Final answer:
Loyalty, honesty, and reciprocal obligations contribute to the foundation of trust, which is essential in transformational leadership, rather than transactional leadership which relies on rewards and punishments.
Step-by-step explanation:
Loyalty, honesty in dealing with others, and reciprocal obligations are the building blocks of trust. Trust is a foundational component that impacts various leadership styles within organizations. Specifically, transformational leadership, as developed by Bass and others, leverages trust through charisma, inspiration, intellectual stimulation, and considerate actions. In contrast, transactional leadership centers around supervision, and organizational goals are achieved primarily through a system of rewards and punishments where the maintenance of the status quo is prioritized. Research by Eagly, Johannesen-Schmidt, & van Engen suggests that transformational leadership strategies are generally more effective than transactional approaches, although leaders may exhibit both to varying degrees depending on the situation and needs of their followers.