевірити теорію за допомогою дослідницьких змінних, використовуючи розрахунки та статистичний аналіз як індикатори, щоб визначити, чи існує ефект або якісний зв'язок між змінними при перевірці гіпотез. Незалежною змінною в цьому дослідженні є трансформаційне лідерство (X), а залежною змінною є організаційна креативність (Y), тоді як посередницькою змінною є задоволеність роботою (Z). На основі результатів аналізу та перевірки гіпотез, які були висунуті в цьому дослідженні, ми дійшли висновку, що існує прийнятний рівень практики трансформаційної лідерської поведінки в досліджуваній організації, і це дозволяє їй відповідати вимогам зовнішнього середовища та отримати конкурентні переваги завдяки своїм людським ресурсам, оскільки це заохочує всіх посадових осіб проявляти ініціативи, які сприяють процесу змін всередині організації шляхом набуття трансформаційної лідерської поведінки. Доведено, що в досліджуваній організації існує прийнятний рівень вимірювання організаційної креативності, який дозволяє досягти досконалості в продуктивності для забезпечення лідерства. Результати дослідження в FGV Hodings Berhad продемонстрували високий рівень трансформаційної лідерської поведінки.

Ключові слова: трансформаційне лідерство; організаційна креативність; задоволеність працею.

Introduction

Every institution aspires to success and excellence works to find an effective management capable of influencing employees to accomplish work efficiently and with distinction. The process of influence requires leadership that faces the successive changes and developments surrounding the institution at the internal and external levels. Therefore, leadership is the cornerstone of the success and development of institutions in our time. Hence, contemporary institutions have attached great importance to the role of leadership because of its impact on the survival and continuity of institutions in light of the diversity of their culture, objectives and resources. Perhaps the success of countries in achieving their aspirations is related to the ability of their institutions to accomplish tasks and provide services in the best way, and to create an organizational culture targeting efficiency. Effectiveness, a set of values, attitudes and work ethic, achieving a level of satisfaction, which leads to an increase in work motivation and maximizing loyalty and a sense of belonging to the institution.

In the face of challenges, the traditional administrative leadership, with its methods and patterns, has become unable to make the organization capable of facing the intensity of competition and achieving the desired level of performance, which makes it imperative for organizations today to use patterns that are characterized by vitality and flexibility in order to be able to live up their activities to the level of developments taking place in their reality. It is within this framework that transformational leadership comes as a modern leadership style. Through transformational leadership, organizations can bring about significant change to followers and organizations by creating the ability to direct changes in the organization's strategy, mission, structure and culture, and can enhance products and innovation (Mustica et al., 2020). So that a leader who has a transformational leadership style is able to make an impact that leads to the innovation process in achieving organizational goals, and on the other hand, according to (Mittal & Dhar, 2015).

The concepts of creativity and innovation are among the basic concepts on which transformational leadership is based, as it believes in the participation of workers and building an organizational culture based on creativity in solving problems and supporting subordinates in creating alternatives, appreciating their contributions and motivating them through self-development and creativity in order to achieve effective participation. Accordingly, creativity is the means to bring about change and development in institutions. Creativity is a valuable and important resource that should be strengthened and developed, and to the extent that institutions pay attention to creativity, as much as this will have an impact on their prosperity and continuous development and its impact on employee satisfaction, whether at the personal or collective level. Creativity in institutions in general and Malaysian institutions in particular as it is a dynamic environment characterized by diversity and disparity in its internal and external components and depends on the skills and capabilities of the work group, which requires the availability of initiative leaders capable of producing an organizational culture that believes in the capabilities and initiatives of employees as a basis for enriching and developing work.

Malaysia ranked 8^th in Asia and 37^th globally in the Global Innovation Index. Organizations must invest heavily in creativity and innovations, in order to maintain and adapt to fast-paced competitive business around the world. Creativity and innovation can be achieved by encouraging workers to innovate, innovate and produce through the company's leadership, practices, and foundations that inspire or limit creativity and innovation within the organization (Khalili, 2016). Based on this description, the study is interested in knowing the impact of transformational leadership on organizational creativity in light of the mediation of the variable job satisfaction at FGV Hodings berhad, located in Kuala Lumpur, Malaysia.

