Transformational Leadership and Industrial Relation Instruments as a Determinant of Firm’s Performance Mediated by Industrial Relation Climate

Abstract

Globally companies have faced conflict in the workplace which led to unfavorable impacts on organizational performance. The dispute would cause an unfavorable workplace climate which leads to a reduction in the level of the firm’s productivity and negatively impact the chance of the organization's survival. The objective of the study is to confirm the relationship between Transformational Leadership and IR instruments to IR Climate. And how IR climate relates to firm performance. A Descriptive quantitative study of 406 respondents from various industries in Indonesia was conducted. Participants of this study were from various stakeholders in organizations such as Directors, Managers, Employees, Heads of Unions, and members of unions from various types of organizations. The result shows that Transformational Leadership and Industrial Relations Instruments positively influence Industrial Relation Climate. And Industrial Climate has a positive relation to the Firm’s Performance.