Abstract
This study examines the relationships between organizational learning culture, strategic human resource management (SHRM) practices, and transformational leadership and organizational innovation, as well as the relationship between organizational innovation and organizational performance in micro, small, and medium enterprises (MSMEs). The study also examines the moderating role of transformational leadership in the relationships among organizational learning culture, SHRM practices, and organizational innovation. This quantitative explanatory study used a cross-sectional survey design and primary data collected from 150 MSME employees in Southeast Sulawesi, Indonesia. Employees assessed all constructs based on their perceptions of organizational conditions and outcomes within their respective MSMEs. We analyzed the data using partial least squares structural equation modeling (PLS-SEM) in SmartPLS, including measurement-model assessment, structural-model assessment, and nonparametric bootstrapping to test direct and interaction effects. The results show that organizational learning culture and SHRM practices are not significantly associated with organizational innovation, whereas transformational leadership is strongly and significantly associated with organizational innovation. Organizational innovation is positively and significantly associated with organizational performance. Transformational leadership does not significantly moderate the relationship between organizational learning culture and organizational innovation, but it positively and significantly strengthens the relationship between SHRM practices and organizational innovation. These findings indicate that learning-oriented values and HR practices do not automatically translate into organizational innovation in MSMEs. Their effectiveness may depend on leadership that provides direction, encourages employees to apply their capabilities, and links internal organizational systems to innovation priorities. The study contributes to the literature by offering a moderated capability-conversion perspective in which transformational leadership directly supports organizational innovation and enhances the innovation value of strategically aligned HR practices. Practically, MSMEs should strengthen transformational leadership and ensure HR practices align with innovation objectives to improve innovation implementation and organizational performance.