Browse > Article
http://dx.doi.org/10.13106/jafeb.2020.vol7.n10.769

Transformational Leadership and Financial Performance: The Mediating Roles of Learning Orientation and Firm Innovativeness  

KITTIKUNCHOTIWUT, Ploychompoo (Mahasarakham Business School, Mahasarakham University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.10, 2020 , pp. 769-781 More about this Journal
Abstract
This study attempts to examine the relationships between transformational leadership, learning orientation, firm innovativeness, and financial performance. Specifically, the moderating effect of learning orientation and firm innovativeness. The data collected from 606 SMEs in Thailand were evaluated using the structural equation modeling, typifying that quantitative research. The results revealed that transformational leadership had a positive effect on learning orientation. Similarly, transformational leadership had a positive effect on firm innovativeness. Further, the study found that transformational leadership had a positive indirect effect on financial performance through the mediation of learning orientation. The results of the study found that transformational leadership had a positive indirect effect on financial performance through the mediation of firm innovativeness. Transformational leadership and learning orientation to improve innovation within the organization, including organizations and leaders among themselves. Especially, innovative firms inculcate ideals of promise to learning, open-mindedness, and shared vision. Furthermore, practitioners can use the findings of this study when they perform their role of leaders to challenge creativity and innovation among followers. Finally, those developments would influence a procedure of evidence procurement, evidence distribution and shared explanation that escalations equally individual and administrative effectiveness owing to its influence going on products.
Keywords
Transformational Leadership; Learning Orientation; Firm Innovativeness; Financial Performance; Small and Medium-sized Enterprises;
Citations & Related Records
Times Cited By KSCI : 6  (Citation Analysis)
연도 인용수 순위
1 Bass, B. M. (1999). Two decades of research and development in transformational leadership. European Journal of Work and Organizational Psychology, 8(1), 9-32. https://doi.org/10.1080/135943299398410.   DOI
2 Burns, J. M. (1978). Leadership. New York. Harper & Row.
3 Budur, T. (2018). Analytic hierarchy process to evaluate corporate image, trust, and switching cost of GSM operators: A case of Kurdistan Region of Iraq. International Journal of Social Sciences & Educational Studies, 5(2), 241-250. https://doi.org/10.23918/ijsses.v512p241.
4 Budur, T., Faraj, K. M., & Karim, L. A. (2019). Benchmarking operations strategies via hybrid model: A case study of caferestaurant sector. Amazonia Investiga, 8(23), 842-854.
5 Blanchard, K. H., Zigarmi, D., & Nelson, R. B. (1993). Situational leadership(R) after 25 years: a retrospective. Journal of Leadership & Organizational Studies, 1(1), 21-36. https://doi.org/10.1177/107179199300100104.   DOI
6 Dvir, T., Eden, D., Avolio, B. J., & Shamir, B. (2002). Impact of transformational leadership on follower development and performance: a field experiment. Academy of Management Journal, 45(4), 735-744. https://doi.org/10.2307/3069307.   DOI
7 Diamantopoulos, A., & Siguaw, J. (2000). Introduction to LISREL: a guide for the uninitiated. London, UK: SAGE Publications. Inc. https://doi.org/10.4135/9781849209359.
8 Avolio, B. J., & Bass, B. M. (1988). Transformational leadership, charisma and beyond. In: J. G. Hunt, B. R. Baliga, H. P. Dachler, & C. A. Schriesheim (Eds.), International leadership symposia series. Emerging leadership vistas, 29-49.
