ISSN: 2222-6990
Open access
This study examines the influence of transformational leadership and strategic agility on innovation performance and business sustainability among MSMEs in Indonesia’s post-pandemic context. Drawing on Transformational Leadership Theory and Strategic Capability Theory, the study positions innovation as a mediating mechanism. Using a quantitative approach with PLS-SEM, data were collected from 238 MSME leaders in the Riau Islands. The results show that transformational leadership positively affects strategic agility (? = 0.743), which in turn enhances innovation performance (? = 0.423). Innovation also mediates the relationship between leadership and sustainability (? = 0.104), and between agility and sustainability (? = 0.117). These findings underscore the role of leadership and agility as human resource capabilities that drive innovation-led sustainability. The study contributes to the HR and MSMEs literature by highlighting the importance of internal capabilities in fostering resilience and long-term performance. Practical implications are offered for MSME leaders and policymakers seeking to promote innovation and sustainable growth in emerging markets.
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