Volume 26 Issue 1 Article 3 March 2024 Transformational Leadership and Work Engagement: The Transformational Leadership and Work Engagement: The Moderating Role of Intrinsic Motivation Moderating Role of Intrinsic Motivation Barbara Grah University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia, barbara.grah@ef.uni-lj.si Vlado Dimovski University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia Marko Perić University of Rijeka, Faculty of Tourism and Hospitality Management, Opatija, Croatia Simon Colnar University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia Sandra Penger University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia Follow this and additional works at: https://www.ebrjournal.net/home Part of the Finance and Financial Management Commons, and the Hospitality Administration and Management Commons Recommended Citation Recommended Citation Grah, B., Dimovski, V., Perić , M., Colnar, S., & Penger, S. (2024). Transformational Leadership and Work Engagement: The Moderating Role of Intrinsic Motivation. Economic and Business Review, 26(1), 32-44. https://doi.org/10.15458/2335-4216.1334 This Original Article is brought to you for free and open access by Economic and Business Review. It has been accepted for inclusion in Economic and Business Review by an authorized editor of Economic and Business Review. ORIGINAL ARTICLE Transformational Leadership and Work Engagement: The Moderating Role of Intrinsic Motivation Barbara Grah a, * , Vlado Dimovski a , Marko Peri´ c b , Simon Colnar a , Sandra Penger a a University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia b University of Rijeka, Faculty of Tourism and Hospitality Management, Opatija, Croatia Abstract We examine the moderating role of intrinsic motivation in the relationship between transformational leadership and work engagement. In a sample of 168 tourism and hospitality employees in the quantitative section, Study 1, we found that the highest level of work engagement is identied when the level of intrinsic motivation is highest. Intrinsically motivated employees then exhibit engaged behaviors at work. In Study 2, we opted for a descriptive design to better understand the ndings of Study 1, using interviews with three experts and a three-phase coding analysis. We found that increasing intrinsic motivation further promotes engaged work behavior. This article provides insight into the benet of intrinsic motivation on work engagement and offers practical guidance to tourism and hospitality stakeholders by demonstrating how intrinsic motivation functions as an essential management concept in adapting after the coronavirus pandemic. Keywords: Transformational leadership, Work engagement, Intrinsic motivation, Moderation, Tourism and hospitality industry JEL classication: M10, M12 Introduction A ccording to Gallup, only 15% of employees worldwide are engaged in the workplace, and the job of leaders is to ask employees the right ques- tions and create conditions that foster engagement (Royal, 2019). The tourism economy worldwide was hurt the most during the coronavirus pandemic in 2020 and 2021, and it was one of the rst to be af- fected by the pandemic. According to Gursoy and Chi (2020), the worldwide outbreak of COVID-19 inu- enced the research strategies in the hospitality and tourism industry. Despite the unique characteristics of the hospitality industry (e.g., the seasonal com- ponent), hospitality professionals often discover new leadership opportunities from their experiences with employees and followers and initiate their actions to maintain employee engagement. Drawing on the existing scientic research on the studied concepts, we observed how intrinsic motivation moderates this relationship in the Croatian tourism economy, as its economic environment is heavily dependent on tourism and the hospitality industry. Although employees’ behaviors are inuenced by contextual factors, their perceived importance of specic tasks plays a signicant role, highlighting the need to better understand the moderating effect of intrinsic motiva- tion (Sha et al., 2020). Different approaches to leadership impact em- ployee engagement at the workplace in different ways (Breevaart et al., 2014). Shu (2015) showed that authoritarian leadership is negatively linked to em- ployee work engagement, while authentic leadership is positively linked to work engagement. Employee Received 9 May 2023; accepted 12 January 2024. Available online 5 March 2024 * Corresponding author. E-mail address: barbara.grah@ef.uni-lj.si (B. Grah). https://doi.org/10.15458/2335-4216.1334 2335-4216/© 2024 School of Economics and Business University of Ljubljana. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/ licenses/by-nc-nd/4.0/). ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 33 engagement is closely related to their innovative be- haviors in the studied sector, which outlines the value of an engaged workforce (Kim & Koo, 2017; Vithaya- porn & Ashton, 2019). Previous studies implicitly assume a positive correlation between transforma- tional leadership and work engagement (Amor et al., 2020; Cavazotte et al., 2020; Ghadi et al., 2013; Hayati et al., 2014; Salanova et al., 2011). Chalofsky and Kr- ishna (2009) provided theoretical support for intrinsic motivation in predicting worker engagement. The re- search ndings of Walker et al. (2006) show that the moderating effect of intrinsic motivation positively contributes to work engagement. From a theoretical perspective, most relevant studies have been con- ducted in traditional organizational settings. In this study, we go beyond the classical context and turn to the contemporary leadership approach by exploring the transformational leadership style, taking into account the harsh reality of the hospital- ity industry, which is unable to nd sufcient and committed workers, especially after the recent pan- demic, due to the fear of infection, losing jobs, and the seasonal component of the Croatian tourism econ- omy sector (Bajrami et al., 2021). This study aims to contribute to contemporary leadership styles, such as the transformational leadership style, in an attempt to help nd enough committed and engaged employees in the tourism and hospitality sector, which is cur- rently considered a research gap in existing tourism and hospitality literature (Arasli & Arici, 2019). Based on the work of Shu (2015), we extended the existing literature by proposing to explore transformational leadership as it is commonly practiced in the hospital- ity industry, as previous research on transformational leadership in the Croatian hospitality industry has shown that it is prevalent and the most commonly used leadership style (Walker & Kužnin, 2018). It is clear that to improve employee engagement in the studied sector, tourism and hospitality entities need an improved knowledge of practical leadership tools (Slåtten & Mehmetoglu, 2011). In terms of work en- gagement, an increased fear of losing jobs was evident during the recent pandemic, which in turn negatively impacted work engagement and similarly increased turnover intentions (Jung et al., 2021). The theoretical contribution of our work is to en- hance the existing knowledge of our research model by highlighting the importance of intrinsic moti- vation in the selected Croatian sector. First, our paper improves on the existing academic insights on transformational leadership and its interactive po- sition in promoting work engagement, particularly by focusing on the moderating role of intrinsic mo- tivation. Second, it extends the framework of the studied research model by introducing transforma- tional leadership in promoting work engagement at the individual level in the studied Croatian sector. Third, it responds to the call for an investigation of how intrinsic motivation contributes to the recovery of the studied sector during and after coronavirus pandemics. The overall major contributions of our research can be highlighted in the fact that our em- pirical results conrm that employee engagement in practice depends on transformational leadership be- havior within the tourism and hospitality context. In addition, our results support the claim that intrin- sic motivation indeed has a moderating effect, as the highest levels of work engagement are achieved when the level of intrinsic motivation is highest. Another major contribution of our research lies in the practical implications for managers in the tourism and hospi- tality sector about what they can do to foster engaged work behaviors in practice, where one suggestion is that they need to lead by example. We employed mixed methods research to investi- gate our research model. In Study 1, we analyzed survey data using quantitative research methods, specically hierarchical linear regression. This was followed by Study 2, which involved in-depth in- terviews analyzed using a three-phase coding proce- dure. The main objective was to answer the following question: does the moderating effect in our research model exist, and if so, is it positive? We wanted to bet- ter understand the hospitality- and tourism-specic environment, characterized by a vital seasonal com- ponent of workers, difculties in nding compe- tent workers, and the strong impact of the recent pandemic. 1 Theoretical background and hypotheses 1.1 Work engagement Kahn (1990) understands work engagement as con- necting organizational true selves to their work func- tions through the assignation of workers by practicing their own physical, cognitive, and emotional intel- ligence while working. Christian et al. (2011,2014) dened it as a relatively lasting state of mind focusing on investing in individual vitalities while working. Workers who show a higher level of engagement show a strong relationship with their tasks while perceiving them as challenging (Bakker et al., 2014). The two essential characteristics of work engagement are high determination with tasks, identication with work, and abundance of individual vitality (Bakker et al., 2014). In recent years, contemporary literature has highlighted and drawn attention to the impor- tance of engagement at work. Work engagement is ex- plored in the service context because it has particular 34 ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 relevance for service organizations (Chandni & Rah- man, 2020). Work engagement is crucial for employees’ out- comes (Harter et al., 2002), as engagement of em- ployees in the hospitality industry can lead to im- proved service quality, guest satisfaction, and, nally, greater competitiveness in the industry. According to a Gallup study, engaged employees in the hospi- tality industry are 17% more productive, 21% more protable, and have 10% better customer ratings than their disengaged counterparts (Schaufeli, 2013). In- deed, quite a few academic papers have studied the importance of work engagement in the hospitality industry from theoretical and practical standpoints. These studies demonstrate that the importance of work engagement in the hospitality industry is rele- vant due to identied characteristics of the hospitality industry, namely service quality, customer interac- tions, seasonal components, and the impact of em- ployee attitudes on guest satisfaction. The study of Rich et al. (2010) sheds light on the antecedents of job engagement and its effects on job performance, enabling the comprehension of the role of work en- gagement in the hospitality sector. In their paper, Kusluvan et al. (2010) elaborated on the important role of work engagement in the hospitality sector for the provision of service quality. According to Bakker and Demerouti (2008), contin- gency and individual factors are crucial for predict- ing work engagement. Within contingency factors, Christian et al. (2011,2014) pointed out job resources (e.g., autonomy at work, diversity of tasks and its importance for the organization, problem-solving, complexity of tasks, social capital at work, coach- ing, performance feedback, psychical demands, and work conditions) as key job characteristics and crucial predictors of work engagement because such char- acteristics help employees achieve their job targets, support career and individual development, as well as decrease task workloads. They identied transfor- mational leadership as an important job resource that affects work engagement. In addition to the situational factors, individual fac- tors, namely personality type, can affect work engage- ment (Albrecht, 2010). Mäkikangas et al. (2013) identi- ed extraversion as a critical personality type relating to higher work engagement, along with emotional stability and conscientiousness. Those ndings align with the results of Christian et al. (2011,2014). They identied the positive effects of having a proactive personality and being conscientious, self-efcacious, and optimistic, in addition to job assets. The re- search evidence of Bakker et al. (2014) divides work engagement outcomes into two groups: job-related outcomes and motivational outcomes. Within the latter, scientists relate work engagement to improved healthiness (Seppälä et al., 2012) and encouraging feelings (Rodríguez-Muñoz et al., 2014). Employees who are more engaged are also more proactive and willing to learn (Bakker et al., 2012). Those insights are in line with the ndings of Halbesleben and Wheeler (2008), as well as the nd- ings of Salanova et al. (2011), who showed evidence of a positive connection between work engagement and organizational performance. 