The Impact of Transformational Leadership in Micro, Small and Medium Enterprises (MSMEs) A Literature Review

Mohammad Naufal Fawwaz; Richie Ichsan; Rizka Dewi Anggraeni; Ananda Fortunisa

Authors

Mohammad Naufal Fawwaz Bakrie University
Richie Ichsan Bakrie University
Rizka Dewi Anggraeni Bakrie University
Ananda Fortunisa Bakrie University

Keywords:

Organizational Leadership Behavior, Transformational Leadership, Leadership Orientation, Effects and Impacts in business and MSMEs

Abstract

This study aims to investigate the influence of transformational leader behavior in MSMEs. Globally, micro, small and medium enterprises (MSMEs) compete and work on their sustainability to survive and thrive. MSMEs rely solely on their internal strength, and this strength lies primarily in their employees. This research discusses how transformational leadership will affect how MSMEs leadership would play its role efficiently, and how it promotes volunteer attitude of work among employees. This research was carried out using literature review. The articles studied are collected using keywords “Leadership in Organizational Settings” and produced as many as 4,580 research articles. After going through the elimination stage by looking at factors such as object, subject, and location in relation, it has been found that there are 30 articles that is available for usage. From this research, it was found that transformational leadership has the potential to influence, motivate, and allow others to contribute to the effectiveness and success of the organization in which they are a member of. As a result, leadership orientations, perspectives, along with elements such as strategic vision and charisma are components which will play an important and crucial role in understanding how transformational leader could and would perform in MSMEs.

References

Journal:

Abed, M. T. 2021. The computation intelligent system of role of parental leadership in organizational familiarity in Iraqi Airways employees. Materials Today: Proceedings: 1 – 9.

Aman-Ullah, A., Mehmood, W., Amin, S., Abbas, Y. A. 2022. Human capital and organizational performance: A moderation study through innovative leadership. Journal of Innovation & Knowledge. Volume 7. Issue 4: 1 – 9.

Bakker, A. B., Hetland, J., Olsen, O. K., Espevik, R. 2022. Daily transformational leadership: A source of inspiration for follower performance. European Management Journal: 1 – 9.

Bagheri, A. 2017. The impact of entrepreneurial leadership on innovation work behavior and opportunity recognition in high-technology SMEs. Journal of High Technology Management Research: 1 – 8.

Banmairuroy, W., Kritjaroen, T., Homsombat, W. 2022. The effect of knowledge-oriented leadership and human resource development on sustainable competitive advantage through organizational innovation's component factors: Evidence from Thailand ’s new S- curve industries. Asia Pacific Management Review. Volume 27. Issue 3: 200 – 209.

Buil, I., Martínez, E., & Matute, J. 2019. Transformational leadership and employee performance: The role of identification, engagement and proactive personality. International Journal of Hospitality Management: 64- 75.

Chaithanapat, P., Punnakitikashem, P., Oo, N. C. K. K., Rakthin, S. 2022. Relationships among knowledge-oriented leadership, customer knowledge management, innovation quality and firm performance in SMEs. Journal of Innovation & Knowledge. Volume 7. Issue 1: 1 – 10.

Chatterjee, S., Chaudhuri, R., Shah, M., Maheshwari, P. 2022. Big data driven innovation for sustaining SME supply chain operation in post COVID-19 scenario: Moderating role of SME technology leadership. Computers & Industrial Engineering. Volume 168: 1 – 12.

Colovic, A. 2022. Leadership and business model innovation in late internationalizing SMEs. Long Range Planning. Volume 55. Issue 1: 1 – 17.

Do Adro, F. J. N., Leitão, J. C. C. 2020. Leadership and organizational innovation in the third sector: A systematic literature review. International Journal of Innovation Studies. Volume 4. Issue 2: 51 – 67.

