Modeling transformational leadership, supply chain collaboration and firm performance – a case of India

Purpose: The competitive rivalry, rapid change and high business volatility necessitate inter-organizational collaboration, including the supply chain (SC). This paper develops an interpretive model of the effect of the chief executive officers’ (CEO's) transformational leadership (TL) style on SC collaboration and, consequently, on the firm's performance. Design/methodology/approach: Total interpretive structural modeling (TISM) is adopted to develop a hierarchical model to delineate the association between the elements of TL, SC collaboration and firm performance. Furthermore, the model has been validated statistically. Findings: The TISM analysis results suggest that the TL style elements require maximum attention and are strategic. These elements drive factors of SC collaboration leading to improved firm performance. Therefore, CEO leadership is critical for SC collaboration to effectively affect firm performance. Research limitations/implications: The TISM framework in this paper preferred the majority approach over the fuzzy one, which requires a much larger data set. However, the bias of the majority approach can be eliminated by having multiple consultations with participants. Further, the development and validation of the paper was limited to manufacturing small and medium enterprises (SMEs) in India. The model can also be tested in large organizations to garner additional insights. Originality/value: This study uniquely integrates TL and SC collaboration elements to explain firm performance. The TISM framework explains not only the “what” and “how” but also the “why” of theory building. This study also adds methodological value by combining triangulation with the interpretive tool.