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Service quality
Transformational leadership in e-commerce
and service quality in businesses

e-commerce businesses
The role of trust and team performance 23
Mehri Mahdikhani and Bita Yazdani Received 27 December 2018
Revised 4 May 2019
Department of Management, Najafabad Branch, Islamic Azad University, Accepted 10 February 2020
Najafabad, Iran

Abstract
Purpose – The purpose of this paper is to examine the transformational leadership and service quality in
the businesses active in the field of e-commerce with the mediating role of trust and team performance.
Design/methodology/approach – Survey questionnaires were administered on a 384-subject sample of
the employees of the teams working in electronic businesses in Iran. The structural equation modeling and
partial least square techniques were used to analyze the data.
Findings – The results showed that transformational leadership has a positive impact on service quality
and improves team performance. The effect of transformational leadership on the interpersonal trust and the
trust on the team performance are also positive and significant. In summary, the improved performance also
has a positive impact on service quality.
Research limitations/implications – The main limitation is the assessment by questionnaire because
the questionnaires measure the attitudes of individuals, not the facts as they are, and the attitudes of
individuals usually involve personal judgments and prejudices in the research. Also, examining the research
model in different cultural domains may provide different results because of being influenced by different
cultures. Hence, the authors recommend that the findings should be examined in other communities with
different cultures.
Originality/value – Evaluating the impact of the transformational leadership on service quality
(SERVPERF scale) by a survey of team trust and performance in e-business is an innovation in the influence
assessment of these variables. The present research is considered applicable to the management science as
new findings in organizational behavior studies and recognition of transformational leaders, as well as the
positive impacts of the characteristics of them on individuals and followers.
Keywords Trust, Transformational leadership, Team performance,
Service quality SERVPERF scale
Paper type Research paper

