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The relationships among transformational leadership, sustainable leadership,

lean manufacturing and sustainability performance in Thai SMEs
manufacturing industry
Article in International Journal of Quality & Reliability Management · January 2019

DOI: 10.1108/IJQRM-09-2017-0178
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IJQRM QUALITY PAPER

36,6
The relationships among
transformational leadership,
sustainable leadership, lean
1014
Received 14 September 2017
Revised 4 February 2018
manufacturing and sustainability
23 April 2018
Accepted 30 October 2018 performance in Thai SMEs
manufacturing industry
Piyachat Burawat
Rajamangala University of Technology Thanyaburi, Khlong Hok, Thailand
Abstract
Purpose – The purpose of this paper is to examine the structural relationship model among transformational
leadership, sustainable leadership (SL), lean manufacturing practices and sustainability performance.
Design/methodology/approach – The data were collected from the middle and senior managers working
in small and medium enterprises of Thai manufacturing industry. Regarding the quantitative approach, the
data were collected by means of survey from 598 respondents from 374 companies. Qualitative data were
collected from 40 participants by participant observation, non-participant observation and in-depth interview.
Findings – The model reported that lean manufacturing has a partial mediate effect on the relationship
between transformational leadership and sustainability performance, and between SL and sustainability
performance. The structural model is different in automotive and nonautomotive companies, and the
structural model is different among the companies which implemented lean program for less than five years
and above five years. The data from in-depth interview informed that lean practices are appropriate for
automotive industry though with less implementation in other industries. Firms pay most attention on
customer involvement with some attention on employee and supplier involvement. Managers give advices
and exchange ideas with their followers rather than inspiring and giving opportunities to make decision.
Research limitations/implications – The findings may also enable Thai managers to realize that lean
practices are appropriate for any industry. The first thing to do before launching lean program to all process
is that the company should buy-in the understanding of managers about lean concept and implementation.
Willingness with well understanding and realizing importance of lean program will lead to superior results,
especially operational, economic and sustainable performance.
Originality/value – The reliability and validity measurements confirmed that both SL and environmental and
social performance are appropriate for manufacturing industries. This study provides evidence of the positive
relationship between SL and lean manufacturing, lean manufacturing and sustainability performance, as well as
the partial mediate effect of lean manufacturing on the relationship between SL and sustainability performance,
which are the additional contributions to research in academic field. The results confirmed the positive relationship
between transformational leadership and lean manufacturing. The results reported that there is difference of lean
practices between automotive and nonautomotive companies, and between companies which implemented lean
program less than five years and above five years. The structural relationship result reported that transformational
leadership has effects on lean manufacturing whereas SL has no effect on lean manufacturing, which asserted the
previous study in which one leadership model is more appropriate for success within lean implementations.
Keywords Transformational leadership, Lean manufacturing, Manufacturing industry,
Sustainability performance, Sustainable leadership
Paper type Research paper
International Journal of Quality & This study was supported by research grant for new scholar funding in the fiscal year 2016 of the
Reliability Management Thailand Research Fund. The author would like to express appreciation to mentor, Associate Professor
Vol. 36 No. 6, 2019
pp. 1014-1036 Dr Chanongkorn Kuntonbutr, who provided efforts to help finish this study. In addition, the author would
© Emerald Publishing Limited also like to express appreciation to all 598 respondents and 40 participants who gave priceless information
0265-671X
DOI 10.1108/IJQRM-09-2017-0178 and their companies for the permissions that enabled the author to successfully carry out this study.
Introduction Thai SMEs
Currently, globalization leads to free communication without borders; this results in high manufacturing
competition in both national and global markets. In addition, due to low productivity and industry
high inventory, firms operating in manufacturing industry are imperative to explore
strategies to raise profit, productivity and quality while decreasing costs, defects and lead
time delivery to end users, all of which need the mutual support of all supply chain members
from suppliers, subcontractors, employees, management teams, distributors and customers. 1015
Although 70 percent of all manufacturing firms pay much attention on lean manufacturing,
only 26 percent are considered significant success (Pay, 2006). The companies accepted that
they did not receive satisfactory outcomes with lean program implementation because they
did not pay good attention to the supply and did not encourage their implementation of lean
practices (Pay, 2006). In addition, firms that won great prizes from the Shingo Prize
Association did not carry on and did not keep operating with lean program; thus, they could
not maintain sustainable results (Pay, 2006). Successful lean program is associated with
management attention, clarifying goals and directions, serious involvements and practices
of all members, employees’ empowering, clear measurement criteria, obvious plan for
improved process (Smalley, 2005).
Cheerawit et al. (2014) conducted a research from 540 managers in Thailand’s automotive
part industry. The results reflected that there is a relationship between leadership and firm
performance through lean manufacturing practices. This is corresponding to Masood (2015)
which revealed that for successful implementation of lean concept and to enjoy the benefits
of lean system, deployment of transformational leaders can play a key role for achieving
lean status. The author further concluded that transformational leaders employing lean
manufacturing at the shop floor were facing little or no hurdle in implementing lean concept
and their productivity and profitability were better than where non-transformational leaders
were employed. Achanga et al. (2006) conducted a study on the critical success factors for
lean implementation within the small and medium enterprises (SMEs) and found that strong
leadership behaviors are vital to successful application of the principle of lean practices
within SMEs. The three other important factors include the finance capabilities, skills and
expertise and the organizational culture. Solid leadership behaviors would facilitate the
integration of all infrastructures within the organization and instill the vision and strategy
of the organization.
The existing research studies place an emphasis on the relation of leadership behaviors
and practices that lead to successful lean implementations. The research literature falls
short of considering that one leadership model might be more appropriate for success within
lean implementations (Malin, 2010). Consistent with Herkness (2005), it reveals that
transformational leadership augments transactional leadership by building on the
exchanges between leaders and followers. The findings of the study add to the existing
empirical data, suggesting that the transformational leadership model is useful when trying
to lead change.
In accordance with the Bass and Avolio’s (1994), transformational leadership can be
viewed as a multidimensional leadership continuum consisting of transactional and
transformational leadership styles. These theorists believe that transformational leaders can
act both in transformational and transactional manners depending on their respective style
and context. Correspondingly, Bass (1998) suggested that the best leaders are both
transactional and transformational.
The new kind of paradigm in leadership could be called sustainable leadership (SL)
characterized by three core processes, i.e. learning through doing, having a clear sense of
personal purpose and awareness of personal assumptions and motivations and effective
management of stress and sufficient self-care (Casserley and Critchley, 2010). Peterlin et al.
(2015) concluded that transformational leadership and SL are indistinguishable in main four
IJQRM ideas consisting of their dedication to understanding all demands of stakeholders,
36,6 intellectual stimulation of stakeholders, motivation by inspiration action and individualized
treatment of stakeholders (Bass et al., 2003). Looking at the difference, transformational
leadership focuses more on individual charisma or idealized influence in having impact on
existing followers (House et al., 1991), whereas SL focuses on motivating the sustainability
value at the personal, organizational, social and ecological levels for both existing and future
1016 cohort (Peterlin et al., 2015).

