The effect of leadership on the innovation and organizational performance of employees : A survey within technical sector companies

Abstract: Background: At present, the level of globalisation in technological companies requires them to incorporate innovation to retain their position and move forward and grow. In this direction, a successful leader can prove beneficial in order to help the company evolve and flourish. A leader capable of boosting an innovative spirit among the employees and motivate them to strive for the welfare of the organisation can result in increased organisational performance. This terms are not separate from each other. Leadership, employee motivation, innovative spirit and organisational performance are interconnected and they constitute key elements for ensuring the positive future of every company.Objectives: The present study aims at investigating whether and how participative leadership and transactional leadership can affect the innovation and motivation of employees and by extension whether they can affect the organisational performance. Methodology: This thesis utilises a quantitative approach for data collection and data analysis. A structural equation model (SEM) has been created for the investigation. Employees of tech companies in Sweden and Belgium have been requested to answer an online questionnaire using Google forms. The employees of the companies hold different positions, educational backgrounds and professional experience. A total of 200 answers has been collected and analysed using STATA software both quantitatively and qualitatively. Results: The results of the present study showed that there is a strong relationship with transactional leader with regards to stimulating the motivation of employees along with their innovative spirit. This can by extension result in improving organisational performance. Conclusions: The thesis showed that a common leadership style in tech companies, transactional leadership, can contribute in engaging employees to demonstrate a rather innovative attitude, be motivated and improve significantly organisational performance. The effect of transactional leadership needs to be directed through goals and rewards that increase motivation and innovation to have a positive impact on organisational performance, wrong goals and rewards can instead be seen as having a negative impact. Recommendations for future research: Future work could be focused on applying the present model in different sectors and industries. In addition, different leadership styles could be examined that are more fitting to the industry under investigation. Finally, applying the current model in different or broader sample or adding different constructs could be a rather interesting starting point for future research.