Transformational and Transactional Leadership in Ambidexterous Innovation: Exploratory and Exploitative Outcomes

Abstract

Purpose - The research on the relationship between leadership styles and innovation behaviors, particularly exploratory and exploitative innovation, remains inconsistent and underdeveloped. To address this gap, this study aims to investigate the influence of transformational and transactional leadership styles on exploratory and exploitative innovation, while also examining the moderating effects of organizational factors, specifically firm size and organizational age. Design/methodology/approach - This study employs a quantitative research design, with the sample of firms that have at least ten employees. A total of 762 valid responses were collected through surveys. The data were analyzed using hierarchical regression analysis. Findings - The results reveal that transformational leadership positively influences exploratory innovation but negatively affects exploitative innovation, whereas transactional leadership positively influences both types. Notably, contrary to prior research, transactional leadership also enhances exploratory innovation. Firm size moderates these relationships in an inverted U-shape: transformational leadership fosters exploratory innovation in small and large firms and supports exploitative innovation in medium-sized firms. A similar pattern emerges for transactional leadership. Additionally, younger firms exhibit a stronger preference for exploratory innovation. Research limitations/implications - This study is limited to Turkish firms, which may restrict the generalizability of the findings. It relies on perceived innovation behavior rather than objective metrics and does not consider factors like sectoral or cultural differences. The cross-sectional design also limits causal inferences, indicating the need for longitudinal or experimental research to explore temporal dynamics. Practical implications - From a practical standpoint, this study highlights the critical role of leadership in shaping innovation behaviors, offering insights for organizations of different sizes and ages. It demonstrates how leadership styles can be leveraged to foster ambidextrous innovation, providing a tailored approach for leaders to enhance innovation while considering key contextual factors affecting leadership effectiveness. Originality/value - This study enhances understanding of how leadership styles influence the balance between exploratory and exploitative innovation in Turkish firms, emphasizing the moderating roles of firm size and age. It also challenges the conventional view that transformational and transactional leadership are exclusively linked to specific innovation types, offering a more nuanced perspective on the role of leadership in fostering ambidextrous innovation.