1.2 Transformational leadership Burns (1978), a political sociologist, rst intro- duced transformational leadership as a leadership ap- proach in his seminal book Leadership. Subsequently, Bass (1999) laid the foundation for transformational leadership theory. Four key behaviors characterize transformational leaders: they demonstrate idealized inuence by exemplifying what they say and gaining trust; they motivate by communicating compelling visions and helping their employees understand how their work contributes to their realization; they stim- ulate intellectually by creating a safe environment that encourages their workers to run the risks and question the existing status; and they show individual consideration by understanding the needs of oth- ers and supporting them accordingly (Colbert et al., 2008). Bass and Riggio (2006) also identied four facets of transformational leadership, namely (1) idealized inuence, (2) inspirational motivation, (3) intellectual stimulation, and (4) individualized consideration, and each of those predicts a positive effect on work engagement. Transformational leaders act as role models and are therefore respected by their followers, which shows the idealized inuence facet, as work- ers who see their leaders as role models are more prone to be engaged in their work (Eisenbeiss et al., 2008). The crucial driver of work engagement is in- spirational motivation, which stimulates workers to achieve set goals by offering a sense of purpose and meaning in the work (Saks, 2006). Employees who are encouraged to think critically and innovatively tackle problems are more devoted to being engaged at work (Bakker et al., 2011). Transformational leaders acknowledge and act upon the individual followers’ needs, which ascribes a sense of appreciation and understanding among workers, which is in turn pos- itively associated with work engagement (Wright & Cropanzano, 1998). Transformational leaders develop an appealing vi- sion, emphasize innovation, serve as role models, and respond individually to their employees (Bass & Avolio, 1995). They encourage their followers to ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 35 evaluate the existing position and challenge beliefs and values to innovate and develop solutions (Aryee et al., 2012; Bass et al., 2003). They also aim to im- plement new work methods, ows, and structures to achieve lasting prots and help their employees seize opportunities. The usefulness of transforma- tional leadership in stimulating employee outcomes has already been demonstrated (Dvir et al., 2002). In line with its ability to inspire and motivate employees, it ts well with the unique requests of the service and hospitality industry, which emphasizes guest satisfac- tion and service quality (Wong et al., 2013). The connection between transformational leader- ship and work engagement is well-researched. Cava- zotte et al. (2020) claim transformational leadership is an essential factor for service management because it promotes commitment and satisfaction and posi- tively inuences organizational outcomes. Salanova et al. (2011) showed that it supports nurses’ work en- gagement in a positive manner. Hayati et al. (2014) conrmed a positive connection between the above concepts among nurses in government hospitals in a descriptive, correlational, cross-sectional study based on 240 surveys. Ghadi et al. (2013) showcased that transformational leadership inuenced follow- ers’ work engagement attributes and that employees’ perceptions of the importance of work act as a me- diator in this relationship. Amor et al. (2020) also reported a positive connection between transforma- tional leadership and work engagement based on self-reports from 240 tourism employees in north- west Spain. Arasli and Arici (2019) claim it is crucial to deepen our understanding of effective leadership styles and their impact on employees in the tourism sector. Therefore, we propose the following hypothesis: H1. Transformational leadership impacts employees’ level of work engagement positively. 1.3 Intrinsic motivation as a moderating mechanism Ryan and Deci (2000, p. 54) state that “to be motivated” implies “to move toward something.” However, there is no single denition of motivation. Intrinsic motivation has often been conceptualized as a time-based condition or experience that indicates a contingency factor impact on personal behaviors (Tu & Lu, 2016) and is perceived as a crucial element of work engagement (Deci & Ryan, 2013). It refers to acting out of personal desire to achieve person- ally valued goals, in contrast to external motivation, which refers to acting in line with the external stim- ulus (Ryan & Deci, 2000). The concept of intrinsic motivation was rst observed in the experimental study of animal behavior (White, 1959). Intrinsic mo- tivation is found in individuals and exists in the relationship between individuals and specic activ- ities (but not all activities). Some denitions focus on the tasks being interesting, and others on the satisfying personal gain from completing the intrin- sically motivated tasks (Ryan & Deci, 2000). Intrinsic motivation must not be misunderstood as external motivation, which is characterized by workers driven by external rewards, nor as amotivation, which oc- curs when workers experience a lack of motivation (Vallerand, 1997). It is crucial for comprehension of the multifaceted interplay between transformational leadership and work engagement. In addition, distin- guishing the boundary conditions, for example, the level of intrinsic motivation, is crucial for an oper- ationalization of the moderating effect of the work engagement on the relationship between transforma- tional leadership and work engagement, as it allows leaders to build customized interventions to optimize work engagement. Putra et al. (2017) found that intrinsic motivation is vital in improving employee work engagement in the tourism sector and plays a vital role as an antecedent in predicting work engagement. They advised man- agers to create a pleasant work environment and interesting tasks to increase intrinsic motivation and engagement. Shu (2015) discovered that the authori- tarian theory of leadership was negatively correlated to followers’ work engagement when controlling for obedience, while authentic-based leadership had a positive relationship to work engagement. Using an example from the nance industry, Karatepe et al. (2019) found that motivated employees are more likely to develop novel solutions to existing chal- lenges and suggest future practical actions to address challenges, which also