Fostering Supply Chain Agility through Transformational Leadership and Organizational Ambidexterity in the Indonesian Automotive Industry

Abstract

Indonesia’s automotive components industry faces unprecedented supply chain and innovation challenges, driven by the rapid adoption of Industry 4.0, the CASE (Connected, Autonomous, Shared, Electric) paradigm, and intensified global trade tensions. The “Trump Trade War 2.0,” marked by a 32% U.S. tariff on Indonesian exports, has disrupted supply chains and heightened the urgency for organizational agility and innovation among Tier-1 suppliers. This study examines how transformational leadership fosters organizational ambidexterity, balancing exploration and exploitation, to enhance innovation performance. Using Partial Least Squares Structural Equation Modeling (PLS-SEM) on data from 100 top leaders in the Indonesian automotive industry, CEOs, Vice Presidents, Directors, and Owners, findings reveal that transformational leadership significantly strengthens ambidexterity, which fully mediates its indirect effect on innovation. However, transformational leadership does not directly impact innovation outcomes, reflecting the mature, process-driven nature of Tier-1 suppliers. These results highlight the crucial role of leadership in developing ambidextrous capabilities to foster innovation and resilience within globally exposed, digitally transforming supply chains in emerging markets.