Attribution-ShareAlike 4.0 International (CC BY-SA 4.0)
Vol. 03, No. 07, July 2023
e-ISSN: 2807-8691 | p-ISSN: 2807-839X
IJSSR Page 1978
https://doi.org/10.XXXXX/ijssr.xxxx.xx
This work is licensed under a Attribution-ShareAlike 4.0 International (CC BY-SA 4.0)
TRANSFORMATIONAL LEADERSHIP AND KNOWLEDGE
MANAGEMENT IMPACT ON ORGANIZATION
PERFORMANCE: A SYSTEMATIC REVIEW
Tan Hadi*, Alexander Batara Marpaung
Faculty of Economics and Business, Universitas Pelita Harapan, Banten, Indonesia
*email: tanhadi.th@gmail.com
Keywords
ABSTRACT
Company performance; Leadership
style; Organizational Performance;
Systematic Review;
Transformational Leadership
A leader is a frontrunner who will lead an organization to sail
to its desires. In carrying out their functions, a leader will
normally use the management style/version believed to be the
most perfect to support their achievement. Transformational
leadership is a leadership style that gives freedom to the
organization to generate ideas for its advancement, permits
subordinates to view problems from different perspectives,
enables adaptation to the changing environment, and
improves the effectiveness of human resource management in
numerous sectors of the business. The impact of
transformational management on organizational overall
performance through expertise control has been studied in
various research. This journal represents the outcome of
systematic opinions from several journals on the influence of
transformational management and information control on
organizational overall performance. Based on the results of
the literature search, five journals related to transformational
leadership and know-how management effect on
organizational overall performance had been determined.
The finfings of the systematic evaluation show that the
transformational management fashion and information
management has a positive influence on enterprise
performance, both at once and in a roundabout way.
INTRODUCTION
The increasingly more complex and competitive business environment, marked by such dynamic
changes, encourages each business enterprise to move quickly, creatively, and innovatively to pursuit
sustainability, which relies on excellent organizational overall performance. This aspect is inseparable
from the function of the leader. Therefore, setting the maximum appropriate leaders will become the
most crucial element for the organization these days. Leaders are very instrumental in motivating and
assisting their personnel to be competitive and have a high commitment to the achievement of the
dreams and targets of the organization, by means of the use of a powerful management style. The chief
is at the middle of change in a set pastime (Bass & Stogdill, 1990) which in this attitude is closely related
to the studying system and knowledge of the enterprise. Organizational knowledge is the potential of
businesses to observe the value of new understanding, assimilate it, and apply it for business purpose
(García‐Morales et al., 2008). This dynamic capability influences the organization's capacity to create
and disseminate the know-how had to build other organizational abilities (organizational studying,
innovation) that offer the premise for the corporation to attain the overall performance that nice.
Inrernational Journal of Social Service and Research https://ijssr.ridwaninstitute.co.id/
IJSSR Page 1979
(Tomal and Jones, 2015) cited (Salim, 2022) define organizational performance as the result or
output of an organization, whereas (Cho & Dansereau, 2010) cited (Saleem et al., 2020) define company
performance as everything that refers to the achievement of organizational goals. The core purpose of
this paper is to systematically review the background of the transformational leadership of the
organization. (Avolio et al., 1999) define transformational leadership as leadership that understands the
common interests (Nguyen, 2019) of its followers and helps them to achieve the collective goals of the
organization (Avolio et al., 1999). Whereas (Senge, 1990; Slater & Never, 1995) cited (García‐Morales et
al., 2008), defines the transformational leader as a leader who can create a network of communication
and trust, enabling the effective two-way sharing of knowledge between the leader and their followers.
Each leader may have a transactional and transformational style, which can be used simultaneously with
a composition that is adapted according to the situation and conditions that exist in an organization.
Samad, (2012) cited (Saleem et al., 2020) explains that transforaminal leadership affects organizational
performance, several studies conducted empirically between transformational leadership and
organizational performance have proven to have a positive correlation.
