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The pressures of the global economy inspire leaders to reshape organisational resources to improve performance. This study explores transformational leaders’ core competencies for improving use of firms’ internal resources by influencing knowledge management practices. The analytical framework is based on a review of leadership and knowledge management literature and the integration of concepts from social capital theory and the resource-based view and knowledge-based view of the firm. Results of this thesis indicate that to improve knowledge management, transformational leaders act as change agents who better deploy internal resources. This better use of internal resources mediates the relationship between transformational leadership and knowledge management. The study contributes to knowledge by exploring a framework upon which to continue developing more comprehensive understandings of the relationships between transformational leadership, knowledge management, firms’ internal resources, and organisational performance. Finally, these findings contribute to practice by identifying the ways in which to build a high-performing organisation through transformational leadership and knowledge management.