The Impact of Leadership Styles and Orga

Global Business and Management Research: An International Journal
Vol. 10, No. 1 (2018, Special Issue)
The Impact of Leadership Styles and Organizational

Culture on Job Satisfaction of Employees in
Malaysian Manufacturing Industry
Pakyasri Visvanathan
Graduate School of Business, Universiti Sains Malaysia, 11800 Pulau Pinang, Malaysia
Email: pakya99@hotmail.com
Rajendran Muthuveloo*
Email: rajen789@usm.my
Teoh Ai Ping
Email: apteoh@usm.my
* Corresponding Author
Abstract
Purpose: The purpose of this study is to explore the impact of leadership styles and organizational
culture on job satisfaction of employees in Malaysian manufacturing industry.
Design/methodology/approach: The researcher conducted the study via structured questionnaire
with a sample size of 127 employees from Malaysian manufacturing industry employees. The data
analysis was done via SPSS (or commonly known as Statistical Package for the Social Sciences),
IBM SPSS Statistics 23. The data analysis meant to conduct demographic profile of respondents
and mean of variables, factor analysis to test the goodness of data, reliability analysis to measure
the repeatability of measuring instrument and regression analysis for hypothesis testing of
independent and moderating variables.
Findings: Results showed that both leadership styles have a positive significant impact on
employee job satisfaction. Supportive culture moderates the relationship between transactional
leadership and employee job satisfaction. While, bureaucratic and innovative culture was not a
significant moderator.
Research limitations/implications: The study is limited to Malaysian manufacturing employees
in Penang.
Practical implications: This study provides a strategy for management team to increase employee
job satisfaction and reduce employee turnover rate.
Originality/value: This study extends the understanding of the impact of transactional and
transformational leadership styles employees’ job satisfaction, with organizational culture as a
moderator of relationship between these two variables. The researcher proposed a model to study
the moderating effect and the impact on job satisfaction in Malaysian manufacturing industry.
Findings intend to broaden knowledge of academician pertaining employee job satisfaction.
Keywords: Transformational Leadership, Transactional Leadership, Organizational Culture,

