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A Literature Review on the role of Leaders in Influencing Innovations in Business Organizations

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Abstract

Innovations are essential for businesses to stand out and gain a competitive advantage in the business
environment. The meeting point between innovation and leadership is that innovation requires leaders to
establish it and acts as a tool for business leaders to exercise leadership. Tidd and Bessant's (2009)
innovation management model has provided the basis for the literature review on the topic with its
dimension on strategy, organization, process, linkages, and learning. Research has shown that
organizational culture, through its leadership structure and climate, influence and initiate creativity and
productivity in innovations. Strengthened working relationships, on the other hand, create a conducive
environment for the generation of ideas implemented through innovation.

Keywords: Leadership, innovations, organizational culture, and relationships.

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Introduction

The chosen topic for the paper is the role of leadership in influencing innovations in business
organizations. Leadership is the ability to influence others to perform a given task in an organization.
Their mandate and influence aim to achieve the organization's overall success by establishing a conducive
environment in the workspace. This conducive environment involves inspiring, encouraging, motivating,
and building confidence capacities among the employees for the achievement of the set goals and
objectives of the organization(Tallman, Luo, and Buckley, 2017, P.15). For successful gains from
innovation, great leadership is a necessity for enhancing and implementing of innovations. The paper will
therefore conduct a mini-literature review of the topic to give a deep insight into the matter. Research and
findings from the literature review highlighting key insights, thematic patterns, and an evaluation of the
results from a practical perspective will follow. Finally, the paper will summarize key points from the
research.

Literature Review

As mentioned earlier in the introduction, leadership entails influencing others to perform certain tasks.
The meeting point between innovation and leadership is that establishing innovation requires a leader to
establish and avail it. Innovation also becomes a critical tool for leaders to exercise their influence,
enabling them to conduct their leadership tasks successfully (Tallman, Luo, and Buckley, 2017, P.217).
Innovative leadership is a method and philosophy that incorporates many leadership philosophies to
persuade and inspire staff to produce innovative ideas, products, and services. The world becoming
globalized has made the business environment more challenging in the 21st century as it is faced with lots
of dynamism and more competitive businesses. The most effective way to stay at the top of the game is
through the generation of innovative business methods, which the organization's leadership is responsible
for. Research indicates that 70% of organizations fail to attain their goals linked to bad leadership.
Organizations have been forced to reevaluate how they function to develop, accept, and understand their
business-changing model due to shifting markets, rapid technological advancements, and rising customer
demands.

Innovation on its own cannot be maximized for the business organization's competitive advantage if it is
not managed, which requires exceptional leadership. This is explainable through Tidd and Bessant's
(2009) model of Innovation organizational management, which has five dimensions, namely: strategy,
organization, process, linkages, and learning(Alharbi et al., 2019, Para.16). Essentially, the innovation
strategy is a master plan that contains the objectives and guidelines necessary for the successful
coordination of all innovation projects. On the organization's dimension, a business's culture should be
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designed to encourage innovation. As the third dimension, the process considers an organization's size,
flexibility, and geographic reach that must be created if an organization is to use innovation to gain a
competitive advantage. Linkages, however, deal with relationships inside and outside the business
organizations, which ought to be strong. Learning as the final component ensures that the company
provides fresh information to the staff to foster innovative thinking and ensure that it is used. The model
essentially provides a basis for anchoring business leadership roles in innovation.

According to (Fetrati and Nielsen, 2018, P.3), creativity is the generation of novel and new ideas, while it
is the work of innovation to implement these ideas. Studies have shown a strong relationship between
organizational culture and creativity. An organization's culture entails its leadership structure and climate,
which upon being maximized well, can have shown to increase innovation productivity (Hermida, Clem,
and Güss, 2019, P.2). According to (Dedahanov, Rhee, and Yoon, 2017, P.338), the leadership structure
of an organization plays a role in influencing creativity. A structure with a high level of specialization and
professionalism supports the idea that a company that separates labor according to skill fosters
innovation. Furthermore, research by (Schippers, West, and Edmondson, 2017, P.772) indicates that team
reflexivity entails the team members overtly reflecting upon and communicating about the group's
objectives, and strategies to make changes accordingly, enhances productivity in innovations. In this
highly reflexive, teams can develop more innovations and reflect critically on ideas, dropping those that
are less promising and choosing to implement the better ones.

The structure of leadership under organizational culture in promoting innovation can be viewed in
leadership styles. According to (Kozioł-Nadolna, 2020, P.1), modern challenges no longer require the
traditional methods of leadership for innovation like authoritarian leadership ,(Tallman, Luo, and
Buckley, 2017, P.220), which makes leaders have a low tolerance for mistakes they create a threatening
environment for innovation and creativity. Rather the two authors agree that the best leadership style for
innovation is well understood through the leadership theory based on two different types of leadership
behavior- transactional leadership and transformational leadership. When Transformational leadership is
contrasted with transactional leadership, transformational leadership brings intrinsic motivation among
employees when generating and implementing innovations. This type of leadership inspires motivation
and intellectual stimulation, which are critical factors for innovations. Research has also proved that
transactional leadership positively influences the adoption of management innovations and inventive
behavior (Kozioł-Nadolna, 2020, P.15).

