Transformational Leadership and Its Effects on Organizational Learning and Innovation: Evidence from Dubai

Abstract

Peter Drucker argued, "As the trees are rotten from the head and die, organizations are suffering from degradation and destruction when the managing director of that organization can't manage it" (quoted in Hassan & Faezeh, 2011, p. 422). This statement highlights the significant role that managers play in the success or failure of organizations. Indeed, senior managers are critical not only with regard to the articulation of organizational goals, but also the execution of strategies needed to make a corporation competitive in a given market.As a result of rapid changes in technology, globalization, and shortening product life cycles, most organizations have been compelled to adapt to ensure their survival in this dynamic environment (Garcia-Morales, Llorens-Montes, & Verdu-Jover, 2007). However, organizations are largely unable to adapt and achieve success unless they have managers who are able to motivate employees to be innovative in their pursuit of both short and long-term goals.In this way, innovation is a key contributor to the development of an organization's competitive advantages in a market and, therefore, its success. Innovation increases the efficiency and effectiveness of organizational activities and facilitates the improvement of products and services that organizations offer, thereby promoting long-term survival (Gumusluoglu & Ilsev, 2009b). Owing to its significance for organizational outcomes, many researchers have sought to identify the factors that can affect organizational innovation. Some researchers have found that leadership style is an important factor in this regard (e.g., Jung, Chow, & Wu, 2008). Using Burn's (1978) model, Sabir, Sohail, and Asif Khan (2011) identified two leadership styles that affect innovation: transformational and transactional leadership. Transformational leaders emphasize the necessity of organizational change in dynamic markets and promote creativity and innovation. In contrast, transactional leaders tend to favor the status quo and foster performance through well-defined tasks designed to meet specific performance objectives (Eisenbiess, Knippenberg, & Boerner, 2008).Transformational leaders motivate subordinates to achieve their organizational goals through four behavioral elements: charisma, intellectual stimulation, consideration, and inspiration (Jaskyte, 2004). Moreover, transformational leaders indirectly support innovation by affecting employee commitment and cultivating an organizational atmosphere that motivates employees to generate new ideas geared towards sustaining organizational survival in the longterm (Avolio, Zhu, Koh, & Bhatia, 2004). As a result, employees of transformational leaders tend to be more satisfied with their work environment and more likely to develop innovative contributions to organizational success (Elenkov & Manev, 2005).Most research on the relationship between leadership styles and innovation has been performed on Western nations. Comparatively few studies have been conducted in a Middle Eastern cultural setting (Mozhdeh, Wan, & Amin, 2011). In addition, the majority of past research on innovation has focused on the private sector (Sarros, Cooper & Santora, 2011); few scholars have explored the concept of innovation in the public sector where firms face a number of unique challenges related to the execution of government functions and the effective provision of public services (Hartley, 2005). These challenges demand the development of innovative methods of conducting business among public-sector firms (Borins, 2002). Moore and Hartley (2008) argued that dealing with the challenges of the public sector requires leadership strategies based on an understanding of the ways in which leaders can promote innovation. Given this argument, it is essential that public organizations devote greater effort to supporting continuous innovation among their employees through leadership practices to this end (Hartley, 2005). …