Although several studies focus on the effect of leadership on lean practice, they pay
attention to only one industry; thus, the simultaneous study on overall industry is lacking.
In addition, transformational leadership can be viewed as a multidimensional leadership as
well as indistinguishable between transformational and SL. Therefore, this study extends
current knowledge by examining the influence of transformational and SL on lean
manufacturing practices in manufacturing industry.
Since SL is lacking in scholarly field, the theoretical foundation has not been fully
developed (Gurr, 2007). In addition, according to the author’s knowledge, it is the first time
that the relationship between SL and lean manufacturing as well as the influence of lean
manufacturing on the relationship between SL and sustainability performance has been
described, which are the additional contributions to research in academic field.
The most regularly cited advantages associated with lean manufacturing are
development in labor productivity and quality, along with the decrease in lead time to
customer, cycle time and production costs (Marynell, 2013). However, some studies
presented that some lean manufacturing aspects are connected organizational performance.
Moreover, some studies revealed that there is no connection between lean manufacturing
and performance (Kaplan and Norton, 1992; Hibadullah et al., 2013). In addition, some
studies reported that lean manufacturing has an effect on financial performance through
operational performance (Fullerton and Wempe, 2009; Burawat, 2017).
Regarding the above concepts, the relationships among leadership style, lean
manufacturing and performance are equivocal. Thus, this study intends to investigate
the simultaneous relationships among transformational leadership, SL, lean manufacturing
practices and sustainability performance in Thai manufacturing industry. Furthermore, this
study intends to examine the relationship between transformational leadership and
sustainability performance through lean manufacturing, and to test the relationship
between SL and sustainability performance through lean manufacturing. The results of this
study provide insight information in an efficient form for a company’s operational system,
which in turn will create sustainable development despite sudden or severe changes in the
international competitive environment.
Literature review
Effective leadership
Boards of directors typically believe that transforming a company from good to great requires
an extreme personality, an egocentric chief to lead the corporate charge. Collins (2001)
identified the characteristics common to Level 5 leaders for effective leadership including
humility, will, ferocious resolve and the tendency to give credit to others while assigning
blame to themselves. The author suggested that getting the right people on board and
creating a culture of discipline can strive for Level 5 leaders. Kotter (1999) expostulated that
effective leaders are associated with pressing issues such as power, influence, dependence and
strategies for change. Without leadership, companies move too slowly, stagnate and lose their
way. In addition, Kotter (2006) suggested that the most important thing that leadership really
does is to maximize organizational performance by inspiring or motivating employees to
excel, build team’s self-confidence in others, provoke positive change, set direction, increase
self-awareness, draw strength from adversity and increase self-awareness.
Transformational leadership Thai SMEs
Over the last 25 years, transformational leadership has occurred as an extremely essential manufacturing
model for organizational leadership academicians (Northouse, 2004). Burns (1978) explained industry
that transformational leadership emerges when one or more individuals engage with others
in such a way that leaders and followers raise one another to greater motivation and
morality levels. Bass (1985) suggested four characterized transformational aspects including
idealized influence and charisma (strong role models with high ethics), inspirational 1017
motivation (high team spirit and shared vision), intellectual stimulation (stresses problem
solving and creativity) and individualized consideration (supportive climate and use of
delegation). Meanwhile, Northouse (2004) explained that transformational leaders have a
clear vision of the future state of their company. Transformational leaders are also noted to
be social architects who are able to communicate and transform organizations’ values. In
addition, Northouse (2004) defined transformational leadership as the leaders who engage
with followers in a cooperative effort to raise their level of motivation and morality. To sum
up, transformational leadership’s intention is to raise the consciousness of followers’
understanding of what is important, and tends to move followers to transcend their own
self-interest in favor of what is important to their organization (Bass and Avolio, 1994).
Transformational leadership theories suggested the importance of visionary goals,
ideological values, intellectual stimulation, symbolic behaviors and intellectual stimulation
(Yukl, 2002). Transformational leadership is highly relevant and ideally suitable to help
transform firms and individuals during lean system deployments (Bryman, 1992).
Sustainable leadership
The new kind of paradigm in leadership could be called SL. McCann and Holt (2011)
defined that the sustainability is concerning the creation of current and future profits for a
firm while improving the lives of all concerned. Meanwhile, Kiewiet and Vos (2007) stated
that the topic of SL is found in the business definitions of sustainability and it becomes
more influential in business today. The triple bottom line (TBL) perspective is the
prevailing idea when considering the notion of sustainability and SL. This concept focuses
on leadership in organizations on balancing people, profits and planet for a sustainable
future (Elkington, 1997).
Casserley and Critchley (2010) proposed that SL is characterized by three core processes,
i.e. learning through doing, having a clear sense of personal purpose and awareness of
personal assumptions and motivations and effective management of states and sufficient
self-care. Corresponding to Casserley and Critchley (2010), the first level of SL is a personal
level; therefore, several approaches develop organizational sustainability at the strategic
micro-level of leadership (Suriyankietkaew and Avery, 2014). First, the notion bases on
concepts of stakeholder relationship management and the TBL approach (Porter and
Kramer, 2011). Second, the concept comes from ethical leadership (Resick et al., 2006), which
associates with the significance of getting involved with business standards of ethical. The
final notion is derived from global research. Avery and Bergsteiner (2011) proposed the SL,
which is the balancing of people, profits and the planet to encourage continuance of an
organization through practices based on evidence management in the process embracing a
holistic approach toward organizational sustainability.
Lean manufacturing
Lean manufacturing or production is a strategy used to improve the manufacturing and
delivery of a product (to a customer’s expectation) by means of a purpose-designed facility
and process, utilizing an interconnected array of supply chains. Lean production is classified
by the academician community mostly into three levels. The first level associates with
wasted elimination from the production process (Ohno, 1988; Womack and Jones, 1996) and
IJQRM the efficiency to make the excellent quality products that can fulfill the need of final buyers.
36,6 For the second level, some researchers construe lean as a rule controlling production process
(Spear and Bowen, 1999). The final level is seen as a combination of techniques and means
(Hines et al., 1999; Shah and Ward, 2003; Basu, 2009) intended to remove waste.
The values, principles and techniques of lean are often presented as a house or a
temple, the foundation of which most often consists of the firm’s values. A number of
1018 values and principles have been identified by different researchers as the core of lean
(Liker, 2004; Womack and Jones, 2003; Emiliani, 2010). Five principles of lean were
presented by Womack and Jones (2003): specify customer value, identify the value stream,
manage the value stream, use a “pull” mechanism to support flow in the value stream and,
finally, when the other four principles are in place, the pursuit of perfection. Liker (2004)
illustrated lean through 14 principles separated into four parts of a pyramid, the “4P”
model, influenced by Toyota’s internal training document, the “Toyota Way.” In this
pyramid, the 4Ps are, from the bottom up, philosophy (long-term thinking), process
(eliminate waste), people and partners (respect, challenge and grow them) and problem
solving (continuous improvement and learning) (Liker, 2004). According to Emiliani
(2010), “real lean” is achieved in a firm when the two main values “continuous
improvement” and “respect for people” permeate the organization. Regarding well-known
study, Shah and Ward (2007) separated lean production into ten aspects, including
supplier feedback, just-in-time delivery by suppliers, supplier development, customer
involvement, pull system, continuous flow, set up time reduction, total productive/
preventive maintenance and employee involvement.
Sustainability performance
Since the expanding attention of all kinds of stakeholders in company activities in recent
rivalry situation, there have been crowded studies in area of corporate sustainability
performance evaluation. Firms are struggling to succeed long-term benefits by applying
sustainability activities as principal organizational strategy (Chabowski et al., 2011). The
firms, whose aim is outstandingly seen as being one of economic return, might be greater
readily excused for separately reporting voluntary sustainability assesses.
Takala and Pallab (2000) proposed that corporate sustainability performance generally
focuses on the environmental, social and economic performance of sustainable
development. Meanwhile, sustainability performance is described by Schaltegger and
Wagner (2006) as the performance of a firm in all aspects and for all corporate
sustainability drivers. Fiksel et al. (1999) mentioned that it extends beyond the single
organization boundaries and typically addresses the performance of both upstream
suppliers and downstream consumers in the value chain. To sum up, sustainability
performance involves performance related to: level of emission and natural resource
saving; other environmental activities and initiatives; employment features; occupational
health and safety; relationships with society and community; involvement of stakeholder;
and economic impacts of the organization other than those financial assesses applied in
the financial accounts. The previous study presents the scarcity of accountability for
environmental and social performance. Although there has been a gush of studies in
corporate sustainability performance evaluation area, there is still no concurred universal
guideline or standard. Generally, there are some measures commonly mentioned or
applied by companies in opting sustainability performance assesses.
Research methodology
As the GDP structure of Thailand in 2015 concerns, the service sector was still the most
important economic activity, followed by trade and maintenance, and the manufacturing
sector, accounting for 41.4, 29.4 and 22.1 percent, respectively. GDP of manufacturing sector
for the year 2015, categorized by sizes of SMEs, accounted for 1,225,919m baht or Thai SMEs
33.7 percent (Office of SMEs Promotion, 2016). The manufacturing industry is essential to manufacturing
Thailand’s economy. The main part of manufacturing industry consists of automotive and industry
automotive part, electric and electronics, chemical, petroleum and petrochemical, iron,
plastic, textile and garment shoes and leather, tire and rubber, food and beverage, paper and
publication, wood and furniture and cement industry (Office of the National Economic and
Social Development Board, 2015). 1019

