Transformational leadership and organizational performance of Omani SMEs: the role of market orientation

Abstract

PurposeThis study proposed and tested a model on the relationship between transformational leadership (TL) and organizational performance (OP) with a possible intervening effect of market orientation (MO) at Omani small and medium enterprises (SMEs).Design/methodology/approachThe study followed a quantitative research design and the deductive approach. Data were collected from 259 employees working in Omani SMEs and were analyzed using structural equation modeling SEM AMOS V24.FindingsThe findings supported positive direct effects of transformational leadership on Omani SMEs' business performance and market orientation. The results also supported the effect of market orientation on business performance. Further analysis showed that market orientation partly mediates the relationship between transformational leadership and business performance.Practical implicationsThe results motivate Omani SMEs' leaders to use intangible capabilities (i.e., market orientation practices) to improve the different aspects of organizational performance. It also suggests that developing SMEs leaders' transformational skills on envisioning the future, adopting open communication styles, motivating employees and stimulating their creativity influences Omani SMEs' performance.Originality/valueDue to the mixed results regarding the TL–OP relationship and the recommendations for further exploring this relationship, this study contributes to theory and practice. It is among the few studies to explore the mediating role of MO between TL and OP in a developing country's SMEs environment.