Transformational leadership and knowledge infrastructure as enablers of digital readiness

Abstract

This study investigates how transformational leadership enhances digital readiness among Malaysian micro, small, and medium enterprises (MSMEs) by mediating knowledge infrastructure. It addresses the managerial question of how leaders’ decisions translate into technological preparedness in resource-constrained contexts. Drawing on Transformational Leadership Theory, Dynamic Capabilities Theory, and the Knowledge-Based View, this study proposes and tests the Leadership–Knowledge Infrastructure Readiness Model (LKIRM). Data from 500 MSME owner-managers were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) to examine both direct and mediated effects. Transformational leadership significantly influences digital readiness, both directly and indirectly, through knowledge infrastructure. Knowledge infrastructure partially mediates this relationship, confirming that leadership and technology jointly build MSME digital capabilities. MSME leaders who articulate a digital vision, allocate resources effectively, and promote knowledge sharing accelerate organisational readiness. Policymakers should align leadership development initiatives with digital infrastructure programs to close the sectoral readiness gaps. This study integrates behavioural and structural perspectives by validating LKIRM within an emerging-economy context. It provides empirical evidence that leadership behaviours act as micro-foundations of dynamic capabilities, enabling digital transformation among MSMEs.