1. Introduction
The business environment is rapidly changing (Nisar and Prabhakar, 2017). The emergence
of e-commerce is one of the major technological developments in the past 20 years, which
has led to a revolution in world trade (Karavdic and Gregory, 2005). In the transition from a
traditional economy to modernity, e-commerce has eliminated the problem of time and
distance in transactions (deals) and reduced the costs in the production process; thus, it has
turned into a dynamic factor in the economy (Savrul and Kılıç, 2011). The advantages of e- International Journal of Law and
Management
commerce include further flexibility, market expansion, lower costs structure, faster deals, Vol. 62 No. 1, 2020
pp. 23-46
wider production lines, more comfort and customization (Brynjolfsson et al., 2009). In © Emerald Publishing Limited
1754-243X
addition, companies with secured payment systems have increased the purchase from DOI 10.1108/IJLMA-12-2018-0290
IJLMA virtual markets and encouraged consumers to buy from virtual markets (Nisar and
62,1 Prabhakar, 2017). The websites are the most important global distribution channels for
goods and services in e-commerce. They are not only a tool for supporting the deals and
transactions but also a channel for the communication of businesses with their consumers
(Al-Natour et al., 2011).
Changes also cause new challenges in the organizational structure, management
24 practices and leadership. Instability in the external environment affects the restructuring,
predictions and adaptation to changes. As Fulmer et al. (2000) pointed out, globalization,
deregulation, e-commerce and the rapid change of technology make the companies re-
evaluate their methods of activities. Fluctuations and complexities create an unpredictable
environment (Milliken, 1987), which may influence the type of emerging leadership. In the
new business space (emergence of the internet and online trading), the e-commerce
businesses also face many challenges and obstacles such as inappropriate infrastructures
and weakness in providing communication platforms, legal and cultural challenges (some
people prefer direct purchase instead of online shopping), marketing issues, the lack of
necessary education and information on the benefits of e-commerce and so on (Fleenor and
Raven, 2002).
In such an unstable environment, businesses cannot create their strategic re-coalition
without transformational leaders (Beugré et al., 2006), who create and promote innovation
by providing the right organizational culture and effectively increasing the employees’
participation in the decision-making. The rapid process of environmental changes and
uncertainties reveals the need for committed leaders to inspire followers in achieving the
organizational goals (Lengnick-Hall, 1992; Roberts, 1998). The ability to exercise power on
subordinates and followers is one of the most important elements of leadership. In every
business, success and short-term attitudes to environmental changes have caused the
managers to see the organization and management as a system and evaluate the behavior of
employees with such an attitude; also choose their style of leadership based on existing
conditions with the realism and according to the nature of work, description of duties and
the characteristics of employees (Farajpour et al., 2014). The concept of transformational
leadership originates from the new theories of leadership such as the theory of charismatic
leadership. According to many scholars, the primary motivation for leadership is the desire
for change. The transformational leaders in practice develop innovation and creativity,
increase the convergence, expand teamwork and increase the employees’ morale by using
the strategies of change and transformation (Cronin and Taylor, 1992). In the theory of
transformational leadership, the particular behaviors of the leader change the values, needs,
preferences and the goals of the followers and prepare them to do things beyond their power
(Mittal and Dhar, 2015; Wang et al., 2016). The transformational leaders achieve the
expected results through their followers by using idealized influence, inspirational
motivation, intellectual stimulation and individualized consideration (Bass, 2008; Bass and
Riggio, 2006).
The necessity to delegate organizational activities for people in the form of teams has
been revealed with the arrival at the global arena and the intense international competition,
the development of human knowledge and further specializing of jobs, economic problems,
changes in the organizational and managerial structures, etc (Woodcock, 2006; Katzenbach,
1998). What that helps organizations increase their ability to cope with the challenges is to
form appropriate and effective teams (Procter and Currie, 2004), which brings more
adaptation, creativity and productivity for people and improves the performance followed
by increased employees’ satisfaction (Salas et al., 1997). The teams provide a variety of
attitudes, knowledge, skills and experiences that are the best response to problems and
provide flexibility in facing the challenges and encourages performance and satisfaction Service quality
(Rico et al., 2011). However, the team-based structures need leaders not only able to lead and in e-commerce
motivate people but also capable of leading and conducting the whole team (Braun et al.,
2013).
businesses
The majority of research studies in the field of leadership has been done so far on the
transformational leadership (Braun et al., 2013). Its effect has been measured on various
variables such as organizational citizenship behavior, organizational innovation and
innovation in followers, job performance, managerial performance and organizational 25
performance, employees’ creativity, effectiveness, employees’ motivation and satisfaction
and so on. (Bottomley et al., 2015; Majeed et al., 2017; Nusair et al., 2012; Herman and Chiu,
2014; Jyoti and Bhau, 2015; Ng, 2017; García-Morales et al., 2012). The effect of
transformational leadership on service quality (Lee et al., 2011; Farazmand and Lebasi, 2015;
Schaubroeck et al., 2016) is a topic that has been less considered. A common goal for the
providers of goods and services is to meet the growing needs of the customers and provide
high-quality products and services to them. Based on literature related to marketing, service
quality and customer satisfaction have always been concerns for the researchers
(Pantouvakis and Patsiouras, 2016). Some examples are as follows: evaluation of service
quality in health care centers and hospitals (Meesala and Paul, 2018), banks (Lee et al., 2011),
universities (Najafi et al., 2014) and small and medium-sized enterprises (Pantouvakis and
Patsiouras, 2016). However, service quality has been generally measured from the
perspective of customers, and the SERVQUAL scale has been more used in evaluating
service quality (Jabnoun and Juma AL Rasasi, 2005; Lee et al., 2011; Meesala and Paul, 2018;
Chui et al., 2016). In the present study, service quality was measured from the employees’
point of view, which has been of lesser interest to the researchers. A good thing about this
research is that by asking the staff, they will be better informed about how they can provide
their services and can identify the deficiencies of their work to resolve them. Also, the
SERVPERF scale was used to assess service quality because of the ease of use, as well as its
higher validity of the evaluation. This scale has been less used.
Various studies have also demonstrated the effect of transformational leadership on
motivating the followers, increasing trust and commitment (Jain et al., 2019) and improving
the efficiency and performance (Arnold et al., 2001; Altunog lu et al., 2019). For example,
studies on the impact of transformational leadership on the team performance (Chi and
Huang, 2014), the creative behavior of working teams (To et al., 2015), the transformational
leadership relationships, confidence in the team and the supervisor, job satisfaction and
team performance (Braun et al., 2013) indicate a positive correlation between
transformational leadership and team performance. We also sought to confirm the impact of
transformational leadership on team performance by measuring the trust among the team
members. Previous studies have mostly examined the influence of leadership and trusting
the leadership (Dirks and Ferrin, 2002). However, the present research focused on the role of
leadership in trust building among the employees (Lau and Liden, 2008; Braun et al., 2013)
and also measured the effect of trust among the members on the performance of the team.
With the growth of changes in today societies, global e-commerce development, the
tendency of businesses to provide online products and services and more interaction with
customers to satisfy customers as much as possible, as well as the consumers welcoming to
e-purchases because of ease of purchase, comparison of prices and cost savings in cost and
time as mentioned above, more familiarity of senior executives, Chief Executive Officers
(CEOs) and entrepreneurs with the subject of e-commerce and turning to online trade and
business, and most importantly, choosing the individuals with the spirit of teamwork and
with appropriate leadership guidance appear to be as necessities of all types of nowadays
IJLMA businesses to meet the goals and gain competitive advantage. On the other hand, as a
62,1 member of the global community, the businesses know that they will undoubtedly fail if
they do not conform themselves to these changes. Thus, they need to get familiar with the
sciences, new skills and leadership styles tailored to implement technologies and use
technologies to achieve their goals. Hence, it seemed essential to do research to understand
and recognize a style of leadership capable of directing and conducting the forces, accepting
26 new conditions and changes. Such leaders develop the culture through social influence and
guide the employees to achieve their goals by influencing them. By involving these
dimensions of variables, the transformational leadership was studied in managing active
teams in a variety of businesses. The trust coming with transformational leadership in team
members will affect the team performance, as well as service quality provided. Ultimately,
the lack of a kind of context specificity in the research on the area of leadership has been
widely criticized. Accordingly, based on the aforementioned, the main objective of this study
was to examine the transformational leadership and its impact on the service quality in less
studied area of businesses active in the field of e-commerce through evaluating the role of
team performance and the trust between team members as essential intermediary variables.
Hence, the main question of the research that we need to answer is as follows: is the
transformational leadership effective on service quality in active businesses in the field of e-
commerce with the mediating role of trust and team performance?

2. Theoretical development and hypotheses

In today’s businesses, in addition to defined and purposed prospects and financial capitals,
human capitals also play a key role in the success and achieving a sustainable competitive
advantage in the field of business activity (McGregor et al., 2004). On the one hand,
businesses’ performance depends on those who manage them (Zaccaro and Klimoski, 2002).
Management approaches to employees have changed, and the focus on leadership has
grown. Leadership is an important principle of organization, as leaders have a great impact
on the decisions and the direction of the organizations (Porter and Nohria, 2010). Influencing
in followers and communicating as a team is a duty of leadership role (Bennis, 1997).
Leadership is a process of interactivity between leaders and subordinates as the leader is a
person who always tries to guide and support subordinates and affect the behavior of
subordinates to achieve organizational goals (Yukl, 2009).
Leadership is important in most societies and organizations in achieving fundamental
issues (prospects, values, missions, goals, etc.). Hence, in the present era, traditional and
classical practices in the management of organizations are unable to deal with changes and
challenges and require new styles of leadership (Glen, 2003). One of the new theories on
contemporary leadership styles has been called the “full-range leadership theory,” that
showed three types of leadership behavior: transformational, transactional and non-
transactional laissez-faire leadership (Bass, 1985; Bass and Avolio, 1994; Hunt, 2004;
Antonakis and House, 2014). In this study, transformational leadership is proposed by the
researcher.

