Transformational leadership builds trust in challenging online teams more effectively than transactional leadership: a multigroup analysis

Introduction Managing project teams virtually can create difficulties for leaders. Some online projects have a low level of challenge and require less from a leader, while more challenging online projects can require far more from the leader. There are several leadership styles, with different benefits, that can be chosen for each context and the difficulties it presents. The leadership style that is most effective for challenging virtual teams is not clear. This research evaluates the two most popular leadership styles, transactional and transformational in virtual projects with a low level of challenge, and a high level of challenge. Methodology The two contexts of low and high challenge are explored in focus groups, and then modeled and contrasted using structural equation modeling multi-group analysis. Results The results show that transformational leadership builds trust more effectively when there is a highly challenging team project, and transactional leadership is more effective when the challenge is low. Discussion This research offers the clarity that transformational leadership should be chosen for challenging team projects, while transactional should be chosen for those that are not particularly challenging.