Transformational Leadership and Innovation: Direct and Indirect Effects


L.I.F.E. Learning Is Fun Every day. All of us learn every day, and most of the time learning is fun experience. That is why, I have named my blog L.I.F.E. I have also published my posts about creativity, talent, creative potential, innovation and creative culture here on LinkedIn. Recently, I have been studying and researching about transformational leadership and innovation. This post is actually a “Thank You Note” to my LinkedIn connections who have been very kind to answer the survey questionnaire which I have sent to them. By using the collected data, we have written an empirical article which has been published in the International Journal of Business and Management by the Canadian Center of Science and Education. The three parts that I would like to share with you are abstract, discussion and implications for management.

This study aims to examine the influence of transformational leadership on organizational through the mediating effect of organizational learning and knowledge management in Turkish HR consulting companies. Sample is selected from small, medium size and large HR consulting companies located in Istanbul. Structural equation modeling and bootstrapping is used for data analysis. The research findings indicated that transformational leadership did not directly affect organizational innovation; transformational leadership directly affected organizational learning and knowledge management, and organizational learning directly impacted knowledge management. Besides, knowledge management directly affected organizational innovation, yet organizational learning indirectly influenced organizational innovation. Finally, transformational leadership indirectly influenced organizational innovation through the intervening effect of organizational learning and knowledge management.

The major contribution of this research was the empirical examination of the proposed research model on HR consulting companies in Turkey. The key finding of this research is that the transformational leadership does not directly influence organizational innovation. In other words, leaders who practice the transformational leadership style will not be able to make their organizations innovative only by being transformational leaders. In addition, it was proposed that the transformational leadership was significantly correlated to organizational learning, so it was confirmed that transformational leadership supports to the improvement of organizational learning. The study provided an opportunity to expose a comprehensive depiction of leaders’ role in aiding organizational learning. As argued in the literature, transformational leaders are strategic in creating environment that stimulates the organizational learning.

As discussed in the literature, our research also showed that transformational leadership and knowledge management were related. Consequently, it can be concluded that transformational leaders converse a shared vision and build a favorable social environment which can advise followers to involve in a greater amount of knowledge management activities. In other words, leaders who practice transformational leadership style offer information, stimulus and skills for followers in obtaining, sharing, keeping and applying knowledge. However, organizational learning did not lead to organizational innovation. Stated differently, the organizational learning which is an outcome of transformational leadership is not enough for organizational innovation. This finding is not consistent with the findings in the literature. Actually, organizational learning turned into organizational knowledge is useful for organizational innovation, so it might be useful to investigate knowledge management as the moderating effect in the connection between organizational learning and innovation.

The empirical model demonstrated that knowledge management has a link with organizational innovation. This finding is in accordance with some of the results discussed in the literature, so it should be seriously considered that knowledge management is a vital antecedent of organizational innovation. Hence, by spreading over knowledge management strategies it might be possible to enable the formation of innovative organizational outcomes. Another important contribution of this research is the finding that organizational learning influences knowledge management. Turkish HR consulting companies which are successful in organizational learning are more likely to succeed in allocating, implementing and managing knowledge.

The last major contribution of this study is the finding shows that transformational leadership indirectly impacts organizational innovation through learning and knowledge management in HR consulting companies. Thus, organizational learning and knowledge management are like a channel that connects transformational leadership and innovation, so leaders should be aware that knowledge management and organizational learning are critical strategic aspects of organizational innovation. In other words, it should be emphasized that transformational leaders should not overlook the knowledge management and learning; otherwise they will not be able to directly advance organizational innovation.
Implications for Management

This study offered some advice to help leaders to comprehend how to manage knowledge management and learning to influence innovation within their organizations. Thus, the findings of this research have quite a few management implications. First of all, the research reveals the significance of transformational leadership in cultivating knowledge management. It recommends that companies have to promote transformational leadership style, and leaders should practice the transformational leadership style since it affects organizational knowledge management. Transformational leadership that supports knowledge management can lead to organizational innovation. Shortly, transformational leadership empowers employees and companies to use knowledge so as to build the crucial capabilities essential for innovation.

Secondly, this research shows that transformational leadership is a critical element for learning and innovation within an organization. Therefore, managers should be skillful in engaging in transformational leadership behaviors so that they can enhance organizational learning and organizational innovation. Managers have to concentrate on creating a learning context that is fruitful for collective learning and innovation because innovation can only occur when resources are devoted to innovation and when innovative ideas and behaviors are supported. Finally, research findings reveal that transformational leadership indirectly impacts organizational innovation through organizational learning and knowledge management that are mediating the link between transformational leadership and innovation in an organization.

As a result, it should be underlined that if leaders who practice the transformational style of leading overlook knowledge management and learning, these leaders cannot directly enhance innovation. In order to increase organizational innovation, leaders have to use the transformational leadership and apply the intervening effect of knowledge management and organizational learning. All in all, this research helps managers to better comprehend how to implement transformational leadership to increase organizational innovation through organizational learning and knowledge management and their mediating effect.

If you want to read the whole article, you can reach it via this link.

(Posted also on LinkedIn Pulse)

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