contributes to overall service improvement. Therefore, the effect of transformational leadership on work engagement should be different under vary- ing conditions of intrinsic motivation, namely high or low level of intrinsic motivation. When a worker has a high level of intrinsic motivation, transformational leadership may act as a catalyst for increasing the level of work engagement, as the worker’s individual values are aligned with the with the leader’s inspi- rational vision and their supportive actions (Deci & Ryan, 2013). In contrast, individual workers who have low intrinsic motivation experience less inuence of transformational leadership on work engagement, as their intrinsic drive to get involved in the work is limited. By studying the interaction between intrinsic motivation and transformational leadership, a more nuanced perspective on the mechanisms that under- lie work engagement is gained, which allows the 36 ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 development of tailored strategies for individual workers, depending on their personal level of intrin- sic motivation. Based on the above, we expect that transforma- tional leadership plays a promising role in promoting work engagement among employees when mediated by higher rates of intrinsic motivation. Analogically, workers with lower rates of intrinsic motivation are associated with lower work engagement, as they do not have the condence to engage at work, which could lead to a demotivating state. Low intrinsic mo- tivation is expected to be less effective. We hypothesize that high levels of intrinsic motiva- tion may promote work engagement. Consequently: H2. Intrinsic motivation acts as a moderator in the con- nection between transformational leadership and work engagement. When employees’ intrinsic motivation is high, the described connection in a described relationship is more favorable than when intrinsic motivation is low. 2 Methodology Our research was structured as a mixed methods approach to generate extensive results that enable researchers to elaborate more precise conclusions with higher reliability (Jogulu & Pansiri, 2011; Stentz et al., 2012). We collected our data in two phases; the rst was quantitative, and in the second phase, we collected the data for a conrmatory qualita- tive analysis. Our combination of quantitative and qualitative data enabled us to better understand our research problem, constructs, and complex phenom- ena (Molina-Azorin & Cameron, 2010), enhancing our results’ credibility (Jack & Raturi, 2006). More specif- ically, we opted for an explanatory sequential design to gain further insight into the quantitative phase of our research, followed by qualitative interviews (Hayes et al., 2013). 2.1 Quantitative research design 2.1.1 Sample characteristics and the process of collecting data We utilized an adapted in-person questionnaire that enabled us to collect primary data from our respon- dents. Questionnaires were sent to be lled out by tourism and hospitality personnel (who studied at the University of Rijeka, Faculty of Tourism and Hospi- tality Management in Opatija, Croatia) with at least one authentic employment experience in the tourism and hospitality industry as managers or employees. Given the difcult circumstances, the attractiveness of pursuing and building a career in the hospitality and tourism sector is signicantly hindered due to the global pandemic (Birtch et al., 2021). The retention of existing employees and the ability to attract future employees (who are now students) is expected to gain recognition in the very near future. Out of 217 deliv- ered questionnaires, we collected 168 valid responses, which represents a 77% response rate. There were 217 graduate students (106 full-time and 111 part- time students). We approached every student, and we received 168 valid responses. In case of any mis- understanding, the respondents were able to ask for clarications and additional explanations. In order to attract participants to engage in our survey, we as- sured them that the survey was voluntary and that their identity would remain hidden. Surveys were completed in paper form. The majority of our respondents (167 respondents) originated from Croatia. The largest share of employ- ees (88.4%) was from non-managerial positions. More than half of our respondents (54.6%) had worked in their organization for more than 1 year. Almost half (46.6%) of our respondents had worked with their immediate superior for more than 1 year. The majority of our respondents (91.1%) belonged to the age group from 21 to 30 years. The largest share of respondents (70.2%) had successfully nished a master’s degree, and 78.4% of the respondents were women. The high percentage of female respondents reects the fact that the researched industry is a women-dominated sector in Croatia, accompanied by the fact that the majority of students are women. As data for all of the variables in our proposed researched model were obtained from individuals at one point in time, we acknowledge that common method bias might have an impact on some of the proposed relationships in our hypothesized model. To examine the potential negative impact of com- mon method bias, we opted to apply Harman’s (1976) single-factor test. Results show that our rst factor ac- cumulates 56.6% of the overall variance. Such a result is above the threshold (50.0%) proposed by Podsakoff et al. (2006) and indicates that common method bias might have an inuence on certain relationships that were analyzed in the quantitative part of our research. To overcome it and assure verisimilitude, we also con- ducted the qualitative part of the study, which further rened our thinking, allowing us to regularly com- pare multiple types of data. 2.1.2 Measures For the constructs researched in our paper, we uti- lized measurement instruments commonly used and validated in numerous scientic papers. The instru- ments satisfy three criteria: (a) they are recognized ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 37 and used by prominent authors of the studied topics; (b) they are commonly cited in established scientic journals; (c) they are used in contemporary research. In our research, we applied a 7-point Likert scale (1—strongly disagree; 7—strongly agree) for transfor- mational leadership and intrinsic motivation and a 7-point Likert scale (1—never; 7—always) for work engagement. Such scales enabled us to determine the level of agreement of individual respondents with items intended to measure the level of our researched constructs. Transformational leadership. We used the 20-item scale (aD .92) that Bass and Avolio (1997) and Colbert et al. (2008) developed to measure transformational