Leadership is the driving force behind any organization, but its functions and capabilities are
becoming increasingly complex. It is described by the characteristics of the leader, qualities, and
behavior. (Chuang, 2013) Leadership is the moral and intellectual ability to visualize and work for what
is best for the company and its employees. Good management and effective leadership help to develop
teamwork, and the integration of individuals and group goals. (Hogg, 2001) cited (Piter, 2016)
concludes that leadership is closely related to the theory of social identity, where the emergence of
leadership is when a person matches the identity of the group as a whole. As the group evolves over
time, so does the prototype of the group, and an individual emerges as a leader within the group when
they most closely resemble the group's prototype?
A person's behavior in an attempt to influence others is a factor that shapes a leadership style.
This includes directive behavior and supportive behavior. Directive behavior helps group members
achieve goals by providing direction, setting goals and evaluation methods, setting schedules, defining
roles, and showing how goals should be achieved. Directive behavior makes it clear, often with one-way
communication; what to do, how to do it, and who is responsible for doing it. Supportive behavior, on
the other hands, helps group members feel good about themselves, their co-workers, and the situation.
Supportive behavior involves two-way communication and responses that indicate social and emotional
support to others. Examples of supportive behavior include asking for feedback, problem-solving,
compliments, sharing information about yourself, and listening. Supportive behavior is mostly work-
related. (Markman 2013, cited in Maina A. M., 2018), concluded that leadership style has tremendous
benefits for organizational performance. (Duggan, 2017) conveys the subject leadership style has an
impact on the organization by influencing employee morale, productivity, speed in decision making, and
metrics. Successful leaders carefully analyze problems, assess the skill level of subordinates, consider
alternatives, and make informed choices. By choosing the most appropriate leadership style for the
situation, an effective leader makes a lasting impact.
Transformational leadership is defined as a leadership approach that brings changes in
individuals and social systems. In its ideal form, it creates valuable and positive changes in followers
with the ultimate goal of developing followers into leaders. Established in its original form,
transformational leadership increases the motivation, morale, and performance of followers through
various mechanisms. This includes connecting the followers' sense of identity and self with the
organization's mission and collective identity, serving as a role model for followers who inspire them,
challenging followers to take greater ownership of their work, and understanding the strengths and
weaknesses of followers, so that leaders can align followers with tasks that optimize their performance.
While first introduced in the context of political leaders in descriptive research, the term "leadership
transformation" is now also used in organizational psychology. According to Burns, leadership
transformation is the process by which "leaders and followers help each other to advance to a higher
level of morality and motivation". Burns (1978) relates to the difficulty of distinguishing between
management and leadership and states that the difference lies in characteristics and behaviors. He
established two concepts: "transformational leadership" and "transactional leadership". According to
Burns, the transformational approach creates significant changes in the lives of people and
organizations. It redesigns perceptions and values and changes employee expectations and aspirations.
In contrast to the transactional approach, this approach is not based on the relationship of "give and
Inrernational Journal of Social Service and Research,
Tan Hadi, Alexander Batara Marpaung
IJSSR Page 1980
take", but on the personality, traits, and ability of the leader to make changes through examples, the
articulation of energizing visions, and challenging goals. Transforming leaders are idealized in the sense
that they are moral role models in working for the benefit of the team, organization, and/or community.
Burns theorizes that transformational and transactional leadership are mutually exclusive styles.
Transactional leaders usually do not seek to change to change the organization's culture but instead
work within the existing culture, while transformational leaders can try to change the culture of the
organization.