2.1 Transformational leadership

The transformational leadership theories were initially introduced by Burns from the late
twentieth century (1978) and later developed by Bass (1985) and Avolio (1988) (Majeed et al.,
2017). The transformational leaders use mental stimuli to challenge their followers’
thoughts, imaginations and creativity. These leaders ask their followers to find new
methods and approaches to solve the problems (Avolio et al., 2004). Bass (1990) believes that
transformational leaders encourage followers to fulfill transcendental goals. He describes
the transformational leadership as a process of establishing a commitment to the Service quality
transcendental goals of the organization and empowering the followers to achieve the in e-commerce
goals. In his view, a transformational leader is the one who empowers the followers,
motivates them and encourages them to seek group goals rather than pursuing personal
businesses
interests. These leaders use all their intelligence, talents and abilities to promote the ideals of
others aimed at improving the performance of individuals and the organizations (Mirkamali
et al., 2011).
According to Bass’s (1985) theory, transformational leadership has four dimensions of 27
idealized influence, intellectual stimulation, inspirational motivation and individualized
consideration (Bass, 1990; Bass et al., 2003; Mittal and Dhar, 2015).
2.1.1 Idealized influence. It describes leaders who are strong models for their followers.
The pride, charisma, loyalty and respect from the followers to the leader transmit the sense
of idealism (Bass and Avolio, 1994; Bass and Riggio, 2006; Eberly et al., 2017).
2.1.2 Intellectual stimulation. Intellectual stimulation or subjective persuasion plays an
important role in the organizational changes. Transformational leaders try to encourage
their followers to be creative and innovative. Bass defines intellectual stimulation as a
motivator for followers to think about beliefs, values and become aware of the problems and
their solutions. Through intellectual stimulation, transformational leadership promotes the
ability of followers to understand the nature of the organization’s problems (Bass et al., 2003;
Bass and Riggio, 2006).
2.1.3 Inspirational motivation. The inspirational motivation represents the leader as a
character that encourages followers to show proper behavior through inspiring.
Inspirational motivation is to initiate motivation in the followers through their emotions
(Bass et al., 2003; Bass and Riggio, 2006; Engelen et al., 2015).
2.1.4 Individualized consideration. Individual attention and considerations include
spending the time to train behavior and interaction with subordinates to grow and develop
their abilities. Transformational leaders spend a lot of time educating and training
individuals (Epitropaki and Martin, 2005), which improves the performance of individuals,
leading to improved organizational performance (Bass et al., 2003; Bass and Riggio, 2006;
Mittal and Dhar, 2015).
Over the past three decades, transformational leadership has been recognized as the most
prominent theory to understand the effectiveness of leadership (Avolio et al., 2009). The
actions of these leaders allow businesses to improve their performance in facing high-
turbulent and unpredictable environments. The use of transformational leadership is a
source of competitive advantage for companies. The use of such a competitive advantage
greatly helps in strategic competition and gaining higher yields in the short-term and long-
term. Without transformational leadership, the likelihood of achieving the better
performance of a firm will reduce in meeting economic challenges (Ansari and Teimouri,
2007).

2.2 Transformational leadership and team performance

The increasing development of human knowledge and the specialization of businesses, the
advances of the world toward a single economy and the intense international competition
have created major changes in the organizational structures, which have increased the need
for working in the form of teams. Woodcock (2006) thinks a team is a group of people who
share common goals who need to work together to achieve such goals. Katzenbach and
Smith also believe that team is a set of individuals with complementary skills, in which, the
members consider themselves accountable for achieving their shared goals, are committed
and make effort accordingly. The behavior of individuals in a team is different from the set
IJLMA of tasks that they perform on their own. The behavior of the members affects the team and
62,1 also is influenced by the team (Haghighifard et al., 2008).
The first efforts in the study of teamwork processes date back to the 1950s and 1960s.
Those studies were focused mainly on military teams and their processes to help them
operate better in tough and stressful situations (Gil et al., 2005). The energetic, emotional and
encouraging expressions have a positive effect on the followers’ morale (Hur et al., 2011),
28 which reduces the effects of job burnout and occupational stress phenomena (Bono et al.,
2007). The positive impact of transformational leadership on the effectiveness and
performance of the leader has been confirmed at the individual, group and organizational
levels (Burke et al., 2006; Hur et al., 2011). Therefore, according to the above studies, one can
realize that transformational leadership can improve team performance. The
transformational leaders affect the team environment while changing the attitudes and
values of the followers toward the collective goals. The transformational leaders, create an
atmosphere within the team that the employees realize that they are able to achieve higher
goals than those they originally had in mind (Hur et al., 2011). This leads to the positive
performance of the team in the subjective (Schaubroeck et al., 2007) and objective (Rowold
and Heinitz, 2007) indices. Kane (1996) believes that the performance refers to what the
person leaves behind a record and is created without regard to the goal. The leadership in
individual features and situational factors affects the performance (DeShon et al., 2004). The
evaluation of the success rate of work teams is not an easy task because of the high human
nature of the teams. The term “performance” means doing a job or task (Haghighifard et al.,
2008).
Mening and Kortis’s (2003) studies showed that transformational leaders use optimism,
motivation, intelligence and many of their personal abilities to promote the ideals of
followers and increase the individuals’ level of performance. Stashevsky et al. (2006) also
found that in their results that the transformational leaders well transfer the importance,
mission and organizational goals to the employees, which will lead to more workforce efforts
(Hosseinitabaghdehi and Khalatbari, 2012). In other studies, the influence of
transformational leadership has been also evaluated: efficiency/performance of the team in
the military (Lim and Ployhart, 2004). Financial performance for a large service company,
whose managers had the characteristics of transformational leaders (Howell and Avolio,
1993). Significant effect on the achievement of annual performance goals in the field of
transportation (Rowold and Heinitz, 2007). A strong correlation between the perceptions of
transformational leadership followers and the team’s positive performance in two diverse
cultural areas in Hong Kong and the USA (Schaubroeck et al., 2007) indicated that the
leadership has a positive and increasing influence on the team performance (Liu et al., 2015;
Mohammadian and Ghahremani, 2015; Rao and Kareem Abdul, 2015). Transformational
leaders emphasize the relationship-based performance, which includes ethics, cooperation
and participation, peaceful competition and humility in achieving goals (Majeed et al., 2017;
Bass and Riggio, 2006). Braun et al. (2013) found that the team understanding of
transformational leadership is a major driving force for the team performance. They also
proved a positive and significant relationship between team performance and the team
perceptions of transformational leadership. In Lee et al. (2011) a meaningful relationship was
confirmed between the dimensions of transformational leadership and three dimensions of
the team’s performance (team integrity, competency and team leader’s job satisfaction).
Also, the dimensions of team performance in their research introduced the predictors
of dimensions (reliability and accountability) in service quality showed that all
correlations were statistically significant between the constructs. In another study,
Wang and Howell (2010) concluded that the dimensions of transformational leadership have Service quality
a positive relationship with the team and team performance. in e-commerce
As already mentioned, we sought to confirm the impact of transformational leadership
on team performance in this study. The teams with transformational leaders can achieve a
businesses
higher level of performance. Therefore, we assumed that transformational leadership has a
positive impact on the team performance of existing businesses active in the field of
electronic commerce. Considering the arguments presented above, we propose the following
hypothesis:
29