leadership. Examples of statements are “My supervi- sor talks about the most important values and beliefs” and “My supervisor spends time teaching and coach- ing.” Intrinsic motivation. We opted for the 12-item scale (aD .97) that Van Yperen and Hagedoorn (2003) de- veloped to examine intrinsic motivation. Examples of statements are “I do my job for the pleasure I feel while learning new things in my job” and “I do my job because I feel pleasant in my job.” Work engagement. We utilized the 17-item scale (aD .94) that Salanova et al. (2005) developed to mea- sure work engagement. Examples of statements are “When I get up in the morning, I feel like going to work” and “I am proud of the work I do.” Control variables. Education and gender were in- cluded as control variables. We opted to include control variables in our research because including or excluding them can have an important impact on research results (Bernerth & Aguinis, 2016). Prior studies have documented that education has an in- uence on work engagement (Coetzee & Rothmann, 2005). Previous studies have also examined the in- uence of gender differences on the level of work engagement, where Gallup’s research indicates that women can nd more gratication in their work and, consequently, can be more engaged than males (Gulzar & Teli, 2018). Further, the study of academic staff in higher education showed that female repre- sentatives of academia expressed higher engagement with their jobs as compared to their male counter- parts. 2.1.3 Methods Hierarchical linear regression was performed to analyze our primary data and proposed interaction effects. In addition, we conducted a conrmatory fac- tor analysis (CFA) using lavaan (Rosseel, 2012) in the R programming environment. We applied CFA to en- sure that the proposed model appropriately t our data. In the next step, we analyzed the convergent validity by analyzing factor loadings for all state- ments included in the questionnaire to gain insight into their statistical signicance as Hair et al. (1998) had proposed with their .50 threshold. CFA results show that factor loadings in all three cases of our con- structs were statistically signicant and in line with the proposed threshold of Hair et al. (1998). Our re- sults further strengthen the convergent validity of all proposed constructs. The standardized loadings for transformational leadership ranged from .50 to .80, for intrinsic motivation from .76 to .87, and for work engagement from .53 to .86. In the iterative process of purifying our scale, we removed three items in the measurement variable of transformational leader- ship because their standardized loadings were below the recommended .50 threshold. In our nal model, 46 statements in the questionnaire were included to measure our three constructs. To test composite reliability, we calculated the composite reliability index (CRI) and the average variance extracted (AVE) (Fornell & Larcker, 1981). In the interpretation of our results, we followed Diamantopoulous and Siguaw’s (2000) proposition that researchers should be content with CRI results that are above the recommended .60 thresholds 1 . We also followed Diamantopoulous and Siguaw’s (2000) proposition regarding a threshold for AVE of .40. All three proposed constructs were within the pro- posed CRI and AVE threshold values. CFA results (expected three-factor solution) intended to evaluate model t displayed the following results: CFI D .92; $ 2 D 1,401.699; root-mean-square error of approxima- tion (RMSEA)D .06; dfD 912, thus indicating good model t with the data collected. 2.2 Qualitative research design: Sample characteristics and the process of collecting data The second phase of data collection consisted of interviews with three experts from the hospitality and tourism industry. The open-ended questions were as follows: (a) What is your opinion on the recovery 1 Notes: CRI: Transformational Leadership .92, Intrinsic Motivation .96, and Work Engagement .94. AVE: Transformational Leadership .41, Intrinsic Motivation .69, and Work Engagement .48. Within construct items, residuals were allowed to correlate. Without those modications, the results of the model t with data collected are: CFI D .74,$ 2 D 2,796.537, RMSEAD .09, and dfD 1124. 38 ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 Table 1. Mean values, standard deviations and correlations. Variable Mean SD 1 2 3 4 5 Education 4.70 0.46 – Gender 1.78 0.41 .07 – Transformational leadership 5.03 0.99 .03 .04 (.92) Work engagement 4.24 1.22 .03 .12 .35 (.94) Intrinsic motivation 5.06 1.38 .06 .05 .33 .77 (.97) Note: nD 168 employees from Croatia. Reliability indicators (Cronbach’s alphas) are on the diagonal in the parentheses. p< .01. of the Croatian tourism and hospitality industry in relation to the coronavirus? (b) What would be the key factors for speeding up the recovery? (c) What is the role of human resources in the recovery process? (d) Do you nd the motivation and work engagement of employees in the tourism and hospitality industry important for future recovery? (e) What do you think managers should do to stimulate employees’ intrin- sic motivation and work engagement? We employed a systematic three-phase coding procedure to scru- tinize the transcriptions of the gathered qualitative data. In the initial phase, we established rst-order categories and presented illustrative data by meticu- lously analyzing and summarizing discrete segments of the dataset. The next phase involved delineating second-order themes to connect with categories aris- ing from the initial illustrative data, while the third phase involved expounding upon aggregate dimen- sions. In coding and classifying the collected data, we systematically sought keywords within sentences that indicated the phenomena under investigation, adhering to a coding scheme developed through a comprehensive comparison of the collected pri- mary data and an in-depth theoretical review. The identied themes informed our categorization of the coded structure, as outlined in Table 2. To ensure the reliability of the coding procedure, researchers independently coded the interview data. In instances of disagreement, thorough discussions ensued until a consensus was reached. Throughout the qualita- tive analysis design, electronic research memos were maintained, containing generated observations and additional technical data. The analysis underwent scrutiny by eld experts to validate its external cred- ibility, and nal authorization was obtained through this rigorous process. More specically, the trustwor- thiness of the study was assured by our engagement of eld experts from the tourism and hospitality industry, namely an established professor (male; 65 years old; 35 years of experience in studying and teaching tourism and hospitality), a travel agency manager (female; 41 years old; 15 years of experi- ence managing a travel agency business), and a hotel director/manager (male; 44 years old; 25 years of ex- perience in tourism and hospitality, of which 15 as a hotel director). Our use of mixed research methods drawing on multiple and diverse sources and our ex- perience in the eld helped to assure verisimilitude between the data and our interpretation. 