Transformational leadership inﬂuence on organizational performance
Publication Year: 2011
Journal: Journal of Business Research
This study analyzes the influences of transformational leadership on organizational performance through the dynamic capabilities of organizational learning and innovation. Theories of transformational leadership emphasize emotions, values, and the importance of leadership oriented to encouraging creativity in employees. Transformational leaders have charisma, provide inspiration and promote intellectual stimulation. Charisma generates the pride, faith and respect that leaders work to encourage their employees to have in themselves, their leaders, and their organizations. Transformational leaders provide inspiration by motivating their followers, largely through communication of high expectations. Such leaders also promote intellectual stimulation by promoting employees’ intelligence, knowledge and learning so that employees can be innovative in their approach to problem solving and solutions. Organizational learning is the capability within an organization to maintain or improve performance based on experience. This activity involves knowledge acquisition (the development or creation of skills, insights, and relationships), knowledge sharing (the dissemination to others of what has been acquired by some), and knowledge utilization (integration of learning so that it is assimilated and broadly available and can be generalized to new situations). Organizational learning involves cognitive and behavioral change. More than ever, organizational learning has become a need rather than a choice. Inability to learn is the reason most firms disappear before forty years have passed. Innovation is defined as a new idea, method, or device. The act of creating a new product or process. The act includes invention as well as the work required to bring an idea or concept into final form. Empirical studies support the relationship between organizational learning and innovation. The literature also emphasizes the great importance of organizational learning and innovation for a company's survival and effective performance. Organizational learning is a major component in any effort to improve organizational performance and strengthen competitive advantage. The study confirms these influences empirically, basing the analysis on a sample of 168 Spanish firms from the automotive and chemical sectors. The results reveal that (1) transformational leadership influences organizational performance positively through organizational learning and innovation; (2) organizational learning influences organizational performance positively, both directly and indirectly through organizational innovation; (3) organizational innovation influences organizational performance positively.