1. The University of Edinburgh
Business School
Employee’s Perspective on Transformational and
Transactional Leadership and their Influences on Stress
and Trust
By
Ariel Liu
Dissertation Presented for the Degree of MSc in Management
2013/2014

2. 2
Abstract
Purpose – The purpose of this paper is to explore the impacts of perceived
leadership on employees’ stress level, well-being, and trust in their leaders, and
make comparison between transformational and transactional leadership to verify
and complete the theory.
Design/Methodology/Approach – The author conducted qualitative research
methods, using in-depth interviews to collect data and analysis though grounded
theory.
Findings – On the employee’s perspective of view, employees respond very well
when they consider they have a closer relationship with their leaders. Although the
results show that leadership is not the crucial factor of employees’ job-related stress
level, leaders could be seen as the mediator, and when employees sense a close
relationship, they tend to take their leaders as a buffer to their stress than a stressor.
Moreover, the results also indicate that a leader having enough professional
knowledge is crucial to employees when building fundamental trust in their leaders,
but a good leader-employee-relationship would help to reinforce the trust.
Employees under transformational leaders tend to have better leader-employee-
relationships; therefore they are often connected to lower job-related stress, higher
well-being, and higher trust than transactional leaders.
Research Limitations/Implications – This research was conducted exclusively in
Taiwan region and has very a narrowed range of participants. Further research is
needed in order to explore different regions and different age group of employees, as
well, aiming to highlight any potential differences and contradictions.
Practical Implications – The implications are that leaders focus on enhancing their
relationship with the employees, regardless they practice transformational or
transactional leadership.
Keywords: Transformational leadership, Transactional leadership, employee stress,
employee well-being, employee trust, leader-employee relationship