The objectives of this study are to examine the structural relationship model among
transformational leadership, SL, lean manufacturing practices and sustainability performance,
to explore the relationship between transformational leadership and sustainability performance
through lean manufacturing, and to explore the relationship between SL and sustainability
performance through lean manufacturing in SMEs of Thai manufacturing industry. This study
contains seven research hypotheses:
H1. There is a positive relationship between transformational leadership and lean
manufacturing.
H2. There is a positive relationship between transformational leadership and
sustainability performance.
H3. There is a positive relationship between sustainable leadership and lean manufacturing.
H4. There is a positive relationship between sustainable leadership and sustainability
performance.
H5. There is a positive relationship between lean manufacturing and sustainability
performance.
H6. There is a mediate effect of transformational leadership on sustainability
performance through lean manufacturing.
H7. There is a mediate effect of sustainable leadership on sustainability performance
through lean manufacturing.
The study was investigated from May 2016 to October 2017, and the procedure of gathering
and analyzing data was from July 2016 to March 2017. Bentler and Chou (1987)
recommended that under theory of normal distribution, in order to obtain reasonable
significance tests, the proportion of sample size to amount of free parameters would be
preferred at 10:1 (Kline, 2015). Since the free parameter for this study equals 52, the lowest
sample size for this study is 520.
The study was conducted and accomplished by quantitative method together with
qualitative method. Considering quantitative approach, the study was conducted and
accomplished by using random sampling and snowball sampling from 598 current middle and
top managers working for 374 companies. The instrument is composed of five parts. The first
part is demographic information of respondents and information of the companies. The latter
two parts are transformational leadership which was created by Bass and Avolio (1997), and
SL which was created by Avery and Bergsteiner (2011). Next, lean manufacturing was created
by Shah and Ward (2007). The last part is sustainability performance separated into three
dimensions: operational performance scale taken from Rahman et al. (2010); financial
performance scale developed from Griffith et al. (2006), Wiklund and Shepherd (2005) and Hung
et al. (2010); and environmental and social performance developed from Global Reporting
Initiative (2014) index. The results were analyzed by descriptive statistics, confirmatory factor
analysis and the structural equation modeling by using statistical software programs.
The qualitative data were collect by three methods from 40 participants. First, the data
were collected by participant observation, whereby the researcher joined and worked as an
IJQRM employee at company A and company B for 15 days. Second, the data were collected by non-
36,6 participant observation in which the researcher walked and asked employees, and toured
around the production line from eight companies. Third, the data were collected from 30
participants by in-depth interview using semi-structure questions composed of four parts.
The first part is demographic information of the companies such as type of industry, age of
company, size of plant, number of employees and union representation. The second part is
1020 the current situation of lean implementation. The third part is the current situation of
leadership, relationship among leader and all company’s members, solving problem, team,
culture and innovation. The last part is the organizational success due to applying lean
practice and the overview and recommendations for manufacturing industry in Thailand.
For interviewing the initial participants, the researcher requested assistance from the initial
participants to assist in exploring participants with an identical attribute of attentiveness.
Content analysis was done by means of content analysis by three professionals from
industrial management and industrial engineer, working for advisor company, in order to
analyze the current situation and the problems, and to suggest solutions and guidance for
organizational success related to lean implementation.
Results
The 598 of total 1,740 questionnaires (response rate 34.4 percent) were obtained for analysis.
The majority of respondents were male (56.2 percent) of the age above 40 years old
(31.4 percent), factory/production manager (38.8 percent), bachelor’s degree (75.6 percent),
working in nonautomotive (63.9 percent) and company age above 15 years (46.2 percent).
Before conducting any statistical analysis, the rule of normal distribution of collected
responses should be tested. The skewness and kurtosis values, which evaluate the normal
distribution, should vary from −3 to +3 (Decarlo, 1997). The results showed that the skewness
values vary from −0.902 to 0.415, and the kurtosis values vary from −1.210 to 2.554.
Meanwhile, Pearson’s bivariate correlations of all relationships were significant. Thus, it could
be summarized that the normal distribution and linearity principle were accepted.
The χ2 is important statistics; however, a statistical significance test is responsive to the
sample size (Schermelleh-Engel and Moosbrugger, 2003; Byrne, 2010), which presents that
when the large samples are applied, the χ2 statistics almost always deny the framework
( Jöreskog and Sörbom, 1996; Kenny, 2015). Therefore, several academicians mentioned that a
framework could also be accepted if most of the fit indices report good evaluation results and
only a few quantities of indices are less than the lowest threshold (Browne and Cudeck, 1993;
Mueller, 1996). Although there are no well-established guidelines for what minimal conditions
constitute an adequate fit, some rules of thumb exist. Table I provides the minimum criterion
of reliability and validity analysis and Table II provides an overview over some rules of
thumb for goodness-of-fit indices. Table III presents reliability and validity of the instruments.
Initial model 1
Model fit testing
Although the finding of χ2 statistics of the proposed initial model 1 showed significance at the
0.05 level, the leftover results were higher than the minimum criteria displayed in Table IV.
Thus, it could be claimed that the structures of transformational leadership, lean
manufacturing and sustainability performance were reasonable to illustrate the
interrelationships among items and latent variables (Figures 1 and 2).
Direct effect testing

