Uncertainty Management, Transformational Leadership, and Job Performance

in an AI-Powered Organizational Context

Masaki Matsunaga, Ph.D.

Associate Professor
Kyushu University Business School
Room E-E-636, 6th flr., East 2 Bldg.
Motooka 744, Nishi-ku, Fukuoka
819-0395 JAPAN

Telephone: (+81-92) 802-5558

e-mail: masaki.matsunaga@econ.kyushu-u.ac.jp
or masaki.matsunaga@gmail.com

Acknowledgement: This research was partly funded by the faculty research grant of Kyushu

University School of Economics and JSPS KAKENHI Grant-in-Aid for Scientific Research(C)

(Grant Number: 21K01630). I thank the Editor, Dr. Paul Schrodt, and three anonymous

reviewers for their insightful suggestions.

 AI Uncertainty, Leadership, & Job Performance 2

ABSTRACT

This study coupled the theory of uncertainty management (TUM) with the notion of

transformational leadership (TFL) to examine how the uncertainty over the adoption of artificial

intelligence (AI) technologies affects employees. The SEM analyses with the two-wave data

collected in Japan (N = 1,318 employee-supervisor dyads) have revealed that uncertainty is

negatively associated and TFL is positively associated with employees’ job performance. In

addition, consistent with TUM, the digital literacy of leaders is found to moderate the effects of

TFL such that the positive association between TFL and job performance has disappeared when

the employees simultaneously feel high uncertainty and find supervisors low on digital literacy.

These findings are discussed with reference to the relevant literature.

Keywords: Artificial Intelligence (AI); Digital Literacy of Leaders; Job Performance;

Theory of Uncertainty Management; Transformational Leadership (TFL)

 AI Uncertainty, Leadership, & Job Performance 3

Uncertainty Management, Transformational Leadership, and Job Performance

in an AI-Powered Organizational Context

Change is inevitable for organizations to survive and thrive but changes also inevitably

bring uncertainty to employees. Organizational members feel insecure about future career when

their organization undertakes major changes in its structure, strategy, or business model (Allen et

al., 2007). Thus generated uncertainty may harm employees’ job performance as it causes anxiety

and consumes their mental energy (Cullen et al., 2014). Especially when the change is disruptive

and extensive, the impact of uncertainty will increase pro-rata (Bordia et al., 2004).

As a prime example of such game-changing, uncertainty-provoking transformations, the

current study focused on the adoption of artificial intelligence (AI), which is defined as a digital

system, typically powered by big data and machine-learning technologies, that generates

adaptive responses to meet preset goals (Davenport, 2018). Given its immense power, adopting

AI is no longer a matter of choice; rather, it signifies one of the top strategic priorities for today’s

enterprises to stay competitive (Ghosh et al., 2019). At the same time, AI-driven transformation

has been causing a surge of concerns among employees about the restructuring of the workforce

and job evaporation (Byrnes, 2017; Kravchenko, 2019; Sverke & Hellgren, 2002).

A key to solving this “human-versus-machine” dilemma lies in leaders’ communication,

particularly how they frame the impact of the technology (Cleavenger & Munyon, 2013). As the

use of AI becomes more and more unexceptional, the essence of leadership shifts from exerting

administrative control to helping followers discover meanings and purpose worth pursuing

(Dewhurst & Willmott, 2014). On this front, Fairhurst and Connaughton (2014) noted that

effective leaders “transform” the way their followers see a problem by framing ostensibly

irresoluble, disheartening problems in an inspirational fashion. Those leaders present positively

 AI Uncertainty, Leadership, & Job Performance 4

biased interpretations so that the followers feel convinced that their efforts to tackle the problems

will not be wasted and, in fact, they will find otherwise inaccessible opportunities for personal

growth; through this reconstruction of social realities will their stress get reduced and motivation

enhanced (Fairhurst & Sarr, 1996). Thus, the leader’s framing discourses would give profound

impact on employees facing the uncertainties driven by today’s AI revolution.

To encapsulate such meaning-centric leadership, this study highlighted the notion called

transformational leadership (TFL; Bass, 1990). TFL is conceptualized as a vision-driven

leadership style that inspires followers to overcome personal fears and aim to achieve higher

goals through the provision of a role model and individually tailored support (Hoch et al., 2018).

The literature, however, is still thin on how interpersonal influences such as TFL help

address employees’ uncertainty vis-à-vis AI. While there is a rapidly growing body of research

on how to redesign organizations and execute corporate strategies to leverage the digital

technology (e.g., Davenport, 2018), the link between leadership and AI-driven uncertainty

remains to be explored. It is an important gap to fill, since AI is relevant not just to a select set of

high-tech companies but also to a wide range of organizations and people (Ghosh et al., 2019).

To address this challenge, the current study drew on Brashers’ (2001) theory of uncertainty

management (TUM). According to TUM, the way in which uncertainty affects individuals is

determined by how they communicate about an uncertainty-provoking event rather than the

objective nature of the event per se (Hogan & Brashers, 2009). Building on this postulation, the

current study scrutinized the impact of AI-driven uncertainty on employees’ job performance and

how TFL is related to their uncertainty management processes.

In so doing, this study simultaneously examined a TUM proposition that had scarcely been

put on empirical tests. Brashers (2001) posits that the perceived competence of the support

providers moderates their influences (Brashers & Hogan, 2013). That is, even if individuals
 AI Uncertainty, Leadership, & Job Performance 5

received identical support messages from different sources, the impact of those messages should

differ depending on how the individuals evaluate each support provider’s competence. To test

this claim, the current study focused on the digital literacy of leaders as it is argued to provide an

essential cue for employees to weigh the received support about AI-driven uncertainty.

This study developed hypotheses based on these tenets of TUM and examined them against

time-separated data collected from 1,318 employee-supervisor dyads working at organizations in

Japan. It should be noted that Japan is one of the most uncertainty-avoidant cultures (Venaik &

Brewer, 2010). Uncertainty avoidance refers to a cultural tendency regarding how people react to

matters with high unpredictability; the higher the uncertainty avoidance, the more likely people

in the respective culture are to show stronger anxiety and have higher security needs (Hofstede et

al., 2010). Theoretically, employees in Japan would react markedly negatively to the uncertainty

driven by AI. Thus, if TFL is shown to reduce those adverse reactions appreciably, it should be

reasonable to expect that the same pattern would hold in other, less uncertainty-avoidant cultures.

