The Mediating Effect of Psychological Empowerment on the Relationship between Transformational Leadership and Staff Retention in Microfinance Institutions in Kenya
Loading...
Date
2022
Journal Title
Journal ISSN
Volume Title
Publisher
Economics and Business Quarterly Reviews, Vol.5 No.2 (2022)
Abstract
Retention of the desired staff in microfinance institutions has remained a major challenge as depicted from extant
literature. It is often associated with inappropriate leadership deployed in these institutions among other
antecedents. The current study, therefore, set out to establish the effect of transformational leadership on staff
retention in microfinance institutions in Nairobi City County, Kenya, as well as the mediating effect psychological
empowerment on the relationship between transformational leadership and staff retention in microfinance
institutions in Nairobi City County, Kenya. The study was guided by Transformational Leadership Theory, LeaderMember Exchange Theory, Social Exchange Theory, and Resource-Based View Theory and founded on the
positivism philosophy. Descriptive and explanatory research designs were adopted to guide the study. A sample
of 298 respondents was obtained from 12 microfinance institutions in the Nairobi City County, Kenya, through
census method for data collection. The unit of analysis was the head offices of the 12 microfinance institutions,
while the unit of observation was the senior management level, middle management level and lower management
level. Data was collected using structured questionnaires and analysed using descriptive and inferential statistics.
The hypotheses were tested at the 5% significance level. The study established that transformational leadership
was a significant predictor of staff retention, and that this relationship was partially mediated by the psychological
empowerment. The study recommends that the microfinance institutions management should align
transformational leadership practices with the strategic goals set for staff retention and emphasize on
psychologically empowering strategies for their staff.
Description
Journal Article
Keywords
Transformational Leadership, Psychological Empowerment, Staff Retention, Microfinance
Citation
Kariuki, Josphat K. and Wandiga, Eunice N. and Odiyo, Wilson O., The Mediating Effect of Psychological Empowerment on the Relationship between Transformational Leadership and Staff Retention in Microfinance Institutions in Kenya (May 25, 2022). Economics and Business Quarterly Reviews, Vol.5 No.2 (2022), Available at SSRN: https://ssrn.com/abstract=4119341