The importance of transformational leadership in organizational innovation in MSMEs

Authors

  • Elsa Galdys Alvarez Bautista Universidad Nacional del Centro del Perú https://orcid.org/0000-0002-1653-6470
  • Medaly Indyra Bujaico de la Cruz Universidad Nacional del Centro del Perú
  • Johann Angelo Camac Machuca Universidad Nacional del Centro del Perú
  • Eleazar Hector Peña Tunque Universidad Nacional del Centro del Perú

DOI:

https://doi.org/10.26490/1z04m664

Abstract

MSMEs represent a vital component of the global economic system, facing continuous challenges in highly competitive markets. Although they contribute significantly to job creation and economic development, these organizations regularly face important limitations. Given this reality, the transformational leadership model emerges as a fundamental alternative to strengthen their organizational progress and flexibility. The present study sought to evaluate how this type of leadership influences organizational innovation in MSEs by examining recent research using a systematic qualitative approach. The findings revealed that this leadership style, through its different factors, considerably influences the capacity for business innovation, despite the existence of limitations such as insufficient resources or resistance to change, transformational leadership provides clear possibilities to implement digital technologies and promote continuous improvement. The evidence allows establishing that transformational leadership is crucial to drive organizational innovation and ensure the continuity of these businesses in the current economic context.

Downloads

Download data is not yet available.

References

Abdul-Azeez, O., Ihechere, A. O., & Idemudia, C. (2024). Transformational Leadership in SMEs: Driving Innovation, Employee Engagement, and Business Success. World Journal of Advanced Research and Reviews, 22(3), 1894-1905. https://doi.org/10.30574/wjarr.2024.22.3.1888

Aristana, I. N., Puspitawati, N. M. D., Salain, P. P. P., Koval, V., Konarivska, O., & Paniuk, T. (2024). Improving Innovative Work Behavior in Small and Medium Enterprises: Integrating Transformational Leadership, Knowledge Sharing and Psychological Empowerment. Societies, 14(11), 228. https://doi.org/10.3390/soc14110228

Ashfaq, F., Abid, G., Ilyas, S., & Hasnain, A. (2021). How Transformational Leadership Influences Innovative Behavior: The Mediating Role of Psychological Empowerment and Proactivity of Employees. Independent Journal of Management & Production, 12(1), 241-264. https://doi.org/10.14807/ijmp.v12i1.1162

Ashoor, W. A. (2021). Transformational Leadership and Innovation for Competitive Advantage in Large Firms and SMEs. International Journal of R&D Innovation Strategy, 3(1), 1-12. https://doi.org/10.4018/IJRDIS.20210101.oa2

Aya Hamza, K., Alshaabani, A., & Rudnak, I. (2024). Impact of Transformational Leadership on Employees’ Affective Commitment and Intention to Support Change: Mediation Role of Innovative Behavior. Problems and Perspectives in Management, 22(2), 325-338. https://doi.org/10.21511/ppm.22(2).2024.25

Begum, S., Xia, E., Mehmood, K., Iftikhar, Y., & Li, Y. (2020). The Impact of CEOs’ Transformational Leadership on Sustainable Organizational Innovation in SMEs: A Three-Wave Mediating Role of Organizational Learning and Psychological Empowerment. Sustainability, 12(20), 8620. https://doi.org/10.3390/su12208620

Bravo-Bravo, I. F., & Herrera-Sánchez, M. J. (2023). Tendencias Globales del Liderazgo Transformacional en Empresas Modernas. Horizon Nexus Journal, 1(2), 14-31. https://doi.org/10.70881/hnj/v1/n2/15

Franco Medina, J. L., Alfaro Bardales, M. R., Villanueva Figueroa, R. E., & Nieva-Villegas, M. A. (2023). Liderazgo Transformacional las PYMES Peruanas: Perspectiva de los Trabajadores. Revista Venezolana de Gerencia, 28(104), 1794-1808. https://doi.org/10.52080/rvgluz.28.104.26

Gad David, K., Yang, W., Pei, C., & Moosa, A. (2023). Effect of Transformational Leadership on Open Innovation through Innovation Culture: Exploring the Moderating Role of Absorptive Capacity. Technology Analysis & Strategic Management, 35(5), 613-628. https://doi.org/10.1080/09537325.2021.1979214

