The Impact of Incentive Systems on Employee Performance:The Mediating Role of ‎Transformational Leadership in Oman’s Banking Sector

  • Authors

    • Mohammed Murad Mohammed Al Bulushi Research scholar,‎ Department of Graduate Business School, Universiti Tenaga Nasional, Kajang, Selangor, Malaysia.Putrajaya Campus, Jalan Ikram UNITEN
    • Shafazawana Mohamed Tharikh UNITEN Business School (UBS) Sultan Haji Ahmad Shah Campus, Universiti Tenaga Nasional Deputy Executive Department
    • Z. A. Al Busaidi Present Designation: Deputy Chief Executive Officer, Trifoil Company, Field Supervisor, Universiti Tenaga Nasional. Malaysia
    https://doi.org/10.14419/g80g9g38

    Received date: November 4, 2025

    Accepted date: December 9, 2025

    Published date: December 27, 2025

  • Incentive Systems; Transformational Leadership; Employee Performance; Oman; Banking Sector; ‎Resource-Based View

  • Abstract

    Incentive systems are among the most strategic human resource mechanisms used to enhance employee ‎motivation and organisational performance. However, the behavioural processes through which incentives ‎lead to improved performance outcomes remain underexplored, particularly in developing economies. This ‎study examines the mediating role of transformational leadership in the relationship between incentive ‎systems and employee performance in Oman's banking sector. Grounded in the Resource-Based View ‎‎(RBV) and Transformational Leadership Theory, the study proposes that well-designed incentive systems ‎promote transformational leadership behaviours, thereby enhancing employee motivation, engagement, and ‎performance. Data were collected from 346 non-managerial employees of the Central Bank of Oman ‎‎(CBO) using a structured questionnaire. Partial Least Squares Structural Equation Modeling (PLS-SEM) ‎was applied to test the hypothesised model. The results show that incentive systems have a significant ‎positive effect on both transformational leadership and employee performance. Moreover, transformational ‎leadership partially mediates this relationship, suggesting that incentives not only motivate employees ‎extrinsically but also cultivate leadership behaviours that strengthen intrinsic motivation and collective ‎achievement. The study contributes to strategic human resource management (SHRM) theory by identifying ‎leadership behaviour as a key mechanism linking HR systems to performance outcomes, and it provides ‎practical insights for Omani banks to design incentive frameworks that reinforce leadership-driven ‎excellence‎.

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  • How to Cite

    Al Bulushi , M. M. M. ., Tharikh , S. M. ., & Al Busaidi , Z. A. . (2025). The Impact of Incentive Systems on Employee Performance:The Mediating Role of ‎Transformational Leadership in Oman’s Banking Sector. International Journal of Accounting and Economics Studies, 12(8), 863-870. https://doi.org/10.14419/g80g9g38