Despite evidence that emotion-based leadership enhances firm performance, little is known about the variables mediating those effects. Adopting a multistakeholder, multimeasure approach, we examined the effects of three mediators (communicating/sharing a vision, organizational climate, and leader–follower trust) on the leadership–performance relationship and their interactive effects on performance in small professional service firms. Using four employee-perceived leadership paradigms (classical, transactional, visionary, and organic), we measured staff and customer satisfaction and financial performance. Findings confirm that the effects of the mediating variables on all performance measures vary with the prevailing leadership paradigm, and interactions between all variables strengthen their effects on performance.
- leadership style
- organizational climate