The value of t-test depicted in Table V, including the estimated value, standard error (SE),
critical ratio (CR) and p-value, indicates that there is a significant positive relationship
Analysis detail Threshold/minimum criterion
Thai SMEs
manufacturing
Reliability analysis industry
Cronbach’s α Above 0.70 (Nunnally and Bernstein, 1994)
Between 0.6 and 0.7 is acceptable (Hair et al., 2010)
Composite reliability Above 0.70 (Nunnally and Bernstein, 1994)
Between 0.6 and 0.7 is acceptable (Hair et al., 2010)
1021
Validity analysis
IOC Tested by minimum three raters, all items of questionnaire with the IOC score less
than 0.5 were eliminated (Rovinelli and Hambleton, 1977)
p-value p-value associated with each loading should be significant (Nunnally and
Bernstein, 1994; Awang, 2012)
Factor loading Above 0.6 (Nunnally and Bernstein, 1994)
Above 0.5 for a newly developed items and above 0.6 for an established items
(Awang, 2012)
Average variance Above 0.5 (Wang and Wang, 2012)
extracted (AVE) Above 0.4 is acceptable (Diamantopoulos and Siguaw, 2000)
Discriminant validity (DV ) AVE for each construct is greater than its shared variance with any other
construct (Bhattacherjee and Sanford, 2006) Table I.
or The minimum
Factor loadings of each item must be greater than the cross-loadings of items of criterion of reliability
other constructs (Bhattacherjee and Sanford, 2006) and validity analysis
Model fit
index Threshold/minimum criterion
χ or CMIN
2
Should not be significant at a 0.05 threshold ( p W0.05) (Schermelleh-Engel and Moosbrugger,
2003)
χ2/df or CMIN/ Should be less than 5.0 to judge the fitness of the model (Bentler, 1989; Awang, 2012)
df
CFI, IFI, TLI Should be greater than 0.9 to judge the good fit (Bentler and Bonett, 1980; Awang, 2012)
AGFI Should be greater than 0.90 to judge satisfactory fit (Hair et al., 2010; Awang, 2012)
AGFI of 0.8 is sometimes proposed as sufficient as recommended cut-off (Chau and Hu, 2001)
PGFI Should be greater than 0.5 to judge acceptable fit (Hair et al., 2010)
RMSEA Should be less than 0.05 to judge good fit, and between 0.05 and 0.08 to judge reasonable fit
(Schermelleh-Engel and Moosbrugger, 2003) Table II.
AIC Smaller than AIC for comparison model (Schermelleh-Engel and Moosbrugger, 2003) The minimum
CAIC Smaller than CAIC for comparison model (Schermelleh-Engel and Moosbrugger, 2003) criterion of model
ECVI Smaller than ECVI for comparison model (Schermelleh-Engel and Moosbrugger, 2003) fit indices
between transformational leadership and lean manufacturing, transformational leadership

and sustainability performance and lean manufacturing and sustainability performance.
Thus, it could be summarized that H1, H2 and H5 were supported.
Mediate effect testing

The competing model was to investigate the direct effect of transformational leadership on
lean manufacturing and sustainability performance, which is depicted in Figure 1.
Comparing the model fit statistics of the competing initial model 1 and the proposed initial
model 1, which is presented in Table IV, these results confirmed that the model fit statistics
of the proposed initial model 1 are greater than those of the competing initial model 1. Thus,
it could be asserted that the relationships among transformational leadership, lean
IJQRM manufacturing and sustainability performance are better described by an effect of
36,6 transformational leadership on sustainability performance through lean manufacturing.
Regarding the competing initial model 1, the standardized direct effect between
transformational leadership and sustainability performance was 0.691. In contrast, the
findings from the proposed initial model 1 revealed that standardized direct effect between
transformational leadership and sustainability performance was 0.374 while the
1022 standardized indirect effect was 0.294, and standardized total effect was 0.668. Since the
standardized direct effect of the proposed initial model 1 was less than that of the competing
initial model 1, it could be summarized that there is an effect of transformational leadership
on sustainability performance through lean manufacturing.
Cronbach’s Composite Average variance Highest Discriminant

