Management Innovation and Leadership: The Moderating Role of Organizational Size

TLDR

Management innovation, defined as new managerial processes, practices, or structures that alter managerial work, is increasingly recognized as a source of competitive advantage and is heavily influenced by top management. The study investigates how leadership behavior—specifically transformational and transactional styles—affects organization‑level management innovation and how organizational size moderates this relationship. The authors examine leadership behavior and organizational size as contextual variables, assessing their moderating impact on the link between leadership styles and management innovation. Both transformational and transactional leadership promote management innovation, but transactional leadership is more effective in smaller, less complex organizations, whereas transformational leadership is essential for larger organizations to overcome complexity.

Abstract

abstract Recent research on management innovation, i.e. new managerial processes, practices, or structures that change the nature of managerial work, suggests it can be an important source of competitive advantage. In this study, we focus on management innovation at the organization level and investigate the role of leadership behaviour as a key antecedent. Due to its prominent role within organizations, top management has the ability to greatly influence management innovation. In particular, we focus on leadership behaviour and examine transformational and transactional leadership. Additionally, as contextual variables like organizational size may influence the impact of leadership, we investigate its moderating role. Findings show that both leadership behaviours contribute to management innovation. Interestingly, our study indicates that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation. On the other hand, larger organizations need to draw on transformational leaders to compensate for their complexity and allow management innovation to flourish.