Supportive Culture, Innovative Culture, Bureaucratic Culture, Job Satisfaction
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Introduction
This research focuses on the employee job satisfaction in manufacturing industry and its
influencing factors. The manufacturing industry is the growth substance for Malaysia, which
currently the entire manufacturing industries in Malaysia are facing a turbulence due to the fast-
moving pace of the competitive environment. Productivity of Malaysia’s economic development
is to be linked with the performance which seems to be a main contributor as per indicated in the
Eleventh Malaysia Plan. Which, the path towards achievement the productivity is not easy. With
the high demands due to the competitive environment, employees of the manufacturing firms to
be pushed to work extra miles, loaded with work overload and longer working hours. This
subsequently leads to high turnover rate in this industry due to lack of job satisfaction. Turnover
contributes to the productivity of the Malaysian manufacturing industry, whereby, the micro and
small-scale companies running in the manufacturing industry has higher turnover rate as compared
to medium and larger firms. In fact, it was also seen in Malaysia that employee turnover rate
increased from 12.3 percent to 13.2 percent from year 2012 to 2013, which this includes industries
like manufacturing, business and banking too (Lim, Phang, Foong, S'ng & Tiong 2015).
The manufacturing industry is the highest contributor in year 2016, with an increment of 1.4
percent from the previous year. While, manufacturing industry too faced the highest number of
job vacancies, amounting 376,349 jobs in year 2016, which eventually led to an increment in
unemployment rate from 3.1 percent in year 2015 to 3.4 percent in year 2016. The increase in
unemployment rate was due to job mismatch. One of Eleventh Malaysia Plan is to increase
productivity via enhancing workforce skills, which indeed obtainable via proper leadership.
However, the reality is, in year 2016, the manufacturing industry faced an increment in both the
labour cost, which the indicator showed that it was due to unskilled employees, and of course, high
labour turnover.
There are many factors influencing employee satisfaction, ranging from compensation and benefits
package, leadership styles, work nature and many more that found by many past literatures. In
general, autonomy and independence are contributing factors to an employee’s job satisfaction.
Whereby power on decision-making and flexibility is core to this dimension that enhances one’s
job satisfaction. According to the survey conducted by SHRM 2017, about 71 percent employees
are satisfied with their level of autonomy and independence. Thus, this proves that any
deterioration in this aspect may eventually lead to job dissatisfaction of employees. For instance,
a local courier company based in Malaysia, ABX Express (M) Sdn. Bhd. (ABX) ensures there is
a proper measure on enhancing employee job satisfaction via the internal system named
Productivity-Linked Wage System (PLWS). Reason being, employee job satisfaction is the
determinant for business productivity. Aside to that, it is proven that 36 percent of employees leave
organizations in Malaysia as they are dissatisfied with the salary package (Johari, Yean, Adnan,
Yahya and Ahmad, 2012). In fact, competitive nature of business and industry movement may
lead to reduce openness, transparency, decision-making power and finally reduce an employee’s
job satisfaction. According to the survey conducted by SHRM 2017, about 71 percent employees
are satisfied with their level of autonomy and independence. Employees’ job satisfaction
determinants can vary from the leadership manner, compensation and benefits, fairness and
transparency, organization culture and many more. For instance, an Executive Summary generated
by the Society for Human Resources entitled Business and Human Capital Challenges Today and
Future (2017), indicated that almost 51 percent of U.S. employees are less satisfied with the job
while only 38 percent were very satisfied. In fact, the report too has identified factors like
respectful treatment of employees, compensation, benefits, job security and trust between staffs
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and senior managers as the top five contributors to employee job satisfaction. Although the
monetary factor seems to be at a higher rank, the non-monetary factors like organizational culture
and leadership too affects and influences one’s job satisfaction at work. A supportive culture that
leads to job satisfaction varies can be seen from the existing organizational culture, where 44
percent of employees have indicated that this factor is very important to attain job satisfaction,
while 48 percent of employees indicated it is important to have this factor. In fact, deterioration
occurred, only 28 percent of employees feel that very satisfied with the current organizational
culture while 41 percent are somewhat satisfied.
Also, leadership manner and styles can vary across the organization based on the theories
practiced, where in this case two major types are to be analysed on its effectiveness namely,
transformational and transactional leadership (Müller, Georgianna, Schermelleh-Engel, Roth,
Schreiber, Sauerland, Muessigmann & Jilg, 2013). Where, job satisfaction measured via the
efficiency of the leadership especially through the impact made. The right leadership style indeed
is able to influence the job satisfaction and productivity of an employee. Aside to that, there is no
one right leadership style that fits all manufacturing industries in Malaysia as, it varies based on
the situational needs. In fact, Wallace and Weese (1995) have indicated that both the organizational
culture and leadership are interrelated whereby leaders are to understand the organizational culture
to ensure there is an alignment with the organizational mission and goals. In addition, the
organizational culture is essential on promoting the organizational values and behaviour in
congruence with the leadership style. Aside to that, that a favourable organizational culture could
lead to good organizational performance and employee commitment only if there is an existence
of proper employee job satisfaction (Priem, 2010).
As it is clearly stated the job satisfaction among employees working in manufacturing sectors is
vital for retention of capable employees to ensure employee productivity and organisational
performance, this study focus on determining the factors that enhances employee performance.
The influencing factors are namely, compensation and benefits, pay, leadership, organizational
culture, working environment, work-life balance, teamwork, and respect for employee. Effective
leadership style and job satisfaction contributes to the organization’s success. Organizational
culture, influences job satisfaction of employees in manufacturing industries greatly. For instance,
the report generated by SHRM on Job Satisfaction and Engagement Report 2015, indicates that
compensation and benefits package is important, but the corporate culture means more and has
greater impact on employees’ job satisfaction. In fact, the top employees’ job satisfaction factors
in year 2014 were the following in descending order, respectful treatment for all employees, trust
between employer and senior management, benefits, compensation/pay and lastly job security.
In fact, organizational level factors like organizational culture too proven to have an effect on
employee job satisfaction (Tsai, 2011, Muthuveloo & Rose, 2005). In fact, gaps identified were in
terms of teamwork and employee relationship, where the nursing industry recommended is to
improve the relationship to increase employee job satisfaction. In fact, Chang and Lee (2007)
found that there is significant impact of leadership and organizational culture on employee job
satisfaction. However, no significant results support this. In contrast, research done by Loganathan
(2013), indicates that there is a significant relationship between the transactional and
transformational leadership towards job satisfaction. In addition, a supportive organizational
culture, directive leadership and participative – supportive leadership have a significant effect on
job satisfaction of employees (Al-Sada, Al-Esmael & Faisal, 2017). Erkutlu (2012), studied on the
moderating role of organization culture between relationship of leadership and team proactivity. It
resulted that organizational culture indeed moderates the relationship between leadership and team
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proactivity when the supportive culture is high. Many researches are done on impact of leadership
styles and organizational culture on job satisfaction, but very few with moderating impact of
organizational culture on leadership styles and job satisfaction. Thus, this research helps to identify
if organizational culture, besides being independent variable, would have a significant moderating
impact to enhancing job satisfaction.
Based on the problem statement outlined above, the main objectives for this research are as the
following:
i. To determine whether transformational leadership style influences job satisfaction
among employees in the Malaysian manufacturing industry.
ii. To determine whether transactional leadership style influences job satisfaction among
employees in the Malaysian manufacturing industry.
iii. To identify the influence of bureaucratic, supportive and innovative culture as a
moderator between leadership styles and job satisfaction among employees in the
Malaysian manufacturing industry.
This study contributes to knowledge and insight in the field of job satisfaction. In terms influence
of transactional and transformational leadership style on job satisfaction, moderated by
bureaucratic, innovative and supportive culture. This research provides insights and reference to
academicians in terms of employee job satisfaction. Moreover, the practical contribution of this
research enables researcher to identify the type of impact leadership and organization culture has
