Encouraging Innovation Capability in MSMEs: The Strategic Role of Transformational Leadership and Knowledge Management Capability
DOI:
https://doi.org/10.51903/rgssx581Keywords:
Transformational Leadership, Knowledge Management Capability, Innovation Capability, MSMEs, PLS-SEMAbstract
This study examines the influence of Transformational Leadership (TL) on Innovation Capability (IC) with a particular emphasis on the mediating role of Knowledge Management Capability (KMC) among micro, small, and medium enterprises (MSMEs) in Surabaya. A quantitative approach employing an explanatory research design was adopted, wherein data were collected from 290 MSME actors across various business sectors through the distribution of structured questionnaires. The analytical procedure utilized Partial Least Squares–Structural Equation Modeling (PLS-SEM) with the aid of SmartPLS software to assess both the direct and indirect relationships among the variables under investigation. The empirical findings indicate that TL exerts a positive and significant effect on IC, illustrating that transformational leaders are capable of fostering an organizational climate conducive to creativity and innovative behavior. TL was also found to have a positive and significant impact on KMC, reinforcing the notion that transformational leaders play a strategic role in enhancing knowledge management processes through inspiration, intellectual stimulation, and effective collaboration. Moreover, KMC demonstrated a positive and significant influence on IC, underscoring its function as a critical mechanism that supports the development of innovation within MSMEs. The mediation analysis further confirms that KMC serves as a significant mediator in the relationship between TL and IC, indicating that effective knowledge management practices strengthen the influence of transformational leadership on innovation performance.
Downloads
References
Afsar, B., Cheema, S., & Saeed, B. B. (2020). Do transformational leadership, creative self-efficacy, and knowledge sharing facilitate innovative work behavior? Journal of Business Research, 116, 60–73. https://doi.org/10.1016/j.jbusres.2020.04.012
Akhavan, P., Manteghi, M., & Rezaeenour, J. (2022). The role of knowledge management capabilities in enhancing innovation performance: Evidence from knowledge-based industries. Journal of Knowledge Management, 26(5), 1089–1110. https://doi.org/10.1108/JKM-10-2021-0820
Akhavan, P., Manteghi, M., & Rezaeenour, J. (2022). The role of knowledge management capabilities in enhancing innovation performance: Evidence from knowledge-based industries. Journal of Knowledge Management, 26(5), 1089–1110. https://doi.org/10.1108/JKM-10-2021-0820
Carless, S. A., Wearing, A. J., & Mann, L. (2000). A short measure of transformational leadership. Journal of Business and Psychology, 14(3), 389–405.
Gui, L., Lei, H., & Le, P. B. (2024). Fostering product and process innovation through transformational leadership and knowledge management capability: The moderating role of innovation culture. European Journal of Innovation Management, 27(1), 214–232.
Hidayat, A. S. (2025). Empowering SMEs innovation through intangible factors. Innovation & Entrepreneurship. https://doi.org/10.1186/s13731-024-00437-w
Imran, M. K., Ilyas, M., & Fatima, T. (2021). How transformational leadership enhances knowledge management processes: Mediating role of trust. VINE Journal of Information and Knowledge Management Systems, 51(3), 411–428. https://doi.org/10.1108/VJIKMS-04-2019-0058
Kementerian Koperasi dan UKM Republik Indonesia. (2023). Statistik UMKM Indonesia 2023. Kemenkop UKM.
Khalili, A. (2023). Transformational leadership and organizational innovation: The mediating role of knowledge management capability. European Journal of Innovation Management, 26(7), 162–180. https://doi.org/10.1108/EJIM-06-2021-0307
Nguyen, T. M., & Malik, A. (2020). Cognitive processes, rewards and knowledge sharing: The mediating role of motivation. Journal of Knowledge Management, 24(6), 1241–1261. https://doi.org/10.1108/JKM-02-2020-0127
Saunila, M. (2020). Innovation capability in SMEs: A systematic review of the literature. Journal of Innovation & Knowledge, 5(4), 260–265. https://doi.org/10.1016/j.jik.2019.11.002
Yasir, M., & Majid, A. (2020). Impact of transformational leadership on innovation: The role of psychological empowerment and knowledge sharing. International Journal of Innovation Science, 12(1), 77–95. https://doi.org/10.1108/IJIS-12-2018-0142
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Seminar Nasional Teknologi dan Multidisiplin Ilmu (SEMNASTEKMU)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
