Short answer
When designing interventions or organizational structures for labour-intensive SMEs, consider leadership approaches that directly cultivate entrepreneurial thinking and emotional commitment, rather than relying solely on transformational leadership models.
- Field
- Innovation & Design
- Source
- Business Ethics and Leadership (2025)
- Method
- Quantitative survey research with subsequent observational data collection, analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM).
- Sample
- 190 respondents
- Evidence
- Moderate effect
Transformational leadership may inadvertently hinder innovation in labour-intensive SMEs by failing to foster entrepreneurial orientation and affective commitment among employees. This innovation & design research insight is drawn from a 2025 study published in Business Ethics and Leadership. Using Quantitative survey research with subsequent observational data collection, analyzed using partial least squares structural equation modelling (pls-sem). with 190 respondents, researchers explored how this design variable affects real-world outcomes. The key design takeaway: When designing interventions or organizational structures for labour-intensive SMEs, consider leadership approaches that directly cultivate entrepreneurial thinking and emotional commitment, rather than relying solely on transformational leadership models.
Transformational Leadership Weakens Entrepreneurial Drive in Labour-Intensive SMEs
Transformational leadership may inadvertently hinder innovation in labour-intensive SMEs by failing to foster entrepreneurial orientation and affective commitment among employees.
Business Ethics and Leadership · 2025
Key Findings
- 01Transformational leadership did not positively impact entrepreneurial orientation in this context.
- 02Transformational leadership did not positively impact affective commitment in this context.
- 03The study suggests challenges for these SMEs in innovation and long-term competitive advantage due to these leadership dynamics.
Application
Design takeaway
When designing interventions or organizational structures for labour-intensive SMEs, consider leadership approaches that directly cultivate entrepreneurial thinking and emotional commitment, rather than relying solely on transformational leadership models.
How to apply
When developing strategies for innovation in labour-intensive sectors, explore alternative leadership styles or supplementary programs that specifically target fostering employee initiative and a strong sense of belonging.
Project actions
- 01Consider the specific industry and employee type when selecting leadership theories for your design project.
- 02If your project involves leadership, explore how different styles might impact employee motivation and innovation in a practical setting.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Investigates a nuanced relationship including mediation and moderation.
- +Focuses on a specific, under-researched sector (labour-intensive SMEs).
Limitations
The study's focus on a single industry and geographical location limits its generalizability.
Reliability & validity
The use of PLS-SEM and a quantitative survey method provides a structured approach to data analysis, but the reliance on self-reported data may introduce common method bias. Further research could incorporate objective measures of innovation and leadership effectiveness.
Think critically
To what extent do the cultural context and the specific nature of 'labour-intensive' work in the swiftlet nest industry contribute to the observed ineffectiveness of transformational leadership?
Design Principles
"Leadership effectiveness is contingent on industry type and employee engagement mechanisms."
This insight challenges the universal applicability of transformational leadership models in all business contexts. For designers and strategists, it highlights the need to tailor leadership and organizational approaches based on the specific industry and employee engagement dynamics, particularly in sectors reliant on human labor.
What This Means for Your Design
In some businesses that rely heavily on people's work, the usual 'inspirational leader' approach might not actually make employees more creative or feel more connected to the company, making it harder for the business to come up with new ideas.
How to use in your project
- 1.Reference this study when discussing the limitations of certain leadership styles in specific business contexts within your design project.
Add to My Project
Quick Cite
Paragraph starter
This research highlights that transformational leadership may not always foster entrepreneurial orientation and affective commitment in labour-intensive SMEs, potentially hindering innovation. This suggests that design projects aiming to improve innovation in such contexts should explore leadership approaches tailored to the specific industry dynamics and employee engagement needs, rather than relying on generic models.
Source
Business Ethics and Leadership
Entrepreneurial Orientation, Affective Commitment, and Transformational Leadership’s Impacts on SMEs’ Innovation Performance
journal · 2025
View sourceQuestions About This Research
- What does the research say about transformational leadership weakens entrepreneurial drive in labour-intensive smes?
- When designing interventions or organizational structures for labour-intensive SMEs, consider leadership approaches that directly cultivate entrepreneurial thinking and emotional commitment, rather than relying solely on transformational leadership models. Evidence: Business Ethics and Leadership (2025).
- Why does "Transformational Leadership Weakens Entrepreneurial Drive in Labour-Intensive SMEs" matter for design?
- This insight challenges the universal applicability of transformational leadership models in all business contexts. For designers and strategists, it highlights the need to tailor leadership and organizational approaches based on the specific industry and employee engagement dynamics, particularly in sectors reliant on human labor.
- How can designers apply this research?
- When designing interventions or organizational structures for labour-intensive SMEs, consider leadership approaches that directly cultivate entrepreneurial thinking and emotional commitment, rather than relying solely on transformational leadership models.
- What were the main findings?
- Transformational leadership did not positively impact entrepreneurial orientation in this context.. Transformational leadership did not positively impact affective commitment in this context.. The study suggests challenges for these SMEs in innovation and long-term competitive advantage due to these leadership dynamics.
- What research method was used?
- Quantitative survey research with subsequent observational data collection, analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM). with 190 respondents.
- How strong is the evidence?
- Evidence strength is rated Moderate effect, based on a 2025 journal from Business Ethics and Leadership.
- What should I do differently in my next project?
- When developing strategies for innovation in labour-intensive sectors, explore alternative leadership styles or supplementary programs that specifically target fostering employee initiative and a strong sense of belonging.
- What are the limitations?
- The findings are specific to the swiftlet nest industry in North Jakarta, Indonesia, and may not generalize to all labour-intensive SMEs or other industries.