Transformational leadership, job performance and innovation: The mediating role of knowledge sharing in Lebanese SMEs

Abstract

This paper investigates the influence of Transformational Leadership on Job Performance and Innovative Work Behavior within the volatile context of Lebanese Small and Medium-sized Enterprises (SMEs) amid a severe national socio-economic crisis. The research aims to examine Knowledge Sharing as a critical mediating mechanism that translates leadership efforts into organizational outcomes, thereby enabling SMEs to survive. Adopting a positivist, deductive approach, a cross-sectional survey was conducted among 400 employees across diverse managerial levels and sectors. Data were analyzed using Structural Equation Modeling (SEM) to evaluate the hypothesized causal pathways and the robustness of the measurement model. The findings provide strong evidence that transformational leadership (TFL) acts as a powerful direct driver of both job performance (JP) and innovative work behavior (IWB), confirming its effectiveness even in high-pressure, resource-constrained environments. While knowledge sharing (KS) significantly influences performance and innovation, its mediating role is found to be contingent on specific contextual boundary conditions. These results conclude that leadership is a primary lever for stability in crisis-stricken markets. Practically, the study implies that SME owners should prioritize transformational behaviors and formalize knowledge sharing protocols to sustain employee output and creative problem-solving especially during periods of national instability.