Impact of transformational leadership and transparent communication on employee openness to change: mediating role of employee organization trust and moderated role of change-related self-efficacy

Abstract

Purpose
This study investigates the impact of transformational leadership and transparent communication on employees' openness to change with the mediating role of employee organization trust and moderating effects of change-related self-efficacy.

Design/methodology/approach
A sample of 260 employees from banking sector of Pakistan through self-administrated questionnaire participated in this study and the data was analysed through partial least square structural equation modelling (PLS-SEM).

Findings
The results reveal that transformational leadership and transparent communication help to create trust among employees of the organization which ultimately have positive effects on employee openness to change. Further, the results suggest that the presence of change-related self-efficacy significantly moderates relation between the transformational leadership and employee openness to change. However, change self-efficacy does not change the relationship between transparent communication and employee openness to change.

Research limitations/implications
This study contributes to change management literature and helps organizations to understand the importance of employees and their positive behaviour during change.

Practical implications
The researcher provides the guidelines for employers to craft change communication policy during the change implementation phase.

Originality/value
This study tests a mediating role of employee organization trust and moderating role of change-related self-efficacy in relation with transformational leadership and transparent communication on employees' openness to change which had not been tested theoretically and empirically in the context of Pakistan.

Full text

Impact of transformational
leadership and transparent
communication on employee
openness to change: mediating role
of employee organization trust and
moderated role of change-related
self-efficacy
Bushra Zainab, Waqar Akbar and Faiza Siddiqui
Faculty of Management Sciences, Shaheed Zulfkar Ali
Bhutto Institute of Science and Technology (SZABIST), Karachi, Pakistan
Abstract
Purpose –This study investigates the impact of transformational leadership and transparent communication
on employees’openness to change with the mediating role of employee organization trust and moderating
effects of change-related self-efficacy.
Design/methodology/approach –A sample of 260 employees from banking sector of Pakistan through self-
administrated questionnaire participated in this study and the data was analysed through partial least square
structural equation modelling (PLS-SEM).
Findings –The results reveal that transformational leadership and transparent communication help to create
trust among employees of the organization which ultimately have positive effects on employee openness to
change. Further, the results suggest that the presence of change-related self-efficacy significantly moderates
relation between the transformational leadership and employee openness to change. However, change self-
efficacy does not change the relationship between transparent communication and employee openness to
change.
Research limitations/implications –This study contributes to change management literature and helps
organizations to understand the importance of employees and their positive behaviour during change.
Practical implications –The researcher provides the guidelines for employers to craft change
communication policy during the change implementation phase.
Originality/value –This study tests a mediating role of employee organization trust and moderating role of
change-related self-efficacy in relation with transformational leadership and transparent communication on
employees’openness to change which had not been tested theoretically and empirically in the context of
Pakistan.
Keywords Transformational leadership, Transparent communication, Employee organization trust,
Employee openness to change, Change related self-efficacy
Paper type Research paper
Introduction
In today’s competitive world, organizations engage their employees in the strategic change
process to remain competitive. Instead of knowing the fact that it is related to risk and
uncertainty, many initiatives taken to bring change have not achieved their desired goals.
The reason behind the failure of change initiatives is not due to the inherent dearth of
employees required skills which might be crucial for the implementations of those change
initiatives but these initiatives fail because of mismanagement in implementation of change
initiatives (Kasemsap, 2017). Despite knowing the importance of change management,
empirical evidence shows the change initiative failure (Dumas and Beinecke, 2018). Change
Transfor
mational
leadership and
communication
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0143-7739.htm
Received 24 August 2020
Revised 18 August 2021
Accepted 18 August 2021
Leadership & Organization
Development Journal
© Emerald Publishing Limited
0143-7739
DOI 10.1108/LODJ-08-2020-0355