Together, this study would make several distinct contributions. First, it advanced TUM by

empirically testing its key claim on the moderation effects of support providers’ competence

(Brashers, 2001). The theory’s utility in non-health contexts was also examined; although TUM

originates in Brashers’s research on HIV/AIDS patients’ communication, its essential logic and

insights about how individuals manage uncertainty are not necessarily bound to that particular

context (see Afifi & Matsunaga, 2008, for a review). Second, this study yielded practical

implications for addressing employees’ uncertainty related to disruptive AI technologies. Finally,

the current study illuminated an important boundary condition for TFL from a communication-

centered perspective. While the research that demonstrates the effectiveness of TFL abounds in

the leadership and management literature (e.g., Crede et al., 2019; Wang et al., 2011), the leaders

depicted therein are typically “faceless”—that is, how they are seen by followers is often unclear.
 AI Uncertainty, Leadership, & Job Performance 6

Leadership effectiveness, however, is partly in the eye of the beholder. Particularly, the

effectiveness of TFL hinges upon the degree to which leaders successfully frame the reality in

inspiring manners, and therefore, whether their messages ring true to followers should be critical

(Cleavenger & Munyon, 2013). The current study tested this conjecture by examining the

moderation effects of supervisor’s competence and thereby advanced the understanding of

transformational leadership from a communication-centered perspective.

Theoretical Framework

Theory of Uncertainty Management

The theory of uncertainty management (TUM) provides a set of explanations about how

individuals manage uncertainty (Brashers, 2001). TUM defines uncertainty as “an individual’s

perceived inability to predict something accurately” (Milliken, 1987, p. 136). Thus, individuals

experience uncertainty when the given situation is complex, available information is incomplete

or inconsistent, and/or when they feel unsure of the state of knowledge (Brashers, 2001).

Uncertainty may be generated for many reasons, and organizational changes provide a

primary source of uncertainty for employees (Allen et al., 2007). In particular, the current study

focused on the adoption of AI as an uncertainty-provoking change. AI affects blue-collar workers

as well as a wide range of white-collar professionals, but this study focused on the latter

population. It is because one of the most unique, unprecedented features of today’s AI revolution

is its impact on white-collar workers, who were once believed, if naïvely, to only benefit from—

rather than getting threatened by—digitalization (Kravchenko, 2019). Modern AI applications

are, however, so capable of handling highly intellectual and even creative tasks that they are

increasingly replacing white-collar knowledge workers in many industries (e.g., Byrnes, 2017).

The ways in which uncertainty affects people seem complicated. Uncertainty provokes

stress, deprives individuals of psychological and professional resources, and hampers their job
 AI Uncertainty, Leadership, & Job Performance 7

performance. Cullen et al. (2014) found that change-related uncertainty is negatively associated

with employees’ satisfaction and job performance. Other studies also show that high uncertainty

might bring undesirable consequences such as emotional exhaustion, damage in the sense of

control, decreased vigor, and poorer outcomes overall (Bambra et al., 2007; Nikolova et al.,

2014). Those negative influences of uncertainty seem to be most pronounced when individuals

feel short of social support and resources for coping (Allen et al., 2007; Kashdan & Silvia, 2009).

TUM recognizes this anxiety-producing, psychologically draining nature of uncertainty.

When faced with an overwhelming level of uncertainty, people lose curiosity and become overly

protective (Kashdan & Silvia, 2009; Taber & Blankemeyer, 2015). Such defensive attitudes harm

their performance, especially in today’s knowledge economy that places a premium on creativity,

entrepreneurship, and innovation (Powell & Snellman, 2004). Hence, the first hypothesis:

H1: Employees’ uncertainty concerning the adoption of AI technologies is negatively

associated with their job performance.

At the same time, TUM suggests that uncertainty can be taken positively (Brashers, 2001).

In fact, if everything were fixed and utterly predictable (i.e., nothing is uncertain), it is literally

hopeless, mind-numbing, and even demoralizing (Snyder, 2002). Employees would be dispirited

if they feel certain that their jobs will be lost due to AI and there is no way but to leave

familiarized organizations against their will. They might feel cheered or even excited, however,

if they find the adoption of AI an opportunity to fortify their professional expertise and open up

interesting career paths. What, then, determines the valence of uncertainty?

According to TUM, individuals assess a given uncertainty-producing event through a two-

step process called appraisal; (Brashers & Hogan, 2013); first, they identify whether the given

event has relevance to their lives; next, they analyze how the event might affect them and how

they can cope with it (Lazarus & Folkman, 1984). The latter process, called secondary appraisal,
 AI Uncertainty, Leadership, & Job Performance 8

is shaped by communication with others. Individuals embrace uncertainty positively if they are

able to engage in constructive discussions and develop a multifaceted understanding of the given

event (Brashers & Hogan, 2013). Communication with others can help release stress by

providing validation and ventilation opportunities. It can also facilitate constructive uncertainty

management by encouraging reappraisal of an event from previously unexplored perspectives

(Brashers et al. 2004). Conversely, when individuals receive poor support and perceive their

feelings are unrecognized, they ruminate over the negative aspects of the event longer and feel

more anxious about it (Afifi et al., 2013). In short, the quality of communication about the

uncertainty-provoking event determines how individuals experience uncertainty and how

uncertainty affects their subsequent thoughts and behaviors (Brashers, 2001).

In line with this tenet, research shows that organizational support mitigates the impact of

uncertainty. Allen et al. (2007) found that the presence of supportive supervisors helps employees

maintain positive attitudes and open-mindedness during major organizational changes. When

supervisors authenticate aggressive risk-taking and show accepting attitudes toward failures,

employees feel safe to admit mistakes, share information that might reveal their vulnerability,

and become motivated to grapple with uncertainty (Abuhamdeh et al., 2015; Dayan et al., 2017).

Searching for a key to producing such psychologically safe environments, this review now turns

to the literature on transformational leadership (Carmeli et al., 2014; Edmondson & Lei, 2014).

