Abstract:
The primary purpose of this study was to investigate the effects of leadership styles
(transformational, transactional and laissez-faire) on employees’ job performance mediated by
employees trust (cognitive and affective trust) in Bahir Dar Branch of customs commission. The
questionnaires were distributed to 224 employees selected using a stratified random sampling
technique. Descriptive statistics was employed to determine type of leadership styles and level of
employees’ job performance using SPSS 26. A partial least squares structural equation model
(PLS-SEM) was used to test the hypotheses with Smart PLS 3.3.7. The data have been validated
by the use of measurement modeling to determine internal consistency reliability (CR) and
convergent validity (CV), followed by structural modeling, which addresses the direct and
indirect relationships via coefficient of determination (R
xi
2
), path coefficients (hypotheses tests),
and effect size (f
2
). The descriptive statistics revealed that the leadership behavior adopted in the
Bahir Dar branch customs commission was more transformational (M = 3.07; SD = 0.60) than
transactional (M = 2.04; SD =0.97) and laissez-faire (M = 1.86; SD =0.88), where employees
achieved high level of job performance (M = 3.83; SD =0.52). The PLS-SEM results indicated
that transformational leadership had a significant positive relationship with job performance
and both affective and cognitive trust (p < 0.05), while transactional and laissez-faire
leaderships proved insignificant. It has also been found that both affective trust and cognitive
trust in the leader partly mediates only in the relationship between transformational leadership
and job performance. Both trust bases (affective and cognitive) did not explain the relationship
between other leaderships (transactional and laissez-faire) and performance in the expected
direction. The implication is that leaders should know any action to improve employees’ trust
and then performance should take into account appropriate leadership behavior. Hence, to
foster greater job performance directly or through promoting trust, leaders need to avoid the
laissez-faire leadership style and focus more on the transformational leadership behavior with a
complementing role of transactional leadership behavior to the extent of rewarding employees’
efforts.