How can leadership and organizational culture predict innovation in small, medium and large enterprises?

Abstract

This study intends to analyse the effects of leadership and organizational culture in innovation in small, medium and large Portuguese enterprises. The sample is composed of 102 organizations (68.6% small, 24.5% medium-sized and 5.9% large companies), from which a total of 854 workers answered to the Transformational Leadership Scale and the Organizational Culture Questionnaire Denison. Additionally, a total of 102 top managers of each organization answered a questionnaire concerning the innovation activity in their organization. Data analysis was performed with structural equation modelling. The results showed that the size of the company moderates the relationship between leadership and organizational culture in the prediction of innovation. This moderation surpasses the differentiated effect size of leadership in innovation predicted by culture, showing also influence on the contribution of the several variables in the model.