Transformational Leadership

Transformational leadership (TFL) refers to a set of leader attributes and behaviors that

inspire followers to go beyond personal interests and aim for higher goals (Bass, 1990). More

specifically, TFL is characterized by four distinct features—namely, inspirational motivation,

intellectual stimulation, idealized influence, and individualized consideration (Bass & Riggio,

2006). First, transformational leaders portray the organization’s mission in attractive, awe-
 AI Uncertainty, Leadership, & Job Performance 9

inspiring manners so that followers become motivated to challenge difficult goals. Second, those

leaders give members a free hand and encourage them to exercise their creativity for problem-

solving; this is in sharp contrast with more directive, authoritarian leadership that exerts control

through minute instructions and contingent rewards (Gumusluoglu & Ilsev, 2009). Third,

transformational leaders “walk the talk” and practice what they present as an ideal way for

followers to behave (Bruch & Walter, 2007). Fourth, transformational leaders provide

individually tailored support. They take into consideration each member’s idiosyncratic needs for

help and adjust the ways to support those members (see Wang et al., 2011, for a review of TFL).

Given these features, it should come as no surprise that TFL improves followers’ job

performance (Crede et al., 2019; Wang et al., 2011). For example, Gong et al. (2009) found that

TFL enhances employees’ performance by boosting their self-efficacy and learning orientation.

Herman and Chiu (2014) highlighted the solidarity between transformational leaders and

followers; organizational members feel strong relational identification with leaders who exercise

TFL and thus established identity, in turn, undergirds their motivation and performance.

Further, transformational leaders help followers take a different look at the world through

framing, which refers to the act of promoting a particular definition of the given issue with a

coherent set of meanings and causal interpretations (Fairhurst & Sarr, 1996). As such, framing

determines people’s sensemaking, or construction of social realities (Weick, 2001, 2009). A fable

of two sales teams provides an illustrative example—they both carried the mission of selling

shoes and landed on a remote island, only to find out that none of the indigenous people wore

shoes; the leader of one team muttered in despair, “There is no hope for our business here . . .”;

in contrast, the other team’s leader joyfully shouted, “Fantastic! Look, everyone here is our

potential customer!” The objective fact (i.e., no one on the island wore shoes) was the same, but

those leaders used different ways of framing and crafted completely opposite social realities.
 AI Uncertainty, Leadership, & Job Performance 10

Transformational leaders identify a problem that would otherwise seem dishearteningly

difficult and incomprehensible as a breathtaking opportunity (Cleavenger & Munyon, 2013;

Fairhurst & Connaughton, 2014). When followers buy into those discourses of transformational

leaders, they become intrinsically motivated to undertake difficult challenges and start to

embrace uncertainty as a source of hope and personal growth (Hannah et al., 2016). This

follower transformation process provides a central mechanism underlying the impact of TFL

(Siangchokyoo et al., 2020). Such a shift in perspective, if not paradigm, helps organizational

members transcend the personal and situational constraints which were thought to be limiting.

It follows that TFL should encourage employees to accept changes proactively and engage

in constructive uncertainty management. Organizational changes, by nature, are inseparable from

the organization’s aspired vision. To the extent that transformational leaders successfully frame

those visions in an attractive and inspiring manner, their followers should positively see the

upcoming change and its accompanying uncertainty. Consistent with this surmise, research has

shown that TFL is associated with increased acceptance of uncertainty-provoking events (e.g.,

merger and acquisition) and superior job performance after organizational changes (Chen et al.,

2019; Nemanich & Keller, 2007; Shin et al., 2015; Van Dierendonck et al., 2014).

Together, the literature review so far suggests that TFL should enhance employees’ job

performance through dual processes. On the one hand, TFL boosts job performance directly by

heightening employees’ self-efficacy and relational identification with leaders (Crede et al.,

2019; Gong et al., 2009; Herman & Chiu, 2014). On the other hand, inspiring discourses of

transformational leaders promote followers’ reevaluation of organizational changes and helps

them embrace uncertainty more favorably (Fairhurst & Sarr, 1996). This study tests these

conjectures in the context of AI-powered organizations. Put in the form of hypotheses:

H2: Supervisors’ TFL is positively associated with the job performance of employees.
 AI Uncertainty, Leadership, & Job Performance 11

H3: Supervisors’ TFL moderates the effects of uncertainty such that the greater the TFL, the

more positive the effect of uncertainty on employees’ job performance.

Moderation Effects by Leaders’ Competence

Intriguingly, TUM posits that the degree to which communication affects the process of

uncertainty management is contingent upon support providers’ competence (Brashers, 2001).

Ellis (1992) found who provide support affects individuals’ reception of those messages; in her

study, employees who received information from highly competent and credible sources reported

more positive attitudes toward change-related uncertainty.

This notion that the impact of communication is determined in part by the perceived

competence of one’s interactional counterpart is consistent with the literature on leadership

effectiveness. According to the research on implicit leadership theories, leaders are judged as

effective when they match the schematic representations of leadership held by followers, and

being competent typically provides an essential component of such schemas about what the

leader should be like (Offermann et al., 1994). Yammarino and Dubinsky (1994) discovered that

the effects of TFL vary by competence-related factors, such as dependability (Cheng & Jen,

2005), communication competence (Flauto, 1999), and intellectual capacity (Rubin et al., 2002).

In fact, research seems to suggest that the perceived competence of the interactional

counterpart has certain impact on one’s uncertainty management experiences (see Brashers et al.,

2006; Jensen & Hurley, 2012). Brashers (2001) points out that: “Individuals may choose some

sources of information over others because they believe there are differences in the efficacy of

the sources” (p. 483). Stated differently, individuals use the perceived competence as a proxy of

the credibility/utility of an information source. Note that this perception of credibility is context-

specific; for example, individuals would see a cardiologist as a credible source of information for

some mysterious chest pains, but not for addressing nebulous organizational politics.
 AI Uncertainty, Leadership, & Job Performance 12

In terms of the current study, a leader’s digital literacy is argued to provide a reasonable

measure of context-relevant competence. Digital literacy refers to a set of skills and knowledge

to explore technological issues and exploit digital technologies’ potentials (Calvani et al., 2009).

