Transformational Leadership and Organizational Performance: The Sequential Mediating Roles of Strategic Agility and Innovation Capability

Abstract

The transformational leadership concept is known to significantly contribute to success in dynamic and competitive business environments. It focuses on inspiring, motivating and challenging staff to work at their best. This research investigates how transformational leadership impacts on organisational performance in a sequential mediation research framework, with strategic agility and innovation capability playing a mediating role. Transformational leaders promote flexibility, creativity and help organizations cope with changing environments effectively. The concept of strategic agility improves the organization's power to restructure resources and adapt quickly to the changing market conditions, whereas innovation capability supports the creation of new products, services, and processes. The study is of the cross sectional quantitative type and the respondents are middle and top-level managers in both the public and private sector. Data is collected using a structured questionnaire which is based on validated scales. Purposive sampling is used to choose participants that have managerial or leadership experience. Structural Equation Modeling (SEM), descriptive statistics, and reliability and validity test are used to analyze the data through SmartPLS. Sequential mediation is examined using bootstrapping techniques to test for mediation effects. The study adds to the literature on leadership and organizational behavior by clarifying the relationship between transformational leadership and performance as evidenced by the dynamic capabilities.