Dong I Jung, Chee Chow, Anne Wu. 2003. The role of transformational leadership in enhancing organizational innovation: Hypotheses and some preliminary findings. The Leadership Quarterly. Volume 14. Issues 4–5: 525-544.

Do, V. P. A., Bui, Q. T. 2022. The influence of leadership personality on profitability and firm investment in human capital: The case of Vietnamese SMEs. Finance Research Letters. Volume 47. Part A.

Dvir, T., Eden, D., Avolio, B.J., Shamir, B. 2002. Impact of transformational leadership on follower development and performance: A field experiment. Academy of Management Journal. Volume 45. Issue 4: 735-744,

García-Morales, V.J., Lloréns, Montes, F.J. and Verdú-Jover, A.J. 2008. The Effects of Transformational Leadership on Organizational Performance through Knowledge and Innovation. British Journal of Management. Volume 19: 299-319.

Gokalp, P., Soran, S. 2022. The Impact of Leadership Styles on Performance and Mediating Effect of Organizational Culture: A Study in Flight Schools. Transportation Research Procedia. Volume 65: 304 – 317.

Grinerud, K., Aarseth, W. K., Robertsen, R. 2021. Leadership strategies, management decisions and safety culture in road transport organizations. Research in Transportation Business & Management. Volume 41. 1 – 11.

Guzmán, V. E., Muschard, B., Gerolamo, M., Kohl, H., Rozenfeld, H. 2020. Characteristics and Skills of Leadership in the Context of Industry 4.0. Procedia Manufacturing. Volume 43: 543 – 550.

Hetland, J., Hetland, H., Bakker, A. B., & Demerouti, E. 2018. Daily transformational leadership and employee job crafting: The role of promotion focus. European Management Journal. Volume 36: 746 – 756.

Hoai, T. T., Hung, B. Q., Nguyen, N. P. 2022. The impact of internal control systems on the intensity of innovation and organizational performance of public sector organizations in Vietnam: the moderating role of transformational leadership. Volume 8. Issue 2: 1 – 10.

Jena, L. K., Pradhan, S., Panigrahy, N. P. 2018. Pursuit of organisational trust: Role of employee engagement, psychological well-being and transformational leadership. Asia Pacific Management Review. Volume 23. Issue 3: 227 – 234.

Jia Hu, Zhen Wang, Robert C. Liden, Jianmin Sun. 2012. The influence of leader core self-evaluation on follower reports of transformational leadership. The Leadership Quarterly. Volume 23. Issue 5: 860-868.

Khalil M. Dirani, Mehrangiz Abadi, Amin Alizadeh, Bhagyashree Barhate, Rosemary Capuchino Garza, Noeline Gunasekara, Ghassan Ibrahim & Zachery Majzun. 2020. Leadership competencies and the essential role of human resource development in times of crisis: a response to Covid-19 pandemic. Human Resource Development International: 380-394.

Kim, H., Im, J., Shin, Y. H. 2021. The impact of transformational leadership and commitment to change on restaurant employees’ quality of work life during a crisis. Journal of Hospitality and Tourism Management: 322 – 330.

Lale Gumusluoglu, Arzu Ilsev. 2009. Transformational leadership, creativity, and organizational innovation, Journal of Business Research. Volume 62. Issue 4: 461-473.

Madanchian, M., Hussein, N., Noordin, F., & Taherdoost, H. 2018. The impact of ethical leadership on leadership effectiveness among SMEs in Malaysia. Procedia Manufacturing. Volume 22: 968 – 974.

Mai, N. K., Do, T. T., Phan, N. A. 2022. The impact of leadership traits and organizational learning on business innovation. Journal of Innovation & Knowledge. Volume 7. Issue 3: 1 – 9.

Madanchian, M., & Taherdoost, H. 2019. Assessment of Leadership Effectiveness Dimensions in Small & Medium Enterprises (SMEs). Procedia Manufacturing. Volume 32: 1035 – 1042.

