Due to the vital role of innovation for firms to respond effectively to the rapid changes of business environment, the purpose of this study is to explore the influence of transformational leadership (TL) on innovation capability of firms via mediating role of knowledge management capability (KMC). It attempts to deepen insight on the moderating mechanism of innovation culture (IC) in enhancing the effects of KMC on two specific aspects of innovation capability namely product and process innovation.
The paper utilized structural equation modeling (SEM) and cross-sectional design to test hypotheses in the proposed research model using data collected from 339 participants in 75 manufacturing and service firms in China.
The findings indicate that TL directly or indirectly affect firm's innovation via mediating role of KMC. The findings highlight that influences of KMC on aspects of innovation capability are different and depended on the degree of innovative climate in an organization.
Future research should examine the mediating mechanisms of knowledge acquisition, knowledge sharing and knowledge application to provide deeper insight on specific roles of knowledge management's constituents in linking TL and innovation capability.
This study contributes to bridging research gaps in the literature and advancing the insights of how TL directly and indirectly fosters product and process innovation via mediating roles of KMC. By investigating moderating role of IC, this study has provided the valuable initiatives and integration view of a new mechanism to foster specific dimensions of innovation capability of firms in developing and emerging market.