on employee job satisfaction in the manufacturing industry in Malaysia. Which, this research
provides deeper insights on the leadership style that is most relevant to enhance job satisfaction
seeing the current issues faced in terms of the dissatisfaction faced by employees. In addition, it
provides significance to the manufacturing industries Malaysia, where leaders and management
folks can apply the findings to enhance employee job satisfaction as a longer-term strategy.
Managers in an organization can enhance their respective leadership skills by ensuring one goes
beyond self-interest for the goodness of the employees. In fact, the research contributes in a way
that provide guidelines for managers on handling employees via practicing transformational and
transactional leadership.
For instance, a transformative manager tends to look at differing prospective to solve issues and
spends time coaching. While having transactional leadership traits enable managers to make clear
expectation and focused on goal achievement for the betterment of the organization and individual
goals. Further supported by Dartey-Baah (2015), transformational leadership style is preferred by
employees in organization. With such traits, employees tend to feel a sense of belongingness and
attachment to the organization. Subsequently, enabling employees to have satisfaction towards job
and managers to retain these employees for a long-term prospect.
Literature Review
Job Satisfaction
Job satisfaction is the feelings of employees towards jobs where researchers see it as an attitude of
employee (Davis, 2004, Muthuveloo &Teoh, 2013). According to Locke (1976 as cited in Mete,
2017), job satisfaction is an emotion or feeling felt by an employee at workplace. Factors like
autonomy distribute justice, supervisory support, internal labor market, task significance,
integration and pay positively influence job satisfaction of employees. Role uncertainties, role
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conflict, role overload and routine job influenced employee job satisfaction negatively (Priem,
2010).
According to Valaei & Rezaei (2016), job satisfaction is classified into three facets, namely, on
the identification of factors affecting job satisfaction like work environment, job characteristics
and individual attribute. In contrast, retention and turnover is highly influenced by job satisfaction
(Al-Sada, Al-Esmael & Faisal, 2017). Factors like supervision, promotion, and co-worker
relationship do relate positively to job satisfaction. In fact, personal factor like goal orientation and
contextual factors like organizational culture and feedback channel lead to job satisfaction that
eventually affects the turnover rate in an organization (Joo & Par, 2010). On the other hand, job
autonomy and core self-evaluations too influence employee job satisfaction positively (Rodríguez,
Landeghem, Lasio, & Buyens, 2017). Leadership and organizational culture too are positively
influencing employee job satisfaction based on a study conducted by Chang & Lee (2007). Similar
study done by Al-Sada, Al-Esmael & Faisal (2017), where one of the objectives is to identify the
most influential leadership style and organizational culture towards job satisfaction. Where,
supportive culture is one of the contributing factors towards job satisfaction.
Transformational Leadership
Transformational leadership style, which is also known as supportive leadership is the proper and
ideal leadership style preferred by employees in an organization (Baah, 2015).
This leadership style is a motivating factor for the employees, where they challenge the employees
to achieve the organizational goals. In addition, its nature of developing the employees, allows
organizational development via organizational goals. In which, this goal attainment represents an
act of a transformational leader (Rao, 2014). Birasnav (2014) however defined transformational
leadership as the relationship that exist between a leader and employee.
Several behaviors portray a person as a transformational leader. Namely, a leader with idealized
influence, an inspirational motivator, intellectual stimulation provider and individualized
consideration towards employees (Yaghoubipoor, Tee, & Ahmed, 2013). In contrast,
transformational leadership style is the innovative culture in an organization besides leading to
organizational performance, while Ivey & Kline (2010), also further strengthened by indicating,
transformational leaders tend to focus more on the employees’ well-being, needs, and motives. In
general, the transformational leadership consist of four main components namely (Avolio, Bass
and Jung, 1999), idealized influence where employees see leaders as role model, inspirational
motivation, where leaders motivate employee via commitment and teamwork, intellectual
stimulation where leaders allow employees to be innovative and have critical thinking and
individualized consideration, where leaders focus on employees’ needs.
Transactional Leadership
Transactional leadership style which is also known as directive leadership, is seen as an agreement
between both the leader and employee, where a fulfilment or achievement of a given goal or target
leads enables the relationship between both parties to be secured (Baah, 2015). Known as active
management by exception, transactional leadership focuses on the compliance towards the
regulations in order to achieve the end-result. The punishment can take place if one does not adhere
to the regulations (Bass, Avolio, Jung & Berson, 2003). In fact, the leader takes actions only after
the problem occur or never act at all. In a way, insufficient chances were giving to employees to
explain on the occurrences. Differing from transformational leadership, transactional leadership
focuses on maintaining the status quo with no changes, where it is more effective to be used in
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organizations having certain projects to be done in a certain manner (Odumeru, & Ogbonna, 2013).
There are two factors within transactional leadership namely, contingent reward, and management
by exception (active and passive). Which contingent rewards is more on the appraisal given when
an employee meets the expectation and hit the organizational goals, while management by
exception (active) focuses on continuous employee performance check and corrective action plan,
and management by exception (passive) are for leaders who wait till the issues arise (Baah, 2015,
as cited in Bass, 1997). Tung (2016), too indicates that mutual benefits is seen as the base for the
existence of a relationship between an employee and a transactional leader. In fact, rewards and
punishments are closely associated with a transactional leader, where employees managed were
via these measures in the process of achieving the established goals in the organization.
The Transactional-Transformational Theory of Leadership (Bass, 1985, 1990; Burns, 1978), is
applied to test against the constructed hypothesis. This theory implies that transactional leaders
often focused on obtainment of results from the subordinates while transformational leaders focus
on motivating, support, and promote effort towards their subordinates (Pastor & Mayo, 2006).
Transformational leadership happens when leaders are focused on fulfilling the subordinate’s
individual needs, feelings, being an inspiration and also have a charismatic relationship that allows
subordinates to take leaders as role models. While, transactional leadership however, is more
focused on the leader-member exchange where subordinates are used as instruments to achieve
goals of leaders and vice versa (Pastor & Mayo, 2006). This again comes in with the influencing
factors like intellectual stimulation, individualized consideration, and inspirational motivation for
the transformational leadership. While transactional leadership focuses on factors like contingent
reward, management by exception – active and management by exception – passive. In sum, the
usage of this theory is to test the development on hypothesis in this research study. Subsequently
identifying the contribution of the research study on the theory itself.
Organizational Culture
Culture is the attitude and behaviour held by a group of people living together (Belias &
Koustelios, 2014). In fact, it is also known as the method employees of an organization perform
and portray employee engagement towards the organization via the existence of values and belief
system that guides them through. An organizational culture however consists of both the visible
cues like workplace setting, dress code, myths and stories and non-visible cues like belief system,
values and norms in an organization (Chang & Lee, 2007 In fact, it is also known as values upheld
and practiced by a group of organizational folks which differentiates them from other organizations
(Suharti & Suliyanto, 2012). This shows that the organizational culture upheld can aid
organizational members to have a sense of belonging, where, in return, the organizational culture
should provide good organizational values like fairness, transparency and trust. In addition, a good
and strong organizational culture can retain these values and beliefs if the employees are willing
to practice it at all times (Suharti & Suliyanto, 2012). The organizational culture generally
comprises both the tangible and intangible items like attire, office set-up, organizational values,
beliefs, mission and values (SHRM, 2015). Bureaucratic culture has high degree of control and
power by the management or leader (Lee, 2008), with compartmentalized with high power oriented
to ensure tasks are completed in a timely manner (Golafshani, 2003). While, innovative culture
focuses on challenging status quo, while stimulating new ideas and growth for the organization
(Lee, 2008) and supportive culture focuses on challenging status quo, while stimulating new ideas
and growth for the organization (Lee, 2008).
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Research Theoretical Framework