9 Avlonitis, G. J., Kouremenos, A., & Tzokas, N. (1994). Assessing the innovativeness of organizations and its antecedents: project innovstrat. European Journal of Marketing, 28(11), 5-28. https://doi.org/10.1108/03090569410075812.   DOI
10 Avolio, B. J., & Bass, B. M. (1995). Individual consideration viewed at multiple levels of analysis: a multi-level framework for examining the diffusion of transformational leadership. The Leadership Quarterly, 6(2), 199-218. https://doi.org/10.1016/1048-9843 (95)90035-7.   DOI
11 Avolio, B. J., & Gardner, W. L. (2005). Authentic leadership development: getting to the root of positive forms of leadership. The Leadership Quarterly, 16(3), 315-338. https://doi.org/10.1016/j.leaqua.2005.03.001   DOI
12 Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515-524. https://doi.org/10.1016/s0019-8501(01)00203-6.   DOI
13 Bettis, R. A., & Prahalad, C. K. (1995). The dominant logic: retrospective and extension, Strategic Management Journal, 16(1), 5 -14. https://doi.org/10.1002/smj.4250160104.   DOI
14 Bono, J. E., & Judge, T. A. (2004). Personality and transformational and transactional leadership: a meta-analysis. Journal of Applied Psychology, 89(5). 901-910. https://doi.org/10.1037/0021-9010.89.5.901.   DOI
15 Bono, J. E., & Judge, T. A. (2003). Self-concordance at work: toward understanding the motivational effects of transformational leaders. Academy of Management Journal, 46(5), 554-571. https://doi.org/10.2307/30040649.   DOI
16 Damanpour, F. (1991). Organizational innovation: a metaanalysis of effects of determinants and moderators. Academy of Management Journal, 34(3), 555-590. https://doi.org/10.5465/256406.   DOI
17 Bass, B. M., Avolio, B. J., Jung, D. I., Berson, Y. (2003). Predicting unit performance by assessing transformational and transactional leadership. Journal of Applied Psychology, 88(2), 207-218.   DOI
18 Bakar, M. S., & Mahmood, R. (2014). Linking transformational leadership and corporate entrepreneurship to performance in the public higher education institutions in Malaysia. Advances in Management and Applied Economics, 4(3), 109-122.
19 Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99- 120. https://doi.org/10.1177/014920639101700108.   DOI
20 Bass, B. M. & Riggio, R.E. (2006). Transformational leadership (2nd ed). Lawrence erlbaum associates publishers.
21 Bass, B. M. (1985). Leadership and performance beyond expectations. New York: The Free Press.
22 Arendt, L. (2009). Transformational leadership and follower creativity: the moderating effect of leader humor. Review of Business Research, 9(4), 100-106.
23 Amabile, T. M. (1996). Creativity in context. Boulder, CO: Westview Press.
24 Aaker, D. A., Kumar, V., & Day, G. S. (2001). Marketing Research. New York, NY: John Wiley and Sons.
25 Akgun, A. E., Keskin, H., Byrne, J. C., & Aren, S. (2007). Emotional and learning capability and their impact on product innovativeness and firm performance. Technovation, 27(9), 501-513. https://doi.org/10.1016/j.te chnovation.2007.03.001.   DOI
26 Ali, S. H. K., Khan, N. S., & Yildiz, Y (2020). Leadership effects on CSR employee, media, customer, and NGOs. Management and Economics Research Journal, 6(1), 1-9. https://doi.org/10.18639/merj.2020.961566.
27 Aragon-Correa, J. A., & Cordon-Pozo, E. (2005). The influence of strategic dimensions and the environment on the introduction of internet as innovation into small and medium-sized enterprises. Technology Analysis & Strategic Management, 17(2), 205-218. https://doi.org/10.1080/09537320500088856.   DOI
28 Aragon-Correa, J. A., Garcia-Morales, V. J., & Cordon-Pozo, E. (2007). Leadership and organizational learning's role on innovation and performance: lessons from Spain. Industrial Marketing Management, 36(3), 349-359. https://doi.org/10.1016/j.indmarMan.2005.09.006.   DOI
29 Armstrong, J. S., & Overton, T. S. (1977). Estimating non-response bias in mail surveys. Journal of Marketing Research, 14(3), 396. https://doi.org/10.2307/3150783.   DOI
30 Argyris, C., & Schon, D. A. (1978). Organizational learning: a theory of action perspective. Reading, Mass: Addison-Wesley. Organization Studies, 1(3), 292-293. https://doi.org/10.1177/017084068000100310.   DOI
31 Lim, B., & Ployhart, R. E. (2004). Transformational leadership: relations to the five-factor model and team performance in typical and maximum contexts. Journal of Applied Psychology, 89(4), 610-621. https://doi.org/10.1037/0021-9010.89.4.610.   DOI
32 Kuratko, D. F., Ireland, R. D., & Hornsby, J. S. (2001). Improving firm performance through entrepreneurial actions: Acordia's corporate entrepreneurship strategy. Academy of Management Executive, 15(4), 60-71. https://doi.org/10.5465/ame.2001.5897658.
