Management Decision

Linking transformational leadership, creativity, innovation, and innovation-supportive climate

Ashkan Khalili
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Ashkan Khalili , (2016),"Linking transformational leadership, creativity, innovation, and innovation-supportive climate",
Management Decision, Vol. 54 Iss 9 pp. -
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 Linking Transformational Leadership, Creativity, Innovation, and Innovation-
Supportive Climate

1. Introduction
To remain competitive and sustainable in today’s fast paced changing and highly competitive
business environment, organisations have to invest on creativity and innovation. To achieve
the desired outcomes such as creativity and innovation, substantial attention has to be given
to how employees as enablers of creative and innovative outputs experience their firms’
leadership, practices and polices that encourage or restrain creativity and innovation in the
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organisation. Creativity and innovation are considered to be the most important capacity for
organisations that wish to establish a competitive advantage (Gisbert-López, Verdú-Jover,
and Gómez-Gras, 2014).
Scholars from a wide range of disciplines have tried to comprehend the key factors that
shape creativity and innovation. For instance, a review by Mumford, Scott, Gaddis, and
Strange (2002) notes a broad variety of factors such as climate, individual performance
abilities, strategy and structure. To be more specific, prior research has focused on
antecedents of creativity and innovation including personal (i.e. leadership) and contextual
(i.e. supportive climate for innovation) factors (Černe, Jaklič, and Škerlavaj, 2013; Wang,
Tsai, and Tsai, 2014). However, according to Černe, Nerstad, Dysvik, and Škerlavaj (2014) a
better understanding of the factors impacting the creative and innovative behaviours of
employees in firms is needed. Therefore, both notions of leadership and organisational
climate are the focus of this study.
Among all available leadership theories, transformational leadership was chosen since it
has documented that it can foster and enhance creativity and innovation (Sosik, Avolio, and
Kahai, 1997). In this regard, Bass (1985) defined a transformational leader as one who
inspires subordinates to do more than they are expected to do in the first place.
Transformational leaders are dynamic and proactive and capable of leading not only
themselves but also their followers in order to embrace changes (Ahangar, 2009). According
to Ergeneli, Gohar and Temirbekova (2007), transformational leaders tend to take their
subordinates beyond their own self-interests for the benefits of their organisations. Although
the theoretical reasoning, little empirical prove exists to confirm the associations as
mentioned above (Reuvers, van Engen, Vinkenburg, and Wilson-Evered, 2008).
 Researchers have described organisational climate as the way it feels to be a member of
the firm, reflects the behaviours and reactions of staff to what the workplace assumes and
values. The organisational climate construct reflects the shared values workforce attach to the
behaviours they believe being anticipated, encouraged and recognised (Gundry, Muñoz-
Fernandez, Ofstein, and Ortega-Egea, 2015). A business environment for creative and
innovative behaviours reflects workforces’ perceptions of organisation practices, procedures
and polices and ways of interaction that encourage or restrain the behavioural aspect of
creativity and innovation (Schneider, 2000). In accord to Ren and Zhang (2015), employees’
creativity and innovation emerge from the encouraging climate in which they find creativity
and innovation to be worthwhile. This climate convinces staff that their creative and
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innovative behaviours are considered valuable. Therefore, the present research examines the
impact of employees’ perceptions of a supportive climate for innovation as a moderator
variable on the relationships between transformational leadership and employees’ creativity
and innovation.
In sum, this study is attempted to provide an empirical answer for each of the developed
research questions: Are there positive and significant relationships between transformational
leadership and employees’ creativity and innovation in developing countries, and are these
relationships moderated by employees’ perceptions of a supportive climate for innovation in
developing countries.