The Research Theoretical Framework shown in Figure 1 was formulated based on the research
gap and the underpinning theory called The Transactional-Transformational Theory of Leadership.
The focus of the research is to assess the impact of organizational culture and leadership styles on
job satisfaction. In which, the original model of relationship between leadership styles
(transformational and transactional leadership) and employee job satisfaction adopted from the
research done by Yaghoubipoor, Tee, & Ahmed, (2013). Thus, this research theoretical framework
used involves two independent variables, three moderators and one dependent variable. Factors
studied as follows; Independent Variable (IV): Transactional Leadership & Transformational
Leadership, Dependent Variable (DV): Job Satisfaction and Moderating Variable (MV):
Organizational Culture (Bureaucratic, Innovative & Supportive Culture).
Figure 1: Theoretical Framework
Hypothesis Development
Based on the above research theoretical framework, the following hypothesis were-generated.
Direct Hypothesis
The direct hypothesis focuses on transformational and transactional leadership styles’ impact on
job satisfaction. The hypothesis development is created according to several studies. Namely, a
research conducted by Loganathan (2013), indicates that there is a significant relationship between
transformational leadership and job satisfaction. This too, supported by another research conducted
on the relationship between transformational and traditional leadership on job satisfaction
(Yaghoubipoor, Tee, & Ahmed, 2013). Where, results indicated that transformational leadership
style has a significant positive relationship with job satisfaction in Iran’s automobile industry.
While transactional leadership too influenced and positively significant towards employee job
satisfaction in Agricultural Ministry in Eastern Azerbaijan (Dartey-Baah, & Ampofo, 2016 as cited
in Eskandari, Gholizadeh, Moharrami, and Mohammadpour, 2014).
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H1: Transformational leadership has positive significant impact on job satisfaction of employees
in Malaysian manufacturing industry.
H2: Transactional leadership has a positive significant impact on job satisfaction of employees in
Malaysian manufacturing industry.
Indirect Hypothesis
The indirect hypothesis focuses on moderating variables impact on relationship between leadership
styles and job satisfaction. Wallach’s Organizational Cultural Index (OCI) applied by assessing
the moderating effect of the organizational cultural dimension, supportive, innovative and
bureaucratic culture.
H3: Bureaucratic culture moderates the relationship between transformational leadership style
and job satisfaction of employees in Malaysian manufacturing industry.
H4: Bureaucratic culture moderates the relationship between transactional leadership style and
job satisfaction of employees in Malaysian manufacturing industry.
H5: Innovative culture moderates the relationship between transformational leadership style and
H6: Innovative culture moderates the relationship between transactional leadership style and job
satisfaction of employees in Malaysian manufacturing industry.
H7: Supportive culture moderates the relationship between transformational leadership style and
H8: Supportive culture moderates the relationship between transactional leadership style and job
satisfaction of employees in Malaysian manufacturing industry.
Research Methodology
Based on the Table1, the research is a descriptive analysis that uses quantitative method to
investigate on the research questions and to meet the research objectives. The descriptive research
focuses on using the average, frequency, means to calculate the data (Loganathan, 2013). The
correlation research for hypothesis testing focuses to analyze the impact of the variables like
organizational culture, leadership styles, and employee motivation towards job satisfaction of
Malaysian employees in manufacturing industries. A cross sectional approach focuses to apply
descriptively and analytically since it is a one-time study that allowed the research objectives to
achieve and does provide insights for further research (Kanchanaraksa, 2008). While the
measurement instrument is a structured questionnaire, which the questions are fully adopted from
past literatures.
The data were collected via online platform survey with measurement of variable were done via
five-point Likert scale. Section I, leadership Styles (Independent Variable) adopted from a study
done by Seyal & Rahman (2014 as cited in Bass & Avolio, 1995), where Multifactor Leadership
Questionnaire (MLQ Form5X) used for transformational and transactional leadership, with 32
items. Section II, Organizational Culture (Moderating Variable), Wallach’s Organizational Culture
Index (OCI), with 24 items. Section III, Job Satisfaction (Dependent Variable) consists of
Minnesota Satisfaction Questionnaire (MSQ), which has 20 items measuring job satisfaction, with
five-point scale answers. The unit of analysis and sampling frame for this research are the
population focusing at individual level, which target population, are Malaysian manufacturing
employees residing in Penang.
Convenience non-probability sampling focuses on easily available respondents and approach
varying types of manufacturing companies in “Silicon Valley of the East”, Penang, which resulted
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with 127 respondents. The data analysis however was done via SPSS (or commonly known as
Statistical Package for the Social Sciences), IBM SPSS Statistics 23. Subsequently, conduct the
demographic profile analysis and descriptive analysis of respondents. Followed by factor analysis
to test the goodness of data, which focused on the KMO value. Reliability analysis to measure the
repeatability of measuring instrument which tested on the Cronbach’s alpha value, where values
between 0.7 (minimum cut-off) to 0.9 were used as level of acceptability (Golafshani, 2003).
Finally, a regression analysis to conduct hypothesis testing of independent and moderating
variables.
Table 1: Research Methodology Summary

