The effect of leadership styles and psychological capital on intention to remain among executives in electrical and electronics manufacturing sector in Malaysia

Statistical data shows that the electrical and electronics (E&E) industry in Malaysia is facing high employee turnover especially among the executives who are middle level managers. The E&E industry is not so fortunate in retaining its executive employees. Though they can be easily hired, retention becomes the most challenging task faced by the E&E industry managers when high turnover gradually increases. There is a research gap in this area since most of the previous researchers focused their studies on employee turnover. This study however focuses on the employee
retention strategy. On this note, the research framework was developed based on the Social Exchange Theory. The current study aimed to identify whether factors such as transformational and transactional leadership styles and psychological capital have
significant influence on executive employees’ intention to remain in the Malaysian E&E industry. Out of the 582 questionnaires distributed to the executive employees in the E&E industry, 387 sets of questionnaires were returned and found useable,
constituting about 66.49 per cent response rate. The data was analyzed using the Smart PLS-SEM package version 3.2.7. The findings indicated that transformational and transactional leadership styles have positive effects on psychological capital and intention to remain. Psychological capital also was found to have an effect on
intention to remain. The study also revealed that the psychological capital serves as the mediator on the effect between both leadership styles and intention to remain. This study concluded with a discussion on the theoretical and practical contributions, study limitations and suggestions for future research.