Study on the impact of transformation leadership on performance of small and medium enterprises in Can Tho City, Vietnam

Abstract

Transformational leadership is understood as a leadership style that enhances a sense of collective benefits for members of an organization. This study aims to analyze the impact of transformational leadership on the performance of small and medium enterprises in Can Tho city, Vietnam. This research is based on the theory and the four components of Transformational Leadership Theory (TLT) (Idealized Influence - II; Inspirational Motivation - IM; Intellectual Stimulation - IS; Individualized Consideration - IC), a review of related studies, and opinions from expert interviews to develop a research model. The primary data of the article was collected from a survey of 214 small and medium enterprises in the city. The data analysis methods used in this study include Cronbach's alpha reliability test, confirmatory factor analysis (CFA), structural equation modeling (SEM), and multigroup structural analysis. The article's research results confirm that the leaders of enterprises with a transformational style play a significant and positive role in the spirit of learning and sharing knowledge of the organization members, especially the micro-enterprises face many difficulties due to the lack of resources. Research results also show that thanks to the transformational leadership (TL) style and organizational learning (OL), it has made an essential contribution to organizational innovation (OI) as well as to improving operational efficiency (both financial and non-financial performance) for small and medium enterprises in Can Tho city. Based on the article's research results, the authors have proposed some characteristics of transformational leaders in small and medium enterprises in the city. In particular, the study emphasizes the influence of the individualized consideration and idealized influence factors in improving learning ability, contributing to organizational renewal and improving performance for small and medium enterprises in Can Tho city.