3 Study 1 results: Quantitative analysis 3.1 Descriptive statistics Table 1 presents the results of descriptive statis- tics related to our researched constructs. On aver- age. intrinsic motivation received the best evaluation (5.06), followed closely by transformational leader- ship (5.03), while work engagement received the lowest evaluation (4.24). Correlation coefcients rel- evant for measured variables in our research were moderately or strongly positive (from .33 to .77). There was a signicant positive correlation between Table 2. Hierarchical regression analysis predicting work engagement—Models 1 and 2. Model 1 Model 2 Variables b SE ß t b SE ß t Education 0.04 0.14 .01 0.27 0.03 0.14 .01 0.22 Gender 0.24 0.16 .08 1.53 0.22 0.16 .08 1.44 C_TL 0.14 0.07 .11 0.05 0.16 0.07 .13 0.03 C_IM 0.64 0.05 .72 12.75 0.64 0.05 .73 13.04 C_TLxC_IM 0.11 0.04 .14 0.01 R 2 .604 .622 F(df ) 51.51 (138) 45.00 (137) 1R 2 0.604 0.018 p< .05; p< .01. ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 39 transformational leadership and work engagement (.35; p < .01) and between transformational leader- ship and intrinsic motivation (.33; p < .01). Work engagement displayed a signicant positive correla- tion with intrinsic motivation (.77; p < .01). Control variables did not show any signicant correlations. The 95% condence interval for the mean for the interaction between transformational leadership and intrinsic motivation was .2152 (lower bound) and .6935 (upper bound). 3.2 Hypotheses testing Within our research, we tested the direct rela- tionship between transformational leadership and work engagement, as expressed in Hypothesis 1. We included intrinsic motivation as a moderating mech- anism, as expressed in Hypothesis 2. We applied a hierarchical linear regression analysis using centered variables to examine our hypotheses. In our rst re- gression model (Model 1), we included two control variables with transformational leadership as the in- dependent variable. In our second model (Model 2), we entered a two-way interaction (Transformational Leadership Intrinsic Motivation). The results are presented in Table 2. In Model 1, we found a positive and signicant re- lationship between transformational leadership (bD .11; exact pD .048) and work engagement. Our data provide empirical support for Hypothesis 1. Model 2, which was intended to test intrinsic motivation as a moderating mechanism of transformational lead- ership and work engagement, showed some added value with our direct effect model (1R 2 when com- paring Model 2 with Model 1). Results gained from Model 2 showed a signicant positive relationship between the two-way interaction of transformational leadership and intrinsic motivation with work en- gagement (bD .14; exact pD .012). The analysis of the simple slope, which is also intended as a graphical representation of the model, suggests it is signicant (exact pD .001). The interaction between transfor- mational leadership and intrinsic motivation as they inuence work engagement is displayed in Fig. 1. Based on the results (see Fig. 1), the highest lev- els of work engagement are visible in the case when the levels of intrinsic motivation are the highest. Intrinsically motivated employees will then exhibit engaged behavior at the workplace. The relevance of transformational leadership for engaged behavior is illustrated by high levels of intrinsic motivation. In this example, higher levels of transformational lead- ership encourage higher levels of work engagement. Hypothesis 2 states intrinsic motivation moderates the relationship between transformational leadership 0 1 2 3 4 5 6 LowTRANSFORMATIONAL LEADERSHIP HighTRANSFORMATIONAL LEADERSHIP WORKENGAGEMENT LowINTRINSIC MOTIVATION High INTRINSIC MOTIVATION Fig. 1. Interaction between transformational leadership and intrinsic mo- tivation in inuencing work engagement. and work engagement in such a way that the effect of transformational leadership is stronger if the level of intrinsic motivation is higher. The higher the lev- els of transformational leadership, the more intrinsic motivation contributes to a higher level of engaged work behavior. When intrinsic motivation is low, employees will exhibit lower levels of work en- gagement, regardless of the level of transformational leadership. 4 Study 2 results: Qualitative analysis In our qualitative analysis, we discerned evidence indicating that transformational leadership, coupled with intrinsic motivation, serves as a catalyst for en- hancing employee work engagement (Table 3). This study underscores pivotal concepts that possess the capacity to redene our research domain. We posit that cultivating and fortifying the nexus with intrinsic motivation holds signicant promise for organiza- tions within the hospitality and tourism industry, along with other service sectors, facilitating the cul- tivation of a workforce characterized by heightened levels of engagement. 5 Discussion 5.1 Theoretical contributions The existing scientic literature on transforma- tional leadership and motivation theories leads us to propose that maintaining and strengthening the relationship with intrinsic motivation can help hospi- tality and tourism organizations employ work-ready employees. It is of great importance for hospitality workers to be engaged and offer high-quality ser- vices. We argued that the correlation in our research model depends on the intrinsic motivation that fol- lowers may experience. We found that an increase in intrinsic motivation would further promote engaged work behavior. In contrast, organizations with lower 40 ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 Table 3. The three-phase coding. First-order categories and illustrative data Second-order themes Aggregate dimension “As in any business, and especially in tourism and hospitality, human resources are key. Everything else (e.g., space, equipment, facilities:::) is implied.” (Expert 1) Human resources are key Work engagement “People are still the core of tourism, and the future development of the current situation will depend largely on our ability to recognize the time ahead, that is, the time after the crisis caused by the pandemic, and to use all the