The Relationship Between Transformational Leadership and Human Capital Development: The Mediating Effect of Knowledge Management and Organizational Culture

Human capital development is one of the most important enablers for any organization to achieving a sustainable competitive advantage. Thus, organisations are interested in adopting various initiatives and mechanisms to support the development of human capital, such as transformational leadership style, knowledge management practices and building organisational culture. This study intends to examine the mediating effect of knowledge management and organisational culture on the relationships between transformational leadership and human capital development in the Abu Dhabi emirate. This study used a structured questionnaire to collect data from a large sample of employees drawn from government and semi-government entities in the Abu Dhabi Emirate. The questionnaire consists of two parts. The inquiries of the first part based on Bass and Avolio\u27s (1995) MLQ Fonn 5x-Short to measure and identify the leadership factors incorporated in their model. The inquiries of the second part investigated the various aspects of knowledge management and organisational culture, which might have significant effects on human capital development in an organisation. The human capital development as perceived by respondents is also measured using a separate scale. The quantitative analysis of the questionnaire data was conducted to examine the factor structure of the variables measured, whereas the structural equation model (SEM) estimation tested the hypotheses of the study. The generated results of this study revealed that transformational leadership as perceived by respondents has positive effects on the human capital development of subordinates. The findings also indicated knowledge management and organisational culture partially mediated the relationship between transformational leadership and the human capital development. The implications of the study findings on theory, practices, and policymaking are providing a roadmap to organisations to put much concern on developing leadership and boosting human capital development in the UAE and similar contexts