Another researcher, Bernard M. Bass (1985), extended Burns' (1978) work by explaining the
psychological mechanisms underlying transformation and transactional leadership. Bass also uses the
term "transformational" instead of "transforming". Bass adds an earlier concept of Burns (1978) to help
explain how transformational leadership can be measured, as well as how it affects followers'
motivation and performance. The extent to which a transformational leader is, measured first, in terms
of his influence on the followers. The followers of such a leader feel trust, admiration, loyalty, and
respect for the leader. Due to the qualities of the transformational leader, they are willing to work harder
than originally expected. This result occurs because transformational leaders offer followers something
more than just working for one's benefit; they give followers an inspiring mission and vision and give
them an identity. The leader transforms and motivates his followers through his ideal influence
(formerly referred to as charisma), intellectual stimulation, and individual consideration. Furthermore,
this leader encourages their followers to find new and unique ways to challenge the status quo and
change the environment to support success. Finally, in contrast to Burns, Bass suggests that leadership
can simultaneously display transformational and transactional leadership.
Over the past 30 years, research and several meta-analyses have shown that transformational and
transactional leadership positively predicts a variety of performance outcomes including individual,
group, and organizational level variables (Bass B. &., 2008).
Transformational leaders in practice are inseparable from the implementation of human resource
management and organizational learning practices (Birasnav M., 2014). They also concentrating on the
development of an organizational culture that supports knowledge, including 1. Tacit knowledge –
knowledge that is incomparable, valuable, underutilized, not articulated, and based on the brains of
employees; and 2. Explicit knowledge – knowledge that is distributable, easy to handle, documentable,
and can be stored (Lucardie, 2003). By transforming this type of knowledge into another form of
knowledge which is valuable, distinctive, and cannot be replicated to another company, it will explore
the organizational knowledge for it, thus it will become a source of continued competitive advantage.
Designing a strategy to effectively manage knowledge is important for many organizations due to
its significance to achieve organizational results. Knowledge Management (KM) is defined as the
"management" function responsible for the regular selection, implementation, and evaluation of
knowledge strategies aimed at creating an environment that supports working with internal and
external knowledge for the organization to improve organizational performance" (Maier, 2005). KM
architecture consists of KM processes and KM infrastructure, and the interaction between these two
components supports the organization to create an organization of knowledge and improving
organizational innovation and consequently, supports the achievement of overall performance. Scholars
often define two kinds of KM processes: (1) KM tactical processes - by which employees collect
information to solve problems, derive value from the information collected, learn from values, and
update the knowledge present in the system; and (2) strategic KM processes — in which organizations
formulate KM strategies to assess, create, and maintain (Fillius, 2000).
(Ramachandran, Chong, & Wong, 2013) in his research states that effective leadership has a
significant influence in increasing knowledge. Furthermore, they assert that leadership style can
improve the development of decision- making processes and organizational strategies. Consequently,
knowledge management has a significant effect on the quality of decision-making, as well as improving
the continuous performance of the organization. A leader must be an expert who can inspire, motivate,
and guide their subordinates while being able to measure their own performance in various conditions,
especially through knowledge management strategies. In addition, to become an expert in knowledge
management, subordinates must be given sufficient authority and responsibility.
Organizational performance for researchers is considered the main dependent variable, since it
has to do with the measurement of productivity fundamental for the organization (Richard, Devinney,
Inrernational Journal of Social Service and Research https://ijssr.ridwaninstitute.co.id/
IJSSR Page 1981
Yip, & Johnson, 2009). Organizational performance represents the tangible outcomes achieved by the
organization, which can be measured by reference outputs, goals and objectives that are desired
(Gavera, 2011). According to Mathura in (Mahmu, 2021) leadership characteristics influence the
behavior of subordinates to achieve organizational goals. Therefore, leadership style can improve
organizational performance. To improve organizational efficiency and effectiveness, a different
leadership approach is needed, this is evident where past leadership models will be felt to be inadequate
to manage complex organizations at this time.
METHODS
A systematic approach was employed through article review to identify the correlation between
transformational leadership and organizational performance. This systematic review article uses
inclusion criteria such as the selection of topics falling within the research category, namely
transformational leadership and organizational performance. Article searches were limited to
databases such as Google Scholar, Research Gate, and Science Direct with the keywords
“transformational leadership” and “organizational performance” published in 2014 – 2022. Articles that
met the inclusion criteria were then collected and systematically examined. Out of the 76 articles
obtained, there were 15 relevant articles and then 5 relevant articles were selected for this review. This
paper not only contributes to the existing body of knowledge but also serves as a valuable reference for
future research endeavors. For instance, it may pave the way for exploring topics such as authentic
leadership within organizations and identifying the skills required for successful competition in the
digital age.