Mawlawi, A., El Fawal, A., Maaliky, B. 2019. How Employees' Performance in The Lebanese Banking Sector is impacted by Innovative Leaders' Characteristics, World J. Manag. Volume 10: 1-15.

Mohsin Shafi, Zoya, Zheng Lei, Xiaoting Song, Md Nazirul Islam Sarker. 2020. The effects of transformational leadership on employee creativity: Moderating role of intrinsic motivation: 1 – 11.

Morf, M., Bakker, A. B. 2022. Ups and downs in transformational leadership: A weekly diary study. European Management Journal: 1 – 11.

Mulla, Z. R., & Krishnan, V. R. 2018. Impact of employment on newcomer's values: Role of supervisor's transformational leadership. IIMB Management Review. Volume 34. Issue 3: 228-241

Nguyen, P. V., Huynh, H. T. N., Lam, L. N. H., Le, T. B., Nguyen, N. H. X. 2021. The impact of entrepreneurial leadership on SMEs’ performance: the mediating effects of organizational factors. Heliyon. Volume 7. Issue 6: 1 – 13.

Ocasal, D. L. M., Lugo, A. L. V., Melo, L. A. B., Miranda, P. P. 2022. Innovative thinking in the leaders and competitiveness of SMEs in the Industrial sector in Colombia. Procedia Computer Science. Volume 210. 333 – 338.

Parvaneh Saeidia, Lorenzo Adalid Armijos Roblesb, Sayedeh Parastoo Saeidia, María Isabel Vera Zamorac. 2021. How does organizational leadership contribute to the firm performance through social responsibility strategies: 1 – 12.

Qalati, S. A., Zafar, Z., Fan, M., Limón, M. L. S., & Khaskheli, M. B. 2022. Employee performance under transformational leadership and organizational citizenship behavior: A mediated model. Heliyon. Volume 8. Issue 11: 1 – 10.

Ronnie Chuang Rang, Gao., William H. Murphy., Rolph E. Anderson. 2020. Transformational leadership effects on salespeople’s attitudes, striving, and performanceJournal of Business Research. Volume 110: 237-245.

Saeidi, P., Robles, L. A. A., Saeidi, S. P., Zamora, M. I. V. 2021. How does organizational leadership contribute to the firm performance through social responsibility strategies. Heliyon. Volume 7. Issue 7: 1 – 12.

Schaedler, L., Graf-Vlachy, L., König, A. 2021. Strategic leadership in organizational crises: A review and research agenda. Long Range Planning. Volume 55. Issue 2: 1 – 28.

Shafi, M., Lei, Z., Song, X., Sarker, M. N. I. 2020. The effects of transformational leadership on employee creativity: Moderating role of intrinsic motivation. Asia Pacific Management Review. Volume 25. Issue 3: 166 – 176.

Sikandar Ali Qalati, Zuhaib Zafar, Mingyue Fan, Monica Lorena Sanchez Limon, Muhammad Bilawal Khaskheli. 2022. Employee performance under transformational leadership and organizational citizenship behavior: A mediated model: 1 – 10.

Vaccaro, I.G., Jansen, J.J.P., Van Den Bosch, F.A.J. and Volberda, H.W. 2012. Management Innovation and Leadership: The Moderating Role of Organizational Size. Journal of Management Studies. Volume 49: 28-51.

Van, N.T., Phong, L.B., Loan, L.T. 2018. Antecedents of innovation capability: The role of transformational leadership and organizational learning, International Journal of Business Administration. Volume 9. Issue 5: 1-10.

Yun-Hwa Chiang, Chu-Chun Hsu, Kuang-Peng Hung. 2014. Core self-evaluation and workplace creativity, Journal of Business Research. Volume 67. Issue 7: 1405-1413.

Zhang, Y., Wei, F. 2021. SMEs’ charismatic leadership, product life cycle, environmental performance, and financial performance: A mediated moderation model. Journal of Cleaner Production: 1 – 7.