H1. Transformational leadership has a positive and significant effect on team

performance.

2.3 Trust
The first empirical studies on trust have dined in the late 1950s and early 1960s. The
researchers investigated trust as an individual characteristic and in the private relationships
of the individuals. Trust came to the focus of attention from the late 1980s and early 1990s
(Holste, 2003). Trust is one side’s willingness to act on the other side’s actions (Mayer et al.,
1995). Despite differences in the definition of trust, most researchers find the people’s
positive expectations about the behavior of others and a group of tendencies about the
vulnerability to others among the main elements in the definition of trust. In most
definitions, trust is related to the individual characteristics involved with the motivations
and intentions in the behavior of individuals (Costa, 2003).
Trust is one of the most important factors that influence organizational interactions and
the success of an organization (Caldwell and Dixon, 2010; Dirks and Ferrin, 2001). According
to researchers in recent research studies, there are two types of trust, one based on the
cognition and the other based on the feelings and emotions (McAllister, 1995; Mayer et al.,
1995; Wang et al., 2010). The structure of trust can vary with respect to the rational or
emotional root in interpersonal relationships. This difference causes changes in the quality
and outcomes of relationships between individuals (McAllister, 1995). In cognitive trust,
individuals are looking for a rational basis for trusting others (Erdem and Ozen, 2003). Here,
trust means that under what conditions and with what documents the individuals trust each
other. The emotional dimension refers to the emotional relationships among individuals
where a kind of emotional relationship occurs with a person or object that comes from
understanding emotions and motivations (McAllister, 1995). Cognitive and emotional
structures can be related to each other. In close relationships among individuals, emotional
trust is formed based on cognitive trust (Holmes and Rempel, 1989). Cognitive trust is more
important at the beginning of the relationship, and when the relationships are tightened,
emotional trust becomes important (McAllister, 1995). Trust will create individual and team
development and improvement by building solidarity between the team members and will,
directly and indirectly, affect the individual and team performance. Success in the
competitive business world requires the development of interpersonal relationships based
on trust. The major focus of this study was on the trust in the team and team members.

2.4 Transformational leadership, team performance and trust

The fundamental developments and changes in organizational sciences have highlighted
the crucial role of trust-based relationships in maintaining individual and organizational
effectiveness (McAllister, 1995). The trust-based relationships bring about political
transparency, effective communication and collaboration skills among the members. Trust
IJLMA is one of the most important factors in creating interactivity and synergy among the
62,1 members (Erdem and Ozen, 2003). Today, in the face of growing demands for a competitive
and complex environment, the organizations seek for cooperation and teamwork as a
solution to deal with the challenges and small and large problems among the hierarchical
levels and cultures (Boies et al., 2015). The trust among the team members is one of the key
elements in ensuring the useful performance of the team (McAllister, 1995; Boies et al., 2015).
30 The trust among the individuals increases the ability of the team members to work together,
which improves team performance (Dirks, 2000). The trust between members of the team is
resulted from the indirect effect of leadership on the team members by stimulating the
communications within the team (Boies et al., 2015). Trust in the leader is a psychological
state that includes positive expectations about the leader’s goals or behavior in risk
situations (Gao et al., 2011). Trust is not only about leader-follower relationships but also for
interactions between team members (Braun et al., 2013). Interpersonal trust plays an
important role in building and keeping social relationships, promoting collaborative work
and effective teamwork (Alsharo et al., 2017).
The initial trust among members is formed based on judgments on the similarity of
demographic characteristics (Costa, 2003) and the information about the members of the
team. Such information is transmitted through initial communication between the team
members. This quick communication process transfers the information involving the
judgments of the team members about the abilities of their teammates to create a trust
(Mayer et al., 1995). Recent studies have introduced leadership as one of the most important
determinants of trust (Colquitt et al., 2007; Dirks and Ferrin, 2002; Jain et al., 2019). When
followers trust a leader, they are certain that their interests will not be abused (Mayer et al.,
1995). Trust is generally used to measure the quality of social exchange between followers
and leaders (Schaubroeck et al., 2011). From another perspective, the increase of followers’
trust in the leader is one the main mechanism of influence in the transformational leadership
(Podsakoff et al., 1990; Zhu et al., 2013). The characteristics of transformational leadership
(especially being ideal, inspirational and emphasizing the emotions and motivation)
encourage communication processes, creating open communication and trust members
(Bass and Avolio, 2000).
Moreover, Jung and Avolio (2000) suggested trust as a mediating variable in the
relationship between transformational leadership and followers’ performance. Trusting the
team is one of the significant bases in creating a friendly environment and teamwork among
the members to achieve better results. The behaviors of transformational leaders toward the
teams include the emphasis on the team identity, creating a team perspective and group-
making (Wang and Howell, 2010). They guarantee the trust between the members of the
team. Indeed, they show that the teams are trustful entities within themselves so that the
members with a transformational leadership will reach a common and a similar
understanding of the team trust over time (Braun et al., 2013; Wildman et al., 2012). In
particular, transformational leaders increase the trust of their followers as a role model (Jung
and Avolio, 2000; Jain et al., 2019). Therefore, trust is a key element and acts as a facilitator
in enhancing team performance by promoting collaboration among members (Pinjani and
Palvia, 2013). The major focus of this study was on the trust in the team and members.
Therefore, it was assumed that the trust has a positive relationship once with
transformational leadership and once with the team performance as a mediating variable.
Lee et al. (2010) in their research focused on leadership and trust and its impact on
knowledge sharing and team performance, founded that leaders who share and develop
their skills in innovative ways, build confidence in team members, which increases the
willingness of individuals to disclose ideas and views. The influential and inspirational
behavior, as well as the individual attention of the transformational leader toward followers, Service quality
increase their trust. Also, those members who share a common understanding of trust in in e-commerce
their teammates will feel more satisfied (Braun et al., 2013), which improves their
performance. Hence:
businesses

H2. Transformational leadership has a positive and significant impact on trust.

