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Transformational Leadership and Financial Performance: The Mediating Roles of Learning Orientation and Firm Innovativeness



Ploychompoo KITTIKUNCHOTIWUT / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 769–781 769769
Print ISSN: 2288-4637 / Online ISSN 2288-4645
First Author and Corresponding Author. Assistant Professor,
Mahasarakham Business School, Mahasarakham University,
Thailand [Postal Address: Kantarawichai District, Muang City, Maha
Sarakham Province, 44150, Thailand]
© Copyright: The Author(s)
This is an Open Access article distributed under the terms of the Creative Commons Attribution
Non-Commercial License ( which permits
unrestricted non-commercial use, distribution, and reproduction in any medium, provided the
original work is properly cited.
Transformational Leadership and Financial Performance: The Mediating
Roles of Learning Orientation and Firm Innovativeness
Received: July 28, 2020 Revised: September 06, 2020 Accepted: September 10, 2020
This study attempts to examine the relationships between transformational leadership, learning orientation, firm innovativeness, and
financial performance. Specifically, the moderating effect of learning orientation and firm innovativeness. The data collected from 606
SMEs in Thailand were evaluated using the structural equation modeling, typifying that quantitative research. The results revealed that
transformational leadership had a positive effect on learning orientation. Similarly, transformational leadership had a positive effect on firm
innovativeness. Further, the study found that transformational leadership had a positive indirect effect on financial performance through the
mediation of learning orientation. The results of the study found that transformational leadership had a positive indirect effect on financial
performance through the mediation of firm innovativeness. Transformational leadership and learning orientation to improve innovation
within the organization, including organizations and leaders among themselves. Especially, innovative firms inculcate ideals of promise to
learning, open-mindedness, and shared vision. Furthermore, practitioners can use the findings of this study when they perform their role
of leaders to challenge creativity and innovation among followers. Finally, those developments would influence a procedure of evidence
procurement, evidence distribution and shared explanation that escalations equally individual and administrative effectiveness owing to its
influence going on products.
Keywords: Transformational Leadership, Learning Orientation, Firm Innovativeness, Financial Performance, Small and Medium-sized
JEL Classification Code: C54, D23, L25
organizational and operative level in which teams and
employees of the organization were assumed learning
opportunities, leadership support and empowerment as well
(Yoon, Song, Lim, & Joo, 2010; Mughal et al., 2019). In
this concept, leadership is the mechanism of supporting or
motivating a group of people to work towards achieving
a common goal, where it can be leading employees and
workers with a strategy to achieve a vision (Tajeddini, 2015).
Besides, a leader has different actions such as a pure
vision nearby future, explicit and clear objectives that
inspires assistants to set their goals and long-term vision.
In this regard, leadership is the process of inspiration others
especially influence the workers to raise their abilities
for organizational success (Demir et al., 2019; Torlak &
Kuzey, 2019; Ali et al., 2020; Mohammed et al., 2020).
Transformational leadership in selling with the data and
perception of administration and reduced. Particularly about
the resource and capital management, which results in
superior intricacy of the challenges being targeted by people
day afterward day, particularly in the bright of technical
1. Introduction
In the current era of globalization, there exists immense
competition due to local and international competitors. For
this reason, organizations are enforced to accept activities
that are performance oriented and shows a central role in
organizational expansion. Several support devices are
approved by organizations to increase the human resource
accessible to them. These devices were advanced at
Ploychompoo KITTIKUNCHOTIWUT / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 769–781770
growth and the evidence insurrection (Budur, 2018; Budur
et al., 2018). Furthermore, given the increasingly complex
world of economic and social structures, especially in terms
of the different uses of economic capital (Demir, 2019;
Torlak et al., 2019) most leaders and entrepreneurs involved
in expanding their businesses are kept abreast of inclusive
vicissitudes in organization strategies and systems (Budur
et al., 2019).
Learning is one of the utmost essential skills for inclusive
businesses that makes it possible to scope business and
cooperative goals. Currently, the capability to have quicker
learning and the ability to transformation compared to an
organization’s competitors offers the base for supportable
competition. As an outcome, today’s administrations started
to deed with a focus on learning to stay in the market and
be successful in competition. Learning orientation is an
administrative charge that is definite as the capability to
produce, disseminate, and use of knowledge. It affects the
evidence desirable and how it will be construed, evaluated,
and shared (Calantone, Cavusgil & Zhao, 2002). Learning-
oriented organizations are in a continuous pursuit for how
people and administrations can learn organized. However,
the effort has extended to comprise innovativeness as a
mediating factor (Akgün et al., 2007; AragónCorrea et
al., 2007; Keskin, 2006; Rhee et al., 2010). In particular,
academics have initiate that learning orientation has an
impact on performance and that innovativeness is a mediating
influence that likewise straight distresses performance
(Calantone et al., 2002; García-Morales et al., 2007). As
well as, a great share of studies on learning orientation and
firm innovativeness does not explanation for significant
proportions of firm innovativeness.
The narrow operationalization of firm innovativeness
that is as often as possible utilized prepares not explanation
for measurements such as items, forms, marketplaces,
and organization innovativeness. Aimed at instance, a
business could be imaginative at progressing forms to
decrease charges then not inventive by presenting unused
items to unused marketplaces. In case the point is to
construct unused information in a modern field, an essential
operationalization of firm innovativeness container be
invaluable. Nevertheless, these outcomes essential remain
confirmed by an additional in-depth operationalization of
the tenure founded on an extended antiquity of innovation
inspection. Besides, previous academics have affirmed that a
global and dependable degree for measuring innovativeness
does not yet happen in the literature (Deshpande & Farley,
2004). This scholarship pursues to fill this gap with the aid
of utilizing an extensive meaning of firm innovativeness
and a second-order construct appraised by using three first-
order indicators: product, process, and business system
In addition, a study by Llorens Montes et al., (2005) found
that organizational learning effects both the organizational
and practical innovation gap and performance, but they
also found that transformation leadership has a direct effect
on financial performance; organizational learning has a
direct effect on performance. However, there is no clear
evidence as to whether innovativeness and orientation
towards learning play a part or full mediating role in
the relationship between transformation leadership and
financial performance. The mainstream of educations on the
relationships amongst transformational leadership, learning
orientation, firm innovativeness and financial performance
have ignored the direct effect of learning orientation and
firm innovativeness on financial performance (Hult et al.,
2004; Rhee et al., 2010). Therefore, this study examines the
relationships among transformational leadership, learning
orientation, firm innovativeness and financial performance
in the context of small and medium- sized enterprises
(SMEs). The moderating effect of learning orientation and
firm innovativeness will also be studied.
