The Impacts of Transformational Leadership on Motivation of Employees: The Case of Employees at Vietnamese Small and Medium Enterprises

The purpose of this research is to explore and clarify the factors affecting transformational leadership style to employee motivation at Vietnamese SMEs. Meanwhile, propose solutions to develop transforming leadership style to increase employee motivation. In order to achieve the purpose of this study, a literature survey related to transforming leadership, job’s satisfaction and employee motivation, their relations ware carried out. The research is based on a sample of 372 employees currently working at SMEs in Vietnam, 263 respondents are valid for research conducting. Using Cronbach's alpha analysis, Explore Factor Analysis (EFA) and Regression Analysis (RA) with primary data collected 263 valid from 372 employees in Vietnam. This paper explores and confirms that there are existed five factors have a positive effect on employee motivation. In particular, the most powerful factor is intellect stimulating, the weakest factor is the charismatic personality. From the above results, the author proposes the implications for increasing employee motivation at SMEs by transforming leadership style through five factors including charismatic personality, charismatic behavior, stimulation intellect, inspiring and personal attention. Results of the research show strong evidences for policy makers and enterprises for management in SMEs as well as its contribution to causes and effects between transforming leadership style and motivation of employees at Vietnamese SMEs.