H3. Trust has a positive and significant impact on team performance. 31

2.5 Service quality

In recent years, studies on service quality have drawn the attention of many marketing
researchers. Service quality enables organizations to gain a competitive advantage over
their competitors. Increasing service quality leads to enhanced customers’ satisfaction and
attention, positive oral advertising, reduced job quits and improved the financial
performance of companies (Ladhari, 2009). Providing service quality tailored to customers’
needs is essential for businesses’ survival and profitability, which not only will retain the
current customers but also is followed by their long-term loyalty and attracting new
customers. Through assessing service quality providing the staff, the internal domestic
strengths and weaknesses in the service delivery can be evaluated to take serious steps to
improve them. In competitive environments, customers do not buy the services just because
of their suitability, but the service and its quality have suggested the best perceptual value
to them according to their right to choose (Groth and Dye, 1999).
A lot of research has been done to find the best model to measure service quality and
scholars such as Sasser et al. (1978), Gronroos (1984), Johnsen et al. (1995), Parasuraman et al.
(1988), Cronin and Taylor (1992) and Patterson and Johnson (1993) have developed and
provided various tools during various surveys to assess service quality. However, the
SERVQUAL is the most common model for measuring in the literature on service quality,
which was founded in 1988 based on the gap model by Parasuraman et al. This model was
studied in four service sectors, including a bank, a repair company, a stock providing
company and a credit card company. The quality assessment of services in this model is
based on the real understanding of customers from service quality offered in comparison to
the ideal situation in their opinions. Based on this model, the customers’ expectations and
perceptions about the dimensions of the service quality can be measured with five
dimensions (tangible items, reliability, validity, empathy and accountability) (Parasuraman
et al., 1988).
Despite numerous uses, this scale was frequently criticized. The most serious criticisms
of the SERVQUAL scale were made by Cronin and Taylor (1992). These criticisms included
the need to measure expectations, ambiguity in interpreting and making the expectations
applicable, validity and reliability in the subtracting scores between the customers’
expectations and their understanding of performance, cumulative relationships between the
five dimensions and assuming the customers’ expectations static or non-considering the
dynamism of their expectations over the time. They questioned the relation of a gap between
expectations and performance as the basis for measuring service quality and proposed the
SERVPERF scale. The SERVPERF scale directly examines the perceptions of the
performance in dealing with services (Hosseini et al., 2010). The performance-based scale
(SERVPERF scale) is a modified concept of the SERVQUAL quality of services
measurement (Carrillat et al., 2007). Brady et al. (2002) repeated and expanded the studies of
Cronin and Taylor and confirmed the priority of the SERVPERF scale for a better evaluation
of service quality. They believed in cases of difference and contradiction between the
IJLMA customer’s overall perceptions (expectations) and the performance, the SERVPERF scale
62,1 operates better than the SERVQUAL scale. Like the SERVQUAL scale, the SERVPERF
scale has 5 dimensions (tangible factors, reliability, validity, empathy and accountability)
and 22 components.
Transformational leaders create enthusiasm in the followers through verbal and
symbolic behaviors and create a positive atmosphere in the teams they are leading. The
32 positive effects experienced by the followers in the workplace increase the strong
motivational forces in the behaviors related to the service environment (Hur et al., 2011). By
emphasizing what is right or wrong about providing the services, the transformational
leader of the team acts as a role model through which the followers can internalize the values
of the work in line with the mission of the leader (Bono et al., 2007). Transformational
leadership has a positive relationship with all dimensions of service quality (Jabnoun and
Juma AL Rasasi, 2005). Lee et al. (2011) found that the intellectual motivation of the
transformational leadership, the job satisfaction of the team leader and the teamwork skills
of the team performance have an important influence on service quality. Farazmand and
Lebasi (2015) also realized that the dimensions of transformational leadership have a
positive impact on service quality through team performance. Thus, considering the
arguments presented above, we propose the following hypothesis:

H4. Transformational leadership has a positive and significant effect on service quality.
H5. The team performance has a positive and significant effect on service quality.
According to theoretical literature, we presented a model as shown in Figure 1, suggesting
the following: transformational leadership affects service quality. Transformational
leadership improves team performance. The transformational leadership has a positive and
significant effect on the interpersonal trust in the team and trusting in the team
performance.

3. Research methodology
3.1 Population, sample and data collection
Participants, in this study, were the employees of the teams in businesses active in the field
of e-commerce from several provinces with the largest electronic business share in Iran;
however, those were selected who had experience in team working. Some businesses only
operate electronically and compete only through their websites without having a place on
national and international scales. Some have also expanded their activities in the electronic
field and have entered the area of online electronic commerce, sales and services providing
along with many years of activities in the non-virtual environment. The list of businesses
were searched and extracted from information portals such as the e-business guild
association (www.eanjoman.ir), the symbol of the electronic trust portal (www.enamad.ir)

H1

Transformational H2 Trust in the H3 Team H5

Team Performance Service Quality
Leadership
Figure 1.
The conceptual
model H4
and the list of active businesses in the field of e-commerce (www.goodco.ir). The fields of Service quality
activity of the businesses participated in the research included the direct sale of various in e-commerce
goods, website design and search engine optimization services, developing and sale of businesses
various software and applications, educational, tourism, translation, and internet services,
services and consultations on legal affairs, employment websites and agencies, consulting
services in the fields of research and academic activities, etc. A total of 624 questionnaires
were distributed among the employees of the teams. The questionnaires were sent to the 33
participants through the e-mail system of businesses working in the field of e-commerce.
The confidentiality and anonymity of responses were guaranteed and emphasized that the
businesses would only collect the results. Finally, 384 questionnaires were returned for
evaluation.