RESULT AND DISCUSSION
Result
Table 1
Data Extraction Result
Author &
Year
Purpose
Method
Result
Birasnav
(2014)
To investigate the
association
between
transformational
leadership and
organizational
performance, as
well as investigate
the
implementation of
the knowledge
management
process as a
mechanism for
transformational
leaders
Quantitative
This study investigates
the direct effects of
transformational
leadership on
organizational
performance and
indirect effects through
knowledge
management.
Transformational
leadership can
accurately predict
organizational
performance. It was
found that it was
transformational
leaders contributed
significantly to
organizational
performance.
Empirically, there was a
partial relationship
between
transformational
leadership and
Inrernational Journal of Social Service and Research,
Tan Hadi, Alexander Batara Marpaung
IJSSR Page 1982
Author &
Year
Purpose
Method
Result
organizational
performance.
Nouri,
Mousavi &
Soltani
(2016)
Investigate the
effect of
transformational
leadership and
knowledge
management on
organizational
Innovation in
Ardabil University
of Medical
Sciences.
Quantitative
Transformational
leadership has a
positive effect
on knowledge
management and
organizational
innovation; the impact
of knowledge
management on
organizational
innovation was shown
to be positive; and the
mediating role of
knowledge
management was
confirmed
in the relationship
between
transformational
leadership and
organizational
innovation
Mahmud
Kılıç and
Orhan
Uludag
(2021)
To examine. The
relationships
between
transformational
leadership,
knowledge
creation
processes,
organizational
learning, job
satisfaction,
knowledge
management, and
organizational
performance. on
the Northern
Cyprus Security
Forces
Quantitative
This study concludes
that transformational
leadership increases
organizational
performance through
knowledge
management;
organizational learning
has a significant effect
on knowledge
management; and a
significant impact on
organizational learning
and knowledge creation
processes in
transformational
leadership
Firmansyah
&
Purwandari
(2022)
Quantitative
The results showed that
transformational
leadership is
positively related to
Knowledge Sharing,
Affective Commitment,
while knowledge
sharing and affective
commitment are
positively
Inrernational Journal of Social Service and Research https://ijssr.ridwaninstitute.co.id/
IJSSR Page 1983
Author &
Year
Purpose
Method
Result
Related to employee
performance.
Transformational
leadership is
Not positively related to
employee performance.
Furthermore,
knowledge-sharing
mediation and affective
commitment can
mediate
Transformational
Leadership
relationships to
employee
performance
Alsuwaidi &
Mansor
(2022)
This study aims to
identify the
significant
influence of
transformative
leadership
to the
performance of
the Dubai police
department as
well as the role of
knowledge
management
mediation in this
relationship.
Quantitative
This research reveals
that knowledge
management
significantly mediates
the relationship
between
Transformational
leadership and police
performance.
Discussion
By synthesizing the common findings from the five articles, it can be concluded that there is a
positive influence between transformational leadership and organizational performance directly or
indirectly through knowledge management. According to (Aitalegbe, 2017), knowledge management
can be defined as a system that creates, captures, shares, and utilizes knowledge or knowledge for
the success of an organization. The knowledge management process can then be separated into three
stages, namely acquiring knowledge or knowledge acquisition, disseminating knowledge or
knowledge transfer, and applying knowledge or knowledge applications (Birasnav, 2016).
The transformational leadership style usually results in better organizational performance
compared to the transactional leadership (Avolio et al., 1999). This can happen because the
transformational leadership style encourages innovation and knowledge which then generates
benefits for organizational performance (Avolio, 1993).