quality human resources to nd new solutions and to start developing strategies for the years already coming. Among other resources that we abound in, our staff is our strength that we must not neglect in these difcult times.” (Expert 2) “All of our team members are aware of the impact of people in tourism, and I am sure that we will all make our maximum contribution to pass through this period as painlessly as possible and prepare ourselves properly for the tourism that follows.” (Expert 2) “The role of human resources in the process of recovering and adopting a new ‘sustainability model’ is huge and irreplaceable. This role is most relevant for the new approach of extending the tourism paradigm of sustainable management that will study the risk of overtourism and its impact on overall sustainability. The model also refers to measuring residents’ life satisfaction in a destination, which can help destination management organizations (DMOs) and management companies to reduce negative and increase positive tourism impacts, according to the sustainable and responsible tourism paradigm.” (Expert 3) “However, the role of employees in tourism and hospitality, at the level of direct services and contact with the guest and the market, remains irreplaceable.” (Expert 3) “First, they have to answer the questions of what the market and the guests expect from them, and then the question of what the destination where they operate expects from them. This requires continuous monitoring and control (from annual, monthly to weekly basis) of the predened developmental and business goals, as well as the maximum material and moral stimulation of employees and their work engagement in pursuing these high expectations.” (Expert 3) “Appropriate motivation and work engagement are key to recovery in every segment of the business.” (Expert 1) Intrinsic and external motivation Work engagement “Motivation and work engagement of employees are of the utmost importance for the postcrisis period.” (Expert 2) “In each situation,::: there should be traces of optimism.” (Expert 2) “The role of human resources in the process of recovering and adopting a new ‘sustainability model’ is huge and irreplaceable. This role is most relevant for the new approach of extending the tourism paradigm of sustainable management that will study the risk of overtourism and its impact on overall sustainability. The model also refers to measuring residents’ life satisfaction in a destination, which can help destination management organizations (DMOs) and management companies to reduce negative and increase positive tourism impacts, according to the sustainable and responsible tourism paradigm.” (Expert 3) Idealized inuence Transformational leadership “Therefore, we should encourage all employees to work together in planning new solutions and offers in order to be ready to respond to new challenges.” (Expert 2) Inspirational motivation Transformational leadership “The fact is that employee salaries make up a large share of costs now, but the tourism strategy is long-term oriented, and in these difcult times, we need to think about the future and the time when all these employees will continue to give their maximum engagement.” (Expert 2) Shared vision Transformational leadership “The role of human resources in the process of recovering and adopting a new ‘sustainability model’ is huge and irreplaceable. This role is most relevant for the new approach of extending the tourism paradigm of sustainable management that will study the risk of overtourism and its impact on overall sustainability. The model also refers to measuring residents’ life satisfaction in a destination, which can help destination management organizations (DMOs) and management companies to reduce negative and increase positive tourism impacts, according to the sustainable and responsible tourism paradigm.” (Expert 3) “Many destinations are becoming aware of their market position, and where this can lead (i.e., to overtourism), so they want to actively make decisions and laws to regulate the tourism development. Their efforts refer to both the supply side (urban, tax, and municipal policy) as well as the demand side by limiting the number of tourists in the destination while raising the quality level and excellence in tourism services and destinations.” (Expert 3) (continued on next page) ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 41 Table 3. (continued) First-order categories and illustrative data Second-order themes Aggregate dimension “The fact is that employee salaries make up a large share of costs now, but the tourism strategy is long-term oriented, and in these difcult times, we need to think about the future and the time when all these employees will continue to give their maximum engagement.” (Expert 2) Intellectual stimulation Transformational leadership “First, they have to answer the questions of what the market and the guests expect from them, and then the question of what the destination where they operate expects from them. This requires continuous monitoring and control (from annual, monthly to weekly basis) of the predened developmental and business goals, as well as the maximum material and moral stimulation of employees and their work engagement in pursuing these high expectations.” (Expert 3) levels of intrinsically motivated employees are pre- dicted to employ engaged workers and managers to a lesser degree. Our ndings add to the scientic discussion on transformational leadership in two ways, which can be dened as our theoretical contribution. First, the results conrm that employee engagement depends on transformational leadership attitudes, especially in the context of tourism and hospitality. Salanova et al. (2011) and Hayati et al. (2014) have shown that transformational leadership emphasizes the poten- tial of employee engagement to achieve excellence and guest satisfaction in the studied sector, which our study additionally conrms with contemporary empirical data. With our research, we can also ex- tend the theoretical foundations of transformational leadership in the tourism and hospitality sector, as highlighted by Shu (2015). With our study, we can add to contemporary leadership approaches such as trans- formational leadership style in an attempt to help nd enough committed and engaged employees in the sector, with which we are also able to partially ll the theoretical gap found in existing tourism and hospi- tality literature as indicated by Arasli and Arici (2019). Similarly, we add to the body of literature that ac- knowledges the necessity of an improved knowledge of leadership tools such as transformational leader- ship in the tourism and hospitality sector (Slåtten & Mehmetoglu, 2011). Second, our study sheds light on the correlation in our research model by highlighting the moderating effect of intrinsic motivation. Unlike most studies that analyze moderating perspectives, such as motiva- tional aspects (Deci & Ryan, 2013), our study provides a different perspective by examining the moderator at different levels in promoting work engagement. We note that intrinsic motivation in the hospitality, tourism, and service sector environments represents signicant aspects in the literature. Our qualitative section is a response to the current but limited lit- erature on the impact of the recent pandemic on work engagement in the studied sector. The future of the tourism sector in Croatia will be character- ized by the social complexity of relationships between managers and employees to create social communi- cation that supports intrinsic motivation in order to increase work engagement and achieve sustainable development. 