García Monsalve, J. J., Tumbajulca Ramírez, I. A., & Cruz Tarrillo, J. J. (2021). Innovación Organizacional como Factor de Competitividad Empresarial en MYPES durante el Covid-19. Comuni@cción: Revista de Investigación en Comunicación y Desarrollo, 12(2), 99-110. https://doi.org/10.33595/2226-1478.12.2.500

Hadi, S., Fitriana, H., Kirana, K. C., Subekti, N. B., & Ogwu, I. J. (2023). The Impact of Temporal and Transformational Leadership on Innovation Performance: A Mediation Analysis of Self-Efficacy. Journal of Leadership in Organizations, 5(2). https://doi.org/10.22146/jlo.86213

Iqbal, S., Moleiro Martins, J., Nuno Mata, M., Naz, S., Akhtar, S., & Abreu, A. (2021). Linking Entrepreneurial Orientation with Innovation Performance in SMEs: The Role of Organizational Commitment and Transformational Leadership Using Smart PLS-SEM. Sustainability, 13(8), 4361. https://doi.org/10.3390/su13084361

Ishaq, A., & Haleema, B. B. (2024). Transformational Leadership Impact on Employee Innovative Behavior in SMEs: An Exploratory Factor Analysis. International Journal of Academic Research in Business and Social Sciences, 14(11), 2391-2402. https://doi.org/10.6007/IJARBSS/v14-i11/23230

Jun, K., & Lee, J. (2023). Transformational Leadership and Followers’ Innovative Behavior: Roles of Commitment to Change and Organizational Support for Creativity. Behavioral Sciences, 13(4), 320. https://doi.org/10.3390/bs13040320

Júnior, F. S. da R., Alves, H. L., Dandolini, G. A., & Souza, J. A. de. (2020). Efeitos da Liderança Transformacional na Inovação: Uma Revisão Sistemática de Literatura / Effects of Transformational Leadership on Innovation: A Systematic Literature Review. Brazilian Journal of Development, 6(12), 98834-98846. https://doi.org/10.34117/bjdv6n12-392

Karimi, S., Ahmadi Malek, F., Yaghoubi Farani, A., & Liobikienė, G. (2023). The Role of Transformational Leadership in Developing Innovative Work Behaviors: The Mediating Role of Employees’ Psychological Capital. Sustainability, 15(2), 1267. https://doi.org/10.3390/su15021267

Makumbe, W. (2024). Transformational Leadership and Innovation in the Manufacturing Sector: A Moderation Mediation Mechanism of Organisational Culture and Knowledge Sharing. Journal of Law and Sustainable Development, 12(12), e4196. https://doi.org/10.55908/sdgs.v12i12.4196

Nasir, J., Ibrahim, R. M., Sarwar, M. A., Sarwar, B., Al-Rahmi, W. M., Alturise, F., Al-Adwan, A. S., & Uddin, M. (2022). The Effects of Transformational Leadership, Organizational Innovation, Work Stressors, and Creativity on Employee Performance in SMEs. Frontiers in Psychology, 13, 772104. https://doi.org/10.3389/fpsyg.2022.772104

Rasheed, M. A., Shahzad, K., & Nadeem, S. (2021). Transformational Leadership and Employee Voice for Product and Process Innovation in SMEs. Innovation & Management Review, 18(1), 69-89. https://doi.org/10.1108/INMR-01-2020-0007

Santa, R., Zarate-Torres, R., Rey-Sarmiento, C. F., & Morante, D. (2025). Strategic Innovation and Leadership Dynamics: Unveiling Mediating Effects on Operational Quality in Manufacturing Organizations. Administrative Sciences, 15(3), 98. https://doi.org/10.3390/admsci15030098

Sung, W., & Kim, C. (2021). A Study on the Effect of Change Management on Organizational Innovation: Focusing on the Mediating Effect of Members’ Innovative Behavior. Sustainability, 13(4), 2079. https://doi.org/10.3390/su13042079

Susantinah, N., Jusman, I. A., & Ardi, M. (2023). Transformational Leadership Dynamics and Its Influence on Innovation in the Realm of Entrepreneurial Management. Journal of Contemporary Administration and Management (ADMAN), 1(3), 245-250. https://doi.org/10.61100/adman.v1i3.88

Zhang, Q. (2025). The Role of Transformational Leadership in Organizational Innovation. International Journal of Education and Humanities, 18(1), 236-240. https://doi.org/10.54097/xb50z666

Downloads

Published

2026-08-01

How to Cite

The importance of transformational leadership in organizational innovation in MSMEs. (2026). Strategy, 4(1), 16-32. https://doi.org/10.26490/1z04m664