The Impact of Transformational Leadership on Organizational Performance: The Mediating Role of Organizational Knowledge in Pakistan’s Service Industries

Abstract

The service industry is under pressure to redefine itself to improve organizational performance. This study investigates the impact of transformational leadership on organizational performance within Pakistan's service industries, with a specific focus on the mediating role of organizational knowledge. While prior research establishes a link between transformational leadership and performance, the mechanisms—particularly through organizational knowledge—remain underexplored, especially in the Pakistani context. The study aims to identify this impact, analyze the mediating effect of organizational knowledge (comprising knowledge slack, absorptive capacity, and tacitness), and provide practical implications for business practitioners. Addressing a gap in the literature, this research highlights how transformational leaders can enhance competitiveness and performance by fostering an environment conducive to knowledge creation, management, and application. The findings are intended to guide policymakers and organizational leaders in overcoming barriers to sustaining competitive advantage in a dynamic business environment.