Exploring the Effect of Knowledge and Leadership on Firm Performance in RMG Sector of Bangladesh

Abstract

The Ready-Made Garment (RMG) sector is a cornerstone of Bangladesh’s economy, contributing significantly to employment and export earnings. This study investigates the connection between Knowledge Management Practices (KMP), Transformational Leadership (TL), and Employee Learning Ability (ELA) in driving Firm Performance (FP) within the RMG industry. Using Partial Least Squares Structural Equation Modeling (PLS-SEM), data from 145 RMG firms were analyzed to explore how KMP and TL influence FP, with ELA acting as a mediator. The findings reveal that KMP and TL significantly enhance FP, with ELA playing a significant mediating role. Specifically, KMP positively impacts FP and ELA, while TL directly boosts both FP and ELA. ELA, in turn, strongly influences FP, highlighting its role as a bridge between KMP, TL, and FP. These results align with the Resource-Based View (RBV) theory, emphasizing the strategic importance of internal resources like knowledge, leadership, and employee capabilities in achieving competitive advantage. The study underscores the need for RMG firms to invest in KMP and TL to adopt a culture of continuous learning and innovation, thereby enhancing organizational performance. By addressing gaps in existing literature, this research provides actionable insights for RMG firms aiming to navigate the challenges of a rapidly evolving global market.