Factor α reliability extracted (AVE) correlation2 validity (DV )
Table III. Transformational leadership 0.927 0.914 0.684 0.552 1.239

Results of reliability Sustainability leadership 0.962 0.922 0.798 0.653 1.222
and validity Lean manufacturing 0.919 0.914 0.543 0.533 1.018
measurement Sustainability performance 0.611 0.608 0.437 0.197 2.217
Model CMIN p-value df CMIN/df CFI IFI AGFI NFI TLI RMSEA
Competing model 533.573 0.000 98 5.445 0.931 0.932 0.863 0.917 0.916 0.086
Proposed model 459.054 0.000 97 4.733 0.943 0.943 0.878 0.929 0.929 0.079
Table IV. Model AIC BCC BIC CAIC
Model fit indexes of (default (default (default (default
the competing and the model) model) model) model)
proposed initial Competing model 609.573 611.801 776.529 814.529
model 1 Proposed model 537.054 539.340 708.404 747.404
TRANSFORMATIONAL
LEADERSHIP
Figure 1.
The competing of LEAN SUSTAINABILITY
initial model 1 MANUFACTURING PERFORMANCE
TRANSFORMATIONAL
LEADERSHIP
Figure 2.
The proposed LEAN SUSTAINABILITY
Due to the greater model fit statistics and the low level of the standardized direct effect, it Thai SMEs
could be summarized that H6 was supported (Table VI). manufacturing
Regarding the results in Table VII, the equations for the proposed initial model 1 were industry
constructed as follows:
d
Z Lean manufacturing ¼ 0:589 Transformational leadership: (1)
d performance ¼ 0:668 Transformational leadership

Z Sustainability
1023
þ0:499 Lean manufacturing: (2)
Moderate effect testing

Considering the moderate effect of automotive and nonautomotive industry, the χ2 of the
unconstrained was 752.719 and degree of freedom was 194, whereas the χ2 of the fully
constrained was 780.755 and degree of freedom was 210. The difference of the χ2 was 28.036
and degree of freedom was 16. The p-value was 0.031 which could summarize that the model
is different across type of industry. After checking each specific path, the results reported
that industry has moderate effect on the path from transformational leadership and lean
production at 95% confidence whereas industry has no moderate effect on the rest of all
path levels.
Considering the moderate effect of lean adoption less than five years comparing to more
than five years, the χ2 of the unconstrained was 671.728 and degree of freedom was 194,
whereas the χ2 of the fully constrained was 701.810 and degree of freedom was 210. The
difference of the χ2 was 39.082 and degree of freedom was 16. The p-value was 0.001 which
Estimate SE CR p-value
Table V.
H1: Transformational leadership → Lean manufacturing 0.940 0.072 13.105 *** Hypotheses testing
H2: Transformational leadership → Sustainability performance 0.386 0.060 6.422 *** results of the
H5: Lean manufacturing → Sustainability performance 0.323 0.038 8.417 *** proposed initial
Note: ***p-value o0.001 (at the significant level of 0.001) model 1
Standardized Standardized Standardized Table VI.

direct effect indirect effect total effect Standardized direct,
indirect and total
Transformational leadership → Lean manufacturing 0.606 0.000 0.606 effects of the competing
Transformational leadership → Sustainability performance 0.691 0.000 0.691 initial model 1
Standardized Standardized Standardized

direct effect indirect effect total effect
Transformational → Lean manufacturing 0.589 0.000 0.589 Table VII.

leadership Standardized direct,
H6: Transformational → Sustainability performance 0.374 0.294 0.668 indirect and total
leadership effects of the proposed
Lean manufacturing → Sustainability performance 0.499 0.000 0.499 initial model 1
IJQRM could confirm that the model is different across length of lean adoption on the structural
36,6 relationships. After checking each specific path, the results reported that the length of lean
adoption has no moderate effect on the all path levels.
Initial model 2
Model fit testing
1024 Although the finding of χ2 statistics of the proposed theoretical model showed significance
at the 0.05 level, the remaining results were higher than the minimum criteria displayed in
Table VIII. Thus, it could be claimed that the structures of SL, lean manufacturing and
sustainability performance were reasonable to illustrate the interrelationships among items
and latent variables (Figures 3 and 4).
Direct effect testing

The value of t-test depicted in Table IX, including the estimated value, SE, CR and
p-value, indicates that there is a significant positive relationship between SL and lean
manufacturing, SL and sustainability performance and lean manufacturing and sustainability
performance. Thus, it could be summarized that H3, H4 and H5 were supported.
Competing model 346.030 0.000 68 5.089 0.950 0.950 0.886 0.939 0.933 0.083
Proposed model 278.646 0.000 67 4.159 0.962 0.962 0.905 0.951 0.948 0.073
Table VIII. Model AIC BCC BIC CAIC
Model fit indexes of (default (default (default (default
the competing and the model) model) model) model)
proposed initial Competing model 420.030 421.937 582.593 619.593
model 2 Proposed model 354.646 356.604 521.602 559.602
SUSTAINABLE
LEADERSHIP
Figure 3.
SUSTAINABLE
LEADERSHIP
Figure 4.
The proposed initial LEAN SUSTAINABILITY
model 2 MANUFACTURING PERFORMANCE
Mediate effect testing Thai SMEs
The competing model was to investigate the direct effect of SL on lean manufacturing and manufacturing
sustainability performance, which is depicted in Figure 3. Comparing the model fit statistics industry
of the competing initial model 2 and the proposed initial model 2, which is presented in
Table VIII, these results confirmed that the model fit statistics of the proposed initial model
2 are greater than those of the competing initial model 2. Thus, it could be asserted that the
relationships among SL, lean manufacturing and sustainability performance are better 1025
described by an effect of SL on sustainability performance through lean manufacturing.
Regarding the competing initial model 2, the standardized direct effect between SL and
sustainability performance was 0.821. In contrast, the findings from the proposed initial
model 2 revealed that standardized direct effect between SL and sustainability performance
was 0.611 while the standardized indirect effect was 0.194, and standardized total effect was
0.806. Since the standardized direct effect of the proposed initial model 2 was less than that
of the competing initial model 2, it could be summarized that there is an effect of SL on
sustainability performance through lean manufacturing.
Due to the greater model fit statistics and the low level of the standardized direct effect, it
could be summarized that H7 was supported (Table X).
Regarding the results in Table XI, the equations for the proposed initial model 2 were
constructed as follows:
d
Z Lean manufacturing ¼ 0:493 Sustainable leadership: (3)
d performance ¼ 0:806 Sustainable leadership