33 Lee, J. Y., & Lee, Y. (2018). Job crafting and performance: literature review and implications for human resource development. Human Resource Development Review, 17(3), 277-313. https://doi.org/10.1177/1534484318788269.   DOI
34 Liao, S.H., Fei, W.C., & Liu, C.T. (2008). Relationships between knowledge inertia, organizational learning and organization innovation. Technovation, 28(4), 183-195. https://doi.org/10.1016/j.technovation.2007.11.005.   DOI
35 Rusliati, E., Mulyaningru, M., Wibowo, A., & Narmaditya, B. S. (2020). Does entrepreneurial leadership matter for microenterprise development? : lesson from west java in Indonesia. Journal of Asian Finance, Economics and Business, 7(8), 445-450. doi:10.13106/jafeb.2020.vol7.no8.445.   DOI
36 Purushothaman, A. (2015). Organizational learning: a road map to evaluate learning outcomes in knowledge intensive firms. Development and Learning in Organizations: An International Journal, 29(3), 11-14. https://doi.org/10.1108/dlo-07-2014-0053.   DOI
37 Rasool, H. F., Arfeen, I. U., Mothi, W., & Aslam. (2015). Leadership styles and its impact on employees' performance in health sector of Pakistan, City University Research Journal, 5(1), 97-109. https://doi.org/10.1108/tg-11-2014-0054.
38 Rhee, J., Park, T., & Lee, D. H. (2010). Drivers of innovativeness and performance for innovative SMEs in South Korea: mediation of learning orientation. Technovation, 30(1), 65-75. https://doi.org/10.1016/j.technovation.2009.04.008.   DOI
39 Sarros, J. C., & Santora, J. C. (1995). The transformationaltransactional leadership model in practice. Leadership & Organization Development Journal, 22(8), 383-393. https://doi.org/10.1108/01437730110410107.   DOI
40 Schumacker & Lomax. (1996). A beginner's guide to structural equation modeling. Lawrence Erlbaum Associates, Inc.
41 Schumacker, R. E., & Lomax, R. G. (2010). A beginner's guide to structural equation modeling (3rd ed.). Mahwah, NJ: Lawrence Erlbaum Associates.
42 Seda Mengu. (2015). Violence and social media. Athens Journal of Mass Media and Communications, 1(3), 211-228. https://doi.org/10.30958/ajmmc.1-3-4.   DOI
43 Sinkula, J. M., Baker, W. E., & Noordewier, T. (1997). A framework for market-based organizational learning: linking values, knowledge, and behavior. Journal of the Academy of Marketing Science, 25(4), 305-318. https://doi.org/10.1177/0092070397254003.   DOI
44 Metwally, A. H., & El-bishbishy, N. (2014). The impact of transformational leadership style on employee satisfaction. The Business & Management Review, 5(3), 3-4.
45 Llorens Montes, F. J., Ruiz Moreno, A., & Garcia Morales, V. (2005). Influence of support leadership and teamwork cohesion on organizational learning, innovation and performance: an empirical examination. Technovation, 25(10), 1159-1172. https://doi.org/10.1016/j.technovation.2004.05.002.   DOI
46 Lonial, S. C., & Carter, R. E. (2015). The impact of organizational orientations on medium and small firm performance: a resource-based perspective. Journal of Small Business, 53(1), 94-113.https://doi.org/10.1111/jsbm.12054.   DOI
47 McMurray, A. J., Islam, M. M., Sarros, J. C., & Pirola-Merlo, A. (2013). Workplace innovation in a nonprofit organization. Nonprofit Management and Leadership, 23(3), 367-388. https://doi.org/10.1002/nm l.21066.   DOI
48 Neter, J., Wasserman, W., & Kutner, M. H. (1985). Applied linear statistical models: regression, analysis of variance, and experimental designs (2nd ed.). Homewood, IL: Richard D. Irwin.
