The role of creativity and innovation in the workplace has grown exponentially in recent years. Innovation provides a competitive advantage in regards to product outcomes (e.g., new designs) and people processes (e.g., employee recruitment). It has been argued that innovative behavior is more contingent on motivation rather than ability (Amabile, 1988). Assuming this is the case, leadership should play a pivotal role in fostering innovation. In particular, two types of leadership come into play.
TRANSFORMATIONAL VERSUS TRANSACTIONAL LEADERSHIP
Transformational leadership means influencing followers to “rise above their self-interest” and focus their efforts on higher-level goals (such as group or organization-wide goals. Much of the current literature posits that transformational leadership should have a profound impact on innovation. Alternately, transactional leadership centers on clarifying expectations and monitoring follower performance, and this style is generally thought to seriously detract from innovation. However, empirical inconsistencies suggested a need to investigate further. To this end, the authors of the present study were interested in psychological empowerment (PE), which is “active orientation towards a work goal” that encompasses self-efficacy. They propose that PE is relevant, because it gives people a feeling of capability—the “can-do” aspect of behavioral intent.
THE ROLE OF PSYCHOLOGICAL EMPOWERMENT
Accordingly, the current study investigated the impact of psychological empowerment on the relationship between these two different types of leadership (transformational and transactional) on employee innovation. The authors found a relationship between transactional leadership and employee innovation, but no relationship between transformational leadership and employee innovation.
Additionally, they found that psychological empowerment (PE) influences the magnitude of the relationship between leadership style and innovation. Specifically, transformational leadership is more effective in driving innovation and transactional leadership is more detrimental to it among employees high in PE.
PRACTICAL IMPLICATIONS FOR ORGANIZATIONS
Taken together, the results of the current study suggest that we may have been thinking too simply about the nature of transformational versus transactional leadership – at least with respect to innovation. It seems as though neither style of leadership makes much difference in employee innovation unless those employees are high in psychological empowerment. The authors suggest that organizations would do well to focus on building development programs (for both leaders and followers) that seek to foster a culture of psychological empowerment (i.e., perceived participation, self-efficacy, impact, and meaningfulness). Assuming successful empowerment, additional programs to develop transformational leadership could have added benefit.
“Giving people self confidence is by far the most important thing that I can do because then they will act.” — Jack Welch
Pieterse, A. N., van Knippenberg, D., Schippers, M., & Stam, D. (2010). Transformational and transactional leadership and innovative behavior: The moderating role of psychological empowerment. Journal of Organizational Behavior, 31(4), 609-623.