For a leader to perform TFL to help followers take AI-driven organizational changes positively

and engage in constructive uncertainty management, shrewdness in digital technologies is argued

to provide a sine qua non (Westerman et al., 2014). It is hard to imagine that employees at AI-

powered companies get convinced of the vision presented by a leader without adequate tech-

savviness. Likewise, leaders without a grasp of technological trends would be unable to give

appropriate challenges and support for members in the fad of digitalization. Transformational

leaders typically embody the vision they promote by being role-model figures themselves (Bass,

1990; Bass & Riggio, 2006), but it would be difficult for those with low digital literacy. Together,

these discussions suggest that leaders’ digital literacy should determine the extent to which their

leadership affects followers’ AI-related uncertainty management. Hence:

H4: The degree to which TFL predicts employees’ job performance, and moderates the linkage

between AI uncertainty and job performance, depends upon the digital literacy of leaders.

See Figure 1 for a visual summary of the current study’s hypotheses. Note that this model

represents a moderated moderation process in Hayes’s (2018) theoretical framework.

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Insert Figure 1 about here
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Method

Respondents and Procedure

This study collected data in Japan across two waves, using a research service similar to

Amazon MTurk.1 Respondents were screened before taking the Wave-1 survey based on three

inclusion criteria. First, they must be full-time white-collar employees.2 Second, their supervisor
 AI Uncertainty, Leadership, & Job Performance 13

must be involved in the current research; the respondent candidates were told that this research

would require their direct supervisors’ taking surveys, and the candidates must ask the

supervisors for their cooperation; only those who agreed to this condition were included. Third,

the respondents must be working at organizations that had adopted some sort of AI; in the

screening process, they were presented with a definition as well as several examples of AI

applications (e.g., automatically detecting anomalies in the system and sending alert, analyzing

market data and producing a summary report of pre-defined key performance indices, responding

to customers’ inquiries automatically by chatbot technologies while analyzing those inquiry text

data to identify unmet needs, etc.) and asked if they were aware of any of such technologies used

in their office. Only those who answered affirmative to this screening question were included.

Thus identified respondents were asked to forward the URL of the Wave-1 for-supervisor

survey webpage to their direct supervisor. When the supervisors completed the survey, they were

presented with the URL of the Wave-1 for-employee survey webpage and asked to forward it

back to the respondent; the same procedure was repeated for the Wave-2 data collection.3 The

interval between Waves 1 and 2 was about three weeks. All data were treated confidentially so

that the respondents and supervisors could not see each other’s responses.

The final sample included 1,318 employee-supervisor dyads.4 The response rate was

87.9%.5 The item-level missing response rate was less than 1%. The respondents represented a

variety of industries, including but not limited to apparel, consulting, IT, manufacturing, and

media; the respondents’ occupation also varied—account manager, customer service staff,

editor/editorial assistant, engineer/programmer, and sales representative, to name a few. The

mean age of the respondents and supervisors were 26.89 (SD = 3.22, Max = 34, Min = 22) and

36.97 (SD = 5.18, Max = 45, Min = 27) years, respectively. Four-hundred forty-eight respondents

(34.0%) and 189 supervisors (14.3%) identified themselves as female; 525 (39.8%) employee-
 AI Uncertainty, Leadership, & Job Performance 14

supervisor dyads were cross-sex, whereas 793 (60.2%) were same-sex. The mean length the dyad

had worked together was 3.81 (SD = 2.71, Max = 10, Min = 1) years.

Measurement

The predictor and moderator variables, as well as demographics, were assessed at Wave-1,

whereas the outcome variable was measured at Wave-2.6 All measures were translated from the

original (i.e., English) version into Japanese using the back-translation method (Brislin, 1970).

Assessments were made on a 7-point Likert scale (1 = “Strongly disagree”; 4 = “Neither agree

nor disagree”; 7 = “Strongly agree”). Following Hayes and Coutts (2020), scale reliability was

estimated using McDonald’s omega (ω).7 See Online Supplemental Appendix for measurement

items except for Multifactor Leadership Questionnaire, which is commercially protected.

Uncertainty. Uncertainty was assessed at Wave-1 using a modified version of Rafferty and

Griffin’s (2006) 4-item scale. The original scale taps individual-level uncertainty about

organizational changes in general; modifications were made to fit the current study’s context

such that each item asked the respondents to report on their uncertainty vis-à-vis AI used in their

organizations (e.g., “I am unsure how severely AI will affect my work unit”). McDonald’s ω

was .89 (95% confidence interval (CI) = .84 to .92).

Transformational leadership. Respondents rated their supervisors’ TFL at Wave-1, using

20 items of Bass and Avolio’s (2000) multifactor leadership questionnaire (MLQ-5X). Whereas

MLQ-5X has nine subscales, this study’s respondents only used the five of them tapping TFL:

namely, idealized influence (behavior), idealized influence (attributes), inspirational motivation,

intellectual stimulation, and individualized consideration. All subscales were highly positively

correlated (rs > .70) and the results of a higher-order confirmatory factor analysis (CFA) with

five first-order latent variables loading onto one second-order factor representing TFL fit the data

well: χ2 (165) = 402.60, p < .001, χ2/df = 2.44, CFI = .98, RMSEA = .04 (90% CI = .03 to .06).
 AI Uncertainty, Leadership, & Job Performance 15

Following the previous studies (e.g., Gong et al., 2009). the decision was made to treat all items

as representing one unified construct. McDonald’s ω was .92 (95% CI = .89 to .94).

Digital literacy of leaders. Respondents rated their supervisors’ digital literacy at Wave-1,

using a modified version of Zeike et al.’s (2019) 6-item scale. This scale targets leaders’ attitudes

and competence in digital working environments and their vision of digital transformation. The

modification was made to change the scale’s format from self-report (e.g., “I know how to

engage people for digital transformation”) into other-report (e.g., “My supervisor knows how to

engage people for digital transformation”). McDonald’s ω was .82 (95% CI = .77 to .85).