In addition, leadership that promotes a conducive organizational climate is essential in initiating and
enhancing creativity among team members. Recently, managers and scholars have begun to pay greater
attention to the goal of a more caring atmosphere that helps workers feel cared for, treated fairly, and
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concerning enhance employee engagement and improve business outcomes. Employee success in the
workplace is influenced by the psychological climate, which is defined as the meaning that employees
ascribe to events, policies, practices, and procedures in an organization, as well as employees'
identification of the behaviors they believe, are rewarded, supported, and expected (Weziak-Bialowolska
et al., 2020, P.1). (Weintraub and McKee, 2018, Para.12) points out that leaders have the role of creating
a positive psychological climate in an organization if they want to yield innovativeness. Supportive
organizations encourage employees to turn creative ideas into innovative outputs. In this, leaders are
expected to demonstrate emotional intelligence in managing the conflicts and tensions related to the
creativity process(Chater, 2020, P.13). Furthermore, they will be observing psychology safety which
entails leaders providing a collaborative environment, embracing failure to learn from them and leaders
containing anxiety and uncertainty for people to perform. A combination of Psychological safety and a
high-performance culture (Chater, 2020, P.13) results in team creativity and organizational innovation.

As previously mentioned, linkages deal with the employer and employee relationship. It can be explained
through the (Leadership Member Exchange) LMX theory, which looks into the interactions between
leaders and followers. The state of interactions between the two parties is essential as it influences the
follower's conduct. It has been discovered that high-quality LMX is connected with better efficacy in all
stages of the innovation process when it is supported with empowerment and leadership support
(Weintraub and McKee, 2018, Para.13). Leaders ought to understand the way they motivate their
members facilitates or inhibits the willingness and ability of team members to develop and implement
innovations. This is in the type of communication and openness that the leadership establishes among
teams which contribute to innovativeness when they are at a high level. They also play a role in creating
creative attitudes, creative behavior and driving innovations (Kozioł-Nadolna, 2020, P.5)

Findings and Results

Tidd and Bessant's (2009) model of organizational innovation management through its dimensions has
provided the basis for the role of leadership in organizational management (Alharbi et al., 2019, Para.16).
Organizational culture through the leadership structure like that of specialization and reflexivity enhances
innovation. Leadership styles being part of the organizational leadership structure also influences
innovation, with transactional and transformational leadership being the best for innovation. On the other
hand, organizational climate determines whether there will be room for the creation and enhancement of
innovations. A leadership that considers a supportive environment, emotional intelligence, a collaborative
environment, and embraces failure as a form of learning creates room for innovation. Relationships
between the employer and the employee, as explained through the LMX theory, are essential in
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promoting better efficiency in all the stages of the innovation process. Leaders should provide and foster a
motivating, open communication, creative attitudes, and behavior environment.

Therefore, the thematic patterns from the literature review have focused on elements of leadership like
organizational culture, relationships, and climate and how, if positively structured, initiate, enhance and
implement innovations.

The literature review is relevant and practically applicable in the modern business environment. The
leadership of organizations globally, especially in multinational corporations that operate globally, have
embraced organizational cultures that foster innovations among their team members for them to gain a
competitive advantage in the market and stand out (Kozioł-Nadolna, 2020, P.1). For instance, Tesla's
company's culture is comprised of five features namely: Move fast, do the impossible, constantly
innovate, reason from ‘’first principles", think like owners, and we are all in(Meyer, 2016, Para.3). This
kind of culture emphasizes on its employee's capabilities to respond to the trends and changes in the
market. It also constantly rewards its employees for pushing them toward creating more innovative ideas.
Additionally, the fact that it encourages its employees that they are all in and that they should think like
owners automatically shows that the level of employee engagement indicates a stronger working
relationship between the employers and employees which has been proven to promote better efficacy in
all the stages of innovation concerning LMX theory(Weintraub and McKee, 2018, Para.13).
Furthermore,the leadership style also seems to be more of a transformational leadership style since the
leadership of the business organization has a great sense of motivating and inspiring employees to achieve
the organization's objectives(Lai et al., 2020, Para.5) . This kind of leadership style as mentioned earlier
in the literature review is among the best leadership styles in inspiring innovation and creativity(Tallman,
Luo, and Buckley, 2017, P.220).

Furthermore, business organizations that do not embrace innovation management are eventually displaced
in the market. This could include products, technology, marketing, models, and supply chain innovations.
An example is the kodak and Nokia brands which lost strength in the market because of a lack of product
innovation(Aaslaid, 2019, Para.1). This proves that the failure of a business to innovate leads to one's top
position displacement in the market.

Conclusion

From the discussion above, it's evident that innovation requires management, and it is through the Tidd
and Bessant (2009) model that the literature review has analyzed the basis for the topic. The role of
leadership in initiating, promoting, and implementing innovation is exhibited by promoting a positive
organizational culture, climate, relationships, and structures. Therefore, leaders' role in business
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organizations is to ensure that they foster a positive organizational culture, structures, and relationships
that promote innovation for them to remain viable in the competitive business environment.
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Reference list

Aasland, K. (2019). 50 Examples of Corporations That Failed to Innovate. [online] www.valuer.ai.

Available at: https://www.valuer.ai/blog/50-examples-of-corporations-that-failed-to-innovate-
and-missed-their-chance.

Alharbi, I.B.A., Jamil, R., Mahmood, N.H.N. and Shaharoun, A.M. (2019). Organizational Innovation: A
Review Paper. Open Journal of Business and Management, [online] 07(03), pp.1196–1206.
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Chater, P. (2020). Enhancing team creativity and organizational innovation through a psychodynamic
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Schippers, M.C., West, M.A., and Edmondson, A.C. (2017). Team Reflexivity and Innovation. The Wiley
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