Item Details
Research Type Correlation research, Descriptive analysis
Time Horizon Cross-Sectional research
Measurement Instrument Structured questionnaire, Questions fully adopted from
previous studies.
Data Collection Method Online survey platform
Measurement of Variables Five-point Likert Scale
Number of Respondents 127 respondents
Unit of Analysis Individual employees working in manufacturing firms
Sample Frame Silicon Valley of East, Penang
Sampling Type Convenience non-probability sampling
Data Analysis Demographics Profile
Descriptive Analysis
Factor Analysis – KMO
Reliability Analysis
Regression Analysis
Findings
The findings section describes on Demographics Profile of Respondents, Descriptive analysis of
Mean of the variables, Factor Analysis, Reliability Analysis and Regression Analysis that is
needed to achieve the research objectives.
Demographics Profile of Respondents

The demographics profile of all respondents are shown in Table 2. Majority of respondents are
from age group 26-30, 66 (52.0%), followed by 31-35 years old of 29 (22.8%) folks, age 21-25
with 19 (15.0%), age 41-45 with 6 respondents (4.7%), age 36-40 with 5 respondents (3.9%) and
the least are 45>, with only 2 respondents (1.6%). While, 71 (55.9%) respondents are female, while
rest are male, 56 (44.1%).
While for the manufacturing sector, the electric and electronic sector is seen to have the most
respondents, 43 folks (33.9%). Followed by industrial sector, 38 respondents (29.9%), medical
industry, 22 respondents (17.3%) and the least respondents from telecommunication sector with 3
respondents (2.4%). As for the monthly income, 76 respondents seem to earn RM2001-RM5000
(59.8%), making it the majority as compared to rest. 34 respondents (26.8%) seem to earn between
RM5001-8000, while 10 respondents (7.9%) earn lesser than RM2000. 4 folks (3.1%) earn
>RM10,000, while the least will be 3 respondents (2.4%) earning RM8001-RM10,000. Almost
3/4 respondents, 108 folks have a degree qualification (85.0%), followed by 11 Masters (8.7%), 7
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Certificate (5.5%) and only 1 respondent (0.8%) owns a PhD. About 90 respondents (70.9%) seem
to be working less than 5 years in current company, 34 respondents (26.8%) working 5-10 years,
2 respondents (1.6%) working for 11-15 years and only 1 respondent (0.8%) working for 16-20
years. This shows that majority manufacturing employees in Penang, Malaysia works lesser than
5 years in a company and proves more as “job hoppers”.
Table 2: Demographics Profile of Respondents (N=127)

Demographics Variables Description Frequency Percentage
Age 21-25 19 15.0
26-30 66 52.0
31-35 29 22.8
36-40 5 3.9
41-45 6 4.7
45 > 2 1.6
Gender Female 71 55.9
Male 56 44.1
Manufacturing Sector Electric & Electronic 43 33.9
Industrial 38 29.9
Medical 22 17.3
Others 21 16.5
Telecommunication 3 2.4
Monthly Income < 2000 10 7.9
2001-5000 76 59.8
5001-8000 34 26.8
8001-10,000 3 2.4
> 10,000 4 3.1
Highest Level of Education Certificate / Diploma 7 5.5
Degree 108 85.0
Masters 11 8.7
PhD 1 0.8
No. of years in current < 5 90 70.9
organization 5-10 34 26.8
11-15 2 1.6
16-20 1 0.8
Type of Organization Local Organization (Sdn. Bhd.) 12 9.4
Local Public Listed (PLC-Bhd.) 1 0.8
Small and Medium Enterprise 6 4.7
(SME)
Others 3 2.4
Foreign Owned Multinational 105 82.7
Corporation (MNC)
As for the organization type, majority, 105 respondents (82.71%) origin from Foreign Owned
Multinational Corporation (MNC), Local Organization (Sdn. Bhd.), with 12 respondents (9.4%),
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6 respondents (4.7%) from Small and Medium Enterprise (SME), 3 respondents (2.4%) from
others, and 1 respondent (0.8%) from Local Public Listed (PLC-Bhd.).
Descriptive Analysis
The descriptive statistics consists of 127 valid responses, where all six variables’ ratings range
from minimum 1.0 (least favourable) to maximum 5.0 (most favourable). Between the independent
variables, transformational leadership scored 3.7 mean, with standard deviation 0.6 followed by
transactional leadership with 3.5 mean and standard deviation, 0.5. While among the three
moderators, bureaucratic culture has highest mean 4.0, standard deviation 0.8 as compared to
supportive and innovative culture. Dependent variable, job satisfaction however has the lowest
mean 3.4 with standard deviation of 0.6.
Table 3: Descriptive Statistic