initiatives are not welcomed by people in organization. It usually depends on individual
factors (i.e. employee change self-efficacy) based on which they either welcome change or
perceive it as a threat. The perception of threat leads to resistance (Cameron and Green, 2019).
Resistance towards change could be derived from factors like fear of unknown, layoffs,
employee’s status and employee discomfort. However, change resistance can be mitigated
with proper change management process.
Employees who have acquired sufficient or correct internal communication are more open
and positive towards organizational change and transformation (Jiang and Luo, 2018). Lack
of communication creates uncertainty among employees due to a communication gap, or
inappropriate internal communication creates ambiguity to understand the effects of change.
Leaders are aware of the importance of internal communication, but at the same time, it is a
big challenge to disseminate information in timely manner. Hence it is evident that internal
transparent communication in organizations leads towards employee openness to change
(Men and Stacks, 2014). On the one hand, transparent communication is one factor in bringing
change. On the other hand, leadership is an equally important contributor. The rapidly
changing environment created pressure for leaders who play an important role in successful
change implementations and this is the reason transformational leaders have received
researchers’attention specifically in change management. Transformational leaders
facilitate implementation of change through empowering employees and allow to think
beyond self-interest and create trust of the employee in the adoption of the new environment
(Carter et al., 2014). Moreover, employee organizational trust is mentioned as a primary factor
for organizational success and denoted as a base of the organization’s success, goodwill and
organizations public relations. Employee organizational trust enhanced by transformational
leadership and transparent communication can reduce employee uncertainty, psychological
stress and would lead them towards employee openness towards organizational change.
Based on above literature, we may find that among change failures, the two most common
reasons are lack of transparent internal communication and inappropriate leadership style.
Due to absence of these two factors lack of trust has been witnessed, which cause employee
resistance instead of employee openness to change At the same time, researchers also suggest
that communication and leadership style do not guarantee employee openness towards
change, as change-related self-efficacy might moderate the relationship of transformational
leadership and transparent communication on employee response towards change.
Therefore, the present study fills the gap by empirically collecting the employees
perspective towards change and test this relationship of transformational leadership and
transparent communication with a mediating role of employee organization trust. The
research also aims to examine how change self-efficacy moderates the effects of
transformational leadership and transparent communication which may play their role to
affect employee openness to organizational change through developing employee
organizational trust during organizational change.
Literature review and hypothesis development
Transformational leadership and transparent communication are main resources of
organization (Purwana and Madhakomala, 2020). In the perspective of organizational
change, the transformational leadership style has significantly contributed in organizational
success. Transformational leaders play their role to motivate employee to be creative (Yi et al.,
2019). They also encourage them to achieve new opportunities as well as provide them chance
for their personal career growth. In either way, organizations as well as employees face
changes on daily basis, therefore, questions related to the responses of those towards change
continuously transpired. In addition, transformational leaders enhance commitment to
change as well as create trust among their followers for organizational change (Paulsen et al.,
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2013). Similarly, transparent communication is a crucial component of internal
communication (Neill et al.,2019). Transparency of communication makes internal
communicates most effective (Men and Stacks, 2014). Transparency has been associated
with openness. It is also discussed that communicating employee with transparency gives
them a sense of friendliness and support. Transparent communication comprisesthree
dimensions including accountability, participation and sustainability (Yue et al., 2019). These
resources are very important but to increase effectiveness of these variables trust has been
incorporated. Trust is very important factor during change (Browning, 2014). Trust has been
defined as the extent to which one person has confidence on another. Employees with trust to
their organization have faith that their personal interest is linked with organizational success.
Trust in organization can bring positive results on organizational success, whereas lack of
trust can create trouble in organization.
Employee organization trust and employee openness to change
Organizational trust is associated with the goodwill of the organization (Verburg et al., 2018).
It depends upon organizations that how change seeker organizations will use valuable
resources of the organization to create organizational trust specifically in turbulent
organizational change which can lead towards employee openness to change (Yue et al., 2019).
Trust in an organization creates a positive reaction towards change. People who trust the
organization are more open towards change because they perceive that organization the
decision organization made for them is good and beneficial for them (Sw€
ard, 2016). Evidence
found in the literature that employee with trust accept the vulnerability of their status and
accept rationale and legitimacy associated with the decision of change made by organizations
(Sebescen and Vitak, 2017). Hence they become more open to change. Hence this current study
proposes:
H1. Employee organization trust has a significant positive impact on employee openness
to change during change.
Transformational leadership and employee organizational trust
Transformational leaders create employee organizational trust with visionary personality.
They gained trust of the employee in result it increases the chances of successful
implementation of change. Transformational leaders enhance commitment to change as well
as create trust among their followers for organizational change (Paulsen et al., 2013).
Transformational leaders create a sense of protection and support in employee (Men, 2014).
H2. Transformational leadership has a significant positive impact on employee
organizational trust during change.
Transformational leadership and employee’s openness to change
Impact of organizational change on change-related attitude towards openness to change has
been very appealing to the researchers (Paulsen et al., 2013). Transformational leadership has
achieved much attention of recent researchers in change management. Although the
conceptualization of change processes has done in several ways, studies indicate that
leadership change agents have achieved most important notice and it has been viewed as a
significant factor of individual’s reactions to organizational changes (Deschamps et al., 2016).
Researchers suggest the way to initiate and lead change process in an organization with
transformational leadership to communicate the change plan accurately, develop the power
to persuade change rationale and creating a transparent environment by providing support
(Stouten et al., 2018;Wang et al., 2018).
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mational
leadership and
communication

