Impact of Leadership on Organisational Culture: A Literature Review

Abstract

This literature review examines the interplay between leadership styles and organizational culture in driving performance and employee outcomes across diverse sectors and regions. Research consistently highlights the positive impact of transformational and democratic leadership on organizational performance, with transformational leadership notably enhancing job satisfaction, commitment, and employee performance, particularly in challenging environments like the Covid-19 pandemic. Organizational culture mediates the relationship between leadership styles and performance, with cultures promoting skills development and customer focus proving most effective. Studies further emphasize the importance of charismatic leadership in shaping organizational culture, especially within adhocracy and clan frameworks. In contrast, transactional, paternalistic, and bureaucratic leadership styles have limited or negative effects on performance. The review underscores the critical role of leadership in fostering organizational success, with job satisfaction identified as a key predictor of employee commitment.