Transformational Leadership and Employee Loyalty in Chinese Service SMEs: Emotional Regulation and Communication as Mediators
Keywords:
Transformational Leadership, Employee Loyalty, Service Industries, Emotional Regulation, Organizational CommunicationAbstract
This study examines how transformational leadership, emotional regulation, and organizational communication jointly shape employee loyalty in service-focused small and medium-sized enterprises (SMEs) within Shandong Province, China. Drawing on Social Exchange Theory, Leader–Member Exchange Theory, and the Job Demands–Resources Model, the research proposes that transformational leadership exerts a direct influence on employee loyalty. Further, it positions emotional regulation as a mediating mechanism by which employees enhance their capacity to handle the emotional demands characteristic of service-intensive roles. Organizational communication is explored as an additional factor that moderates and strengthens the positive relationships among transformational leadership, emotional regulation, and employee loyalty, thereby offering a more nuanced perspective on workplace dynamics in SMEs.
Survey data were collected from 425 SME employees and analyzed using structural equation modeling. Results indicate that transformational leadership is significantly associated with employee loyalty (standardized path coefficient = 0.62, p < 0.001). Emotional regulation also emerges as a critical mediator (β = 0.61, p < 0.001), demonstrating a partial indirect effect on the leadership–loyalty link. Moreover, organizational communication further amplifies these effects, underscoring its importance as a moderating construct. Theoretically, these findings expand our understanding of transformational leadership by highlighting how cultural and structural elements of Chinese SMEs—particularly robust communication channels and emotional-regulation strategies—serve as key resources for employees. Practically, this study emphasizes the need for leadership-development programs, emotional-support initiatives, and effective communication systems to strengthen employee loyalty, reduce turnover, and bolster organizational performance in service-based enterprises.
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