H3. Transformational leadership has a significant positive impact on employee openness
to change.
Transparent communication and employee organization trust
Previous studies suggest that transparent communication increases trust between employee
and organization which leads to positive relation (Wang, 2020). Public relation researcher has
explored transparent communication and contributed to a number of positive employee
outcomes (Neill et al., 2019). Most researchers showed the effectiveness of properly
communicated change plan, and the efficient internal communication which makes
employees understand the consequences of change better as well as it will create trust
among employees. Transparent communication develops the power to persuade rationale
regarding organizational change and creates a supportive environment (Stouten et al., 2018)
H4. Transparent communication has a significant positive impact on employee
organizational trust during change.
Transparent communication and employee openness to change
Apart from transformational leadership, another vital factor emerged in literature is
transparent communication that affects employee towards openness to change (Hill et al.,
2012). Transparent communication has been considered as one of the powerful tools during
change (Schulz-Knappe et al., 2019). Organizations which communicate the change become
more successful. Transparent corporate communication is an important factor in the change
management process (Jiang and Luo, 2018). Effective internal communication creates a better
understanding of employees regarding the organizational change. A reason behind the
adoption of transparent communication is to help transformational leaders to elaborate
change specific interest in developing, maintain and enhancing their relationships with
employees, which leads towards employee openness to change (Yue et al.,2019).
Communication makes it easy to understand change and help employees towards change
readiness (Augustsson et al., 2017).
H5. Transparent communication has a significant positive impact on employee openness
to change.
Mediating role of employee organization trust
Employees who have trust in their organization have faith that their personal interest is
linked with organizational success. Trust in an organization can bring positive results for
organizational success, whereas lack of trust can create trouble in an organization (Jiang and
Luo, 2018). Trust can be created among employees with the right type of leadership.
Organizational trust is associated with the goodwill of the organization. However, it depends
upon organizations that how change seeker organizations will use valuable resources of the
organization, such as internal communication and transformational leadership to create
organizational trust specifically in turbulent organizational change which can lead towards
employee openness to change (Yue et al., 2019;Browning, 2014). Studies have proposed trust
as a mediator to fully understand how transformational leaders and transparent
communication impact employee openness to change (Paulsen et al., 2013).
H6a. Employee organizational trust mediates the relation of transformational leadership
and employee openness to change.
H6b. Employee organizational trust mediates the relation of transparent communication
and employee openness to change.
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Moderating role of change related self-efficacy
Change related self-efficacy defined as a psychological structure that has an important effect
on individual conduct (Bayraktar and Jim
enez, 2020). It is contended that employee change
self-efficacy is a pivotal factor in deciding change implementation (Gong et al., 2009). Change
related self-efficacy is a cognitive ability during change which has an impact on change-
related commitment and engagement in the employee which leads to readiness for change
(Thakur and Srivastava, 2018). Studies focus on the point that employees rarely react to
organizational change with the response of resistance if they have faith or belief that they can
handle the change (Van Den Heuvel et al., 2017;Choi, 2011). Influence on change
communication studies describes that change self-efficacy is a state which defined
whether the employees will support organizational change or not (Herold et al., 2008).
Conclusively, if employees are motivated and they do have change related self-efficacy they
can control over it (Wang et al., 2014;Busari et al., 2019).
H7. Changes related self-efficacy moderates the relation between transformational
leadership and employee openness to change.
H8. Changes related self-efficacy moderates the relation between transparent
communication and employee openness to change.
Research model
The model in Figure 1 shows the conceptual framework of this study. Transformational
leadership and transparent communication which have been taken as independent variables,
employees’organizational trust is a mediator and change-related self-efficacy moderates the
effects of transformational leadership and transparent communication on employee’s
openness to change, during change.
Methodology
This study uses hypothesis to assess relationship and impact among the variables.
Quantitative and empirical research mainly comprises data analysis. Therefore the best
justified research is quantitative research (Creswell and Creswell, 2017). This study was
conducted in the banking sector in the city of Karachi. Karachi is known as a hub of Pakistan
and a large number of the employee from different region work in this city; therefore, it may
best reflect the diversified employees perception. Cross-sectional data was gathered through
a self-administered questionnaire which has been adopted from previous literature. We
distributed the survey forms to 543 employees working in the banking sector; however, the
Transformation
Leadership
Transparent
Communication
Change Self
Efficacy
Openness to
Change
Trus t
H3
H2
H5
H4
H7 H8
H1
H6A
H6B
Figure 1.
Conceptual framework
Transfor
mational
leadership and
communication

