The Relationship between Transformational Leadership, Islamic Work Ethics and Organisational Performance Among Muslim Employees in Malaysia: the Mediating Role of Good Governance

Shahari, Farihana (2025) The Relationship between Transformational Leadership, Islamic Work Ethics and Organisational Performance Among Muslim Employees in Malaysia: the Mediating Role of Good Governance. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study aims to examine the influence of transformational leadership and Islamic work ethics on organisational performance among Muslim employees in Malaysia, specifically focusing on the mediating role of good governance. To achieve this aim, this study investigates the influence of five direct relationships, which are between transformational leadership and good governance, Islamic work ethics and good governance, good governance and organisational performance, transformational leadership and organisational performance, and Islamic work ethics and organisational performance. This study also investigates the mediation effect of good governance on two relationships, which are between transformational leadership and organisational performance and Islamic work ethics and organisational performance. In addition, the study examines the moderation effect of organisational culture on the link between good governance and organisational performance. The questionnaire. The research employed the quantitative research method with a cross-sectional design and online survey method for data collection. A total sample of 212 was collected from Muslim employees who are currently working in Malaysia. These data were analysed using SPSS and SmartPLS software. The findings revealed significant positive relationships between transformational leadership and good governance, as well as in the relationship between transformational leadership and organisational performance. For Islamic work ethics, its relationship with good governance is significant and positively related to good governance but insignificant to influence organisational performance. Lastly, the findings provide support for the moderating effect of organisational culture in this research model. The finding of this study provides valuable insights into the cultural perspective of Muslim employees on corporate governance and organisational performance, expanding the application of stakeholder and transformational leadership theories in the context of religious and cultural contexts. From the findings, this study suggests training leadership teams to adopt a transformational leadership style, emphasising emotional intelligence and ethical decision-making. It also highlights the link between Islamic work ethics and good governance, particularly in Muslim-majority countries. Organisations should incorporate Islamic work ethics into their culture, ensuring employees work with Islamic values like honesty, integrity, and accountability. Keywords: transformational leadership, Islamic work ethics, organisational performance, good governance, organisational culture