Sustainability 2021, 13, 7981. https://doi.org/10.3390/su13147981 www.mdpi.com/journal/sustainability Article The Effects of Transformational Leadership on Organizational Performance: Testing the Mediating Effects of Knowledge Management Mahmut Kılıç 1, * and Orhan Uludağ 2 1 Business Management, Cyprus International University, 99258 Nicosia, Turkey 2 School of Tourism and Hotel Management, Cyprus International University, 99258 Nicosia, Turkey; ouludag@ciu.edu.tr * Correspondence: 21711397@student.ciu.edu.tr Abstract: Transformational leadership is a sustainable and exemplary form of leadership that lib- erates subordinates’ ideas, enables subordinates to view problems from a different perspective, helps adaptation to changing environments, and increases Human Resources Management effec- tiveness in public and service institutions. The effects of transformational leadership on organiza- tional performance by means of knowledge management have been examined in this study on the northern Cyprus Security Forces. In addition, the study aims to analyze the relationships between transformational leadership, knowledge management, organizational performance, job satisfac- tion, organizational learning, and knowledge creation processes. The questionnaire was conducted in three different periods using a time-lag method, and data were collected from 1229 employees for this study. The collected data were analyzed using structural equation modeling (Lisrel 8.54). The findings of the research include 17 hypotheses that were supported, and 1 hypothesis that was not. In addition, it was determined that organizational learning, knowledge management, and job satisfaction mediate the effect of transformational leadership on organizational performance. Keywords: transformational leadership (TL); knowledge management (KM); organizational performance (OP); job satisfaction (JS); organizational learning (OL); knowledge creation process (KCP) 1. Introduction It is widely recognized that sustainable organizational development and perfor- mance are significant issues in both private and public organizations. Developments in knowledge management have also increased organizational learning and enabled or- ganizations to develop [1]. Transformational leadership places emphasis on subordi- nates’ values, considerations, and emotions, as it encourages organizational creativity. Employees with the most value are the resources of organizations and leaders that can boost sustainable productivity by taking responsibility and ensuring professional de- velopment [2–4]. Transformational leaders have charisma, increase subordinates’ intel- lectual stimulation, and are inspirational [2,3]. Therefore, the main objective of this research was to determine the effects of per- ceived transformational leadership behaviors in military public institutions on sustaina- ble organizational performance. Additionally, the research aimed to explain the rela- tionships between transformational leadership, knowledge creation processes, organiza- tional learning, job satisfaction, knowledge management, and organizational perfor- mance. The military institution was specifically selected for this research. One reason for this is that leadership is an important issue for sustainable and efficient personnel man- agement in military institutions. In addition, the breadth of the fields of operation in Citation: Kılıç, M.; Uludağ, O. The Effects of Transformational Leadership on Organizational Performance: Testing the Mediating Effects of Knowledge Management. Sustainability 2021, 13, 7981. https://doi.org/10.3390/su13147981 Academic Editors: Huseyin Arasli, Trude Furunes and Hasan Evrim Arici Received: 22 June 2021 Accepted: 15 July 2021 Published: 16 July 2021 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Copyright: © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses /by/4.0/).