3.2 Measures
The variables were measured through the following questionnaires: transformational
leadership using the Bass and Avolio multivariate leadership questionnaire developed in
1994 (Seyal and Rahman, 2014), team performance with two components of output and
process (Zolin et al., 2003; Karagozoglu, 2017), trust among people (Cook and Wall, 1980) and
service quality (Cronin and Taylor, 1992; Rasyida et al., 2016). The five-point Likert scale,
from score 1 (very low) to score 5 (very high), was used to measure all the items in the
survey.

3.3 Statistical analysis

Scientific studies have no purpose other than the truth, so they use an appropriate research
method. The choice of the appropriate method depends on the objectives, the nature and
subject of the research, as well as its operational capabilities. Quantitative research is an
approach for testing objective theories by examining the relationship between variables that
measure variables using tools. In the measurements, numerical data or data that can be
transformed into usable statistics are used. It is used to quantify attitudes, opinions,
behaviors and other defined variables and generalize results from a larger sample
population, also the final report has a set structure (non-integral) (Creswell and Creswell,
2017). As the purpose of this study is to investigate the transformational leadership and
quality of services in business activity in the field of e-commerce considering the role of
mediator of trust and team performance, in accordance with the variables studied,
hypothetical and subjective propositions about relationships between variables and the
purpose of this relationship is to examine these relationships. The present research is a part
of quantitative research. The structural equation modeling (SEM) with the partial least
square (PLS) approach was used for data analysis. The PLS method is the second generation
of structural equations originally developed by Wold in 1974 (Haenlein and Kaplan, 2004).
The SEM is a type of statistical methods for examining the relationships between variables
in a model. The power of this technique in the development of theories has led to its
widespread use in various sciences such as marketing, human resources management,
strategic management and information systems (Hair et al., 2013). The path analysis with
the PLS has many advantages compared to the first generation (covariance-based) methods.
The superiority of this method is in its small samples, non-normal data and handling with
formative measurement models (Ringle et al., 2012). In this study, the SmartPLS3 was used.
Also, the SPSS 24 was used for the descriptive analysis of data.
IJLMA 4. Results
62,1 4.1 Demographic information
Based on data analysis, the results showed that out of 384 employees in the study, 152 (6.39
per cent) were male and 132 (34.4 per cent) were female. The average age of employees was
34.78 years. Their age frequency distribution in the 30-40 age group had the highest
frequency with 130 subjects (33.39 per cent). The level of education at the master’s degree
34 with 172 subjects (44.8 per cent) and in the field of humanities with 222 subjects (57.8 per
cent) had the highest frequency rates. The occupational title of direct sales of goods with 139
people (36.2 per cent) had the highest frequency and the job title of job agency and
employment was the least frequent one with 4 cases (0.1 per cent). Regarding the activities of
the individuals in the team, the sales staff in a working team with 81 cases (21.1 per cent)
had the highest frequency. In terms of the number of team members, 284 (74 per cent) of the
employees were working in a team with 1-10 members. The average service record was
8.86 years whose frequency distribution of their service record has, respectively, the highest
frequencies in the ranges less than 5 years and 5-10 years with 185 cases (48.2 per cent) and
83 cases (21.6 per cent). In contrast, the range of 15-20 years with 2 cases (0.5 per cent) had
the lowest frequency. The descriptive information indicated that most respondents had
sufficient experience and knowledge to participate in the survey and provide reliable
information about the studied constructs.

4.2 Measurement validity and reliability assessment

4.2.1 Scales reliability. The index reliability, convergent validity and divergent validity were
used to assess the fit of the model. The index reliability was measured by three criteria of the
coefficients of factor load, Cronbach’s a (CA) and the composite reliability (CR). The factor
loads are obtained by calculating the value of the correlation between the indices of a construct
with that construct. If this value is equal to or greater than 0.4 (Hulland, 1999), it indicates that
the reliability of the measurement model is acceptable. It should be noted that if after
calculating the factor loads between the structures and their indices, the values less than 0.4
were found, those indexes could be modified or deleted. Thus, the factor loads of some
questions with a certain value less than 0.4 were deleted in the research model after the
measurement and the model was fitted again. Hence, the reliability of the measurement model
became acceptable. Concerning the internal reliability, the CA with a specific value higher than
0.7 (Cronbach, 1951) was assessed. All the values were obtained above 0.7. In the CR, each
construct with a value higher than 0.7 (Nunnually, 1978) confirms the proper fit. The values
were reported in accordance with Table I. It should also be noted that in structural equation
modeling, the CR is a better measure than the CA (Vinzi et al., 2010). In calculating CR questions
are weighted to their relative importance measured by their factor loadings, whereas for
calculating CA, all questions are given equal weights (Nunnually and Bernstein, 1994). This
makes the CR values of the constructs to have a more realistic and more accurate criterion than
the CA values. Similarly, in our study, the CR values are better than the CA.

Statistics on reliability Convergent validity Structural model fit

Variable AVE CA CR R2 Q2
Table I. Transformational leadership 0.658 0.856 0.822
Statistics on Trust 0.558 0.872 0.898 0.528 0.274
reliability and Team performance 0.681 0.906 0.913 0.393 0.148
convergent validity Service quality 0.781 0.821 0.865 0.392 0.148
4.2.2 Scales validity. Two types of validity evaluation, namely, content validity and Service quality
convergent validity were used to confirm the validity of the measurement tool. The content in e-commerce
validity was established by ensuring compatibility between the indicators of measurement
and the available literature. Several expert professors were consulted to determine
businesses
the content validity of the questionnaire. The convergent validity refers to the ability of
the indicators of one dimension to explain that dimension (Hulland, 1999). In this study, the
AVE criterion or the mean of the variance extracted related to the first-order variables was
used to assess the convergent validity. The results of this criterion are shown in Table I. The
35
criterion value for the acceptance level of AVE is 0.4 (Magner et al., 1996). All of the AVE
values for the structures were higher than 0.4, which confirms that the convergent validity
of the questionnaire is acceptable.