actual response was received was 272. We discarded 12 questionnaires due to incomplete
information, and the final sample was 260 for further analysis. The data was analysed
through SmartPLS3 software.
Respondents’profile
In this study majority of the respondent are male, i.e. 54.6% as compare to the ratio of the
female respondent which is 45.4%? Majority of the respondent with 40% fall in the age group
of 26–30, whereas 60% of respondents holds master degree, followed by bachelor degree
holder with 36.2% and only 3.5% respondents possess PhD degree. Besides the majority of
respondents were single with 53.8%, whereas 46.2% respondents were married. As job
experience is concern majority of respondent 58.1% fall in 1–5 years of experience group,
31.9% fall in 6–10 group and only 10% of respondents possess 11–15 years of experience.
After collecting data from the respondent, tests were applied. The results in this study
showed reliability and validity of data and measurement of the structural model (See
Figure 2).
Measurement of the variables
The scales used for all variables are given below. A five-point Likert scale ranging from
strongly disagree to strongly agree is used for all variables.
(1) Transformational leadership: For measuring transformational leadership, Rafferty
and Griffin (2004) have given scale which includes 11 items. These items measured
the following dimensions: idealized influence, intellectual stimulation, inspirational
motivation and individualized considerations.
(2) Transparent communication: it was measured by scale provided by Rawlins (2008)
which includes 16 items. These items measure the following dimensions:
Participation, substantiality and accountability.
(3) Employee organization trust: For measuring employee organization trust Rawlins
(2008) provided scale which includes six items.
Figure 2.
Empirically tested
framework (direct,
indirect and
moderating effect)
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(4) Employee openness to change: Employee openness to change was measured by scale
provided by Wanberg and Banas (2000), which includes four items.
(5) Change related self-efficacy for measuring change related self-efficacy Chen et al.
(2001) provide scale which includes five items.
Results
Assessment of measurement models
In Table 1, outer loading for all the items is above 0.7 AC1 that is 0.672, but this value is above
0.5; hence it is acceptable (Hair et al., 2016). Similarly, the composite reliability of all items is
0.7 and above is acceptable. AVE less than 0.5 shows that items may have a greater chance of
error; therefore, the minimum threshold is required to be established (Hair et al., 2017). This
study has met all the given criteria and shown in Table 1.
Assessment of the structural model
Table 2 shows the direct and indirect effect of independent variables on the dependent
variable. Results show that hypotheses (1–5) statistically significant with the p-value less
Construct Loadings
Composite
reliability AVE Construct Loadings
Composite
reliability AVE
Accountability 0.841 0.641 Intellectual Istm 0.970 0.760
AC1 0.672 IS1 0.866
AC3 0.866 IS2 0.860
AC4 0.850 IS3 0.889
Substantiality 0.861 0.608 Openness to
change
0.912 0.809
ST1 0.787 OC1 0.897
ST2 0.798 OC2 0.775
ST5 0.785 OC3 0.932
ST6 0.747 OC4 0.875
Participation 0.955 0.781 Organizational
Trust
0.890 0.829
PT1 0.958 OT1 0.852
PT2 0.884 OT2 0.867
PT3 0.836 OT3 0.910
PT4 0.876 OT4 0.860
PT5 0.828 OT5
PT6 0.814 OT6 0.777
Individualized
Influence
0.939 0.885 Change Related
SE
0.915
II1 0.870 CS1 0.878
II2 0.911 CS2 0.844
Individualized
Consideration
0.914 0.781 CS3 0.832
IC1 0.856 CS4 0.874
IC2 0.842 CS5 0.835
IC3 0.949
Individual
Motivation
0.920 0.888
IM1 0.896
IM2 0.871
IM3 0.859
Table 1.
Assessment of
measurement models
Transfor
mational
leadership and
communication

