Does empowering leadership affect SMEs' sustainability performance through knowledge transfer?

Abstract

Today’s small- and medium-sized enterprises (SMEs) require greater engagement across organizational boundaries. This study examines the relationship between empowering leadership, knowledge transfer, and the sustainability performance of SMEs in three countries. It aims to enrich the field of empowering leadership and knowledge transfer in SMEs by demonstrating their impact on financial, environmental, and social performance. To do so, we use a sample of 392 SMEs from France, India, and the USA. The results suggest that empowering leadership has a direct effect on financial performance but hinders environmental performance. Additionally, although knowledge transfer may limit financial performance, it enhances environmental and social performance. This work is one of the first studies to examine the role of knowledge transfer as a mediator between empowering leadership and sustainability performance. Moreover, it may be used as a reference for improving the sustainability performance of SMEs.