The role of affective leadership in improving firm performance through the integrated internal system and external integration FMCG Industry

Abstract

The manufacturing industry always tries to improve performance amid the trade globalization. Demand and supply uncertainty, and increasingly the intense competition, prosecute the presence of an affective leadership to integrate the company's internal and external resources in improving company performance. This research investigates the role of affective leadership in firm performance through an internally integrated system and external integration in FMCG companies. Data collection used questionnaires, designed with a five-point Liker scale, were distributed to 55 fast-moving consumer goods (FMCG) manufacturing companies. The data analysis used the PLS technique utilizing smart PLS software to assess the validity and reliability of the outer model and to examine the hypotheses developed. The results of the hypothesis testing found that affective leadership can improve internal system integration, external integration, and firm performance. Internal system integration has an impact on external integration but is not strong enough to have a direct effect on firm performance. The internally integrated system has an influence on firm performance through external integration. The company's ability to share information with external partners can improve firm performance through demand fulfillment. The study provides a managerial implication on how to enhance firm performance in the context of internal and external system integration. The finding of this research enriches the current studies in supply chain management.