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Previous work on transformational leadership has focused predominantly on individual level analysis, while less attention has been paid to investigating why leaders engage in transformational leadership. In this study, group level outcomes pertaining to cohesiveness as well as the antecedent factor of emotional intelligence as it relates to transformational leadership are investigated. Data were collected from 51 department managers and 252 employees in 23 small-medium textile business firms in Taiwan. Results indicate that both emotional intelligence and group cohesiveness are positively associated with transformational leadership. In addition, transformational leadership mediates the relationship between leaders’ emotional intelligence and group cohesiveness. Implications of the findings in terms of theory and practice are discussed.