The purpose of the present study is to investigate the mutual relationship between transformational leadership and knowledge management as well the potential effects of a transformational leader on his or her followers. In this paper, we review the role of transformational leadership in effective knowledge management and establish the emerging role of transformational leadership, as an ideal leadership style in building knowledge-based companies to achieve a higher degree of competitive advantage. The findings in this article are based upon previous empirical studies that illustrate the formulation of several propositions that contribute to the knowledge management processes. Our findings are based upon possible scenarios that impact transformational leadership and knowledge management using grounded theoretical research. Research limitations are twofold. One limitation is found in the prior literature indicating that past studies have posited that companies might lack the required capabilities or decide to decline from interacting with other companies (Caldwell & Ancona 1988), or even distrust sharing their knowledge (Kraut & Streeter 1995). And, second, our contribution to the literature lies in presenting a link between knowledge management and transformational leadership that incorporates the knowledge management processes that may impact the effectiveness of transformational leaders to enhance their capabilities to effectively play their roles within companies. In addition, managerial applications that may support knowledge management processes are proposed further research is necessary to finalise conclusions. The original value of this research provides an impetus of mutual interaction of knowledge management and transformational leadership.

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