Performance improvement becomes increasingly important for the public administration discipline (Hondeghem & Perry, 2009). In public administration literature, recent studies emphasize leadership as a key lever for achieving performance goals (Wright et al., 2012; Moynihan et al., 2012; Van Wart, 2013). However, our knowledge is still limited as to how context influences leadership-effects and consequently when public sector leadership is more or less effective (Trottier et al.; Moynihan et al., 2012). Integrating insights from the management literature and public administration research, we suggest leader-employee distance as a crucial predictor of leadership effectiveness (Meier & Bohte, 2003; Antonakis & Atwater, 2002). Specifically, we discuss and test the implication of leader-employee distance for the effect of the idealized transformational and transactional leadership strategies on performance. The research question is how the effect of transformational and transactional leadership strategies on performance is moderated by distance?

To generate expectations on distance, a clear understanding of the distance concept is needed. In the leadership literature, the concept has been defined in very fragmented ways followed by inconsistent operationalizations and empirically varyingly results (e.g. Napier & Ferris, 1995; Antonakis & Atwater, 2002; Collison, 2005). Defined for example as value (in)congruence, demographic similarity, perceived social distance, hierarchical distance, psychical distance, span of control or a combination of several dimensions (e.g. Napier & Ferris, 1995; Antonakis & Atwater, 2002), the concepts sometimes consists of subjectively derived distance and sometimes of objectively given characteristics at both the organizational and individual level. Testing how distance moderates leadership effects, we include objectively given factors of distance and distinguish among organizational characteristics and personal-competence differences between leaders and employees.

We generate and test expectations for two distinct and idealized leadership strategies, i.e. transformational and transactional leadership (Antonakis et al., 2003, Wright & Pandey, 2010). Transformational strategies are behaviors seeking to develop, share and sustain a vision with the intention to facilitate that employees transcend their own self-interest and achieve organization goals. Transactional strategies are the use of contingent rewards and sanctions with the intention to facilitate that employees have a self-interest in achieving organization goals. Both leadership strategies may affect performance (Bass & Riggio, 2006), but the majority of leadership studies assessing the implication of leader distance have focused solely on transformational leadership and only one (but various between studies) type of distance (Collison, 2005). In this paper, we discuss and test the expectation that distance in general decreases the positive impact of the two leadership strategies on performance, as distance makes it more difficult for the leader to provide an appealing vision to and maintain quality of communication with the employees, sustain employees’ attention to core goals (Wright & Pandey, 2010; Howell & Hall-Meranda, 1999), and conduct the monitoring necessary to guide employee behaviors by accurately distributing rewards and sanctions (Miller, 2005; Howell & Hall-Meranda, 1999). To fully assess leadership implications, we include different leadership strategies and expand on the question of if and why different distance dimensions might have different effects across different leadership strategies.