than 0.05. The table further reveals that trust has a partial mediation role between both
independent variables (1) transformational leadership and (2) transparent communication
and openness to change. Thus we failed to reject H6a and H6b and conclude that trust can
perform a mediating role in bringing change among employees. However, change-related self-
efficacy was tested as interaction (Moderating) variable (H7 and H8) and find that change-
related self-efficacy significantly changes the relationship between transformational
leadership and openness to change but does not change the relation between transparent
communication and openness to change.
Discussion
Several studies on organizational change and leadership, the consolidation and combination
of two words to understand the contextual embeddedness is insufficient in the literature
(Detert and Burris, 2007;Oreg and Berson, 2019,Van Der Voet, 2014). In response to this gap,
we have developed a conceptual framework to balance this conflict. These two valuable
organizational resources play a significant role during change process by developing trust.
Employers who have trust in their organizations can depict a positive behaviour during
organizational change process (Jiang and Luo, 2018). Whereas lack of trust has been
witnessed, which causes employee resistance instead of employee openness to change (Yue
et al., 2019). Further, studies showed that the role of trust and self-efficacy played a crucial role
to implement change effectively (Thakur and Srivastava, 2018;Busari et al., 2019).
The purpose of this study was to empirically test the role of trust and change-related self-
efficacy on employee’s openness to change behaviour. Based on results, there is a significant
relationship found between employee organizational trust on employee’s openness to change
(Fugate et al., 2012). Valuable resources of organization transformational leadership and
transparent communication have a positive significant impact on employee organizational
trust (Jiang and Luo, 2018;Braun et al., 2013). Therefore, it can be said that by providing
transformational leadership employees trust can be developed and once employees trust their
organization, they will support organizational change. This will lead towards openness to
change (Paulsen et al., 2013). Thus the results evident in this study that employees
organizational trust partially mediates the relationship of (1) transformational leadership, (2)
transparent communication and employee openness to change (Van Dam, 2013;Van Dam
et al., 2008). This study also evident that self-efficacy moderates the relationship between
transformational leadership (Wang et al., 2014). That indicates, in the presence of change
related self-efficacy, transformational leadership has a significant impact on employee’s
openness to change. Whereas, change-related self-efficacy has no moderating role between
transparent communication and openness to change (Jiang and Luo, 2018;Choi, 2011)
Creating and developing change-related self-efficacy transformational leaders can encourage
Relation Beta Std dev P-value
H1 Employee Organization Trust →Openness to Change 0.228 0.076 0.003
H2 Transformational Leadership →Trust 0.760 0.047 0.000
H3 Transformational leadership →Openness to Change 0.229 0.087 0.011
H4 Transparent Communication →Trust 0.141 0.057 0.013
H5 Transparent communication →Openness to Change 0.268 0.051 0.000
H6a Transformational Leadership →Trust →Openness to Change 0.174 0.061 0.006
H6b Transparent Communication →Trust →Openness to Change 0.031 0.016 0.046
H7 TL_OP →Openness to Change 0.109 0.039 0.006
H8 TC_OP →Openness to Change 0.068 0.044 0.149
Table 2.
Direct, indirect and
moderating effects
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employees to engage in positive behaviour that will leads towards openness to change (Yagil
and Medler-Liraz, 2014).
All the findings in the current study are aligned with previous studies (Jiang and Luo,
2018;Paulsen et al., 2013). In line with previous researches, we find the significant impact of
transformational leadership on employee’s openness to change. The results received in this
study emphasize the importance of transformational leadership and transparent
communication during change (Schulz-Knappe et al., 2019;Yue et al., 2019). By taking
those factors in consideration, the current study expands the literature by providing
empirical evidence that during organizational change process transformational leadership
and transparent communication create trust among employees which develop positive
change-related behaviour that leads employees toward openness to change. Further
employees with a high level of change-related self-efficacy also more inclined towards
openness to change when the leadership shows their roles during the change process.
While the previous study has analysed the moderating role of middle-manager in change