2. Literature Review and Hypotheses
Transformational leadership theory, according to Burns
(1978), is composed of four components: (a) idealized
influence, (b) inspiring motivation, (c) intellectual
stimulation, and (d) individualized consideration (Bass,
1999, 2006; Kirkbride & Kirkbride, 2006; Lim & Ployhart,
2004; Avolio & Gardner, 2005). Idealized influence states
to leaders who, because of their unusual abilities and high
principles of moral conduct, act as dense role replicas for
their followers (Bass, 2006; Avolio & Gardner, 2005). The
leaders distribute a strong vision and mission for their
organization to their followers, and in effect receive a great
degree of support and hope from their groups (Bass, 2006;
Avolio & Gardner, 2005). The second component’s inspiring
encouragement concerns the potential of leaders to inspire
followers to succeed above standards (Jain, 2015).
Hovering followers’ understanding of the mission
and purpose of the organization, empowering them in all
substance and keeping them loyal to the association are
the main sides of inspiring motivational transformational
leadership (Kirkbride & Kirkbride, 2006; Sarros & Santora,
1995). Therefore, transformational leaders would perform in
such a means that inspires and motivates groups (Das, 2017).
Labors to be innovative and inventive by interrogative
potentials, reframing complications, and impending new
knowledge stimulate their supporters. There is still no general
censure of the errors committed by individual representatives
(Avolio & Bass, 1995; Bass, 2006). Intellectual stimulation
is often associated through the role of leaders in promoting
Ploychompoo KITTIKUNCHOTIWUT / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 769–781 771
imagination and ingenuity amongst groups (Metwally & El-
bishbishy, 2014).
Groups are expected to pursue new styles, and their
proposals are not blamed for differing after the proposals of
the leader (Bass, 2006). Individualized attention bandages
the disruptive leadership practices of leaders who use this
leadership style to take into account the needs of their
followers and are equipped to promote the creation of
positive organizational practices (Kirkbride & Kirkbride,
2006; Sarros & Santora, 1995). It in terms of needs and
desires are recognized. The conduct of the chief calls for
the understanding of human distinctions (Bass, 2006).
Relevant transformational capabilities of leaders who are
conventions for the use of the skills of a leader and the
effective performance of the jobs of a leader (Das, 2017). In
particular, in describing firm learning orientation, scholars
used the resource-based view (RBV) primarily to highlight
learning orientations as unique, important, inimitable, and
idiosyncratic organizational tools that can work in harmony
to build superior company efficiency and development
(Barney, 1991; Lonial & Carter, 2015).
An expansion of the Resource-Based View RBV
viewpoint on fluid capacities conceptualizes learning
orientations in terms of ‘ability (1) to sense and form
opportunities and challenges, (2) to grab opportunities,
and (3) to sustain profitability by improving, integrating,
preserving and, where possible, reconfiguring the intangible
and tangible properties of the market enterprise.
2.1. Transformational Leadership and Learning
Transformational leadership refers to a creative leadership
style in which leaders encourage individual focus, inspire
followers, provide mental stimulation, assert idealized
authority, stimulate development, and provide inspiring
encouragement (Jung et al., 2003; Yukl, 1999). Earlier,
Blanchard et al., (1993) added the concept of leadership
through situational leadership that claimed that a single
leadership style was working and dependent on the situation.
Successful leadership will produce exceptional outcomes
(Kouzes & Posner, 2006). Because of its performance rates
above further types of leadership, i.e. transactional and
laissez-faire, transition leadership is generally recognized
around the world (Bono & Judge, 2004; McColl-Kennedy &
Anderson, 2002). Rasool et al. (2015) considered innovative
leadership to be creative, utilizing self-deprecating humor,
and encouraging to followers that eventually contribute to
improving physician efficiency in the strength division.
Besides, Bass et al., (2003) maintained that transformational
leadership increases the feasibility of entity performance.
Transformational leadership consuming motivational outfits
canister pass effective organizational learning orientation to
administrations (Geh, 2014), that can thrive organizational
learning (Purushothaman, 2015).
Moreover, learning orientation is conceived as a fixed
of ideals influencing the point to which a group is fulfilled
through the concepts it has in routine (Argyris & Schon,
1978), its rational replicas (De Geus, 1988), and its main
reasons (Bettis & Prahalad, 1995), which could or might
not take needed their market-based basis. It effects the
grade to which practices are possible to encourage the
core competency of generative learning (Sinkula et al.,
1997). It can likewise remain defined as a procedure of
knowledge collection, distribution of knowledge and shared
understanding that growths individual and organizational
output unpaid to its direct influence on results (Kaya &
Patton, 2011). It is often seen as the grade to which companies
proactively enquiry prevailing opinions and performs,
and their effect on administrative performance (Argyris &
Schon, 1978). It stretches visions that have the possible to
revolution behaviors (Huber, 1991; Slater & Narver, 1995)
through influencing on workers the continuous need to
increase and spread their abilities and information (Kohli
et al., 1998). Notably, learning orientation consists of four
aspects, including learning engagement, mutual purpose,
open-mindedness and intra-organizational information
exchange (Calantone et al., 2002; Hurley & Hult, 1998; Hult
& Ferrell, 1997; Hult, 1998; Sinkula et al., 1997; Moorman
& Miner, 1998). Learning engagement is characterized as
an administrative attribute, which is probable to promote a
learning environment (Sinkula et al., 1997). Therefore, the
research hypothesis is as follows:
H1: Transformational leadership has a positive influence
on learning orientation.