Z Sustainability
þ0:394 Lean manufacturing: (4)
Estimate SE CR p-value
Table IX.
H3: Sustainable leadership → Lean manufacturing 0.587 0.052 11.311 *** Hypotheses testing
H4: Sustainable leadership → Sustainability performance 0.514 0.042 12.176 *** results of the
H5: Lean manufacturing → Sustainability performance 0.279 0.035 8.043 *** proposed initial
Note: ***p-value o0.001 (at the significant level of 0.001) model 2
Standardized Standardized Standardized Table X.

direct effect indirect effect total effect Standardized direct,
indirect and total
Sustainable leadership → Lean manufacturing 0.514 0.000 0.514 effects of the competing
Sustainable leadership → Sustainability performance 0.821 0.000 0.821 initial model 2

direct effect indirect effect total effect Table XI.
Standardized direct,
Sustainable leadership → Lean manufacturing 0.493 0.000 0.493 indirect and total
H7: Sustainable leadership → Sustainability performance 0.611 0.194 0.806 effects of the proposed
Lean manufacturing → Sustainability performance 0.394 0.000 0.394 initial model 2
IJQRM Moderate effect testing
36,6 Considering the moderate effect of automotive and nonautomotive industry, the χ2 of the
unconstrained was 526.975 and degree of freedom was 134. Meanwhile, the χ2 of the fully
constrained was 550.036 and degree of freedom was 148. The difference of the χ2 was 23.061
and degree of freedom was 14. The p-value was 0.059, which could summarize that the
structural model is not different across type of industry. After checking each specific path,
1026 the results reported that industry has no moderate effect on all path levels.
Considering the moderate effect of lean adoption less than five years compared to
more than five years, the χ2 of the unconstrained was 432.904 and degree of freedom was
134, whereas the χ2 of the fully constrained was 463.310 and degree of freedom was
148. The difference of the χ2 was 30.406 and degree of freedom was 14. The p-value was
0.007, which could confirm that the structural model is different across length of lean
adoption. After checking each specific path, the results reported that the length of lean
adoption has moderate effect on the path from SL and lean production at 99% confidence
whereas the length of lean adoption has no moderate effect on the rest of all path levels
(Figures 5 and 6).
Structural relationship model

Since transformational leadership and SL have some correlation and share some variance,
the suppression value is found in the structural model. After deleting the suppression and
insignificance, the revised model is illustrated in Figures 7 and 8. Although the finding of χ2
statistics of the revised proposed structural model showed significance at the 0.05 level, the
leftover results were higher than the minimum criteria displayed in Table IX. Thus, it could
be claimed that the structures of transformational, SL, lean manufacturing and
sustainability performance were reasonable to illustrate the interrelationships among
items and latent variables (Tables XII and XIII).
TRANSFORMATIONAL SUSTAINABLE
LEADERSHIP LEADERSHIP
Figure 5.
structural model MANUFACTURING PERFORMANCE
Figure 6.
The proposed LEAN SUSTAINABILITY
structural model MANUFACTURING PERFORMANCE
Regarding the results in Table XIV, the following equations for the revised proposed Thai SMEs
theoretical model were constructed: manufacturing
d industry
Z Lean manufacturing ¼ 0:586 Transformational leadership: (5)
d performance ¼ 0:408 Lean production þ0:591 Sustainable leadership

Z Sustainability 1027
þ 0:239 Transformational leadership: (6)
Figure 7.
LEAN SUSTAINABILITY The revised
MANUFACTURING PERFORMANCE competing model
Figure 8.
LEAN SUSTAINABILITY The revised proposed
MANUFACTURING PERFORMANCE structural model
Competing model 696.178 0.000 144 4.835 0.935 0.935 0.859 0.919 0.923 0.080
Proposed model 628.234 0.000 143 4.393 0.943 0.943 0.869 0.927 0.931 0.075
Model AIC BCC BIC CAIC Table XII.
(default (default (default (default Model fit indexes of
model) model) model) model) the revised competing
and the revised
Competing model 788.178 791.367 990.284 1,036.284
proposed model
Proposed model 722.234 725.493 928.733 975.733
Table XIII.
Standardized Standardized Standardized Standardized direct,
direct effect indirect effect total effect indirect and total
effects among factors of
Transformational leadership → Lean manufacturing 0.593 0.000 0.593 the revised competing
Sustainable leadership → Sustainability performance 0.809 0.000 0.809 structural model
IJQRM Qualitative results
36,6 Content analysis was done by means of content analysis by three experts, as shown in
Table XV and the details below.
Supplier feedback and involvements

Participants informed that the company pays some attention on supplier involvement,
1028 which is consistent with quantitative results. There are many reasons why the relationship
between company and suppliers is at low level and suppliers do not encourage just-in-time
policy. First, since material prices had been changing frequently depending on market
prices, purchasing in bulk raw materials resulted in a risk of loss from the price difference.
Second, materials for some industry such as plastic, garment and OEM industry had to be
ordered from suppliers which were determined by customers. Therefore, suppliers had high
level of bargaining power to ask maximum purchase volume, leading to high level of raw
material inventory. Third, raw material inventory for some industry such as electric and
electronic, automotive and garment industry was very high because the companies needed
to import raw materials from Germany, America and Japan, the process of which took a long
time for transportation. Therefore, the company selected to purchase raw materials in bulk
in order to avoid the shortage of materials.
Customer feedback and involvements

Participants informed that the company pays the most attention on customer involvement,
which is consistent with quantitative results. Customers are the most important for
organization success; therefore, companies need to operate well to meet customers’
requirements which include superior quality, reasonable cost and on-time delivery.
For instance, some companies measured performance based on cycle or takt time received
from customers. Defect rate for all industry was controlled by customer at 2–3 percent using
three stations of quality control points, i.e. incoming point, in-process point and
outgoing point. Some companies were evaluated and received certificate from customers.
Most participants work with Japanese customers who often visited manufacturing
production line.

