An Empirical Survey of the Relationship between Transformational Leadership and Staff Retention in the Context of Microfinance Institutions in Kenya
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Date
2022-05-09
Journal Title
Journal ISSN
Volume Title
Publisher
Economics and Business Quarterly Reviews, Vol.5 No.2 (2022)
Abstract
Retention of the desired staff is a key determinant of success in microfinance institutions in the modern competitive
world. Notably, these institutions experience poor staff retention due to inappropriate leadership. Investigations
on the effect of transformational leadership on staff retention have largely considered transformational leadership
as a unidimensional construct than its respective dimensions of idealized influence, inspirational motivation,
intellectual stimulation and individualized consideration. This study therefore investigated the effect of
transformational leadership on staff retention in microfinance institutions in Nairobi City County, Kenya,
specifically the effect of idealized influence, inspirational motivation, intellectual stimulation and individual
consideration on staff retention. The underpinning theories were Transformational Leadership Theory, LeaderMember Exchange Theory, Social Exchange Theory, and Resource-Based View Theory. The study was guided
by the positivism philosophy and descriptive and explanatory research designs. A total of 298 respondents was
obtained through census sampling from the 12 accessible microfinance institutions licenced by the Central Bank
of Kenya in Nairobi City County. Primary data was collected from senior, middle and lower-level management
staff in the headquarters of these institutions, using structured questionnaires. The data were analysed using
descriptive and inferential statistics, while hypotheses were tested at 5% significance level using regression
analysis. The study established that transformational leadership significantly predicts staff retention through
idealized influence, intellectual stimulation and individualized consideration. The study recommends that the
policy makers in the microfinance institutions should align transformational leadership practices with the staff
retention strategies for the success of these institutions.
Description
Journal Article
Keywords
Transformational Leadership, Idealized Influence, Inspirational Motivation, Intellectual Stimulation, Individualized Consideration, Staff Retention, Microfinance
Citation
Kariuki, Josphat K. and Wandiga, Eunice N. and Odiyo, Wilson O., An Empirical Survey of the Relationship between Transformational Leadership and Staff Retention in the Context of Microfinance Institutions in Kenya (May 9, 2022). Economics and Business Quarterly Reviews, Vol.5 No.2 (2022), Available at SSRN: https://ssrn.com/abstract=4104339