Leadership Styles, Absorptive Capacity and Firm's Innovation

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).