49 Mughal, M., Bahaudin, A., & Salleh, N. (2019). Behavioral factors for IT project success in Pakistan: moderating effect of leadership styles. Management Science Letters, 9(7), 987-996. https://doi.org/10.5267/j.msl.2019.4.006.   DOI
50 Narver, J. C., & Slater, S. F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, 54(4), 20-36. https://doi.org/10.2307/1251757.   DOI
51 Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory. New York, NY: McGraw-Hill.
52 Paais, M., & Pattiruhu, R. J. (2020). Effect of motivation, leadership, and organizational culture on satisfaction and employee performance. Journal of Asian Finance, Economics and Business, 7(8), 577-588. doi:10.13106/jafeb.2020.vol7.no8.577.   DOI
53 Kelloway, E. K. (2015). Using Mplus for Structural Equation Modeling; A Researcher's Guide. (2nd ed.). Thousand Oaks, CA: Sage Publications. https://doi.org/10.4135/9781483381664.
54 Jung, D. I., Chow, C., & Wu, A. (2003). The role of transformational leadership in enhancing organizational innovation: hypotheses and some preliminary findings. The Leadership Quarterly, 14(4-5), 525-544. https://doi.org/10.1016/s1048-9843(03)00050-x.   DOI
55 Kang, W., & Montoya, M. (2014). The impact of product portfolio strategy on financial performance: the roles of product development and market entry decisions. Journal of Product Innovation Management, 31(3), 516-534. https://doi.org/10.12111.   DOI
56 Kaya, N., & Patton, J. (2011). The effects of knowledge-based resources, market orientation and learning orientation on innovation performance: an empirical study of Turkish firms. Journal of International Development, 23(2), 204-219. https://doi.org/10.1002/jid.1662.   DOI
57 Kirkbride, P., & Kirkbride, P. (2006). Developing transformational leaders: the full range leadership model in action. Industrial and Commercial Training, 38(1), 23-32. https://doi.org/10.1108/00197850610646016.   DOI
58 Knowles, C., Hansen, E. N., & Dibrell, C. (2008). Measuring firm innovativeness: development and refinement of a new scale. Journal of Forest Products Business Research, 5(5), 1-25.
59 Kohli, A. K., Shervani, T. A., & Challagalla, G. N. (1998). Learning and performance orientation of salespeople: the role of supervisors. Journal of Marketing Research, 35(3). 263-274. https://doi.org/10.1177/002224379803500211.   DOI
60 Pancasila, I., Haryono, S., & Sulistyo, B. A. (2020). Effects of Work Motivation and Leadership toward Work Satisfaction and Employee Performance: Evidence from Indonesia. Journal of Asian Finance, Economics and Business, 7(6), 387-397. doi:10.13106/jafeb.2020.vol7.no6.387.   DOI
61 Parast, M. M., Golmohammadi, D., Mcfadden, K. L., & Miller, J. W. (2015). Linking business strategy to service failures and financial performance: empirical evidence from the US domestic airline industry, Journal of Operations Management, 38(1), 14-24. https://doi.org/10.1016/j.jom.2015.06.003.   DOI
62 Phipps, S. T. A., Prieto, L. C., & Verma, S. (2012). Holding the helm: exploring the influence of transformational leadership on group creativity and the moderating role of organizational learning culture. Journal of Organizational Culture, Communication and Conflict, 16(2), 145-156.
63 Mohammed, S. S., Suleyman, C., & Taylan, B. (2020). Burnout determinants and consequences among University Lecturers. Revista Amazonia Investiga, 9(27), 13-24. https://doi.org/10.34069/ai2020.27.03.2.   DOI
64 Budur, T. (2018). The impact of Al-Ghazali's virtues on organizational commitment and performance: A case study at private education institutions in Kurdistan region of Iraq. Icabep. In: ICABEP 2019 Conference Proceedings. https://doi.org/10.23918/icabep2019p18.