A. Knowledge Acquisition
Knowledge can be distinguished according to its source, including knowledge that already
exists within the organization and knowledge obtained from outside the organization. According
to (García‐Morales et al., 2008), the knowledge within an organization can be subdivided into
explicit knowledge or knowledge that is known by the entire organization and tacit knowledge or
knowledge that is only known by a few people.
Inrernational Journal of Social Service and Research,
Tan Hadi, Alexander Batara Marpaung
IJSSR Page 1984
In the stage of knowledge acquisition, (García‐Morales et al., 2008) argue that organizations
need the ability to acquire external knowledge called absorptive capacity and the ability to
capture tacit knowledge referred to as knowledge slack.
B. Knowledge Transfer
Leaders must have the ability to spread the knowledge that has been gained and then
leverage it to improve performance. The process, when an organization acquires knowledge and
disseminates knowledge to improve organizational performance, is referred to as organizational
learning (Nguyen & Luu, 2019). Organizational learning allows the development of new skills and
knowledge (García‐Morales et al., 2008) in five ways: idealized influence, inspirational motivation,
individualized consideration, intellectual stimulation (Maina & Gichinga, 2018), and prosocial
behavioral intentions (Salim & Rajput, 2021). Idealized influence describes an organization's
ability to build trust and respect for its leaders.
According to (Peter, 2016) the leader must be a role model who can influence people.
Another effective approach suggested by (Maina & Gichinga, 2018) is inspirational
motivation or the ability of leaders to encourage people to adopt appropriate behaviors by
demonstrating enthusiasm and optimism, stimulating cooperation, and emphasizing goals
(Ngaithe, 2016).
Individualized consideration is the leader's ability to include people in the process of
organizational transformation by recognizing people's wants, needs, values, and abilities in the
right way. This method requires a relatively high level of trust in the leader.
Intellectual stimulation has an important role in the process of organizational
transformation. The leader must encourage people to reevaluate their problem-solving
approaches by using analogies and metaphors, as suggested by Maina A. M. (2018).
Prosocial behavioral intention is the behavior when people voluntarily or deliberately help
others (Salim & Rajput, 2021). This behavior can also be referred to as altruism, which is the act
of benefiting others in the absence of interests or personal gain (Niculescu et al., 2022).
C. Knowledge Application
The application of knowledge supports creativity and inspires new ideas to increase the
potential for understanding which can then be applied and shape organizational innovation and
organizational culture (Nguyen & Luu, 2019). Organizational innovation can be defined as a new
idea and method, or the act of creating a new thing (García‐Morales et al., 2008). While the core
of organizational culture is the shared values shared by members of the organization (Nguyen &
Luu, 2019) the results of the transformative knowledge management process produce a new
culture and innovation that then encourages and improves organizational performance.
CONCLUSION
Transformational leadership exhibits a significant positive relationship with organizational
performance, not only directly but also indirectly through knowledge management. By acquiring,
disseminating, and utilizing knowledge, transformative leaders can improve financial performance,
product market performance, and shareholder returns. Age, gender, and organizational level mediation
variables and knowledge management mediation variables reinforce the correlation between
transformational leadership and organizational performance. By having the ability to acquire,
disseminate, utilize the knowledge, and produce organizational culture and organizational innovation,
transformative leaders can improve organizational performance. Subsequent research can combine
quantitative and qualitative methods, as the correlation between the leader and the members of the
organization also needs to be considered. The limitation of the five articles is the use of less specific
dependent variables. According to organizational (Richard et al, 2009) performance, it includes three
things, namely financial performance, product market performance, and shareholder returns. To
overcome this problem, further research can use not only financial performance but also non-financial
performance as a dependent variable.
Inrernational Journal of Social Service and Research https://ijssr.ridwaninstitute.co.id/
IJSSR Page 1985
REFERENCES
Aitalegbe. (2017). Knowledge Management. Lulu.com.
