How transformational leadership fulfills psychological contract for reinforcing better performance: a Thai case study

Abstract

This study explores how psychological contract mediates the relationship between transformational leadership (TFL) and performance to see how far these concepts, widely studied in the western context, are applicable in a non-western context. This study utilized a mixed-methodology case study based on a market-leading company in the consumer-electronics business in Thailand. There are 282 samples for quantitative data collection and utilize the three-equation approach to test the mediating effect. There are 55 participants for qualitative data, and thematic analysis was used. To explain the process, this research found three themes, feeling valued, the family atmosphere, and needing to repay the company’s kindness. They need managers with TFL qualities to make them happen. This study reveals three insightful understandings of the concepts. Firstly, the distinction between transactional and relational elements of psychological contact is only apparent at the conceptual level, while in practice, they coincide. Secondly, job satisfaction contributes to organizational commitment. Lastly, the relational psychological contract reinforces the feeling of being overwhelmed by the company’s kindness making employees want to work for the company until retirement.