2.2. Transformational Leadership and Firm
These academics deliberate the affiliation between
firm innovativeness and transformation leadership in R&D
subdivisions as well as the offices of plan management.
The properties of transformational leadership on firm
innovativeness in administrations have generally remained
a focus of attentiveness among researchers. Scholars in
the literature have received specific descriptions of firm
innovativeness. While some of these definitions reflect a
company’s ability to produce innovative products (Wang &
Ahmed, 2004). Others focus on innovative related cultures
or behaviors reflecting an inclination or innovation capacity
(Seda Mengü, 2015; Hurley & Hult, 1998). Besides,
Knowles, et al., (2008) presented a concept representing the
product and behavioral engineering strengths of a company.
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incentives for growth. They assign flexibility and procedure
their bigger expertise and ability to grow their groups
through continuous learning phases that foster creativity
(Avolio & Gibbons, 1998; Bass, 1985; Dvir et al., 2002).
Leaders can boost the imagination of followers through their
abuse of the structure of organizational learning (Phipps
et al., 2012). Transformational leadership orients followers
through information sharing, strengthening employee goals,
awareness, abilities, and learning expectations, which
eventually leads to enhanced creativity.
We promote knowledge collection and dissemination,
and mutual use of data that helps improve innovation.
Transformational leaders are likewise clever to intrinsically
influence their groups to learn novel ideas, concepts, and
skills, apiece resulting in resourceful behavior (Joo & Lim,
2009). Therefore, when linked with a learning orientation,
transformative leadership assistances to improve the equal
of creativeness as transformative leaders generate learning-
oriented environments done inspirational motivation,
idealized influence, individual consideration and intellectual
stimulation (Arendt, 2009), which encourages followers to
accomplish extraordinary things, develop fair and equitable
strategies. Therefore, the research hypothesis is as follows:
H3: Transformational leadership has a positive influence
on financial performance mediated by learning orientation.
2.4. Transformational Leadership and
Financial Performance Mediated by Firm
Leadership is a key component of corporate progress
and performance from institutional and economic efficiency
(Flanigan et al., 2017). Bearing in mind that leadership
positively affects financial performance (Lee & Lee,
2018). The Financial Analysis includes metrics related
to the corporate plan (Westerfield, 2003; Parast et al.,
2015). Measuring financial efficiency, in other words, can
demonstrate how the strategy’s execution leads to results.
A financial outlook would produce good effects, affecting
other outcomes (Kang et al., 2014). It is also important
to monitor and balance the Financial Perspective with
other non-financial perspectives. The transformational
leadership’s emphasis on maintaining partnerships with
consumers, vendors, and stakeholders, or on product quality,
must be matched with other financial metrics and positively
affect them, which is also relevant to every other market
metric (Kovach et al., 2015). In addition, Transformational
leadership actions would improve financial results in line
with McMurray et al. (2013) a study which showed that
transformational leadership promoted creativity in the
Knowles et al., (2008) The scholars describe innovativeness
as “the ability to produce and/or implement new goods,
production process, and market structure” Wang & Ahmed,
(2004), have provided five dimensions of firm innovation
in response to various conceptualizations of firm innovation
in study streams which result in difficulties in comparing
findings across studies. The five aspects are product
innovation, business advancement, process innovation,
organizational advancement and technical innovativeness.
Work going on the causes of company performance and
imagination takes established an extensive variety of
influences after the separate level, such as the input style of a
leader, to the collection equal, such as job arrangements and
styles of contact, to the administrative equal, such as policy,
function, community and environment (Damanpour, 1991).
Our research attentions on the person equal, investigating
the connection among the actions of transformational
leadership and the expectations of leaders about the firm
innovativeness of their employees. Nonetheless, additional
way of understanding the linkage among transformation
leadership and company creativity is founded on the basic
idea essential transformational leadership theory that
transformation leadership workers/followers view their
jobs as more important and are thus additional self-engaged
(Bono & Judge, 2003). Therefore, in link with the research
by McMurray et al. (2013) we expect transformational
leadership actions to improve firm innovativeness. Therefore,
the research hypothesis is as follows:
H2: Transformational leadership has a positive influence
on firm innovativeness.
2.3. Transformational Leadership and
Financial Performance Mediated by
Learning Orientation
Study has demonstrated that transformational leadership
(Sosik et al., 1998) and learning orientation (Janssen & Van
Yperen, 2004) are elements of workplace creativeness. In
this research, learning orientation was identified such as a
possible interface among transformational leadership and
financial success for learning orientation allows workers to
gain a thoughtful of their surroundings and strengthen their
knowledge of effective tactics, encouraging them to effort
vigorously and actively (Sujan et al., 1994). Transformational
leaders offer dangerous support to their employees’ learning
and increase by modeling learning behavior, encouraging
people to donate novel ideas, and safeguarding the distribution
of knowledge that fosters creativity. In fact, transformational
leaders view groups as individuals, display respect aimed at
their particular challenges and working solutions, and offer
Ploychompoo KITTIKUNCHOTIWUT / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 769–781 773
workplace. Since innate and prosocial incentive is correlated
with transformational leadership, and since transformational
leadership is correlated with creativity, mediation is likely
to occur. In addition, we expect the association among
transformational leadership and financial performance to
remain driven through firm innovativeness. Therefore, the
research hypothesis is as follows:
H4: Transformational leadership has a positive influence
on financial performance mediated by firm innovativeness.
3. Research Framework
Based on the literature review, the framework for the
study is illustrated in (Figure 1). The conceptual model of
transformational leadership and financial performance:
the mediating roles of learning orientation and firm
innovativeness is presented in Figure 1.