N Mean Std. Deviation
TLavg 127 3.6629 0.570597
TSavg 127 3.5085 0.487366
JSavg 127 3.4102 0.642951
BCavg 127 3.9675 0.845626
ICavg 127 3.6585 0.570533
SCavg 127 3.7244 0.687065
Factor Analysis
The factor analysis is done via Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) test,
which value is >0.6 and that Barlett’s Test of Sphericity is significant (p<.05) (Taherdoost,
Sahibuddin, & Jalaliyoon, 2014). For this study, based on Table4 shown, KMO’s value is all above
0.70, with Transformational Leadership and Bureaucratic Culture the top two with highest values.
Barlett’s Test of Sphericity reported a high significant value (p=000). Thus, the sample size is
adequate and can proceed for other analysis.
Table 4: KMO and Barlett’s Test (Item 4 of Transactional Leadership Style value was removed)
Variables Kaiser-Meyer-Olkin Measure of Bartlett's Test of
Sampling Adequacy. Sphericity
Sig.
Transformational Leadership .920 0.000
Transactional Leadership .772 0.000
Bureaucratic Culture .915 0.000
Innovative Culture .821 0.000
Supportive Culture .897 0.000
Reliability Analysis
Validation of reliability of data is via Cronbach’s Alpha value. Where, it is to be, value of >0.7.
Table 5 shows the Cronbach’s Alpha value for all the variables. Where results show that all
constructs have reliability value >0.7. Thus, proving that the data collected are internally
consistent.
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Table 5: Reliability Analysis

Variables Cronbach's Alpha No. of items
Transformational Leadership 0.952 21
Transactional Leadership 0.792 12
Bureaucratic Culture 0.941 8
Innovative Culture 0.83 8
Supportive Culture 0.918 8
Job Satisfaction 0.944 20
Regression Analysis
Based on factor analysis and reliability analysis carried out, these data are fit to run regression
analysis to test the hypotheses. The regression analysis is as below.
Direct Relationship – Job Satisfaction VS Leadership Styles

The analysis focuses on predicting the impact of independent variables, transformational and
transactional leadership styles on dependent variable, job satisfaction. Based on Appendix 1, the
ANOVA table shows regression model’s significance <0.05. Thus, proving independent variables
significantly predicts the dependent variable. Table 6 below indicates the multiple regression
coefficient, where it is proven that there is no multicollinearity among the variables since all VIF
values are <5.0. In addition, both independent variables have significant influence on job
satisfaction since all have significance value < 0.05.
Testing against hypothesis, the significance level of transformational and transactional leadership
is 0.002 & 0.005. In which, the independent variables contributed positively and significantly to
the predicted outcome, job satisfaction. Thus, supporting H1 & H2. In addition, the positive beta
values for both independent variables indicate that it supports the dependent variable and has a
positive direction towards it.
Table 6: Multiple Regression Coefficients

Unstandardized Standardized T- P-Value Collinearity
Coefficients B Coefficients Value Statistics VIF
Beta
1 (Constant) .666 1.892 .061
TLavg .374 .332 3.187 .002 2.033

TSavg .392 .297 2.854 .005 2.033
Indirect Relationship – Moderating Effect of Organizational Culture on Relationship between

Job Satisfaction and Leadership Styles
This analysis validates the moderating effect of organizational culture (bureaucratic, innovative
and supportive culture). To avoid multicollinearity issues, Centered data applied to develop the
model. Based on Table 7 shown, Stage 1 model consists of independent, dependent and moderating
variable. While stage 2, was the product of independent x moderating variable. Majority of the
significance R² changed in stage 2 during the analysis of moderating effect.
258
Table 7: Moderating Effect of Organizational Culture

Model Moderator R² R² Changed t-Value p-Value Significance
TL*BC  JS Moderator 1 0.282 0.000 0.68 0.946 Not significant
TL *IC  JS Moderator 2 0.358 0.005 -0.972 0.333 Not significant
TL*SC  JS Moderator 3 0.430 0.017 1.951 0.053 Significant
TS *BC  JS Moderator 4 0.283 0.000 0.079 0.938 Not significant
TS *IC  JS Moderator 5 0.360 0.003 -0.817 0.415 Not significant
TS *SC  JS Moderator 6 0.401 0.006 1.167 0.245 Not significant
Summary of Findings
Based on the Table 8 shown below, only 3 out of 8 hypotheses are supported. Whereby, H1 and
H2 testing against relationship against independent (Transformational and Transactional
Leadership Style) and dependent variable (Job Satisfaction) are fully significant and the
hypotheses are supported. Moreover, these hypotheses possess a p-value <0.05 that directly
supports the t-value resulting above 1.96. In contra, out of 6 hypotheses formed to test against
moderating variables impact on relationship between independent and dependent variable, the
hypothesis accepted was, H7, where supportive culture proves to moderate relationship between
both variables. While the rest do not moderate at all seeing p-value <0.05 and t-value <1.96.
Table 8: Summary of Hypothesis Testing

