Examining the effect of leadership styles on organizational innovation in high-tech industry.

Abstract: Purpose: While it is commonly accepted that organizational innovation is vital for organizations‘ sustainability and competitive advantage, existing literature has not fully determined the relationship between different types of leadership and organizational innovation. The purpose of this study is to seek how transformational and transactional leadership behaviors influence organizational innovation and further examine the moderating role of empowerment. Methodology: The authors collected data from surveying senior and middle level managers from the four largest organizations in Greek telecommunication industry. The data collected were analyzed via regression analysis and the results were compared to the findings of existing literature and studies. Findings: The empirical findings validate that both transformational leadership and transactional leadership positively influence organizational innovation. Additional evidence highlights the importance of specific leadership components, inspirational motivation and contingent reward, in pursuing organizational innovation. Moreover, the results indicate a plausible moderating role of empowerment in the relationship of organizational innovation with both leadership styles. Originality /value: This study contributes to organizational innovation literature by finding that both transformational and transactional leadership can promote organizational innovation even in organizations operating in dynamic environments. Combining and balancing the different characteristics of transformational and transactional leadership can help leaders enhance their follower‘s behaviors towards an innovation-oriented strategy, even in large and mature organizations.