Mediating Role of Change Capability in the Relationship Between Transformational Leadership and Organizational Performance: An Empirical Research

Background: Improving organizational performance for firms in developing countries like Vietnam by huge investments in technological innovation is not feasible, because the majority of firms in these nations are small and medium size, with a lack of capital, resources, and R&D capabilities. Given the important role of change capability for organizational performance, the purpose of this paper is to investigate the impacts of transformational leadership (TL) on organizational performance via the mediating role of organizational change capability in cases of Vietnamese enterprise. Methods: Based on the cross-sectional design method and empirical data, this study applied analysis of moment structures (AMOS) and structural equation modeling (SEM) to inspect the link between the latent variables in the proposal research model through the empirical data gathered from 302 participators in 125 Vietnamese firms. Results: The findings of this study show the significant and positive influences of TL on organizational change capability and organizational performance. Importantly, organizational change capability significantly mediates the influence of TL on operational and financial performance. Conclusion: This study contributes to filling the gaps in the literature and advancing the insights of how TL fosters specific aspects of change capability for improving two crucial components of organizational performance, namely operational and financial performance.