Job performance. Supervisors rated the respondents’ job performance at Wave-2, using

Pearce and Porter’s (1986) 5-item scale. The scale asked the supervisors to evaluate the

respondents’ overall performance, as well as their abilities to get along with various stakeholders

in the workplace, complete assigned tasks on time, produce high-quality performance, and

achieve work goals. McDonald’s ω was .85 (95% CI = .80 to .88).

Results

See Table 1 for the descriptive statistics of this study’s data.

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Insert Table 1 about here
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Measurement Model Analyses

To examine the measurement model, two CFAs were run using Mplus 8.5 (Muthén &

Muthén, 2018). Parameters were estimated with robust maximum likelihood. The first model

specified the items to load onto each of the distinct factors. This multi-dimensional model fit the

data well: χ2 (554) = 1213.26, p < .001, χ2/df = 2.19, CFI = .98, RMSEA = .04 (90% CI = .03

to .05). Next, the largest covariance was fixed to 1.0. This 3-factor model fit the data somewhat

acceptably: χ2 (557) = 2333.83, p < .001, χ2/df = 4.19, CFI = .92, RMSEA = .06 (90% CI = .05
 AI Uncertainty, Leadership, & Job Performance 16

to .09). But the result of the chi-square difference test was statistically significant: Δχ2 (3) =

1120.57, p < .001. Accordingly, the decision was made to retain the original measurement model.

Main Analyses

Next, a structural equation model (SEM) was analyzed using Mplus 8.5 (Table 2). Model

parameters were estimated based on the robust maximum likelihood.8 To keep the model

complexity at a manageable level, items were aggregated at random into two parcels per

construct and then mean-centered each (see Matsunaga, 2008). Further, indicators for two-way

and three-way latent interactions were computed by the orthogonalizing method detailed by

Little et al. (2006)—first, product terms from the sets of parcels for the respective constructs

were computed; second, those product terms were regressed onto the parcels of those constructs

and the residuals for the regressions were saved and used as the indicators of latent interaction

terms; finally, correlations were specified in the SEM between the unique variances of those

indicators which “shared” one or more parcel(s) in their origin. Job performance was specified as

the endogenous variable (see Online Supplemental Figure for model specification diagram). This

model fit the data well (χ2 (304) = 331.36, p = .13, χ2/df = 1.09, CFI = 1.00, RMSEA = .03 (90%

CI = .01 to .04)) and accounted for 18.0% of the variance of job performance (adj. R2 = .180).
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Insert Table 2 about here
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H1: Uncertainty → job performance. The first hypothesis of this study (H1) predicted

that AI-driven uncertainty would be negatively associated with employees’ job performance.

Pearson bivariate correlation (r = −.15, p < .001) as well as multivariate SEM parameter estimate

(unstandardized (unstd.) γ = −0.13, SE = .03, p < .001, 90% CI = −0.19 to −0.06) were both

statistically significant and in the predicted direction. Thus, H1 was supported.

 AI Uncertainty, Leadership, & Job Performance 17

H2: TFL → job performance. H2 predicted that supervisors’ TFL should be positively

associated with employees’ job performance. Pearson bivariate correlation (r = .29, p < .001) and

multivariate SEM parameter estimate (unstd. γ = 0.42, SE = .03, p < .001, 90% CI = 0.34 to 0.49)

were both significant and in the predicted direction. Thus, H2 was supported.

H3: Uncertainty × TFL → job performance. H3 predicted that supervisors’ TFL should

moderate the effects of uncertainty on employees’ job performance such that the greater the TFL,

the more positive the link between uncertainty and job performance. Intriguingly, the uncertainty

× TFL two-way interaction was statistically significant, but its direction was opposite to the

prediction: unstd. γ = −0.10, SE = .02, p < .001, 90% CI = −0.15 to −0.05. Thus, H3 was rejected.

H4: TFL × DLL/uncertainty × TFL × DLL → job performance. H4 predicted that the

degree to which TFL would be associated with job performance, and TFL would moderate the

link between AI uncertainty and job performance, should depend on the digital literacy of

leaders. The results showed that the TFL × DLL two-way interaction was statistically significant

and positive: unstd. γ = 0.10, SE = .02, p < .001, 90% CI = 0.06 to 0.15. In contrast, the

uncertainty × TFL × DLL three-way interaction was not significant: unstd. γ = −0.01, SE = .01, p

= .91, 90% CI = −0.02 to 0.03. Thus, H4 was partially supported.

Simple-slope analyses of the interaction effects. To clarify the underlying structure of the

interactions, a series of simple-slope analyses were performed (Preacher et al., 2006). First, the

conditional effects of TFL on job performance were examined at low (−1SD or lower) and high

(+1SD or higher) values of uncertainty. When uncertainty was low, TFL showed a statistically

significant, positive effect (b = 0.56, SE = .07, p < .001, β = .51, adj. R2 = .257). Interestingly,

when uncertainty was high, TFL was also significantly associated with job performance, but the

magnitude of the effect was much smaller (b = 0.13, SE = .05, p = .011, β = .17, adj. R2 = .023),

implying some factor that attenuates TFL’s effects in the high-uncertainty condition.
 AI Uncertainty, Leadership, & Job Performance 18

Next, the conditional effects of TFL vis-à-vis the digital literacy of leaders (DLL) were

scrutinized. When DLL was low, TFL’s effect failed to reach statistical significance: b = 0.07, SE

= .04, p = .11, β = .12, adj. R2 = .009. In contrast, when DLL was high, TFL showed a significant

and positive effect on job performance: b = 0.42, SE = .04, p < .001, β = .54, adj. R2 = .287.

Together, these results of the simple-slope analyses suggested that TFL would have a

significant positive association with employees’ job performance except when uncertainty is high

and supervisor’s digital literacy is low. In other conditions (i.e., either uncertainty is low or DLL

is high), TFL’s positive effect held up. A visual inspection into the conditional means of job

performance revealed patterns consistent with this interpretation (see Figure 2).
------------------------------
Insert Figure 2 about here
------------------------------
Other findings. Additionally, the SEM revealed that DLL had positive effects on job

performance via main and interaction effects with uncertainty (Table 2). As for the former, DLL

had a statistically significant, positive association with job performance: unstd. γ = 0.13, SE

= .03, p < .001, 90% CI = 0.07 to 0.20. Plus, the uncertainty × DLL two-way interaction effect

was significant and positive: unstd. γ = 0.05, SE = .02, p = .008, 90% CI = 0.01 to 0.09.

