A Comparison between the Effects of Transformational and Servant Leadership on Innovation in R&D teams: A Multi-level Study

Abstract

ABSTRACT Dynamic business environments present challenges to most organisations in both developed and developing countries. In such circumstances, innovation is an essential factor that enables organisations to create an environment of sustainable competitive advantage that can help them to overcome challenges. Innovation requires both creativity and problem-solving ability, and the contention in this research is that these kinds of very personal activities are best supported by appropriate leadership styles, considered to be one of the most important factors in facilitating employee and team innovation. Therefore, the present study aims to answer the main question; to what extent do leadership styles i.e. Transformational Leadership (TFL) and Servant Leadership (SL) affect innovation whether direct or indirect effect, and which one of them has more effect? TFL and SL have recently become the most prevalent of the leadership theories. However, previous studies have not investigated sufficiently how specific behaviours of team transformational and team servant leadership influence employee and team innovation by creating a team climate for innovation in Research and Development (R&D) teams, and certainly not in developing countries such as Saudi Arabia. Therefore, the main aim of this study is to investigate the impact of two comparative team leadership styles (TFL&SL) on employee and team innovation through team climate for innovation. These leadership styles (team level) and employee innovation (individual level) stand out at different levels and need to be dealt with on multiple levels while studying their relationships. Therefore, the research aims are: firstly to examine the direct effect of team TFL and team SL on employee innovation (individual level), and team innovation (team level); secondly, to examine the indirect effect of team leadership styles (TFL&SL) on employee innovation (individual level), then on team innovation (team level) through each variable of team climate, i.e. Team Vision (TV), Participative Safety (PS), Task Orientation (TO), and Support For Innovation (SI); thirdly, to investigate the moderated mediation role of each variable of team climate under different levels of task conflict; finally, to identify which one of the two team leadership styles (TFL and/or SL) undertaken enhances innovation directly at the individual and team levels, and/or through team climate processes. Consequently, this study can contribute to efforts that illustrate the effects of Bass’s theory of TFL (1985) and Greenleaf’s theory of SL (1970) on team climate processes and innovation at multi-levels, as well as further extending West’s (1990) typologies of team processes for innovation by including task conflict with team climate variables that can act effectively for team innovation; however, only under low levels of task conflict. The population of this research is R&D teams in petrochemical companies in the Kingdom of Saudi Arabia (KSA) because they are considered to be an incubator environment for innovation. This research can help managers and leaders to identify which leadership style has more influence on innovation. Both the TFL and SL approaches were expected to be seen as effective in the context of the team climate for innovation in the selected sample of petrochemical companies operating in the Saudi context. The philosophical foundation for this study is positivism, which uses a deductive approach to test the study hypotheses generated. Hence, a quantitative survey is preferred as a means of data collection, using a questionnaire. Simple regression analysis and Ordinary Least Square (OLS) regression have been used in order to analyse the relationships between the study variables. Guidelines regarding ethics and integrity have been followed during this research. The research findings showed that the style