Transformational Leadership, Knowledge Sharing and Innovation Capability: An Empirical Study from Lao Firms

Abstract

The purpose of this paper is to examine the effects of transformational leadership and knowledge sharing on innovation capability in term of individual and organizational innovation capability. This study used Structural equation modelling (SEM) to check proposal hypotheses using empirical data collected from 216 participants at 45 small and medium enterprises in Laos. The research findings revealed that knowledge sharing mediates the relationship between transformational leadership and innovation capabilities. Notably, the findings highlight the greater influence of TL on organizational innovation capability in comparison with its effect on individual innovation capability. In contrasts, knowledge sharing activities induce greater influence on individual innovation capability compared with its effect on organizational innovation capability. The paper has, therefore, significantly advanced our insights of how transformational leaders foster employee knowledge sharing activities for stimulating innovation capabilities of organizations. Keywords: Transformational Leadership; Knowledge Sharing; Individual Innovation Capability; Organizational Innovation Capability