The effects of transformational leadership, competitive intensity and technological innovation on performance

Abstract

This study aims to determine the three-way interaction effects of transformational leadership, technological innovation (i.e. product and process innovation) and competitive intensity on firm performance by detecting three-way interactions involving slope differences in moderated multiple regression. Based on a sample of 182 manufacturing enterprises in China, this paper finds that firms under transformational leadership are more likely to conduct process innovation, that the joint effect of the interaction between process innovation and competitive intensity is negatively related to firm performance and that the joint effect of the interaction between transformational leadership and competitive intensity is positively related to firm performance. Accordingly, this paper concludes that a firm should conduct more process innovation in a moderately competitive environment, but it should conduct less process innovation in a fiercely competitive environment, where in stronger transformational leadership should be adopted.