Discussion

The current study hypothesized that TFL would have positive impact on employees’ job

performance and also it should mitigate the negative impact of uncertainty. Consistent with the

former prediction, TFL demonstrated a positive association with job performance; conversely,

the relationship of TFL with uncertainty, together with the digital literacy of leaders (DLL),

turned out to be more complicated (Table 2). Inspection through simple-slope analyses has

revealed that TFL is associated with higher job performance in all but the high-uncertainty, low-

DLL condition (Figure 2). There is a simple interpretation that explains those complex patterns
 AI Uncertainty, Leadership, & Job Performance 19

of interactions in a theoretically coherent manner. That is, to effectively support individuals faced

with high uncertainty, support providers need context-relevant competence because those

individuals use the perceived competence of the support provider as a heuristic to judge whether

they can fully embrace the given support message (Hogan & Brashers, 2009).

One of TUM’s key tenets is that the way in which uncertainty affects individuals depends

on how they appraise the uncertainty-provoking event (Brashers & Hogan, 2013). If the given

event is perceived as a threat that might cause unpredictable damage, the uncertainty would

generate fear and hamper one’s performance. In contrast, if the event is taken as an opportunity,

it can give hope and motivation for individuals to go extra miles (Brashers, 2001; Snyder, 2002).

This is the point where TFL makes a difference in the uncertainty management process

since transformational leaders frame tough and daunting problems as awe-inspiring opportunities

(Bass & Riggio, 2006; Cleavenger & Munyon, 2013). Those leaders utilize “four Is” (i.e.,

inspirational motivation, intellectual stimulation, idealized influence, and individualized

consideration) to craft persuasive discourses and have their followers vividly imagine that they

can overcome the uncertainty and achieve something significant (Bass, 1990).

Such inspirational discourses of transformational leaders would sound empty, however, if

they lack relevant competence vis-à-vis the source of uncertainty. The act of framing, essentially,

is the promotion of a particular worldview and therefore it requires a leap of faith on the side of

recipients (Fairhurst & Sarr, 1996). The current findings suggest that leaders’ possession of

context-relevant competence undergirds such faith and thereby enhances their TFL effectiveness.

Stated differently, not all framing discourses are equal. Some leaders sound more authentic

and convincing than others because they have decent expertise, which helps followers believe

that those leaders know what they are talking about. In this study’s context, employees with high

uncertainty are likely to feel anxious about the impact of AI. For them, direct supervisors are one
 AI Uncertainty, Leadership, & Job Performance 20

of the most influential figures and their competence related to digital technologies is critically

relevant, as it determines the extent to which they can rely on the supervisors for spot-on advice

and support in the face of digital transformation. The current findings suggest that, if employees

in such circumstances find their supervisors low on digital literacy, their leadership might not

work effectively. This interpretation also explains why DLL did not alter the effects of TFL in the

low-uncertainty conditions, wherein employees are not feeling much unpredictability about the

influence of AI on their job, and therefore, whether supervisors have deep understanding of

digital trends and technologies is not particularly relevant to fathom their credibility.

This insight is argued to signify the current study’s key contribution. Although some

scholars discussed the linkage between leadership and framing (e.g., Cleavenger & Munyon,

2013), few of them stipulate competence as a boundary condition for leadership effectiveness.

Nonetheless, from a communication-centered perspective, it is reasonable to assume that the

perceived capability of interlocutors is related to their credibility and persuasiveness (Burgoon et

al., 1990; Thon & Jucks, 2017). The current study has obtained empirical evidence to corroborate

this classic notion in a modern organizational setting and thereby bridged the gap between the

literatures on innovation diffusion, leadership for change, and uncertainty management.

Support Providers’ Competence and Support Gap in Uncertain Situations

The surmise on the underlying mechanism of the moderation effect of leaders’ competence

also suggests that the perceptions about the competence of support provider might regulate one’s

support negotiation behaviors. High and Crowley (2018) found that individuals sometimes dare

not seek the support they desire in certain situations. This desired-sought support gap is, in turn,

likely to result in some discrepancy between the support individuals desire and that which they

actually receive; ultimately, such desired-received support gaps lower the quality of supportive

communication (see also High & Steuber, 2014; Matsunaga, 2011; McLaren & High, 2019).
 AI Uncertainty, Leadership, & Job Performance 21

Future research might benefit from capitalizing on this mechanism and exploring the

theoretical linkage between TUM and theories about support gaps (High & Crowley, 2018;

McLaren & High, 2019). To illustrate, individuals who consider their interactional counterpart to

lack context-relevant competence might miss the social support they could have received. Those

individuals fail to receive support because they estimate the likelihood of obtaining the support

they desire to be too small and decide, perhaps misguidedly, not to ask for it in the first place.

Similarly, if individuals overregulate their support negotiation behaviors because they

believe that their interactional counterpart would be unable to provide the type of support they

desire, it is also likely that they receive different types of support than what they actually need.

Past research has shown that such support gaps cause psychological and relational damages

(Matsunaga, 2011; McLaren & High, 2019). These speculations not only provide practical

suggestions to design effective support interventions but also help advance the theoretical

understanding of the dynamics of uncertainty management and supportive communication.

On the Influence of the Japanese Culture

The impact of the Japanese culture should be discussed to clarify the generalizability of the

current findings. Research has shown that Japan is one of the most uncertainty-avoidant cultures

(Hofstede et al., 2010). Uncertainty avoidance is related to individuals’ risk assessment of new

technologies and therefore it influences innovation diffusion processes (Laukkanen, 2015). On

this front, scholars have pointed out that Japanese people and organizations often show highly

conservative or even luddite attitudes against disruptive innovations (e.g., Straub, 1994).

Based on those previous findings, it seems reasonable to deem that this study’s sample

recruited in Japan represents a highly risk-aversive population with high uncertainty-avoidance

orientations (see Footnote 4). In other words, this study has tested TUM in a circumstance in

which the impact of uncertainty is likely near its upper end. It is notable that the theory’s
 AI Uncertainty, Leadership, & Job Performance 22

predictions held in such an extreme condition. From this perspective, TFL’s moderation effects to

mitigate the negative effect of uncertainty on job performance at the high-DLL condition (see

Figure 2) is expected to manifest more readily in less uncertainty-avoidant cultures because the

impact of uncertainty should be weaker in those cultures (Hofstede et al., 2010). Granted, this

conjecture should be critically examined through cross-cultural comparisons, along with other

unique features of the Japanese cultures such as low workforce mobility (see, e.g., Kawashima,

2017). Nonetheless, it is encouraging that TUM, which has been developed primarily through the

U.S.-based research (Brashers, 2001), found empirical support via a study conducted in Japan.

Practical Implications

This study’s findings yield some practical implications. First, organizations should squarely

recognize employees’ uncertainty as a serious issue. While the decisions over the adoption of AI

are typically made by the top management (Jarrahi, 2018), care should be taken to address the

concerns among front-line employees and advance their understanding as the technology is

deployed in the organization and transforms the everyday work routines.

In addition, leadership development programs and promotion schemes should integrate

digital literacy trainings. Leadership and digital skills are often treated separately, but the current

findings suggest that they are deeply intertwined. Especially when employees feel high

uncertainty over the influence of newly implemented technologies, digital literacy provides a

sine qua non for leaders to help their team members maintain high performance (Kane et al.,

2019). In a related vein, high learning orientation and related attributes such as developmental

readiness (Avolio & Hannah, 2008) should be required for those in leadership positions.

Limitations and Future Directions

Some limitations should be taken into account as readers interpret this study’s findings.

First, the current findings cannot be generalized beyond the experiences of white-collar workers
 AI Uncertainty, Leadership, & Job Performance 23

at AI-powered organizations. This study focused on that segment because, arguably, white-collar

workers represent the most drastically affected population by AI (Byrnes, 2017). Nonetheless,

the way in which AI affects white-collar workers must be admittedly different from how the

technology impacts blue-collar workers, and such differences should be explored in the future.

Second, the causality among key factors is not established, though the time-separated and

multisource structure of the current data helps rule out the possibility of reversed causality (i.e.,

job performance assessed at Wave-2 cannot influence the Wave-1 variables) and partly addresses

the concerns over the common method bias (Podsakoff et al., 2012). Third, because this study

required employees and supervisors to cooperate to access each other’s surveys, dyads who are

close enough to follow such procedures may be overrepresented. However, additional inspection

detected no indication of censored data.9 Fourth, this study’s data represent various industries

and professions, and therefore, idiosyncrasies related to specific businesses were not examined.

Given the explosive proliferation of the use of AI in today’s business scenes (Ghosh et al., 2019),

however, representation of a wide range of industries and occupations should be taken as a

strength of this study that enhances the generalizability of its findings.

There are also a number of ways to build on the current findings. First, future studies

should benefit from scrutinizing leadership styles other than TFL and their associated

communicative features. Effective as it is, TFL represents just one particular style of leadership

and other leadership styles are known to account for additional variance of organizational

members’ emotions, behaviors, and cognitions (Hoch et al., 2018). Second, more detailed

inspection into the effects of TFL from a communication-centered perspective should be

warranted because the current study treated TFL as a basket construct that symbolizes multiple

interrelated leadership attributes and behaviors (Bass & Riggio, 2006). Unpacking this basket

and shedding light on the unique effects of each of the four Is characteristic to TFL should
 AI Uncertainty, Leadership, & Job Performance 24

illuminate how specifically transformational leaders help address the uncertainty management of

the employees in modern organizations. The current study’s discussions on the framing and

appraisal processes should provide a valuable toehold for such theoretical ventures.

Third, the variability of uncertainty should be examined, as uncertainty varies in magnitude

and direction (Bordia et al., 2004). For example, individuals abstractedly looking for novel

opportunities related to AI and those who seriously worry about the possibility of losing the job

because AI might make their expertise obsolete are both “uncertain” in that they feel some levels

of unpredictability. Nonetheless, it should be clear that the latter’s uncertainty is far more

difficult to manage. To explicate those nuances of uncertainty management related to the

involved parties’ fear and anxieties, researchers of future studies might find emotion-focused

theories such as Babrow’s (2001) problematic integration theory or an updated version of Afifi’s

(2010) theory of motivated information management useful.

Finally, the multilevel structure of uncertainty management processes should be explored

in future studies. The current study has examined employees’ uncertainty management at the

individual/interpersonal level, but research suggests that organizational members’ uncertainty

management is greatly influenced by team climate (Martin et al., 2005) and organizational

culture (Clampitt & Williams, 2005). Thus, future studies should examine how team- or

organization-level dynamics affect employees’ uncertainty management.

Conclusion

Disruptive technologies such as AI beget great uncertainty precisely because of their great

game-changing potential (Sverke & Hellgren, 2002). Adopting AI is no longer a matter of choice

today, as it has become a strategic necessity for most if not all organizations to stay competitive.

Coming along with the proliferation of this digital technology is the fear over restructuring and

job evaporation, and scholars contend that leadership is an indispensable part of the equation to
 AI Uncertainty, Leadership, & Job Performance 25

solve such “human-versus-machine” conundrums (Dewhurst & Willmott, 2014). This study has

developed a model based on the theory of uncertainty management (Brashers, 2001) in an

attempt to contribute to those discussions from the interpersonal communication perspective. The

findings have shown that transformational leadership, coupled with digital literacy, promotes

constructive uncertainty management and helps organizational members maintain high

performance in the face of AI technologies implemented in their daily work experiences.

Transformational leaders utilize vision-driven, awe-inspiring messages to reframe tough

problems as profound opportunities; in so doing, they motivate followers to transcend personal

fears and achieve ambitious goals that they would not consider challenging without the leaders’

support (Bass & Riggio, 2006; Hannah et al., 2016; Siangchokyoo et al., 2020). Such inspirations

help organizational members stay deeply engaged in their work and expend full-fledged efforts

even in the face of uncertainty caused by major organizational changes (Chen et al., 2019; Shin

et al., 2015). The current findings suggest, however, that the impact of those transformational

discourses is conditional. Visionary messages lose their significance if they are not buttressed

with context-relevant competence in digitalized modern organizations.