Hypothesis Remarks t-Value p-value
H1. Transformational leadership has positive significant Accepted 3.187 0.002
impact on job satisfaction of employees in Malaysian
manufacturing industry.
H2. Transactional leadership has a positive significant Accepted 2.854 0.005
impact on job satisfaction of employees in Malaysian
manufacturing industry.
H3. Bureaucratic culture moderates the relationship between Rejected 0.68 0.946
transformational leadership style and job satisfaction of
employees in Malaysian manufacturing industry.
H4. Bureaucratic culture moderates the relationship between Rejected 0.079 0.938
transactional leadership style and job satisfaction of
employees in Malaysian manufacturing industry
H5. Innovative culture moderates the relationship between Rejected -0.972 0.333
H6. Innovative culture moderates the relationship between Rejected -0.817 0.415
259
H7. Supportive culture moderates the relationship between Accepted 1.951 0.053
H8. Supportive culture moderates the relationship between Rejected 1.167 0.245
(p<0.05; t>1.96. P <0.05, T is supported, while P >0.05, T is not supported)
Discussion
Independent Variable’s Relationship
Hypothesis, H1 indicates that transformational leadership has positive significant impact on job
satisfaction of employees among Malaysian Penangites whom work at the manufacturing industry.
H1 was proven significant with value 0.03 and p-value <0.05, while the findings tally with other
literatures, like ElKordy (2013), proved via the study that transformational leadership indeed
contributed to higher job satisfaction attained by Egyptian employees. While in Malaysian
perspective, found that transformational leadership indeed allow employees to improve
performance and attain higher job satisfaction at workplace. Hypothesis, H2, proposes,
transactional leadership has a positive significant impact on job satisfaction of employees in
Malaysian manufacturing industry. Which, H2 is supported with p-value, 0.005 and p-value,
<0.05. Transactional leadership, despite having formal system and procedures, it indeed leads to
job satisfaction of Malaysian manufacturing employees in Penang.
This is supported by other literature where, it was found there is a significant and positive
relationship between transformational leadership style and employee job satisfaction (β=0.313, p
<0.001) (Dartey-Baah & Ampofo, 2016). In fact, it was found via their research that relationship
between transactional leadership and employee job satisfaction is positive and significant. In
addition, out of various leadership styles, results do tally that these two types of leadership styles
influence the job satisfaction with transformational focusing on supportive style and transactional
focused on leading within the existing culture and practices.
Moderating Variable’s Relationship

Organizational culture’s impact as moderator is observable via bureaucratic, innovative and
supportive culture. Where only 1 hypothesis, H7 is accepted, while rest (H3, H4, H5, H6, and H8)
are rejected, as results indicated as insignificant and p-value >0.05. The third and fourth hypotheses
are associated with bureaucratic culture, which it states (H3) bureaucratic culture moderates the
relationship between transformational leadership style and job satisfaction of employees in
Malaysian manufacturing industry and (H4) bureaucratic culture moderates the relationship
between transactional leadership style and job satisfaction of employees in Malaysian
manufacturing industry. Meaning, it indicates that bureaucratic culture has no significant
moderating effect on relationship between both leadership styles and job satisfaction (Muthuveloo
& Teoh, 2017). Bureaucratic culture, being hierarchical and power-oriented, it clearly proves that
it does not moderate relationships of both leadership styles and job satisfaction.
Same goes to H5 and H6, which also rejected, indicating innovative culture has no moderating
effect on relationship between transformational and transactional leadership styles and job
260
satisfaction. Innovative culture’s insignificance in being moderator implies that the manufacturing
industries nature, that requires employees to work based on existing structure, policies and
techniques that leads to wellbeing of the organization itself. Further convinced by Jie, Yee & Wok
(2017), where the research proved that chemical sector disallows employees for innovation due to
the ways of manufacturing products. Another study resulted bureaucratic, innovative and
supportive culture has positive significant impact on job satisfaction in perspective education
industry (Farokhi, Bahrami, Esfandnia, Parvaresh, Moradi & Esfandnia, 2014). In contra, only
bureaucratic culture and innovative culture contributes to increasing employee job satisfaction in
a Malaysian private learning institution (Jie, Yee & Wok, 2017). These results further prove that
the organizational culture’s impact as a moderator depends on the industry setting of respondents.
In a study in Malaysian perspective, Lee (2008), found that only supportive culture has significant
moderating impact on relationship between organizational commitment and job satisfaction.
Indicating, bureaucratic culture and innovative culture has no significance being a moderator
between leadership styles and job satisfaction. These findings support the H7’s significance on
reasoning behind supportive culture being able to moderate relationship between leadership style
and job satisfaction.
Research Contribution
The contribution of this study covers two aspects, namely practical implication and theoretical
implication.
Practical Contribution
The practical implication derived from the results that show both independent variables –
transformational and transactional leadership style have positive significant impact on job
satisfaction. Thus, the management should use these results to further enhance and strengthen the
organizational strategy towards attaining manufacturing industry’s employee job satisfaction.
Theoretical Contribution
The theoretical implication focuses on study’s contribution to Transactional-Transformational
Theory of Leadership. Which, transactional leadership focuses on agreement between leader and
employee where goal fulfilment ensures a secured relationship. In this case, both transformational
and transactional leadership are the contributors to attainment of employee job satisfaction. This
is further supported with H1 and H2 being accepted indicating, transformational and transactional
leadership style have positive significant impact on job satisfaction of employees in Malaysian
manufacturing industry. The research study enables managers in Malaysian manufacturing
industry to reflect on their respective leadership style, be it transformative or transactive as per the
theory applied to construct the hypothesis. Subsequently, contributing for future research on
applying this theory for any leadership related research studies.
Limitation and Suggestion for Future Studies

