The Moderating Effect of Transformational Leadership on the Relationship Between Entrepreneurial Orientation and Performance of Manufacturing Firms in Nairobi County

Abstract

Transformational leadership is an enabler of improved organizational work efficiency, enhanced job satisfaction and organizational performance. In theory, transformational leadership is positively correlated with a variety of organizational outcomes. The current study sought to establish the moderating effect of transformational leadership on the relationship between entrepreneurial orientation and manufacturing firms’ performance in Nairobi County, Kenya. This paper was anchored on the positivism world view and was quantitative in nature. The research design was explanatory design to show cause and effect relationships and the strategy for inquiry was a survey strategy. The independent variable was entrepreneurial orientation with the dependent variable being firms’ performance whereas the mediator was networking capability with the moderator being transformational leadership. The study utilized Hayes Model 59 using PROCESS Macro Version 4.0 for multiple regression analysis. Results on interaction further indicated that transformational leadership had a moderating effect on the relationship between entrepreneurial orientation and enterprise performance with β = .03, p = .005. The study concluded that, transformational leadership had varied moderating effects on the relationship between entrepreneurial orientation and manufacturing firms’ performance. It was the recommendation of this study that for manufacturing firms to better enhance sustainable performance and gain competitive advantage, they should not only adopt entrepreneurial orientation as a strategy but they should also infuse the concept of transformational leadership hence increased improvement.