The role of transformational leadership in facilitating internal resources to create competitive advantage for small and medium-sized enterprises in Vietnam

Abstract

Transformational leadership plays an essential role in establishing a vision and creating a favourable climate for employee innovation and enhancing competition. This paper aims to identify the role of transformational leadership in facilitating internal resources to generate a competitive advantage for small and medium-sized enterprises in Vietnam. To test the research hypotheses, structural equation modelling is applied to survey data collected from 315 managers using the snowball sampling method. The findings reveal the positive and direct influences of entrepreneurial orientation and transformational leadership on organisational learning. In addition, information technology has a direct impact on knowledge management and organisational learning with knowledge management positively influencing organisational innovation. Meanwhile, organisational learning and knowledge management facilitate organisational innovation to create competitive advantage. The results also illustrate that transformational leadership does not directly stimulate entrepreneurial orientation, knowledge management and organisational innovation but indirectly fosters organisational innovation through organisational learning. Some managerial implications for how managers can utilise internal resources to gain competitive advantage are proposed. The paper also points out some limitations and suggests directions for future research.