4.3 Structural model fit

Typically, three indices of the coefficient of determination (R2), significance coefficients (t-
values) and Q2 are used for structural fit in the PLS technique. The R2 shows the effect of an
exogenous variable on an endogenous variable. Higher values of R2 related to the endogenous
structures in a model suggest a greater fit. Chin (1998) defines three values of 0.19, 0.33 and 0.67
as the criterion values for the weak, moderate and strong values of the R2. In the present study,
according to Table I, most of the R2 values indicate the proper fit of the model for the structures.
The criterion Q2 was introduced by Stone (1974) and Geisser (1975). If the value of Q2 for an
endogenous structure becomes zero or less than zero, the relationships between other structures
of the model and that endogenous structure are not well explained, showing the weak
prediction power. Henseler et al. (2009) have determined three values of 0.02, 0.15 and 0.35 on
the strength of model prediction power for the endogenous structures. They believe that if the
value of Q2 for an endogenous structure is within the range close to 0.02, it will indicate the poor
power prediction of the model regarding the indices of that structure. In the present study,
according to Table I, the values of Q2 show a moderate prediction power.
The mean and standard deviation were also calculated with the measurement of the
skewness, kurtosis for the variables, which are given in Table II.

4.4 Structural model and testing the hypothesis

To validate the research hypotheses, the command “Bootstrapping” in the Smart PLS3 was
used that the output from the coefficients t represents the confirmation or rejection of the
hypotheses. The values of t greater than þ1.96 and less than 1.96 indicate the significance
and confirmation of the research hypotheses (Vinzi et al., 2010). The research results are
presented in Table III that these results support hypotheses.

5. Discussion
Today’s world is full of complexities that have hit businesses with many problems. The
leaders and administrators as the planners and pioneers of humanity will somehow face the

Variable Mean SD Skewness Kurtosis

Transformational leadership 3.56 0.42 0.036 0.076

Trust 3.73 0.43 0.112 0.663
Team performance 4.04 0.58 0.225 0.544 Table II.
Service quality 4.24 0.43 0.229 0.145 Descriptive statistics
IJLMA challenges mentioned. Physical assets, human resources, technology and management are
62,1 the constituent elements of each organization. According to many researchers, human
resources are considered among the most important organizational assets (Unger et al.,
2011). Hence, competent employees are an important and critical factor for sustaining
competitive advantage (Lee and Wen-Jung, 2005). Therefore, the training and recruitment of
leaders who are capable of confronting and acting effectively in complex and risky situations,
36 and the sensation that they create in responding to respond to potential challenges and
opportunities (Menguc et al., 2007) are more important than the past. In this context, the role of
transformational leadership involves guiding human resources, encouraging businesses to
team-building, choosing people with a teamwork spirit and creating a positive trust between
the team members, training dedicated and committed staff in providing services, which are
important factors affecting the business maturity, improvement of service quality, success in
competition, increased motivation in staff and their satisfaction, reducing the costs, preventing
the waste of resources, etc. Therefore, there is a need for further study and evaluation regarding
the selection of appropriate leadership style for businesses. The leadership styles have long
been the focus of researchers. In the leadership literature, the leadership styles have been
constantly linked to various variables and have been investigated, which were discussed in the
literature review section. Accordingly, the main goal of this study was to assess the effect of
transformational leadership on service quality through the mediating role of team trust and
performance. Five hypotheses were considered and examined. The findings were based on a
comprehensive case study.
First, we found that transformational leadership has a positive impact on team performance
with all dimensions. The transformational leaders have characteristics such as acting as a
model, doing inspirational motivation, intellectual stimulation and special attention to
employees. Through their interactions, they pass on the respect and loyalty of followers and
enhance the sense of team-orientation. These leaders are effective in developing the employees’
interests and their persuasion in solving problems by a new approach by intelligently
stimulating those (Bass, 1990). Clearly, a leader with transformational features will encourage
the individuals to get familiar with their abilities and use their individual talents and
innovations in the teamwork through influencing and motivating them, as well as paying
individual attention to the followers. The motivated people will undoubtedly have a positive
performance, and as the performance of the team members increases, the team performance
will increase as well. These results are consistent with previous claims suggesting the influence
of transformational leadership on the team performance in the leadership research (Burke et al.,
2006; Schaubroeck et al., 2007; Braun et al., 2013; Mohammadian and Ghahremani, 2015;
Farazmand and Lebasi, 2015; Rao and Kareem Abdul, 2015).
Secondly, as mentioned in the subject literature, trust is one of the underlying factors of
success and achieving goals for any type of business, which is the trust that members of the
team have to each other and to their administrator. The leaders with transformational