Literature review

Transformational Leadership

Transformational leadership involves an exchange process that results in follower compliance with leader request but not likely to generate enthusiasm and commitment to task objective. The leader focuses on having internal actors perform the tasks required for the organization to reach its desired goals (Boehnke et al, 2003), Transformational leadership can be contrasted with transactional leadership. The latter implies leadership based on an exchange process wherein autonomous agents may benefit, which in turn implies reciprocity (Simola et al., 2012). TL has gone through many definitions over the past several years. It is a contemporary approach that can bring positive firm effectiveness, encouraging individuals to exert effort to support this effectiveness via creating strong relationships, meeting individuals' essential needs, and supporting individuals achieve their objectives, contributes to valuable results for the firm (Fitzgerald & Schutte, 2010). Transformational leader can be described as someone who demonstrates clearer imagination of upcoming opportunities, motivates subordinates rationally, and understanding diversities among individuals (Du et al., 2013). Transformational leaders assess the potential capabilities of their followers as they perform to improve those capabilities in a bid to meet preset objectives (Dvir et al., 2002). Transformational leaders also focus on enabling subordinates reliable about using their capabilities to manage the constraints and complications, so they can work beyond expectations (Winston, 2008). Thus, transformational leader should have vision and able to translate this vision into feasible actions (Rok, 2009). This visionary leader encourages and stimulates individuals to work more than the ordinary way, and enable them perform so according to the vision delivered by him/her (Fitzgerald & Schutte, 2010).

H1: There is an implementation of the transformational leadership style at the level of the institution under study

Job Satisfaction

Job satisfaction is a result of employees' perception of how well their job provides those things which are viewed as important. Job satisfaction is also defined as reintegration of affect produced by individual 's perception of fulfillment of his needs in relation to his work and the surrounding it (Saiyaden, 1993). There are a number of factors that influence job satisfaction. The major ones can be summarized by recalling the dimensions of job satisfaction. They are pay, the work itself, promotions, supervision, workgroup, and working conditions (Luthans, 1985).

H2: There is an achievement of job satisfaction at the level of the institution under study

Organizational creativity

A useful definition of organizational creativity is offered by Woodman, Sawyer and Griffin (1993), according to whom it is “the creation of a valuable, useful new product, service, idea, procedure, or process by individuals working together in a complex social system”. Organizational creativity can also refer to the extent to which the organization has instituted formal approaches and tools and provided resources to encourage meaningful novel behavior in the organization (Bharadwaj & Menon, 2000). Thus organizational creativity can be seen as a phenomenon that is structurally embedded in the organization rather than as some innate quality of a few extraordinary individuals, as Jacob (1998) insists, emphasizing that organizational creativity is something more than a collection of creative individuals. To be able to acknowledge the context specific aspects of creativity in organizations, it must be articulated in terms of the organization's mission and cannot only represent novel acts. It must produce value relative to an organization's mission and market, which means that creativity in organizations is valuable only if it is implemented in such a way that it is adapted to the organizations culture, values and processes (Gioia, 1995). When seen from a practitioner's perspective, these aspects fall into a definition of organizational creativity in which it comprises acts of envisioning, demonstrating and applying cost-effective methods for the purpose of eliminating technological problems and providing significant and profitable technology -based opportunities in target areas of business activity (Jones, 1995).

H3: There is an achievement of organizational innovation at the level of the institution under study

Transformational leadership and creativity

Transformational leadership and creativity are closely related to each other. It is highly important that transformational leaders should be qualified enough to inspire others following them to be more creative (Bass and Riggio, 2006). It is possible to find several researches about the relationship between transformational leadership and creativity in the related literature. It has been shown in some researches leaders tend to promote followers ' creativity and innovation instead of being the sole authority for innovation (Mumford, Connelly and Gaddis, 2003; Mumford et al., 2002).

H4: Transformational leadership influences organizational creativity

Transformational leadership and job satisfaction

Transformational leaders serve as an inspiration to their followers by engaging in effective communication that encourages trust, commitment, and consequently greater satisfaction. Based on this premise, many researchers have dedicated themselves to empirically examining the relationship between transformational leadership and job satisfaction (Riaz & Haider, 2010; Yang, 2016). In a quantitative literature review based on studies from 1994 to 2004, Judge and Piccolo (2004) noticed a strong association between transformational leadership and job satisfaction. The relationship between transformational leadership and job satisfaction has recently become one of the main focuses of studies in Brazilian organizations. Research on the relationship between leaders' style as perceived by employees and their job satisfaction showed that transformational leaders were more capable of exerting a significant and positive influence on the employees' satisfaction. (Fonseca, Porto, & Barroso, 2012; Toda et al., 2014; Batista, Kilimnik, & Neto, 2016; Silva, Nascimento & Cunha, 2017).

H5: Transformational leadership affects job satisfaction

H6: There is an effect of job satisfaction on organizational creativity

H7: There is a mediating effect of job satisfaction between transformational leadership and organizational creativity

Materials and methods

This research uses a quantitative approach. Research with a quantitative approach will test theory through research variables using calculations and statistical analysis as indicators to determine if there is an effect or quality relationship between variables through hypothesis testing. The independent variable in this study is transformational leadership (X), and the dependent variable in this study is organizational creativity (Y), while the mediating variable in this study is job satisfaction (Z). The data in this study will be recorded according to the Linkert scale, i.e. giving values from 1 to 5. The use of a scale from 1 to 5 for each answer of the respondent is divided into 5 categories, namely: 1) strongly disagree; 2) do not agree; 3) simply agree; 4) I agree; 5) I strongly agree.

Data analysis techniques

The analysis technique used in this research is based on data obtained from internal sources of the company and the results of questionnaires distributed to 100 participants. The SPSS 25 program was used to answer the first H1, second H2 and third hypotheses H3.

As for answering the fourth H4, fifth H5, sixth H6 and seventh H7 hypothesis, data processing techniques were used using PLS (Partial Least Square), which is a variablebased analysis of the Structural Equation Modeling (SEM) equation model, which allows at the same time to test the measurement model as well as test the explained structural model (Fig. 1).

Fig. 1. Research Conceptual Model

Analysis and discussion

transformational leadership organizational creativity

The characteristics of the study sample:

As shown in Table 1, the demographic data of the respondents in this study showed that the sample consisted of more males than females, most of them with experience, 67% of them over 30 years of age, and 52% of them having university degrees.

Table 1 Descriptive Characteristics

This section presents the results associated with the study of the reliability and validity of the axes vertebrae. After performing the relevant test loading, the outputs show satisfactory values greater than 0.7 than their respective fixtures as shown in Table 2. Moreover, all fixtures show mean variance.

Extracted value (AVE) at the study level of 0.5 for its convergent validity. Hence, these results strongly explore the evidence for the discriminative validity of the measurement model construction. Table 3 presents the loading of the AVE indicator elements to assess the measurement quality of the model constructs (Hair et al., 2012). An AVE value greater than 0.5 represents convergence validity (Memon & Rahman, 2014). This study used mean validity using two methods comparing the square root of mean AVEs values with corresponding coefficients. The AVEs values for all variables are shown in Table 3. This means that the latent variable This study has a high convergence validity as all the mentioned variables exceed the value of 0.50 as recommended (Fornell & Larcker, 1981).

Table 2

Outer Loading and Composite Reliability Value

Table 3 shows the square root of the AVE value for each construct and its correlations with other constructs. The bold diagonal values in the table represent the square root of AVE while the non-diagonal elements represent brown associations with their structures. Discriminant validity is satisfied when the square root of a structure's AVE is greater than its correlation coefficients with other constructs (Hair et al., 2012).

Table 3

The square root of the AVE value

It is noted from Table 4 that all items on transformational leadership have a high level, as the arithmetic averages ranged between (3.91-3.35), and this confirms the validity of the first hypothesis H1 about the application of transformational leadership by the institution under study (3.99-3.33). This confirms the validity of the second hypothesis H2 about achieving job satisfaction within the institution under study in all aspects, as all organizational creativity items were high, and the arithmetic averages ranged between (4.94-3.30), which confirms the validity of the third hypothesis H3, which states: The institution under study achieves organizational creativity at the active level.

Table 4

Results Analysis Description

In this study, after processed using the PLS (partial small square) assessment model, transformational leadership is shown to have a significant impact on organizational creativity which can be seen by the T-statistics value of 6.543 > 1.96, and the Influence Coefficient of 0.657. Thus, it can be said that Hypothesis 4 acceptable.

It shows that transformational leadership has a significant impact on job satisfaction which can be seen by the T-statistics value of 5.654 > 1.96, Influence Coefficient of 0.543 and thus, it can be said that Hypothesis 5 is acceptable. Therefore, it can be concluded that the transformational leadership style applied by Malaysian institutions will be directly influential with the level of job satisfaction, and thus the dimensions of ideal influence, inspirational motivation and intellectual counseling appear. Individual consideration, organizational creativity relations in terms of satisfaction with job content, satisfaction with pay, satisfaction About job advancement opportunities, satisfaction with the work group, satisfaction with social aspects, which gives a reflection in the effect of job satisfaction on the level of organizational creativity through the value of T-statistics of 6.732 > 1.96, and the Influence Coefficient of 0.654. Thus, it can be said that Hypothesis 6 is acceptable.

To test the mediation hypothesis, Hypothesis 7, the smoothing process calculated the indirect effect. If the confidence interval does not extend to zero, it concludes that there is mediation. A 95% confidence interval estimate for the indirect effect of th e examined variable (Hare et al., 2012). TC mediates the relationship between TL and OC. where it is significantly different from zero at the p -value [where ** denotes 1% level of significance, * denotes 5% level of significance (p < 0.001 ** and 0.05 *)] as shown in Table 6 provides support for the hypothesis 7. This study added new evidence for a significant positive mediator effect of TC on the relationship of TL and OC The results of the mediation test show a partial mediation effect of TC on the relationship of TL and OC, supporting all the mediation hypotheses.

Table 5

Path Coefficient Results

Note: If based on the value of T-statistics, then the requirement for T-statistics> 1.96 (significance level 5%) can be concluded that the relationship between the variables being tested is stated to have a significant effect.

Here, all mediation is partial mediation complementary because all direct relationships in Table 5 and indirect relationships in Table 6 are in the same positive direction. Job Satisfaction. Moreover, the Malaysian enterprise sectors have adopted the transformational leadership style and used it to improve the quality of the organization in its sustainable activities. Malaysian organizations provide appropriate motivational aspects through effective performance management.

Table 6

Indirect Effect result

Note: t-value > 1.96 at p = 0.05* significance level; t-value > 2.58 at p = 0.001** significance level.

Conclusions

Based on the results of analyzing and testing the hypotheses that were developed in this study, we concluded that there is an acceptable level for practicing transformational leadership behaviors in the organization under study, in order to keep pace with the external environment and obtain a competitive advantage through its human resources, and from Table 4. We noticed that all of the transformational leadership items are of a high level, as the arithmetic averages ranged between (3.91-3.35), and this confirms the validity of the First hypothesis.

H1 about the application of transformational leadership by the organization under study. (3.99-3.33) This confirms the validity of the second hypothesis H2 about achieving job satisfaction within the institution under study in all aspects, as all organizational creativity items were high, and the arithmetic averages ranged between (4.94-3.30), which confirms the validity of the second hypothesis. The third hypothesis H3 states that the institution under study achieves organizational creativity at the active level. It encourages all officials to take initiatives that contribute to the process of change within the organization, by acquiring transformational leadership behaviors. There is an acceptable level of availability of dimensions of organizational creativity in the institution under study in order to achieve excellence in performance to ensure leadership. And practicing a high level of transformational leadership behaviors, and this is what was observed in the organization in light of the current study, which is reflected in the educational level and organizational culture of the organization's members. There is also an important relationship between transformational leadership and job satisfaction within the organization under study. This result may be attributed to the golden rule that the better leadership style practiced by the organization, is to achieve higher job satisfaction for employees (Omar and Hussein, 2013). (Farrell et al. 2005) asserts that transformational leaders emphasize the basic needs of their subordinates as a priority that must be met. Finished (Negussie and Demissie, 2013) indicate that transformational leaders typically focus on motivating their subordinates to move to higher stats for inspiration and happiness. Furthermore, talented transformational leaders always give careful consideration to the needs of their subordinates and are committed to meeting these needs effectively. By doing so, they are inspiring their followers to do more that exceeds expectations (Bushra et al., 2011) and this conclusion agrees with previous research findings (eg Bushra & Naveed, 2011; Mohammad et al., 2011, 2017; Yang, 2012). Negussie & Demissie, 2013; Al edenat, 2017) who found an important relationship between transformational leadership and job satisfaction.

Finally, regarding the mediating effect of job satisfaction on the relationship between transformational leadership and organizational creativity. The results show a mediating effect of job satisfaction in the interaction between transformational leadership and organizational creativity, this means that job satisfaction is an important pathway for employee performance. Indeed, transformational leaders can improve organizational creativity of employees by working on job satisfaction on a personal and group level, transformation leaders may also create a better degree of satisfaction, when employees are inspired that they are doing better (Faith and Lestari, 2019). In general, today's organizations need to understand the importance of transformational leadership in their business as it is a very fundamental key in motivating job satisfaction which in turn leads to supporting employee performance (Atmojo, 2012). This finding is also consistent with the findings of some other researchers (Atmojo, 2012; Paracha et al., 2012; Braun et al., 2013; Andreani and Petrik 2016), (Iman and Lestari, 2019) that emphasized the mediating role of job satisfaction in the leadership effect. Transformative employee performance.

Implications of the Study. Some implications for both the theoretical and practical aspects of the study results can be observed. From a theoretical point of view, the study reinforces the current theory about relationships and how the variables under study influence each other. The study proved that the positive results of organizational creativity were actually affected by the transformational leadership climate, and that job satisfaction mediated between transformational leadership and organizational creativity. However, many topics related to the effect of job satisfaction on organizational creativity outcomes remain unexplored, and therefore this research complements the existing body of knowledge with the relationship between these variables, and there are many implications that can be derived from the results from a managerial point of view. This study indicated that the creative climate was an essential component to be considered in the organization. Managers in organizations should pay attention to the dimensions of organizational creativity in order to improve the levels of job satisfaction and work performance of employees. Since the creative climate is an important precedent for employee job satisfaction and work performance, improving the organization's climate can also produce significant improvements for the latter. As the management of FGV Hodings berhad Malaysian Foundation has all the tools of change and encourage initiatives that create a more appropriate and effective creative environment. Which led to finding ways to enhance job satisfaction among employees and to facilitate the improvement of the organization's performance by its managers without incurring significant additional costs. This made the Malaysian FGV Hodings berhad, the largest and leading global organization.

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