From chapter 2 of the essay All Shine: How Stewardship Built a Vision
Transactional Leadership This mode of leadership is often found in “middle management”, especially in large bureaucracies. It is a strictly rules-bound method of leading a project or organization. The principle is simple. If you do X, you will receive Y. If you fail to do X, you will receive -Y. Rewards and consequences are the name of the game, and “the way we do things here” is the way we will always do things here. If you’re late, you get written up. If your sales rise above quota, you get a bonus. If you write less speeding tickets than expected, you get a written reprimand.
The problem with transactional leadership (when used exclusively as a leadership style) is that innovation and change is nearly impossible. In a constantly changing world, organizations led by transactional leaders will fail, because of the built-in, rigid and institutionalized resistance to change. It should be easy to see how quickly change agents are targeted for removal from these places.