Leadership Styles, Absorptive Capacity and Firm's Innovation

Leadership Styles, Absorptive Capacity and Firm's Innovation

Saad G. Yaseen (Al-Zaytoonah University of Jordan, Amman, Jordan), Saib Al-Janaydab (Al-Zaytoonah University of Jordan, Amman, Jordan) and Nesrine Abed Alc (Al-Zaytoonah University of Jordan, Amman, Jordan)
Copyright: © 2018 |Pages: 19
DOI: 10.4018/IJKM.2018070106

Abstract

The aim of this article is to investigate the relationship between leadership styles, absorptive capacity and firm's innovation in the Jordanian Pharmaceutical sector. It is a knowledge-intensive industry and one where effective leadership has been very substantial. Findings reveal that transformational leadership style and transactional leadership style are antecedents to absorptive capacity and a firm's innovation. The results confirm a significant and direct relationship between both leadership styles and firm innovation, and indirectly through absorptive capacity. Overall, the research's findings provide valuable insights for managers to foster absorptive capacity and innovation of their firms.
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Introduction

In our globalized and dynamic world, innovation drives competitiveness and business growth (Herrera, 2016; Drucker, 1985; Khalili, 2016; Chassagnon & Haned, 2015). Understanding the antecedents of innovation is essential to knowledge- intensive industry (Nonaka & Takeuchi, 1995; Yaseen et al., 2015; Chang et al., 2015). Leadership has been recognized as a key factor of firm’s innovation (Morales et al., 2012; Ryan & Tipu, 2013; Zheng et al., 2016). However, the existing literature is mainly focused on the influence of transformational leadership on innovation and performance (Morales et al., 2008; Nguyen et al., 2017; Gumusluoglu & IIsew, 2009). The relationship between transactional leadership and firm’s innovation is inconclusive (Chang et al., 2015). Various studies analyze the influence of transformational leadership style on organizational innovation and performance through intermediate constructs such as culture (Chen et al., 2012), empowerment (Jung et al., 2003), organizational learning (Morales et al., 2012), individualism, power distance, uncertainty avoidance (Engelen et al., 2014), and knowledge management (Biranave, 2014).

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