The Relationship of Transformational Leadership Style, Group Cohesiveness and Performance of Cooperatives Movement in Malaysia

The performance of cooperatives movement in Malaysia has shown a significant growth since it inception. In fact the cooperatives movement had played an important role in contributing to the national economic development. However, sustaining the performance of cooperatives movement in Malaysia remains critical, and it has been identified as one of the main issues that have left the movement relatively far behind other sectors. It has been highlighted that lack of competent leaders and management practice, quality of leadership styles that could not achieve the intended results and the low degree of cohesiveness are crucial shortcomings in the movement. Therefore, this study represents an attempt to evaluate the leadership style of cooperative leaders and how it is related to performance. This study also explored group cohesiveness as a mediator on the relationship between leadership style and performance. Specifically this study was to determine the relationship between transformational leadership and performance, and the mediating effect of group cohesiveness on the relationship between transformational leadership and performance in cooperatives movement. Participants in this study consisted of managers or leaders of cooperatives throughout Malaysia. The Statutory and Registration Department of Malaysia Co-operative Commission directory that listed all cooperatives in Malaysia was used to collect data. A total of 1095 questionnaires were sent to cooperative managers or leaders throughout Malaysia, and 371 usable responses were received giving a response rate of 34 percent. Regression analysis was used to test the relationships between transformational leadership, group cohesiveness and performance. The results revealed that transformational leadership style positively predicted group cohesiveness and performance. The results also supported the hypothesis that group cohesiveness significantly mediates the relationship between transformational leadership style and performance. The results of this study suggest that transformational leadership style will be more likely to help leaders dedicate themselves to the organization performance through developing a strong relationship among members in the cooperatives movement. Exhibiting a transformational leadership style is needed throughout the cooperatives movement since it has contributed to a greater performance and enhanced cohesiveness. This study also adds value to the current knowledge in terms of the importance of cooperatives movement in strengthening the degree of cohesiveness among cooperatives managers or leaders as its performance depends largely on it.