5.2 Practical implications The rst practical implication raises the question of what transformational leaders can do to foster engaged work behaviors. Based on the research nd- ings, transformational leaders should foster intrinsic motivation in their employees, rst and foremost, by leading by example. Transformational leaders must lead by example by being intrinsically motivated, which is reected in the studied moderator and stim- ulates their work engagement. Second, leaders should also design and implement human resource management (HRM) practices. This is especially important in times of recovery from the coronavirus pandemic, characterized by lockdowns, social distancing, wearing masks, and other protec- tive measures (Prentice et al., 2021). Third, leaders should be aware of the positive relationship between studied constructs in our re- search model, as leaders who practice higher levels of transformational leadership have a more relevant inuence on their workers’ work engagement. We suggest that leaders engage in and implement the pro- cesses of self-development to sustain advanced levels of transformational leadership. Fourth, leaders, especially those who exhibit lower levels of intrinsic motivation, should identify or re- visit their inner strengths and desires to achieve advanced levels of intrinsic motivation, leading to in- creased leader work engagement. It is assumed that this process will contribute to higher guest satisfac- tion, which will translate into an improved bottom line. There are also practical implications for hiring practices, as companies are more likely to hire in- trinsically motivated managers and personnel in the 42 ECONOMIC AND BUSINESS REVIEW 2024;26:32–44 studied sector because they are more engaged (Grant, 2008). 5.3 Limitations and avenues for future research This paper should be read with specic draw- backs in mind despite the contributions mentioned above. The rst limitation relates to the fact that our data prevents us from making conclusive causal statements about the direction of the hypothesized relationships. This problem is somewhat mitigated by the fact that the hypothesized relationships are based on organizational behavior theory, whereas the ana- lytical techniques used (i.e., regression models) are common in management. Although we examined a diverse sample of participants from the hospitality and tourism sectors, our ndings may be culturally biased. Future research should include longitudinal or experimental studies that could rule out alternative explanations. The second limitation is that different methods could be used to improve the understanding of the lasting inuence of the coronavirus pandemic on la- bor engagement in the studied sector, which future studies could explore. The third drawback is related to self-reporting, known as common method bias. Meta-analyses sug- gest that using data collection strategies based on self- reports allows researchers to capture a broader range of such behaviors. We addressed this by collecting inputs in three stages to be able to explore the research variables at different time points. By having two par- allel data collection and analysis processes in which we sought expert opinion, we attempted to overcome the common method bias of the quantitative portion. Another starting point for future research could be considering institutional and cross-country dif- ferences related to idiosyncratic tourism conditions and country-specic criteria. Future research could focus on individual constructs of transformational leadership, namely idealized inuence, inspirational motivation, intellectual stimulation, and individual consideration in relation to individual factors of the multi-layered concept of work engagement, which include vitality, dedication, and absorption, as this holds signicant promise to enrich the body of knowl- edge regarding more in-depth insight into the re- lationship between transformational leadership and work engagement. In addition, we encourage future researchers to conduct empirical testing of alternative concepts, such as job involvement with subcompo- nents such as vigor and dedication, as it could add value to the overall research proposition and could rule out alternative explanations related to the results of this research. 6 Conclusion Work engagement in the studied sector has been increasingly researched in recent years (e.g., Kim & Koo, 2017; Sha et al., 2020; Vithayaporn & Ashton, 2019; Yeh, 2013). In this article, we theoretically and empirically demonstrate that the correlation between transformational leadership and work engagement is moderated by intrinsic motivation in the tourism and hospitality industry in the context of the coro- navirus pandemic, which has signicantly impacted this sector globally (Hoque et al., 2020; Wen et al., 2020). We explore work engagement interactions that could determine the extent of this specic contribu- tion to tourism engagement, which could be relevant for hotel managers to encourage frontline employ- ees to become more engaged and contribute to the studied sector after its recovery from the coron- avirus pandemic. Our ndings indicate that intrinsic motivation drives work engagement, while trans- formational leadership successfully contributes to work engagement. One potential strategy to facili- tate postcrisis recovery in tourism is to foster the intrinsic motivation of employees. Work engagement among hospitality and tourism employees needs fur- ther study as the consequences of the coronavirus outbreak continue to hinder the tourism sector. We hope future research will further explore the mech- anisms and reasons for advancing work engagement relevant to the studied sector. 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