4. Research Method
4.1. Sample Characteristics and Data Collection
This study surveys a quantitative methodological
approach to test the suggested model by using a questionnaire
to collect data. The survey instrument is a multi-item
measure. All the variables were measured expending five-
point Likert scales. The key informers were asked for the
levels of arrangement with declarations of items ranging
from1 (strongly disagree) to 5 (strongly agree). The items
were established from the prevailing scales of to each
variable for this study explicitly. The hypothesized CFA
measurement ideal consists of 16 measurement items and
four latent constructs. The comprehensive measurement
model is outlined in Figure 2. The SPSS version 16 and
AMOS software programs were used to understand and
evaluate the causal effects. Schumacker and Lomax,
(1996) advised a process of situation suitable illustrative
samples that is 10-20 samples per variable, depending on
the complexity of the model. Processes aimed at improving
the efficiency of companies and the effects of those
procedures are crucial. We tested our hypothesis for this
cause by focusing on the population for this study being the
small and medium-sized enterprises (SMEs) in Thailand.
API portal recruits research: The
research involves in particular commerce, operation, export,
agriculture, food production, wearing clothing production,
the export of other non-metallic mineral goods, manufacture
of other metal resources like machinery and equipment,
and other manufacturing. The researchers analyzed the
information to prevent potential duplications arising from
collaborator participation in the dataset. A mail investigation
process was used for the collection of data via questionnaire.
The principals included in this study were the directors
or managers. Regarding the questionnaire’s mailing, 18
samples became undeliverable since some businesses no
longer existed or had moved to undisclosed areas. Deducting
the undeliverable from the original 986 sent the correct post
was 968 surveys receiving 610 responses. Of the surveys that
were conducted and returned, only 606 were available. The
effective response rate was approximately 62.60 percent.
The response rate for a mail survey is deemed reasonable,
deprived of a satisfactory follow-up process, and above 20
percent, rendering to Aaker, Kumar, and Day (2001).
Figure 1: Framework of the Study
Ploychompoo KITTIKUNCHOTIWUT / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 769–781774
Additionally, the use of a business sample based on a
relatively homogeneous economic, industrial, political, socio-
cultural, technical, and legal area minimizes the influence
of factors that cannot be regulated on qualitative research
(Adler, 2015). We opted for this sense for several reasons.
Small and medium-sized businesses (SMEs) are relatively
well developed and have seen a marginally higher rate of
growth relative to the economy as a whole in recent years.
Besides that, small and medium-sized enterprises (SMEs) in
Thailand are in a regional environment where the recognition
of organizational researchers is comparatively low. Building
on the knowledge of the core aspects of this research, prior
interactions with interested CEOs and scholars, and new
interviews with interested CEOs and academics. In fact,
a bias test on non-response was conducted by comparing
early and late responses. Business features include sector
types, amount of capital expenditure, market time, and
number of workers, and core informants who self-reported
both buildings (Armstrong & Overton, 1977). As for non-
response bias, t-test statistical tests were performed, and;
the results exhibited no significant differences. Therefore, a
non-response bias is of no concern in this data.
4.2. Measurement
Besides, the first-order measures ranging from 1
(strongly disagreeable) to 5 (strongly agreed) were
calculated using a five-point Likert scale. Transformational
leadership will be assessed as a second-order construct by
five first-order indicators: idealized influence, inspirational
motivation, intellectual stimulation, and individualized
consideration (Burns, 1978). Three first-order metrics
were used to assess firm innovativeness as a second-
order construct: product innovation, process innovation,
and business system innovation. The scale of company
innovation was based on earlier studies (Avlonitis et al.,
1994; Deshpandé et al., 1993; Knowles et al., 2008; Wang
& Ahmed, 2004). Furthermore, learning orientation was
restrained as a second-order construct and calculated by
four first-order measures founded on Calantone et al.
(2002) research and numerous previous studies (Galer &
van der Heijden, 1992; Hult & Ferrell, 1997; Sinkula et al.,
1997). The following four sub-dimensions are attention to
learning, shared vision, openness to change, and sharing of
knowledge intra-organizationally. Three objects are used
to calculate each of the measurements. The three items
with higher standard loadings based on Calantone et al.
(2002) study will be selected. Consequently, four measures
focused on Dess & Robinson, (1984), will be used to assess
financial performance. Such elements are revenue income,
sales growth rates, asset after-tax returns, and overall
profitability. The products will be assessed using a self-rated
subjective scale, with respondents being asked to assess the
facility level of their firm relative to that of their industry
5. Results and Discussion
There were three parts to the data analysis: 1) Analysis of
Factor Loadings, Cronbach’s Alpha Coefficients, Composite
Reliability (CR), and Average Variance Extraced (AVE)
for multiple item scales used this study in Table 1. Table 1
shows the all variables that have factor loading scores as
between 0.797 – 0.894 are greater than the 0.40 cut-off and
are statistically significant (Nunnally & Bernstein 1994).
Additionally, Cronbach’s alpha for all variables are shown
between 0.843 – 0.890 are greater than 0.70 (Nunnally &
Bernstein, 1994). Moreover, the Composite Reliability
values were ranged between 0.791 – 0.961 are greater than
0.70 (Hair et al., 2010). The Average Variance Extraced
values were ranged between 0.586 – 0.860 are greater
than 0.50 (Hair et al., 2010). Therefore, all constructs of
the validity and reliability of measurement can be applied
for further analysis, and 2) Table 2 presents the descriptive
statistics and correlation matrix for all variables. With respect
to potential problems relating to multicollinearity, variance
inflation factors (VIFs) were used to provide information on
the extent to which nonorthogonality among independent
variables inflates standard errors.
The VIFs range from well below the cutoff value of 10
as recommended by Neter, Wasserman, and Kutner (1985),
means that the independent variables are not correlated
with each other. Therefore, there are no substantial
multicollinearity problems encountered in this study.
3) Analysis of the three variables of transformational
leadership, the four variables of learning orientation, the
four variables of firm innovativeness, and four variables
of financial performance. Hypothesis testing was carried
out using confirmatory factor analysis (CFA) to measure
the validity of the model fit to the empirical data. The
hypothesis model and empirical data were tested using
structural equation modeling (SEM) which can lead to path
analysis in order to be able to test the model and hypothesis
(Wiratchai, 1999). Regarding the research framework, the
model of confirmatory factor analysis and analysis of the
structural equation model is shown in Figure 2. The result
showed a good model fit with the empirical data within the
expected level (Table 3).
