A review of the article of “transformational leadership, innovation capacity and management accounting systems usage" with the argument model and the Socratic Method for advanced management accounting students

A review of the article of “transformational leadership, innovation capacity and management accounting systems usage" with the argument model and the Socratic Method for advanced management accounting students

 

How to describe the article in Harvard reference format?

Tran, Y.T., Chau, T.H.P. & Pham, Q.T., 2025. Transformational leadership and firm performance: The mediating roles of innovation capacity and management accounting systems usage. Sustainable Futures, 10, p.100988. Available at: https://doi.org/10.1016/j.sftr.2025.100988 [Accessed date].

 

Highlight the main research issues and research objectives, 2 main academic theories used and the main research methods used in this article.

The main research issues, research objectives, academic theories used, and research methods in the article are as follows:

Main Research Issues:

• The impact of transformational leadership (TL) on firm performance remains controversial.
• The mediating mechanisms between TL and firm performance, specifically the roles of innovation capacity and management accounting systems (MAS) usage, have not been thoroughly examined, especially in transition markets like Vietnam.

Research Objectives:

• To enhance understanding of the effects of transformational leadership on firm performance.
• To examine both the direct and indirect effects of transformational leadership on firm performance.
• To investigate the mediating roles of innovation capacity and MAS usage in the relationship between transformational leadership and firm performance within Vietnamese companies, a transition market context.

Two Main Academic Theories Used:

1.    Transformational Leadership Theory: Used to conceptualize how TL influences organizational outcomes through inspiring employees, fostering innovation, and creating adaptive organizational cultures.

2.    Resource-Based Theory: Applied to examine how internal resources like innovation capacity and management accounting systems contribute to firm performance as mediators in the TL-performance relationship.

Main Research Methods:

• Survey data collection from 285 Vietnamese business organizations including accountants, mid-level managers, and top managers.
• Data collected in two stages with a time gap of two months to reduce common method bias.
• Use of a quantitative approach with structured questionnaires measuring TL, innovation capability, MAS usage, and firm performance.
• Analysis conducted using partial least squares-structural equation modeling (PLS-SEM) via SmartPLS3 software to test the research model and hypotheses.

 

Describe 2 main empirical findings of the article.

Two main empirical findings of the article are:

1.    No Direct Effect of Transformational Leadership on Firm Performance: The study found that transformational leadership (TL) does not have a direct significant impact on firm performance in Vietnamese enterprises (β = 0.00; t-value = 0.04; confidence interval contains zero).

2.    Significant Indirect Effects via Innovation Capacity and MAS Usage: TL positively affects firm performance indirectly through the mediating roles of innovation capability and management accounting systems (MAS) usage. Specifically, innovation capability mediates the relationship between TL and firm performance (β = 0.28; t-value = 6.28), MAS usage also mediates this relationship (β = 0.09; t-value = 3.30), and together, innovation capability and MAS usage sequentially mediate the impact of TL on firm performance (β = 0.07; t-value = 3.58).

These findings highlight that TL enhances firm performance by fostering innovation capability and encouraging the use of MAS rather than exerting a direct effect.

 

Describe 3 main claims of the article in terms of Toulmin's model of argument and then provide a critical review of the article using the Socratic Method.

Below are three main claims of the article mapped to Toulmin's model of argument—comprising Claim, Data, and Warrant — followed by a critical review using the Socratic Method.

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Three Main Claims via Toulmin’s Model

Claim 1: Transformational leadership does not directly affect firm performance.

• Data: Survey data from 285 Vietnamese firms analyzed via PLS-SEM shows the direct path between TL and firm performance is statistically insignificant (β = 0.00; t-value = 0.04; confidence interval includes zero).
• Warrant: Empirical evidence from the analysis justifies that the lack of a direct statistically significant relationship invalidates claims of direct TL impact on firm performance.

Claim 2: Innovation capability mediates the relationship between transformational leadership and firm performance.

• Data: Data show a strong positive relationship between TL and innovation capability and subsequent influence on performance, with significant mediation effects (β = 0.28; t-value = 6.28).
• Warrant: Resource-based theory and empirical findings support that innovation capability acts as a key organizational resource influenced by TL which improves firm performance.

Claim 3: Management Accounting Systems (MAS) usage, including its sequential mediation with innovation capability, significantly mediates the impact of TL on firm performance.

• Data: The study found that MAS usage mediates the TL-firm performance link (β = 0.09; t-value = 3.30), and sequential mediation via innovation capacity and MAS usage is also significant (β = 0.07; t-value = 3.58).
• Warrant: The resource-based view and information requirements for innovation justify that MAS usage is an essential organizational capability that transformational leaders promote to improve performance.

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Critical Review Using the Socratic Method (Asking Probing Questions)

Q1: How confident can we be that transformational leadership has no direct effect on firm performance?

• What if the sample size or context limits detecting a direct effect? The authors note a sample of 285 Vietnamese firms using convenience sampling, which may affect generalizability.
• Could measurement or self-report bias have obscured the direct effects? The study tried to reduce CMV but used single respondents per firm, which raises subjectivity concerns.

Q2: Is the mediating role of innovation capability robust across different contexts?

• Does innovation capability always mediate TL's effect in other cultural or industry contexts beyond Vietnamese SMEs? The study is context-specific to transition markets.
• Could other unmeasured mediators or moderators—like organizational culture or external market conditions—also influence the relationship?

Q3: How practically useful is emphasizing MAS usage as a mediator?

• Are all firms equally capable of implementing or benefiting from MAS, or do resource constraints limit MAS adoption in developing markets?
• Might there be different types or qualities of MAS not captured by the measures, influencing how MAS contributes to performance?

Q4: Does the cross-sectional design adequately support causal claims?

• Given the cross-sectional nature and self-reported data, can we confidently infer causality or the direction of relationships among TL, innovation, MAS, and performance?
• Would a longitudinal design provide stronger evidence of the dynamic influences the authors suggest?

Q5: How might the researchers address limitations in future work?

• The authors suggest larger, random samples and multiple respondents from each firm to reduce bias.
• Could experimental or quasi-experimental designs clarify causality more effectively?
• Are there other leadership styles or additional mediators worthy of investigation to deepen understanding?

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Summary of Critical Review

The article makes important claims about the indirect effects of transformational leadership on firm performance through innovation capability and MAS usage, supported by empirical data and theoretical frameworks. However, issues such as sample representativeness, reliance on single respondents, contextual specificity, and cross-sectional design limit the certainty and generalizability of conclusions. Future research with more rigorous designs and broader contexts is needed to confirm and extend these findings.

 

Describe 2 main research limitations of the article.

The article identifies the following two main research limitations:

1.    Sampling Method and Sample Size: The study used a convenience sampling method with a relatively small sample size of 285 enterprises in Vietnam, which limits the generalizability of the findings to the broader population of Vietnamese firms or firms in other contexts. The authors recommend future research to use larger, more representative samples with random sampling methods to enhance external validity.

2.    Use of Single Respondent Data and Potential Common Method Variance (CMV): The research relied on perceptions from a single representative per firm to measure transformational leadership, innovation capability, MAS usage, and firm performance, leading to possible subjectivity bias and common method variance concerns. Although statistical tests (e.g., Harman’s single-factor test and CLF approach) were used to address CMV, the authors suggest that future studies employ multiple respondents per firm or additional methods such as marker variables to strengthen reliability