The Influence of Transformational Leadership on Organisational Performance Through Corporate Entrepreneurship and Absorptive Capacity

Transformational leaders exploit new innovations and opportunities, optimise risks, and create a dynamic working environment to organise and motivate employees towards a common goal. Such leadership has been regarded as an effective development approach to attain higher organisational performance. However, studies have revealed potential mediation effects of factors like corporate entrepreneurship and absorptive capacity on the relationship between leadership style and organisational performance. Studies on the mediation effects of such factors within the context of developing countries, particularly in the healthcare sector, have remained scarce. Focusing on the healthcare sector, the current study examined the mediation effects of corporate entrepreneurship and absorptive capacity in the relationship between transformational leadership and organisational performance. Using a two-step approach to structural equation modelling, the survey responses of 171 middle managers from various healthcare institutions in the UAE were analysed. The assessment of structural model in this study presented evidence on the significance of the hypothesised direct and indirect effects. The empirical findings of the current study on how corporate entrepreneurship and absorptive capacity mediate the influence of transformational leadership and organisational performance have extended the current knowledge base on the resource-based view of the firm theory