Towards Understanding the Direct and Indirect Effects of Transformational Leadership on Firm Innovation
40 Pages Posted: 31 Jul 2006
Date Written: July 31, 2006
This study seeks to advance understanding of how transformational leadership by top executives can affect their companies' innovativeness. A holistic model is proposed that includes both direct effects from transformational leadership, and indirect effects mediated by characteristics of the organizational culture/climate, organizational structure, and the external environment. A multi-source, multi-dimensional approach is used to collect data and to operationalize the variables.
Data from 53 Taiwanese electronics and telecommunications companies generally supported the expectation that transformational leadership increases organizational innovation. The findings also revealed indirect effects mediated by empowerment, climate of support for innovation, centralization, formalization, competition, and environmental uncertainty. While most of the mediating effects were in the expected direction, some (e.g., empowerment) had unexpected signs. The implications of these findings for practice and research are delineated.
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