Transformational Leadership Model: The Mediating Role of Organizational Culture and High Performance Work System on SME Performance in Thailand

Abstract

The objectives of this study are to: 1) investigate and demonstrate the model of transformational leadership, and to demonstrate the mediating effects of organizational culture and high performance work systems on SME performance in Thailand; and 2) develop a causal model linking transformational leadership, organizational culture, high performance work systems, and SME performance in Thailand. The Office of Small and Medium Firms Promotion's database has 545 small and medium-sized enterprises that are divided into 110 retail and wholesale companies, 204 service companies, and 231 manufacturing companies. The data were gathered from 545 SMEs in Thailand as part of the quantitative study design. The respondents were senior management or their representatives from small and medium-sized businesses with between 51 and 200 full-time workers and a fixed asset worth between 50 and 200 million baht. To test the theories, a structural equation model was employed. The research's conclusions indicated that: 1) transformational leadership significantly affected organizational culture and the high performance work system; 2) transformational leadership indirectly influenced SMEs' performance through high performance work; and 3) SMEs' performance was unaffected by either transformational leadership or organizational culture. Additionally, the following empirical data supports the causal hypothesis of transformational leadership, high-performance work systems, organizational culture, and SME performance: CFI = 0.99, GFI = 0.90, AGFI = 0.89, RMSEA = 0.050, SRMR = 0.043, 2= 181.14, df = 131, P-value = 0.00246 and 2/df = 1.38. Finally, the causal model explaining how organizational culture, high performance work systems, and SME performance affect outcomes was consistent with the actual evidence. These factors might be used to characterize the 45.0 percent variability in SMEs' performance in Thailand. © 2022, Association Res Militaris. All rights reserved.