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Table 1: Results of Measure Validation
Construct Indicator Factor Loadings Cronbach’s Alpha Composite Reliability AVE
Leadership (TL)
0.856 0.960 0.858
Learning Orientation
0.853 0.791 0.586
Firm Innovativeness
0.843 0.934 0.779
Performance (FP)
0.890 0.961 0.860
Table 2: Descriptive statistics and correlation matrix
Variables TL LO FI FP FA FS
Mean 4.196 4.086 3.907 3.989 3.910 3.790
S.D. 0.579 0.611 0.519 0.547 0.085 0.730
TL 1
LO 0.659** 1
FI 0.409** 0.580** 1
FP 0.377** 0.546** 0.695** 1
FA 0.253** 0.418** 0.426** 0.564** 1
FS 0.199** 0.349** 0.401** 0.553** 0.499** 1
***p < 0.01, **p < 0.05, *p < 0.10
Table 3: Statistics from Fitting Evaluation
Goodness-of-Fit Measure Recommended Value Structural Model (result)
CMIN/DF 2.0 - 5.0 (Diamantopoulos & Siguaw, 2000) 3.870
GFI ≥0.900 (Diamantopoulos & Siguaw, 2000) 0.930
AGFI ≥0.900 (Diamantopoulos & Siguaw, 2000) 0.905
CFI ≥0.900 (Kelloway, 2015) 0.972
NFI ≥0.900 (Schumacker & Lomax, 2010) 0.962
RMSEA ≤0.080 (Schumacker & Lomax, 2010) 0.069
TLI ≥0.900 (Schumacker & Lomax, 2010) 0.975
RMR ≤ 0.050 (Diamantopoulos & Siguaw, 2000) 0.966
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In summary, the transformational leadership of the
learning orientation, firm innovativeness, and the financial
performance as hypothesized. As a result, the model used for
measurement can be applied using structural equation model
measurement to analyze future causal influence. Table 3
Statistics from fitting evaluation of the transformational
leadership, learning orientation, firm innovativeness, and
financial performance in research. The overall direct and
indirect effects related to the transformational leadership of
learning orientation influencing the financial performance,
transformational leadership of firm innovativeness
influencing the financial performance are expressed in
Table 4. As revealed in Figure 2 and Table 4, suggest that
transformational leadership has a positive effect on learning
orientation (β= 0.792, p < 0.001). Hence, hypothesis 1 is
supported. Similarly, transformational leadership has a
positive effect on firm innovativeness (β= 0.513, p < 0.001).
Thus, hypothesis 2 is supported. This result demonstrates
that transformational leadership has a positive indirect effect
on financial performance through the mediation of learning
orientation (β= 0.156, p < 0.001). Hence, hypothesis 3 is
supported. The results indicate transformational leadership
has a positive indirect effect on financial performance
through the mediation of firm innovativeness (β= 0.751, p <
0.001). Thus, hypothesis 4 is supported.
6. Conclusions
The results of present research recommend that
transformational leadership have a positive effect on learning
orientation. The outcomes direct that transformational
leadership have a positive influence on firm innovativeness.
Figure 2: The Structural Equation Model
Table 4: Direct and Indirect Effects of Variables
Hypothesis Relationship Std Beta Std Error t-value Conclusion
H1 TL LO 0.792 0.049 16.127*** Supported
H2 TL FI 0.513 0.044 11.585*** Supported
H3 TL LO FP 0.156 0.039 3.956*** Supported
H4 TL FI FP 0.751 0.052 14.535*** Supported
***p < 0.001, **p < 0.01.
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Consistent with Rusliati et al. (2020), which suggests that
leadership will successfully effect business development
when sustained by several characteristics, such as manage
the business, capture opportunities, personal integrity, and
communication. Besides, leadership and organizational
culture of employees must to be improved to increase
job satisfaction (Paais & Pattiruhu, 2020). Business
innovativeness as introducing innovations novel to the
business, whether the innovation is expressed in goods,
procedures, and administration or advertising strategies
(Weerawardena, O’Cass, & Julian, 2006). Leadership has
influence on employee performance, job satisfaction, and
work motivation (Pancasila et al., 2020). Transformational
leadership that persons inside the firm are inspired to absorb
and more accessible to novel information. Additionally,
innovative firms frequently approve cross-functional players
(Kuratko et al., 2001) quite than outdated severe and graded
structures, to enable infrastructures that, in turn, take round
an organization-wide agreement of areas and instructions.
Therefore, innovative firms inculcate ideals of promise to
learning, open-mindedness, and shared vision.
This empirical evidence implies that transformational
leadership has affected financial performance. This study
shows the moderating effect of firm innovativeness.
Considering this, financial success has affected
transformational leadership. This work also shows the
moderating effect of learning orientation. This conclusion
is consistent by Weerawardena et al. (2006); Liao et
al. (2008), which suggests that the additional creative
leadership, the extra innovation in the organization.
Consequently, this research promotes learning orientation
to improve innovation within the organization, including
organizations and leaders among themselves. Instead
of learning inertia by a productive, novel method,
organizations and leaders can learn. If the direction of
thinking should affect financial performance positively
(Liao, Fei & Liu, 2008). According to García-Morales et
al. (2008), transformational leadership has remained create
to have an important influence on learning orientation and
firm innovativeness. Similarly, in the education done by
Bakar and Mahmood (2014), learning orientation was found
to partially mediate the association among transformational
leadership and financial performance. Such effects were
nevertheless reliable through folks reported through
(Calantone et al., 2002). They revealed innovation in
business as a crucial factor for financial success. These
finding on firm creativity often suggest that the indirect
effects of transformation leadership on financial output
that depend on the context of the study. Such findings also
match prior literature (Calantone et al., 2002; Damanpour
et al., 1989; Deshpandé & Farley, 2004; Narver & Slater,
1990; Rhee et al., 2010).
This can be difficult for companies to be creative though.
In particular, product and process advancement can involve
substantial investments. However, in some cases, companies
will face a time delay between the innovation and the gains
it creates. Besides, being innovative involves risk, and there
is no guarantee of success. For instance, Jenssen (2003)
initiate that it is regularly the adopter and not the stable
that generates the innovation that accepts the assistances.
However, the association among firm innovativeness and
financial performance was important and positive, and this
demonstrations that businesses in the small and medium-sized
enterprises (SMEs) in Thailand can gain from being innovative.
This empirical evidence implies that transformational
leadership has affected financial performance. This is reliable
through our estimate and concept; although transformative
leadership generates a productive inside situation and extends
the latitude for learning orientation to ensue, to have a
positive influence on performance, the vision of leadership in
medium to large companies must be effectively shared among
all members of the organization (Harrison & Leitch, 2005).
Transformational leadership will be used to assess financial
performance. For instance, elements are revenue income,
sales growth rates, and overall profitability. The products will
be assessed increased financial performance.
7. Limitations
There are drawbacks to research like other studies. It is
a cross-sectional analysis that explores a given opinion in
time. Deprived of longitudinal data, assumptions concerning
destiny cannot be strained. Generalize companies that had
left the commercial were not comprised in the sample, and
the results obtainable in this object can solitary for enduring
companies. It is an essential limitation to be considered,
specifically when firm innovation and financial performance
are primary topics here, though researchers change in their
views on how these two aspects impact firms ended time.
Besides, one subjective methods were used to evaluate
financial performance. While this is a standard approach for
assessing financial performance, and while earlier trainings
have exposed clear linkages among subjective and quantitative
financial performance indicators (Dess & Robinson Jr,
1984), this dimension of research is often perceived as one
of its drawbacks. Several types of research mixed subjective
and objective measurements (Aragón-Correa et al., 2005),
and others used one objective procedures (Jenssen, 2003).
While most researchers establish a relationship between
firm innovation and financial performance when companies
consider themselves efficient when using quantitative
measurements Jenssen (2003), found no evidence of this
connection. Ultimately, similar research to the current one
expending an empirical degree of financial performance may
Ploychompoo KITTIKUNCHOTIWUT / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 769–781778
give additional legitimacy to the conclusions reached on the
relations among transition leadership, learning focus, firm
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... Based on the Multiple Linear Regressions' results, it is shown that p= 0.032 which is less than 0.05, therefore it is indicated that transactional leadership is significantly related to organizational commitment and the hypothesis in this study is accepted. The result is in line with prior studies conducted by (Kittikunchotiwut, 2020), (Prasad and Junni, 2016;Jensen, Potočnik and Chaudhry, 2020;Kittikunchotiwut, 2020). The result shows that Transactional leadership is significantly related to organizational commitment in the Ha-Meem group industry. ...
... Based on the Multiple Linear Regressions' results, it is shown that p= 0.032 which is less than 0.05, therefore it is indicated that transactional leadership is significantly related to organizational commitment and the hypothesis in this study is accepted. The result is in line with prior studies conducted by (Kittikunchotiwut, 2020), (Prasad and Junni, 2016;Jensen, Potočnik and Chaudhry, 2020;Kittikunchotiwut, 2020). The result shows that Transactional leadership is significantly related to organizational commitment in the Ha-Meem group industry. ...
... This leads to an increase in the company's innovation activity [62], which, in turn, has a positive effect on company performance [63][64][65]. Also, a study of a sample of 606 small and medium-sized enterprises from Thailand demonstrated that the positive effect of a company's innovative activities achieved thanks to transformational leadership also positively affects a company's financial activities [66]. In general, reliability of results is also greatly influenced by company size, i.e., in large corporations, the role of a single leader may be blurred. ...
In the contemporary world, leadership concepts are associated with managerial literature. As a rule, scholars define a leader as a person with a certain set of positive characteristics that enable them to lead people and contribute to the successful development of a company. However, the concept of financial efficiency has to be factored into the effective developmentof a company. At the same time, personal characteristics of top managers, such as overconfidence, narcissism, excessive risk-taking, usually have a negative connotation in financial literature. This review includes a study of the development of various leadership concepts in management-related literature. The leader’s main personal characteristics are highlighted according to the literature. It also explores the relationship between the concepts of a leader and a manager. The literature devoted to the relationship between the concept of a transformationalleader and company performance has also been studied. The key conclusion of this literature review is that certain personal characteristics of top managers can have a positiveeffect on a company’s performance if they are considered from the point of view of transformational leadership. This confirms the need for a deeper study of the relationship between managers’ personal characteristics and a company’s financial efficiency, especially in the context of sustainable development and the concept of transformational leadership.
... Only a few studies focus on millennials as leaders (Rony, 2019), (Daud & Wan Hanafi, 2020). Transformational leadership potentially results in performance beyond expectations (Breevaart & Bakker, 2018), (Nguyen et al., 2019), (Kittikunchotiwut, 2020). However, many scholars studied by Jing and Avery (2016), argue that leadership and performance relationship is not conclusive and needs further research. ...
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This study aims to understand the effect of millennial transformational leadership (MTL) on organizational performance in Indonesian Fishery startups. The population of this study included select fishery startups in Indonesia based on the data released by the Ministry of Marine Affairs and Fisheries of the Republic of Indonesia and Digital Fishery Network. This study used the statistical method of PLS-SEM to analyze the data. The findings show that the MTL has no direct positive relationship with organizational performance; MTL has a direct positive relationship with organizational agility; MTL has a direct positive relationship with IT capability; IT capability has a direct positive relationship with organizational agility; organizational agility has a direct positive relationship with organizational performance in fishery startups in Indonesia during this pandemic era. It is suggested that future researches use covariance-based-structural equation modeling which is able to test the research model's feasibility. Roles of mediating variables in addition to the main variables-for example, organizational agility as a mediating variable on the relationship between MTL and organizational performance-are also suggested to be examined. In spite of the limitations, the model developed is still interesting to investigate and is expected to enhance the literature on transformational leadership.
