The Impact of Organizational Structure and Leadership Styles on Innovation

Abstract

Generally, organizations build up their competitive advantage by enlarging and enhancing their idea repository, mainly through formal organisationl structure. However, this study was designed to bring to the fore the relevance of the informal social relations (like leadership and relationship styles) in the innovation process. To achieve this objective, the study investigated the link among organic and mechanistic structures, leadership and relationship styles, and the innovation process through the lens of the knowledge creation theory. Data was collected by means of questionnaires and analysed using regression anaslysis. It was found that: the organic structure impacts idea generation; mechanistic structure impacts idea implementation; transformational leadership impacts idea generation; transactional leadership impacts idea implementation; relationship styles moderates the impact of transformational leadership on idea generation; and relationship styles moderates the impact of transactional leadership on idea implementation. This therefore connotes that an organization could be ambidextrous at the same time and within the same department. A manager that is aspiring to develop innovative employees and a competitive organization in a turbulent environment is thus advised to employ both structures and leadership styles with a good relationship atmosphere among employees within the organization.