65 Yoon, W., Song, H., Lim, H., & Joo, K. (2010). Structural determinants of team performance: the mutual influences of learning culture, creativity, and knowledge. Human Resource Development International, 13(3), 249-264. https://doi.org/10.1080/13678868.2010.483815.   DOI
66 Yukl, G. (1999). An evaluation of conceptual weaknesses in transformational and charismatic leadership theories. The Leadership Quarterly, 10(2), 285-305. https://doi.org/10.1016/s1048-9843(99)00013-2.   DOI
67 Adler, D., (2015). Doppelte Hegemonie. Monograph. https://doi.org/10.5771/9783845265742.
68 Kouzes, J. M., & Posner, B. Z. (2006). The leadership challenge. (3rd ed.). Hoboken, NJ: John Wiley & Sons.
69 Hurley, R. F., & Hult, G. T. M. (1998). Innovation, market orientation and organizational learning: an integration and empirical examination. Journal of Marketing, 62(3), 42-54. https://doi.org/10.1177/002224299806200303.   DOI
70 Hult, G. T. M., & Ferrell, O. C. (1997). Global learning capacity in Purchasing: Construct and Measurement. Journal of Business Research, 40(2), 97-111. https://doi.org/10.1016/s0148-2963(96)00232-9.   DOI
71 Kovach, J. J., Hora, M., Manikas, A., & Patel, P. C. (2015). Firm performance in dynamic environments: the role of operational slack and operational scope. Journal of Operations Management, 37(1), 1-12. https://doi.org/10.1016/j.jom.2015.04.002.   DOI
72 Janssen, O., & Yperen, N.W.V. (2004). Employees' goal orientation, the quality of leader-member exchange, and the outcomes of job performance and job satisfaction. Academy of Management Journal, 47(4). 368-384. https://doi.org/10.5465/20159587.
73 Hult, G. T. M. (1998). Managing the international strategic sourcing process as a market driven organizational learning system. Decision Science, 29(1), 193-216. https://doi.org/10.1111/j.1540-5915.1998.t b01349.x.   DOI
74 Hult, G. T. M., Hurley, R. F., & Knight, G A. (2004). Innovativeness: its antecedents and impact on business performance. Industrial Marketing Management, 33(5), 429-438. https://doi.org/10.1016/j.indmarman.2003.08.015.   DOI
75 Jain, P. (2015). The role of transformational leadership in organizational commitment. International Journal of Business Quantitative Economics and Applied Management Research, 2(5), 1-11.
76 Jenssen, J. I. (2003). Innovation, capabilities, and competitive advantage in Norwegian shipping. Maritime Policy and Management. An International Journal of Shipping and Port Research, 30(2), 93-106. https://doi.org/10.1080/0308883032000084841.
77 Joo, B., & Lim, T. (2009). The effects of organizational learning culture, perceived job complexity and proactive personality on organizational commitment and intrinsic motivation. Journal of Leadership & Organizational Studies, 16(1), 48-60. https://doi.org/10.1177/1548051809334195.   DOI
78 Galer, G., & Van der Heijden. (1992). The learning organization: How planning creates organizational learning. Marketing and Intelligence & Planning, 10(6), 5-12. https://doi.org/10.1108/02634509210018702.   DOI
79 Dyer, J.H., & Singh H., (1998). The relational view: cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23(4), 660-679. https://doi.org/10.5465/amr.1998.1255632.   DOI
80 Flanigan, R., Bishop, B., Brachle, B., & Winn, B. (2017). Leadership and small firm performance: the moderating effects of demographic characteristics. Creighton Journal of Interdisciplinary Leadership, 3(1), 2-19. https://doi.org/10.17062/cjil.v3il.54.   DOI
81 Garcia, V. J., Llorens, F. J., & Verdu, A. J. (2007). Influence of personal mastery on organizational performance through organizational learning and innovation in large firms and SMEs. Technovation, 27(9), 547-568. https:doi.org/10.1016/j.tecHnovation.2007.02.013.   DOI
82 Garcia-Morales, V. J., Llorens-Montes, F. J., & Verdu-Jover, A. J. (2008). The effects of transformational leadership on organizational performance through knowledge and innovation. British Journal of Management, 19(4), 299-319. https://doiorg/10.1111/j.1467-8551.2007.00547.x.   DOI
83 Geh, E. Z. (2014). Organizational spiritual leadership of worlds "made" and "found". Leadership & Organization Development Journal, 35(2).137-151. https://doi.org/10.1108/LODJ-04-2012-0052.   DOI
84 Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis: a global perspective (7th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
85 Harrison, R.T., & Leitch, C.M. (2005). Maximising the potential of University Spin-Outs: the development of second-order commercialization activities. R and D Management, 35(3), 247-272. https://doi.org/10.1111/j.1467-9310.2005.00388.x.