Path St. B t-statistics p-values* Hypothesis test

Transformational leadership ! team performance 0.228 3.948 0.000 H1 accepted

Transformational leadership ! trust in team 0.727 30.061 0.000 H2 accepted
Trust ! team performance 0.441 8.249 0.000 H3 accepted
Transformational leadership ! service quality 0.198 3.706 0.000 H4 accepted
Table III. Team performance ! service quality 0.495 10.079 0.000 H5 accepted
Hypothesis table
with t-statistics Note: *p-values for two-sided test
abilities and skills increase the trust among individuals through influencing people’s beliefs Service quality
and increasing the beliefs of individuals in the usefulness for the team and the organization. in e-commerce
Leadership is a concept of mutual trust based on values and shared vision. Otherwise, the
leader should excessively use the external imposing control, limiting regulations and
businesses
formalization. If an organization is founded based on shared values, its employees will be
more committed instead the employees understand the goals of the organization as a way to
achieve personal goals (Panahi, 2009). Jain et al. (2019) indicated Transformational leaders
have positive impacts on the trust and psychological well-being of their followers. Also, we 37
found that transformational leadership has a positive and significant effect on trust among
the members. These results extend the previous findings on trust and its relationship with
the leadership (Jung and Avolio, 2000; Dirks, 2000; Braun et al., 2013; Jain et al., 2019;
Altunog lu et al., 2019).
Our research showed that transformational leadership has a positive impact on trust. This
effect will lead to increased trust among members and improve team performance. In the teams
that the members trust each other, people have more compatibility and opposite opinions are
more easily accepted (Pinjani and Palvia, 2013). Members work closely with each other and in
times of crisis, they are together; these are the essential principles for gaining positive results
that lead to high team performance (Pinjani and Palvia, 2013; De Jong et al., 2016; Rezvani et al.,
2019). We confirmed that the trust between team members has a positive and significant
impact on the team performance, which is consistent with the studies by Schaubroeck et al.
(2007), Wildman et al. (2012), Braun et al. (2013) and Rezvani et al., 2019.
A possible achievement expected from our analysis was the influence of
transformational leadership as the head of the teams in active businesses in the field of e-
commerce on service quality provided by these businesses, which had not considered in
previous research. As it turns out, the service quality is extremely influential in attracting
and maintaining customers. Because of the results of research and the impact of
transformational leadership on service quality provided by the staff, one can claim that the
transformational leaders with positive attributes and influencing the followers to improve
their delivery of services. The outcomes of this achievement are in line with the opinions of
Jabnoun and Juma AL Rasasi (2005), Lee et al. (2011) and Farazmand and Lebasi (2015).
When the members of the team have a high and constructive performance, the services
provided by them to the customers and applicants of their products and services will be of
high quality and suitable for the customers. As the fifth hypothesis confirms, the team
performance has a positive effect on service quality provided by the employees of the teams
based on the businesses active in the field of electronic commerce, which is consistent with
the research by Farazmand and Lebasi (2015) and Lee et al. (2011).
Empirically, we proved and expanded the influence of transformational leadership on
service quality with a mediating role of trust and team performance in the businesses active
in the field of e-commerce. We are witnessing a daily increase in e-commerce in the age of
information and communication technology and the leadership alongside teamwork plays
an important role in the businesses of e-commerce. Also, considering the ongoing issue of
service quality and identifying shortcomings to improve the quality of services, the research
in this area is very small. Thus, this study is one of the few studies that widely and
empirically reveal the impact of transformational leadership on service quality with the
mediating role of team trust and performance in the businesses of electronic commerce.

5.1 Managerial implications

The organizational behavior studies play an important role in understanding how to properly
manage the employees and govern corporate and businesses. This research is a branch of
IJLMA organizational behavior studies in examining the impact of transformational leadership on
62,1 service quality with the mediating role of the team trust and performance in the businesses of
electronic commerce in Iran. The winner in today’s stressful societies are those businesses that
move with proper planning and vision and choose leaders and managers who use the material
and human assets and resources of the company by the most effective and efficient possible
methods. In an environment that is constantly changing, how talented the employees are, they
38 still need a capable and resourceful manager and leadership.
Given the available research and deep studies, the transformational leaders were recognized
as leaders with divine blessings, which has a positive influence on their followers by
influencing them and creating motives. They are leaders who create an organizational
perspective and act in communicating with their subordinates as such to accomplish the
transcendental goals of businesses with a lot of effort and endeavor. The managers and CEOs
of businesses in the field of e-commerce should know that if they do their best to satisfy the
employees in their business, they will see better performance in their staff both individually
and in the team working. They will also witness the delivery of higher quality services from
their employees. The service quality provided by the staff can be evaluated in terms of different
dimensions such as reliability, assurance, accountability, tangible factors and empathy. Two
dimensions of reliability and the power of accountability were measured in this study, which
plays a role in promoting the sales, gaining market share and having a competitive advantage
for them. Therefore, the managers of companies and businesses are recommended to pay
special attention to employees. They can encourage their employees with proper training of
staff in performing the duties in teamwork and how to treat the client, creating a safe and
peaceful environment for the employees and also giving rewards in accordance with the
members’ efforts, creating willingness to take responsibility and appropriate behavior and
providing services tailored to the customers’ needs to have successful high-performance teams,
as well as employees committed and loyal to the business.
Evaluating the impact of the transformational leadership on service quality with the
SERVPERF scale by a survey of employees and the role of team trust and performance in e-
business is seen as an innovation in the influence assessment of these variables. In addition,
it is considered applicable to the management science as new findings in organizational
behavioral studies and recognition of transformational leaders, as well as the positive
impacts of the characteristics of transformational leaders on individuals and followers,
which contribute to the performance of the team and service quality provided by the staff at
a satisfactory level.

5.2 Limitations and suggestions for future research

There are obviously a number of factors in the process of conducting any research that slows
down the achievement of the goals. The limitations and obstacles in the present research can be
mentioned as follows: the main limitation is in the questionnaires, which assess the attitudes of
individuals, not the facts as they are. The attitudes of individuals usually involve personal
judgments and prejudices in the research. Our results are merely based on data from
questionnaires, which can lead to specific tendencies with interfering the accurate results.
Examining the research model in different cultural domains may also provide different results
because of being influenced by different cultures. Therefore, testing the model in other cultures
is also important. The lack of similar studies and research on the surveyed subject, especially
for businesses active in the field of e-commerce is another limitation.
As the present study is one of the few studies in this field, the researchers are
recommended to validate and extend the proposed model. In terms of the subject and
comprehensiveness of using applied variables, as well as the scope of the territory at a
national scale, the present study provides a suitable ground favorable for future research. Service quality
The model was limited to the impact of transformational leadership on service quality with in e-commerce
the role of team trust and performance. Hence, we ignored the following: other forms of
leadership, other variables as an intermediary, investigating the impact of transformational
businesses
leadership on other dimensions involved in the team performance and investigating the
effect of transformational leadership on all dimensions of the service quality based on the
SERVPERF scale. Because of limiting factors, it was not possible to study all the dimensions
in this study. 39
The model proposed in this study can also be examined in other statistical societies. Given
the demographic and social characteristics, practical results can be achieved accordingly.

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Bita Yazdani can be contacted at: btayazdani@gmail.com

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