Table XIV. direct effect indirect effect total effect
Standardized direct,
indirect and total Transformational leadership → Lean manufacturing 0.586 0.000 0.586
effects among factors Lean manufacturing → Sustainability performance 0.408 0.000 0.408
of the revised proposed Sustainable leadership → Sustainability performance 0.591 0.000 0.591
structural model Transformational leadership → Sustainability performance 0.000 0.239 0.239
Some Moderate Extensive/full

Lean dimension/situation details extent extent extent
Supplier feedback and involvements 28 11 1

Customer feedback and involvements 6 20 14
Process standardization and working instruction 11 20 9
Table XV. Employee feedback and involvements 27 11 2
Content analysis Leaderships, management skills, relationships, innovation 16 18 6
results from 3 experts Organizational success caused by lean implementation 31 7 2
Process standardization and work instruction Thai SMEs
Participants informed that the company pays the most attention on customer involvement, manufacturing
which is consistent with quantitative results. So, some companies, especially OEM industry
companies, must follow process and work instruction received from customers. In addition,
most of the companies were ISO 9001 qualified, guaranteeing the productivity control for all
processes by using work instructions.
1029
Employee feedback and involvements
Participants informed that the firm pays some attention on employee involvement, which is
consistent with quantitative results. Some managers informed that due to low educational
degree of their employees as well as most foreigner employees from Myanmar, Laos, Vietnam
and Cambodia, the managers do not trust and do not give them opportunity to exchange ideas
and potentials. In addition, SME companies operating in fierce competition with small number
of employees do not have enough resources to encourage lean implementation. Managers do
not pay more attention and explanations before launching lean program, which results in
misunderstanding with employees. Employees perceive lean practices as extra work without
extra pay. In addition, most companies are located in an area with many factories; thus,
employees have an opportunity to compare the compensation, welfare and benefits offered in
the companies nearby. Managers want to avoid problem from staff turnover rate; therefore,
they do not force employees much to join lean program.
Leadership skills
Most participants informed that they are proficient in technical skills, human and
communication skills but scarce in conceptual skills. Moreover, most participants informed
that they cannot work well in decision making and cannot be representative for their
company. In addition, most participants informed that due to low skill and dedication
employees, it is difficult to create teamwork, culture and innovation.
Organizational success
Participants informed that lean practices are appropriate for automotive industry despite
less attention and implementation in other industries. Two firms, getting TPS training
program from Thailand Automotive Institute, informed that full success is present in
electric and plastic industry. Due to full success, companies do not come from automotive
industry, which supports quantitative results that lean practices can be applied in any
industry. Most participants informed that they have some knowledge and skills associated
with lean practices; thus, they do not work well for lean implementation. Participants from
automotive industry informed that the firm has implemented lean program for long time;
however, the program fails due to the implementation without continuous and serious
policy. On the other hand, participants from nonautomotive industry informed that the firm
implements lean practices due to popular program but does not succeed due to the execution
in early stage.
Discussion
Discussion of findings
The finding fulfills the ambiguous knowledge about influence of leadership on lean
manufacturing and performance. According to the author’s knowledge, it is revealed for the
first time that the positive relationship between SL and lean manufacturing, lean
manufacturing and sustainability performance, and the partial mediate effect of lean
manufacturing on the relationship between SL and sustainability performance are the
additional contributions to research in academic field.
IJQRM Considering the structural relationships model, the result reported that transformational
36,6 leadership has effects on lean manufacturing whereas SL does not. These results confirmed
that transformational leadership can be viewed as a multidimensional leadership as well as
indistinguishable between transformational and SL (Peterlin et al., 2015), which asserted
that one leadership model is more appropriate for success within lean implementations
(Malin, 2010).
1030 Transformational leadership comprises idealized influence and charisma (strong role
models with high ethics), inspirational motivation (high team spirit and shared vision),
intellectual stimulation (stresses problem solving and creativity) and individualized
consideration (supportive climate and use of delegation). Meanwhile, SL comprises
foundation practices, higher-level practices and key performance drivers. First, foundation
practices are associated with technical, operational and human skill. Second, higher-level
practices are related to conceptual skill, team and culture building. Finally, key performance
drivers are associated with innovation and employee engagement building. Presently,
business cannot survive with only one skill such as technical, operational, human relationship
and conceptual skill; however, it requires combination of these skills. In addition, it requires
advanced technological, forefront innovation, quick adaptation as well as employee and all
supply chain members engagement (Achanga et al., 2006; Found and Harvey, 2007). These
characteristics are necessary factors to enhance the lean manufacturing, resulting in
sustainability performance (Chanegrih and Creusier, 2016).
Since lean production is the strategy which requires cooperation of all supply chain
members, internal lean manufacturing requires all employees’ involvement. Due to Thai
cultures concerning the respect to seniority, empathy and sociable society, leaders will have
high effect on lean success by persuading willingness of employees, coaching, training and
sharing ideas with their workers, which is the main factor to the success of lean practices.
This is consistent with the qualitative results, which confirmed that managers tend to give
advices and exchange ideas with their followers rather than inspiring and giving them
autonomous decision.
The quantitative results reported that the structural model is different between companies
which operate in automotive and nonautomotive companies, and the structural model is
different between companies which implemented lean program less than five years and above
five years. The path level results showed that the relationship between transformational
leadership and lean manufacturing is different in terms of industry type. Automotive
companies are familiar with lean practices for long time; thus, leaders can improve lean level
easier than nonautomotive ones, which implemented lean in early stage. This is consistent
with qualitative results. The managers informed that they realized that lean practices are
appropriate for automotive industry, though with less attention and implementation in other
industries. Transformational leaders encourage lean level by respecting employees and
customers. Heizer and Render (2014) proposed that lean production respects employees by
giving them the opportunity to enrich both jobs and their lives. Company recognizes that
employees know more about their jobs than anyone else. Employees are empowered to make
improvements. Lean production begins externally with a focus on the external customer
including end users and society. Understanding what the external customer wants and
ensuring their input and feedback are starting points for lean production. Lean operation
means identifying external customer value by analyzing all the activity required to produce
the product and then optimizing the entire process from the external customer’s perspective.
The qualitative results reported that two medium size companies informed that the full
success comes from electric and plastic industry. As fully successful companies do not come
from automotive industry, it supports the concept that lean can be applied in any industry,
any size or any place (Shah and Ward, 2003; Anand and Kodali, 2008). However, each sector
has unique cultural challenges which affect the success factors of any lean implementation.
The first thing to do before launching lean program to all process is that the company should Thai SMEs
buy-in the understanding of managers about lean concept and implementation. Willingness manufacturing
with well understanding and realizing importance of lean program will lead to superior industry
results, especially operational (Marynell, 2013; Chanegrih and Creusier, 2016), economic (Hong
et al., 2014) and environmental and social performance (Curkovic et al., 2000).
Even though the concept of SL and environmental and social performance is novel, the
reliability and validity measurements confirmed that both of them are appropriate for all 1031
companies and all manufacturing industries. This is consistent with Gurr (2007), who
proposed that SL takes into deliberation a comprehensive scope of complex interconnections
among personals, the business community, worldwide demands and the natural environment,
with the essential objective that a company accomplishes well-being by concerning social
values, obtaining success in long term based on strategic decision-making value and
preservation of the ecosystem, of which we all form an integral part. In addition, SL creates
communities, encourages cooperation among stakeholders and fosters value in long term. The
relevance of SL for chargeable strategic decision making in sustainable companies is obvious
in the method it directs the sustainable leaders’ attentions with regard to four fields of
deliberation when making decisions. It requires that top executives adopt a macro view of the
company (Avery and Bergsteiner, 2011) because sustainability associates with a various
dimensions of development and performance (Casserley and Critchley, 2010): on an individual
level: keeping physical and individual psychological health; at the business level: keeping a
workplace surrounding that permits workers to improve manifold knowledge with the goal of
accomplishing the company’s purposes, which are linked up with the goals of stakeholders; at
the social level: socially responsible handling in the broader community; and on the ecological
level: preservation and sustainable environmental change.
Managerial implication
The findings provide some implications for the practitioners and entrepreneurs. The results
show that lean manufacturing will result in high level of both operational and financial
performance, which is worth paying more attention. In addition, Thai managers tend to
understand that lean manufacturing is suitable for only automotive industry. Nevertheless,
the results confirmed that it can be applied for any manufacturing as well as any company
size. Moreover, at present, there are many studies asserting that it can also be applied in
service industry. Successful lean production requires serious cooperation and attentions of
all employees across company; thus, managers should create the good two-way relationship,
sharing, caring, bottom-up communication and free-rein culture with their employees.
Effective supply chain management is imperative by close communications and relations
with suppliers, distributors and customers.
Suggestions for future research