86 Huber, G. P. (1991). Organizational learning: the contributing processes and the literatures. Organization Science, 2(1), 88-115. https://doi.org/10.1287/orsc.2.1.88.   DOI
87 Demir, A., & Budur, T. (2019). Roles of leadership styles in corporate social responsibility to non-governmental organizations (NGOs). International Journal of Social Sciences & Educational Studies, 5(4), 174-183. https://doi.org/10.23918/ijsses.v5i4p174.
88 Damanpour, F., Szabat, K. A., & Evan, W. M. (1989). The relationship between types of innovation and organizational performance. Journal of Management Studies, 26(6), 587-601. https://doi.org/10.1111/j.1467-6486.1989.tb00746.x.   DOI
89 Das, S. C. (2017). Managing and leading change through transformational leadership: managing and leading change through transformational leadership.
90 De Geus, A. P. (1988). Planning as learning. Harvard Business Review, 66(2).70-74.
91 Dess, G. G., & Robinson Jr, R. B. (1984). Measuring organizational performance in the absence of objective measures: the case of the privately held firm and conglomerate business unit. Strategic Management Journal, 5(3), 265-273. https://doi.org/10.1002/smj.4250050306.   DOI
92 Deshpande, R., Farley, J. U., & Webster, F. E. (1993). Corporate culture, customer orientation, and innovativeness in Japanese firms: A Quadrat analysis. Journal of Marketing, 57(1), 23-37. https://doi.org/10.1177/002224299305700102.   DOI
93 Deshpande, R., & Farley, J. U. (2004). Organizational culture, market orientation, innovativeness, and firm performance: an international research odyssey. International Journal of Research in Marketing, 21(1), 3-22. https://doi.org/10.1016/j.ijresmar.2003.04.002.   DOI
94 Wang C. L., & Ahmed, P. K. (2004). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303-313. https://doi.org/10.1108/14601060410565056.   DOI
95 Small and Medium-sized Enterprise. (2020).The office of small and medium enterprises. Retrieved January 28, 2020, from https:/www.sme.go.th/th/.
96 Sosik, J. J., Kahai, S. S., & Avolio, B. J. (1998). Transformational leadership and dimensions of creativity: motivating idea generation in computer-mediated groups. Creativity Research Journal, 11(2), 111-121. https://doi.org/10.1207/s15326934crj1102_3.   DOI
97 Sujan, H., Weitz, B. A., & Kumar, N. (1994). Learning orientation, working smart and effective selling. Journal of Marketing, 58(3), 39-52. https://doi.org/10.2307/1252309.   DOI
98 Tajeddini, K. (2015). Using the integration of disparate antecedents to drive world - class innovation performance: an empirical investigation of Swiss watch manufacturing firms. Review of Applied Management Studies, 13(1), 34-50. https://doi.org/10.1016/j.tekhne.2015.09.001.
99 Torlak, N. G., Demir, A., & Budur, T. (2019). Impact of operations management strategies on customer satisfaction and behavioral intentions at cafe-restaurants. International Journal of Productivity and performance Management. https://doi.org/10.1108/IJPPM-01-2019-0001.
100 Weerawardena, J., O'Cass, A., & Julian, C. (2006). Does industry matter? Examining the role of industry structure and organizational learning in innovation and brand performance, Journal of Business Research, 59(1), 37-45. https://doi.org/10.1016/j.jbusres.2005.02.004.   DOI
101 Westerfield, R. J. (2003). Fundamentals of Corporate Finance. New York, NY: McGraw Hill.
102 Wiratchai, N. (1999). LISREL model: inferential statistics for research (3rd ed.). Bangkok, Thailand: Chulalongkorn University Printing House.