Impact of transformational leadership on knowledge transfer, and subsequent knowledge transfer stages during post-merger integration

Abstract

Merger and acquisition (M&A) activities have consistently served as a source of growth and a strategy through which organizations attain competitive advantage. The integration process following an acquisition, which involves the design, planning, and execution of merging multiple organizations into one entity, is significantly influenced by the leadership style and methodologies employed. Managing this transition presents challenges and requires a careful balance of various cultural, procedural, and management systems for the senior executives and managers responsible for this task. Transformational Leadership style through its multidimensional behaviours has been known to be effective in many organisational change scenarios and is essential for effectively managing and leading during post-merger integrations. The ability to transfer knowledge-based assets particularly with cross boarder acquisition remains a key driver for business growth objectives and source of competitive advantage The speed and efficacy of the knowledge transfer process are critical for securing competitive advantage while maintaining organizational efficiency. This study examined the impact of transformational leadership on the knowledge inflow stage of the transfer process and the mechanisms facilitating knowledge flow through the stages of inflow, sharing, absorption, and retention. The strength and significance of the relationship between transformational leadership and knowledge transfer were tested using partial least squares structural equation modelling (PLS SEM). The findings indicate that individualized considerations of behaviours facilitate the knowledge transfer process. Furthermore, the knowledge transfer stage progresses sequentially through inflow, sharing, absorption, and retention. This study enhances the literature on transformational leadership by clarifying the mechanism of knowledge transfer during post-merger integration.