... These findings also supported the previous findings by Siswanti and Muafi (2020), which revealed that empowering leadership has a positive influence on psychological empowerment, which make their followers felt empowered and self-confidence which as a result has high resilience. Moreover, these findings also support the pervious findings by Pancasila, Haryono, Sulistyo, and Tung, (2020), which showed that leadership had positive impact on job performance, and transformational leadership has a positive effect on learning orientation (Kittikunchotiwut, 2020). In other words, an understanding leader, enable to influence their followers to perform better both in job performance and in learning orientation. ...
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Purpose: The study aims to test resilience and work ethics as mediators between charismatic leadership and affective commitment to change. Many organizations, such as banking, insurance companies, and financial institutions, face strong competition and consequently need to effect considerable change within the organization. Many variables have a significant impact on the success of organizational change, and people are a primary variable in this respect. Other variables that have a positive impact on the success of organizational change are leaders and the characteristics of the employees, namely their resilience and work ethics. Methodology This study, using structural equation modeling, was conducted on a sample of 355 employees from banking and insurance companies. In this study, the inventory of affective commitment to change, the Conger-Kanungo charismatic leadership scale, resilience, and work ethic inventory were used. Findings: The results showed that resilience is a partial mediator between charismatic leadership and affective commitment to change. Meanwhile, work ethic was not a mediator between the two variables. Originality / values: This study has contributed empirical findings and theory about the role of the charismatic leader, work ethics, and resilience in the commitment to change, and the change management process as a whole.
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The main objective of this research is to develop a new concept of Transformational Leadership that is used to improve organizational learning capabilities, organizational innovation, organizational competitiveness and organizational environment in improving MSME Performance. This research uses a quantitative approach with SEM-PLS analysis techniques. The research data was obtained from the dissemination of questionnaires with the number of respondents amounting to 97 Handycraft owners in Medan City. Some of the study findings include; 1) Transformational Leadership has no positive and significant effect on MSME Performance. 2) Transformational Leadership has no positive and significant effect on Organizational Learning. 3) Organizational learning has no positive and significant effect on MSME Performance. 4) Transformational Leadership has a positive and significant influence on Organizational Innovation. 5) Organizational Innovation has no positive and significant effect on MSME Performance. 6) Transformational Leadership has a positive and significant effect on organizational competitiveness. 7) Organizational Competitiveness has a positive and significant effect on the performance of MSMEs. 8) Transformational Leadership has a positive and significant effect on the organizational environment. 9) Organizational environment has a positive and significant effect on MSME Performance. 10) Transformational Leadership has no indirect effect on MSME Performance by mediating by Organizational Learning. 11) Transformational Leadership has no indirect effect on MSME Performance by mediating by Organizational Innovation. 12) Transformational Leadership has a positive and significant effect on MSME Performance by mediating by Organizational Competitiveness. 13) Transformational Leadership has a positive and significant effect on MSME Performance by mediating by the Organizational Environment.
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This review aims to present a systematic review of empirical research on leadership and firm performance (FP) in order to synthesize the fragmented knowledge and propose a unifying framework for future research. To achieve this purpose, this research adopts systematic literature review methodology. A total of 60 empirical papers published during the period 2002 to 2021 was retrieved through exhaustive manual searches of online databases. A matrix table was developed to extract and organize information from the retrieved articles. The findings revealed four main key themes. First, the topic of leadership and FP has been mostly quantitatively examined in many countries and industries. Second, different leadership approaches have been found to ameliorate FP and transformational leadership remains the most commonly used approach. Third, innovation, learning, and culture were the most common mediators of the leadership-FP relationship. Fourth, support for innovation, competitive intensity, firm size, leaders’ trust, and justice orientation have been found to moderate the effect of leadership on FP.
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El liderazgo es una de las variables que la alta dirección universitaria requiere ejercer para lograr mejores resultados en las organizaciones. Uno de los efectos del liderazgo se observa en la cultura organizativa. Bajo esta perspectiva, la presente investigación tiene como objetivo analizar las relaciones entre liderazgo transformacional, cultura innovativa y calidad en las instituciones de educación superior. Para este efecto, se trabajó con una muestra de 52 instituciones de educación superior acreditadas por la Comisión Nacional de Acreditación de Chile, entre las que se encuentran Universidades, Institutos Profesionales y Centros de Formación Técnica. Utilizando modelos de regresión lineal múltiple, los resultados muestran que el estilo de liderazgo transformacional influye de manera significativa (test t= 13,691; p<0,01) sobre la cultura innovativa; siendo esta última una variable determinante de la calidad de las instituciones (test t= 3,264; p<0,01). Se concluye que no es trivial ni el estilo de liderazgo empleado por los líderes ni la cultura promovida en estas instituciones, ya que estas pueden marcar diferencia en la calidad, expresada en los años de acreditación institucional.
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This study aims to examine and compare the effects of ethical leadership (EL) and transformational leadership (TL) separately on different dimensions of corporate social responsibility (CSR) including (i) CSR to media (M), (ii) CSR to employee (E), (iii) CSR to customer (C), and (iv) CSR to NGOs (N). Convenience sampling methodology was used to collect the data through two survey questionnaires. In total, 266 responses of employees and managers were received: 87 responses were collected from the customers of top companies in Sulaymaniyah, that is, Carrefour, Qaiwan, Asia-cell, and Korek. The methodology includes descriptive statistics, regression analysis, correlations, and covariance. This study provides a unique insight into the relationship between CSR and different types of leadership styles (EL and TL). The study finds out that both EL and TL have positive relationships with the variables M, E, C, and N. Leadership style, which leads an organization to better CSR in all of the above-mentioned dimensions, has been identified in this study.
