The role of transformational leadership in innovation performance of Malaysian SMEs

Abstract

This study examines the relationship between transformational leadership (TL; idealised influence, inspirational motivation, intellectual stimulation, and individualised consideration) and innovation performance (IP) and investigates whether perceived organisational support (POS) moderates the relationship between TL and the IP of small- and medium-sized enterprises (SMEs) in Malaysia. Data on TL, POS, and IP were collected through a survey of Malaysian SMEs. The results show that idealised influence, intellectual stimulation, and individualised consideration had significant positive effects on IP. In addition, POS moderated the relationship between TL and IP in terms of idealised influence and inspirational motivation. The results are expected to encourage managers of Malaysian SMEs to stimulate their followers through their motivational and charismatic style. No study of TL and IP has considered SMEs in Malaysia, and therefore, this study contributes to the literature by providing empirical evidence of the relationship between TL and innovation as well as between TL and performance in the Malaysian SME context. In addition, although POS has been highlighted as an important variable, no study has identified POS as a moderator of the relationship between TL and IP in the context of Malaysia.