Limitation of this study was the restrictions in reaching out directly to the employees in
manufacturing industry in Penang. This resulted in the respondents attached to the company less
than 5 years.
The sampling subjects in the study were majority of those working less than 5 years in the
organization, which biased the results towards these target respondents. Thus, future studies could
be generating different results if it focuses on respondents attached more than 5 years with an
261
organization. In addition, it can consider to reach out respondents via the manufacturing or
electrical and electronics association available to reach out to more target respondents.
The organizational culture does not moderate the relationship between leadership styles and
organizational culture, except for supportive culture, which moderated transformational leadership
and job satisfaction. Thus, it is considerable for this variable applied as an independent variable
instead as many past literatures have used it as an independent variable in their researches. For
instance, studies done by Farokhi, Bahrami, Esfandnia, Parvaresh, Moradi & Esfandnia (2014) and
Jie, Zu Yee & Wok (2017) have used organizational culture as independent variable to test against
impact on job satisfaction.
Conclusion
This study serves to address the lack of employee job satisfaction in Malaysian manufacturing
industry based in Penang. The analysis of impact of leadership styles, transformational and
transactional leadership styles on its impact on employee job satisfaction. Which resulted with a
positive significant impact and directly proving that the leadership styles indeed are able to
increase job satisfaction. Next, organizational culture used to evaluate if it moderates the
relationship between the leadership styles and job satisfaction. Thus, targeting on the Malaysian
manufacturing industry employees based in Penang, a structured questionnaire was distributed via
online survey platform, which managed to obtain 127 respondents (12 respondents were non-
manufacturing background).
With the obtainment of the respondents’ data, analysis was conducted via IBM SPSS Statistics 23
to generate a result via descriptive, demographic, factor, reliability and regression analysis. In
return, goodness of data was obtained via the factor analysis based on the KMO values. Followed
by reliability analysis which resulted that all data are reliable, with Cronbach’s alpha value >0.7.
Regression analysis was done to generate results of direct relationship between independent
variables and dependent variables, and secondly, the indirect relationship of moderating,
independent and dependent variable. The analysis proved that there is a significant positive impact
of leadership styles on employee job satisfaction. As for the moderating analysis, only supportive
culture moderated the relationship between transformational leadership style and job satisfaction.
While, bureaucratic and innovative culture did not moderate at all. In which, five out of six
hypotheses rejected while only one was accepted. The results show that transformational and
transactional leadership styles affect the employee job satisfaction (Muthuveloo &Teoh, 2014).
The management team to ensure these leadership styles increases employee job satisfaction, which
eventually becomes a good retention plan.
The study contributes in two manners, namely practical contribution that provides organization
management additional measure to improvise the strategies in attaining high employee job
satisfaction in manufacturing industry. While the theoretical contribution would be the usage of
Lawler’s theory in attaining employee job satisfaction, especially needs fulfilment theory, which
relates to the leadership styles. Briefly, it is vital for managers and leaders to know better on
improvising or even using these factors to increase employee job satisfaction at large. This study
serves as a reference point where it shows organizational culture’s role as a mediator between these
variables. Thus, it is proven that good leadership skills will enhance job satisfaction and
organizational culture too should be considered.
262
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Global Business and Management Research: An International Journal

Vol. 10, No. 1 (2018, Special Issue)

The Impact of Leadership Styles and Organizational

Keywords: Transformational Leadership, Transactional Leadership, Organizational Culture,

Research Theoretical Framework

Figure 1: Theoretical Framework

Table 1: Research Methodology Summary

Demographics Profile of Respondents

Table 2: Demographics Profile of Respondents (N=127)

Table 3: Descriptive Statistic

Table 5: Reliability Analysis

Direct Relationship – Job Satisfaction VS Leadership Styles

Table 6: Multiple Regression Coefficients

TLavg .374 .332 3.187 .002 2.033

Indirect Relationship – Moderating Effect of Organizational Culture on Relationship between

Table 7: Moderating Effect of Organizational Culture

Table 8: Summary of Hypothesis Testing

(p<0.05; t>1.96. P <0.05, T is supported, while P >0.05, T is not supported)

Moderating Variable’s Relationship

Limitation and Suggestion for Future Studies

developmental feedback’. Leadership & Organization Development Journal, 31(6),

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