 AI Uncertainty, Leadership, & Job Performance 26

Notes

1
The service provider, Macromill, had the top share in the market research industry in

Japan as of the current study’s data collection (Japan Marketing Research Association, 2019).
2
In the screening process, respondent candidates were asked about their occupation, and

only those who were identified as full-time white-collar employees were included in this study.
3
Several measures were undertaken to ensure the data fidelity. First, attention checks

were included at random places within all surveys. For example, one question specified that a

particular response should be selected (“This is an attention check; please choose ‘strongly agree’

for this item.”) and the data provided by those who failed to follow the instruction were removed.

Second, the cases where the time spent to complete the survey was either too short or too long

(i.e., ±3SDs) were removed. Third, the IP address of every response was inspected. There was

one case where the response to both for-supervisor and for-employee surveys had been sent from

the same IP address; this case was removed. Fourth, at the end of the Wave-1 for-supervisor

survey was included an invitation to a lottery to win 5,000 JPY (approximately $50). To be

included in the lottery, supervisors were asked to enter their name and e-mail address. Those e-

mail addresses were inspected by the personnel of the research service used in this study; none

matched with the respondents’ e-mail address registered to the service. Finally, from among

those supervisors who entered corporate address for the lottery, about 10% were randomly

selected and contacted via e-mail to confirm their identity.

4
All respondents were Japanese citizens. Most of them were employees of Japanese

companies, whereas a fraction (approx. 10%) of them were working at Japan offices of

international/multinational companies.
 AI Uncertainty, Leadership, & Job Performance 27

5
Initially, 1,500 respondents were identified after the screening process, to whom an

invitation for participation was sent. From this initial pool, 17 were removed by the data-fidelity

checks detailed in Note 3. Another 92 dropped at Wave-1 as the response to the for-supervisor

and/or for-employee surveys was not returned. Additional 73 dropped at Wave-2, yielding the

final sample of 1,318 member-supervisor dyads who completed both surveys at Waves 1 and 2.
6
This study represents part of a larger research project; respondents and supervisors

provided data not used in this study at both waves (the questions tapping the focal constructs

examined in this study represented about one-third of the entire questionnaire at each wave).
7
McDonald’s ωs were estimated based on CFA factor loadings computed with Mplus 8.5.

Computations were run based on Hayes and Coutts’s (2020) procedure. The confidence intervals

were estimated using the bootstrapping process with 10,000 iterations.

8
The impact of the demographic variables measured for the current study (Table 1) was

examined by running an alternative SEM, in which the demographic factors were entered as

control variables. The results suggested that the statistical significance and direction of the

effects among the focal variables did not change. For the brevity’s sake, the results of the

analysis without demographic variables are presented in this article. The details of the parameter

estimates computed for the alternative model are available from the author upon request.
9
Both data on employee-rated TFL and DLL or supervisor-rated job performance of

employees included minimum values of the 7-point scale; also, the skewness, kurtosis, and

standard deviation of those data are found equivalent to those of the self-report uncertainty data.
 AI Uncertainty, Leadership, & Job Performance 28

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 AI Uncertainty, Leadership, & Job Performance 39

TABLE 1: Means, Standard Deviations, Bivariate Correlations, and Reliability Coefficients (N = 1,318)

Variable M SD 1. 2. 3. 4. 5. 6. 7. 8. 9.

1. Member Age 26.89 3.22 —

2. Member Sex1 0.34 0.47 −.02 —

3. Supervisor Age 36.97 5.18 .05 .00 —

4. Supervisor Sex1 0.14 0.35 −.02 −.04 .00 —

5. Employee-Supervisor Tenure 3.81 2.71 .65*** .12*** −.01 −.02 —

6. Uncertainty 4.49 1.43 .19*** −.21*** .13*** .04 −.11*** .89

7. Transformational Leadership 4.26 1.30 .01 .01 .04 .01 −.03 .01 .92

8. Digital Literacy of Leaders 4.36 1.40 −.05 .05 −.21*** .00 .03 −.13*** .06* .82

9. Job Performance 3.92 1.46 −.03 −.07* −.08** .06* −.09** −.15*** .29*** .15*** .85

1
* p ≤ .05 ** p ≤ .01 *** p < .001 Sex: 0 = Male; 1 = Female

NOTE. Values in diagonal cells are the point estimates of McDonald’s omega. Variables 6.-9. were on a 7-point Likert scale (1 =

“Strongly disagree”; 4 = “Neither agree nor disagree”; 7 = “Strongly agree”).

 AI Uncertainty, Leadership, & Job Performance 40

TABLE 2: Robust Maximum Likelihood Estimates of SEM Parameters (N = 1,318)

Variable Unstd. SE 90% CI Std.

(Outcome: Job Performance)

Uncertainty (U) (H1) −0.127*** .03 −0.194 to −0.059 −.124

Transformational Leadership (TFL) (H2) 0.418*** .03 −0.337 to −0.492 .369

Digital Literacy of Leaders (DLL) 0.134*** .03 −0.066 to −0.203 .129

U × TFL (H3) −0.097*** .02 −0.150 to −0.052 −.145

U × DLL 0.046** .02 −0.005 to −0.094 .070

TFL × DLL (H4) 0.103*** .02 −0.061 to −0.148 .169

U × TFL × DLL (H4) −0.005 .01 −0.020 to −0.025 −.005

* p ≤ .05 ** p ≤ .01 *** p ≤ .001 NOTE. Unstd. = Unstandardized estimate. SE = Standard

error. Std. = Completely standardized estimate. CI = Confidence interval.

 AI Uncertainty, Leadership, & Job Performance 41

FIGURE 1:

Structure of the Relationships among Uncertainty, Transformational Leadership, Job Performance, and Digital Literacy

H4

H2

H3

H1
 AI Uncertainty, Leadership, & Job Performance 42

FIGURE 2:

Conditional Means of Job Performance vis-à-vis Uncertainty, Transformational Leadership, and Digital Literacy of Leaders