The Mediating Role of Enterprise Risk Management in the Relation Between Transformational Leadership and Non-financial Performance: A Study in the Not-for-Profit Sector

It is well recognized that transformational leadership can have a positive effect on organizational performance. However, further research into the intermediate processes through which this positive effect occurs is needed, especially in the not-for-profit (NFP) sector. This study proposes a model within which enterprise risk management (ERM) maturity is an important variable intervening in the relation between transformational leadership and NFPs’ non-financial performance, specifically internal process performance, employee performance and client performance. Using survey data from 322 Australian NFPs, it was found that ERM maturity mediates the relations between transformational leadership and the three non-financial performance outcomes. The study has both theoretical implications for research and practical implications for NFP managers in fashioning their leadership style and designing their organizational processes to better manage risk within their organizations.