The results offer several implications for scholarly researchers. First, due to the scarce studies
of SL and sustainability performance, the future study should augment knowledge by
investigating the antecedent and consequence of these two variables. Second, the literature on
leadership paradigms, organizational performance and corporate sustainability, and key
mediating variables, particularly shared vision and values, self-leadership, an organizational
team orientation and consensual decision making, affecting their relationships, should be
examined. Third, the initial model reported that there were relationships between SL and lean
manufacturing, and the relationships between transformational leadership and sustainability
performance, but there was no relationship once considering the full structural model. Thus,
the future research should focus on the other influences or interventions that have mediate or
moderate effect on complex model. Fourth, since leadership has effect on lean practices
resulted in higher performance; thus, the future study should be focused more on effect of
IJQRM other type of leadership such as servant, situational and transactional leadership. Fifth, the
36,6 results explain the SME manufacturing in Thailand; thus, the future study should be focused
on other industry, international or multinational corporations. Finally, the successful lean
production required cooperation across all members of supply chain, which takes time; thus, it
requires longitudinal studies.
1032 Limitations
There are some expected potential limitations. First, the effect of external factors may
involve transformational leadership, SL, lean manufacturing and sustainability
performance, such as political issues, macroeconomics, microeconomics and economic
crisis. Second, as the study applied self-report and cross-sectional data, the summarizations
could not only make causal extrapolations but also increase some concerns about common
bias. Therefore, a study in long term is required to offer greater definitive summarization.
Third, the results explain the small and medium manufacturing firms’ situations and
activities which may not be corresponding with the service companies as well as large
companies. Finally, the results describe situations and activities of firms operating in
Thailand, which may not be compatible with international and multinational corporations.
Conclusion
This study fulfills the vague knowledge by confirming the relationships among
transformational leadership, SL, lean manufacturing and sustainability performance. In
addition, this study augments the comprehension that lean manufacturing can be applied in
any industry. Accomplished lean implementation requires serious and much attention from all
members across company, suppliers, distributors and customers. Successful lean managers
need insight comprehension about lean concept and implementation before persuading their
employees to do with higher willingness and cooperation. Referring to the scarcity of lean
manufacturing success at present time (Pay, 2006), it is likely to be a challenge for the future
research to explore antecedent, consequent and intervention factors, which will result in
superior understanding of the lean production notions and utilizations. Successful lean
implementation will generate better financial outcomes and lower cost thanks to the
willingness of all employees and efficient processes which lead to all of sustainable
competitiveness, including operational, financial, social and environmental performance.
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Corresponding author
Piyachat Burawat can be contacted at: piyachat_b@rmutt.ac.th
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1016 cohort (Peterlin et al., 2015).

Social Development Board, 2015). 1019

Direct effect testing

between transformational leadership and lean manufacturing, transformational leadership

Mediate effect testing

Cronbach’s Composite Average variance Highest Discriminant

Table III. Transformational leadership 0.927 0.914 0.684 0.552 1.239

d performance ¼ 0:668 Transformational leadership

þ0:499 Lean manufacturing: (2)

Moderate effect testing

Standardized Standardized Standardized Table VI.

Standardized Standardized Standardized

Transformational → Lean manufacturing 0.589 0.000 0.589 Table VII.

Direct effect testing

d performance ¼ 0:806 Sustainable leadership

Standardized Standardized Standardized Table X.

Standardized Standardized Standardized

Structural relationship model

d performance ¼ 0:408 Lean production þ0:591 Sustainable leadership

Supplier feedback and involvements

Customer feedback and involvements

Standardized Standardized Standardized

Some Moderate Extensive/full

Supplier feedback and involvements 28 11 1

Suggestions for future research

September 10-11, pp. 430-439. 1035

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