Future Business Leaders of America (FBLA) Organizational Leadership Practice Test

In which type of leadership is the focus primarily on maintaining stability through economic and social exchanges?

1. Transformational Leadership

2. Transactional Leadership

3. Charismatic Leadership

4. Servant Leadership

The correct answer is: Transactional Leadership

Transactional leadership is primarily focused on maintaining stability through structured exchanges between leaders and followers. In this leadership style, leaders establish clear goals and expectations, and in return, followers receive rewards or recognition for meeting these expectations. This creates a system of incentives and penalties that encourages compliance and performance, effectively promoting a stable and predictable environment. This style contrasts with transformational leadership, which aims at inspiring and motivating followers to achieve higher levels of engagement and innovation, thus fostering significant change rather than just maintaining stability. Charismatic leadership centers on the leader's personal qualities and ability to inspire followers emotionally, while servant leadership focuses on serving others and emphasizing the well-being of team members. These differing emphases illustrate why transactional leadership stands out for its focus on maintaining steady operations through defined economic and social exchanges.