Avolio, H. &. (1993). Transformational leadership, transactional leadership, locus of control, and support
for innovation: Key predictors of Consolidated -Business-Unit performance. Journal of Applied
Psychology, 891-902. Google Scholar
Bass. (1990). The Bass handbook of leadership: theory, research, and managerial applications. NY: Free
Press. Google Scholar
Bass, B. &. (2008). The Bass Handbook of Leadership: Theory, Penelitian, dan Aplikasi Manajerial". NY:
The Free Press.
Birasnav. (2016). the Relationship between Transformational Leadership and Organizational
Commitment: A Study on the Bank Employees. Journal of Service Science and Management,, 1622-
1629. Google Scholar
Birasnav, M. (2014). Knowledge management and organizational performance in the service industry:
The role of transformational leadership beyond the effects of transactional leadership. Journal of
Business Research, 1622-1629. Google Scholar
Burns, J. M. (1978). Leadership. Michigan: Harper & Row.
Chuang, e. a. (2013). Essential skills for leadership effectiveness in the diverse workplace development.
Online Journal for Workforce Education and Development. Google Scholar
Duggan, B. (2017). Resilient Leadership 2.0: Leading with Calm, Clarity, and Conviction in Anxious
Times. Paperback. Google Scholar
Fillius, D. J. (2000). Knowledge management in the HRD office: a comparison of three cases. Journal of
Workplace Learning, 286-295. Google Scholar
Garcıa-Morales, M. &. (2008). the Effects of Transformational Leadership on Organizational
Performance through Knowledge and Innovation. British Journal of Management, 299–319. Google
Scholar
Gavera. (2011). Determinants of organizational performance: The case of Romania. Management &
Marketing, 285-300. Google Scholar
Lucardie, J. &. (2003). Reconsidering the tacit-explicit distinction - A move toward unctional (tacit)
knowledge management. Electronic Journal of Knowledge Management, 23-32. Google Scholar
Mahmu. (2021). the Effects of Transformational Leadership on Organizational Performance: Testing the
Mediating Effects of Knowledge Management. MDPI, 1-27.
Maier. (2005). the Accelerated Learning Handbook. Bandung: Kaifa. Google Scholar
Maina, A. M. (2018). The Effect of Transformational Leadership On Organizational Performance Of Steel
Manufacturing Companies In Coast Region. The Strategic Journal of Business & Change Management,
1487-1508. Google Scholar
Maina, A. M. (2018). The Effect of Transformational Leadership on Organizational Performance of Steel
Manufacturing Companies in Coast Region. The Strategic Journal of Business & Change Management,
1487–1508. Google Scholar
Ngaithe, a. a. (2016). Effectt of Idealized Influence and Inspirational Motivation on Staff Performance in
State. European Journal of Business and Management, Vol.8, No.30. Google Scholar
Nguyen, T. a. (2019). Linking transformational leadership and organizational performance: An empirical
investigation of manufacturing firms in Vietnam. Economics & Sociology, 170-191. Google Scholar
Piter. (2016). Leadership: Theory & Practice. London: Sage. Google Scholar
Ramachandran, S., Chong, S.-C., & Wong, K.-Y. (2013). Knowledge management practices and enablers
in public universities: A gap analysis. Campus Wide Inf. Syst, 76-94. Google Scholar
Richard et al. (2009). Measuring Organizational Performance towards Methodological Best Practice.
Journal of Management, 718-804. Google Scholar
Richard, P., Devinney, T., Yip, G., & Johnson, G. (2009). Measuring Organizational Performance: Towards
Methodological Best Practice. Journal Management, 718–804. Google Scholar
Salim, A. a. (2022). The Effect of Transformational Leadership on Organizational Commitment and Work
Performance. Journal of Leadership in Organizations,, 61-82. Google Scholar
Inrernational Journal of Social Service and Research,
Tan Hadi, Alexander Batara Marpaung
IJSSR Page 1986
Copyright holder:
Tan Hadi, Alexander Batara Marpaung (2023)
First publication right:
International Journal of Social Service and Research (IJSSR)
This article is licensed under: