Transformational Leadership and Employee Performance in the Digital Age: The Mediating Role of Organizational Culture

Abstract

This study examines the mediating role of organizational culture in the relationship between transformational leadership and employee performance within digital-centric workplaces. Despite extensive research on leadership styles, gaps persist in understanding how digital transformation reshapes these dynamics, particularly in emerging economies. The primary objectives are to (1) analyze the direct impact of transformational leadership on employee performance, (2) assess the mediating effect of organizational culture, and (3) explore implications for leadership strategies in digitally evolving organizations. Using a quantitative approach, data were collected via surveys from 312 employees in Indonesian tech firms. Structural Equation Modeling (SEM) revealed that transformational leadership significantly enhances employee performance (β = 0.58, p < 0.01), with organizational culture mediating 35% of this relationship. These findings contrast with prior studies that emphasize direct leadership effects, highlighting the critical role of adaptive cultures in digital transitions. The results suggest that organizations must cultivate culture alignment alongside leadership development to optimize performance. This research contributes to leadership theory by integrating digital context and mediation mechanisms, offering practical strategies for managers navigating technological disruptions.