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This study aims to investigate the interplay between leadership styles and institutional corporate social responsibility (CSR) practices with non-governmental organizations (NGOs). Field survey of employee’s reveals that firms with greater ethical leadership are more likely to engage in institutional CSR practices with NGOs, whereas transformational leadership is associated relatively less with such practices. This research highlights the differential roles that ethical and transformational leadership styles play for a firm’s institutional CSR practices with NGOs and has significant implications for theory and practice.
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Purpose The purpose of this paper is to examine the relationships of capacity/layout (CL), design (D), location, (L), hygiene (H), human resource management (HRM), food quality (FQ) and ambiance (A) in operations management strategies (OMS) and the direct and indirect effects of OMS on customer satisfaction (CS) and customer behavioral intentions (CBIs) that might affect income and, therefore, be influential regarding café-restaurants in Sulaimania in Iraq. Design/methodology/approach Data are collected through a survey questionnaire using a simple random sampling methodology from 254 customers of 46 casual café-restaurants. Methodology includes demographic analysis, factor analysis, structural equation modeling and mediation analysis. Findings Concerning relationships between structural and infrastructural elements of OMS, only CL and H influence HRM, D and H affect A, and H influences FQ. Regarding relationships between OMS and CS and CBIs, only L, HRM, FQ and A affect CS. Concerning the relationship between CS and CBIs, CS influences CBIs. Finally, given indirect effects of OMS on CS and CBIs, HRM mediates relationships between CL-CS and H-CS; FQ and A mediate relationships between H-CS; and CS mediates relationships between L-CBIs, FQ-CBIs and HRM-CBIs. Research limitations/implications The study that treats seven variables in OMS is limited to Sulaimania in Iraq. Thus, the findings cannot be generalized. The study might guide future studies about the way OMS elements forge CS and CBIs in café-restaurants where owners/managers develop credible strategic plans. Originality/value The study provides a unique insight into the hospitality industry in Iraq where studies among elements of OMS are few and far between.
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Nowadays, there are many uncertainties and risks prevailed in environment especially for information technology (IT) projects in Pakistan context. Behavioural aspects of project management play important role to attain success. Soft dimension of project implementation profile consists of critical success factors like top management support and client acceptance. The proposed study of this paper designs a questionnaire and examines the relationship between behavioural factors and project success. There were 223 respondents from the population of Pakistan software board directory. The results indicate that client acceptance had a positive and significant relationship with project success. Moderation was performed categorical of leadership style; transactional and transformational leadership style.
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The use of social media differs according to the socio-cultural, demographic and psychological aspects of individuals. People chat, share ideas and visual material, and feel that they satisfy their needs of belonging along with the groups they have joined. Social media is not only a domain of freedom where individuals express themselves overtly or secretly, but also an area where several ways of violence emerge or even a means used for some aspects of violence. Being an interactive medium and addressing quite a large number of users, social media issue has become rather sophisticated and problematic. As for the elements of violence in social media, the sites for women and child porn, visual material including excessive violence, campaigns of abuse towards certain people and institutions as well as black propaganda, attributing negative aspects, misdirecting people by assuming fake identities, different ways of theft in social media might be pointed out. The purpose of this study is to assess the media coverage regarding the news in which social media and violence coincide. Therefore, regarding the purpose of assessing the media coverage pertaining to the news in which social media and violence coincide, the news in three Turkish newspapers, namely, Zaman, Posta and Hürriyet have been examined with content analysis method for a three-month period, between November 1st and February 28th, 2014. The respective sampling was determined according to the highest circulation rate. The news have been examined according to the ratio of news coverage, news topics and news actors and the data obtained was processed quantitatively.
The study investigates by empirical methods the effect of motivation, leadership, and organizational culture on job satisfaction, and employee performance at Wahana Resources Ltd North Seram District, Central Maluku Regency, Indonesia. This examination intends to be a critical review for academics researching the field of human resources management (HRM). The study's sample consisted of 155 employees who were selected using the Proportionate Stratified Random Sampling method. At the same time, data were collected using a questionnaire and then analyzed using the Structural Equation Modeling on Amos. The results of data analysis showed that work motivation and organizational culture had a positive and significant effect on performance, but did not significantly influence employee job satisfaction. While leadership has a substantial impact on employee job satisfaction, it does not affect performance. The results of testing the coefficient of determination show that job satisfaction is influenced for 57.4% by motivation, leadership, and culture variables, while employee performance variables are influenced for 73.5% by motivation, leadership, culture, and job satisfaction variables. Other factors outside this study influence the rest. Motivation, leadership, and organizational culture of employees need to be improved to increase job satisfaction. Invariably, if employee job satisfaction increases, employee performance will also increase.
The recent work of Sujan, Weitz, and Kumar (1994) brings into sharp focus two distinct goal orientations of salespeople: learning and performance. In this article, the authors make two primary contributions to this emerging topic in salesforce literature: (1) They develop and examine novel propositions that shed light on how supervisors influence the goal orientations of salespeople, and (2) They examine whether supervisors’ influence on their salespeople's orientations is moderated by salesperson experience. The article's hypotheses are tested using data from salespeople in two Fortune 500 companies. The results support several of the a priori hypotheses and suggest that supervisory behaviors (as perceived by salespeople) have a significant influence on salespeople's learning and performance orientations. Furthermore, the authors obtain some support for the hypothesized moderating effect of salesperson experience.
Research on market orientation and organizational learning addresses how organizations adapt to their environments and develop competitive advantage. A significant void exists in current models of market orientation because none of the frameworks incorporates constructs related to innovation. The authors present a conceptual framework for incorporating constructs that pertain to innovation in market orientation research. Some of the critical relationships in this conceptual framework are tested among a sample of 9648 employees from 56 organizations in a large agency of the U.S. federal government. The results indicate that higher levels of innovativeness in the firms’ culture are associated with a greater capacity for adaptation and innovation (number of innovations successfully implemented). In addition, higher levels of innovativeness are associated with cultures that emphasize learning, development, and participative decision making. The authors make recommendations for incorporating constructs related to innovation into research on market orientation and organizational learning.