implementation process concerning transformational leadership (Carter et al.,2014),
contrarily, this study has revealed that employees with trust and self-efficacy are more
inclined towards openness to change in the presence of transformational leadership and
transparent communication (Yagil and Medler-Liraz, 2014;Browning, 2014). In line with
previous research conducted in Turkey on trust-based approach found quite similar research
results regarding trust, communication and openness to change in enhancing change process
(Ert€
urk, 2008). Conversely, another case study conducted in Canada, also found a significant
correlation between culture, trust and leadership in the organization citizenship context
(Appelbaum et al., 2004). Conclusively, these links found in recent studies that leaders play a
key role in change implementation process and is a prerequisite to change (Armenakis and
Harris, 2009). Transformational leadership appears as a fundamental approach in change
process that leaders can influence employees by giving them a sense of achievement,
mentoring and coaching, like trust and self-efficacy (Van Dam, 2013;Van Dam et al., 2008).
Relatedly, leaders and managers must communicate the change process effectively to
their employee to gain their trust and to achieve change-related self-efficacy (Bayraktar and
Jim
enez, 2020). This study has shown evidence that there is a significant relationship between
transparent communication, trust and self-efficacy. Conversely, another research revealed
insights of managerial communication in change implementation process (Fugate et al., 2012).
The motivation of this discussion is led by the need for the theoretical and operational
distinctions of organizational change. Change cannot be successfully implemented until the
employee trust and self-efficacy or other intangible factors achieved. The written planner and
actual situation are big reality in time. Therefore, this study helps to converge this bridge
from planning to practicality by understanding the role of trust and self-efficacy towards
openness to change in relation to transformational leadership and transparent
communication.
Limitations and future research directions
This study has been conducted to investigate the effects of transformational leadership and
transparent communication on employee openness to change with the mediating role of
employee organizational trust and moderating effect of employee change-related self-
efficacy. Firstly, the current study has been limited to the banking sector of Pakistan.
In future, this research should be conducted in other sectors. Secondly, the current study
worked on cross-sectional data. Future research can include working on longitudinal data.
Thirdly, current research only focuses on employee perspective; it did not take leaders
perspective. Therefore, future research should include leader’s perspective that can provide
new insights. Lastly, the present study does not focus on any particular change type and
Transfor
mational
leadership and
communication

cultural context. Hence, future research can bring new insights while focusing on specific
change type and cultural context.
Conclusion
The study investigated the impact of transformational leadership and transparent
communication on employee openness to change while examining trust as mediator and
change related self-efficacy as a moderator in the banking sector of Pakistan. The findings
suggest that in order to implement change within the organization, it is imperative for leaders
to create trust among employees of the organizations. Transformational leaders consider the
employees’point of view during the change process, mitigate their ambiguity and motivate
them to involve in positive behaviours. Therefore, trust plays a vital role in change process. In
addition to this, transparent communication is referred to as internal communication.
Organizations which communicate change properly before and during the change process are
successful in implementing change properly. Organizations with inadequate communication
face stiff resistance from employees and unfortunately could not get success in implementing
change which results in change initiatives failures. Another important factor is change-
related self-efficacy. Employees who possess a high level of change-related self-efficacy are
very open towards the change they cope up with new change and are more able to deal with
difficulties. Therefore, organizations who work on training and development of change-
related self-efficacy are more likely to face acceptance from employees during change process
and become successful during organizational change. Hence, successfully implement change
initiatives.
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Corresponding author
Waqar Akbar can be contacted at: waqar.akbar@szabist.edu.pk
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