2. Literature Review and Hypotheses Development

2.1 Transformational Leadership and Employees’ Creativity and Innovation
Transformational leadership has been recognised extensively as a popular notion in
management literature due to its relational and inspirational style (Gardner and Avolio,
1998). Transformational leaders motivate subordinates to work for longer hours and generate
more than is expected of them (Bass, 1985). They guide them in all situations, assist them
whenever needed, polish their competences, deliver knowledge to them, and treat them
equally (Hall, Johnson, Wysocki, and Kepner, 2008). According to Burns (1978), it is a form
leadership in which associations are managed around a purpose in ways that transform,
inspire and enhance the aspirations of employees. Podsakoff and his colleagues identified six
key transformational leadership behaviours: Articulating a vision refers to leaders’
behaviours that motivate the employees with a compelling vision of the firm’s future.
Providing intellectual stimulation includes challenging employees to take a various
perspectives on tasks and to rethink the way the job is done. Providing individualised support
 concentrates on the employees’ feelings. Providing an appropriate model comprises the
leaders serving as a role model for the employees. Expecting high performance refers to the
expectations that leaders have regarding the performance of their employees. Fostering the
acceptance of group goals refers to behaviours that nurture the cooperation amongst
employees and that direct them to work together to obtain a shared goal (Podsakoff,
MacKenzie, Morrman, and Fetter, 1990). Transformational leaders are those who attempt to
develop their followers knowledge and skills, and higher needs and motivations (Bass and
Avolio, 1994). In fact, this development inspires the subordinates to unite and alter goals and
beliefs (Rafferty and Griffin, 2004).
Previous research has linked employees’ creativity and innovation to the success of firms
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(Rubera and Kirca, 2012). In late 90s researchers incepted to include the concept of
innovation into creativity. The connection made between these concepts forced firms to
recognise the importance of nurturing the creativity of employees. Mumford et al. (2002, p.
705) noted that ‘creativity, the generation of new ideas, and innovation, the translation of
these ideas into action, have come to be seen as a key goal of many organisations and a
potentially powerful influence on organisational performance’. Generally, theorists explain
two major steps of the innovation process: initiation and application (Axtell, Holman,
Unsworth, Wall, Waterson, and Harrington, 2000). The first step ends with the generation of
a thought, and the second with its application (King and Anderson, 2002). In this paper, idea
generation indicates creativity and idea implementation indicates innovation. Therefore, same
as prior studies by Amabile, Conti, Coon, Lazenby, and Herron (1996) and De Jong and Den
Hartog (2007) the focus of this study is on the both steps of innovation process: creativity and
innovation.
The fundamental source of any creativity is an individual (Redmond, Mumford, and
Teach, 1993). Also, an individual is the fundamental source of innovation in an organisation
(Shalley and Gilson, 2004). The creativity of employees theoretically provides the impetus
needed for innovation (Oldham and Cummings, 1996). In fact, employees who are creative
tend to see opportunities for new products or identify new ways of utilising existing methods,
producing new ideas to solve work-related problems and also often developing sufficient
plans for implementation (Gumusluoglu and Ilsev, 2009). According to Shalley and Gilson
(2004), creative employees produce novel and useful ideas about products, procedures and
practices.
Leaders with transformational leadership style are recognised as the main driver of
employees’ creativity and innovation (Jyoti and Dev, 2015; Nusair, Ababneh, and Bae,
 2012). In fact, transformational leaders let their subordinates to think creatively, anlyse their
problems from several angles and look into new and fresh solutions for problems
(Gumusluoglu and llsev, 2009). According to Bennis and Nanus (1985), employees of
transformational leaders have much confidence and trust in their leaders. Consequently, this
trust would not only motivate and support employees to take risks for the completion of their
assignments, but also encourage critical thinking and stimulate them to take risks and
initiatives most of the time in the workplace. Transformational leaders ensure that
subordinates have their encouragement for taking risks and they own the results of the actions
of their subordinates. This support alters employees’ attitudes and stimulates them to involve
themselves in creative and innovative work processes (Den Hartog, 2003). Transformational
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leaders introduce new patterns for the completion of task and are willing to face more
challenges, which expands the creative and innovative capabilities of their employees
(Howell and Avolio, 1993). According to Yunus and Anuar (2012), transformational leaders
challenge their followers and encourage them to seek new and fresh approaches to their task.
The above literature led the researcher to formulate the following hypotheses (Figure 1):
Hypothesis 1. Transformational leadership is positively and significantly related with
employees’ creativity.
Hypothesis 2. Transformational leadership is positively and significantly related with
employees’ innovation.
------------------------------------
Insert Figure 1 about here
----------------------------------
2.2 Moderating Influence of Employees’ Perceptions of a Supportive Climate for Innovation
Litwin and Stringer (1968, p. 1) defined organisational climate as ‘a set of measurable
properties of the work environment, perceived directly or indirectly by the people who live
and work in this environment and assumed to influence their motivation behavior’. Nystrom
(1990) noted that an organisational climate consists of emotions, standpoints and behavioural
tendencies that explain organisational life. It indicates to individuals what is important and
how it may be obtained; it also identifies with the perception of the processes, occurrences
and types of behaviours that are emphasised and expected (Schneider, 1990). Climate refers
to firm members’ perceptions of processes, policies, and practices (Reichers and Schneider,
1990). Ekvall (1996) defined climate as a company’s ethos and the accumulated behaviours,
postures, and feelings that clarify its working life and the perceptions and comprehension of
its members.
 In general there are two broad standpoints in regard to organisational climate. Some
scholars (Glick, 1985; James, 1982) explained work environment as the peoples’ property
which refers to the perception of members regarding organisational characteristics and
norms. They believed organisational climate is all about the interactions of its individuals. On
the other hand, some theorists (Friedlander and Margulies, 1969; Schneider and Reichers,
1983) described organisational climate as an objective property of the firm which can be
considered as practices and policies of firm. In this paper, employees’ perceptions of a
supportive climate for innovation is treated as their perceptions of workplace climate toward
creative and innovative behaviours.
Researchers have noted that organisations which are failed to bring creativity and
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innovation in their routine assignments and tasks are not capable of being productive and
sustainable because of their inability in establishing a dynamic climate that values creativity
and innovation (Pitta, 2009). In this regard, prior research has documented that a workplace
environment positively effects creativity and innovation (Cummings and Oldham, 1997;
Oldham and Cummings, 1996). Krause (2004) mentioned that a supportive organisational
climate plays as an important predictor of creativity and innovation. Mumford (2000) claimed
that while innovative individuals tend to explore first and ask permission later, they might
withhold an innovative idea if met with premature censure, especially when the thought is in
an early phase. Basu and Green (1997) declared that staff are more likely to implement
innovative thoughts when they are certain that they will not be penalised for it. De Jong and
Den Hartog (2007) stated that supportive organisational climate for innovation can foster and
encourage creativity and innovation.
The workplace environment is a key element for supporting or restraining creativity and
innovation (Scott and Bruce, 1994). Firms which support creativity and innovation (i.e.,
through internal support) may support, acknowledge, and reward creativity and innovation as
well as provide enough resources for creative and innovative activities (Woodman, Sawyer,
and Griffin, 1993). According to Amabile et al. (1996), such encouragement provides the
psychological context of creativity and innovation, which can impact the employees’ creative
and innovative behaviours. To establish a supportive working climate towards creativity and
innovation, the processes and resources require to be distributed and designed such a way
they could encourage creative and innovative performances (Černe, Jaklič, and Škerlavaj,
2013). In fact, the way employees perceive the extent to which creativity and innovation is
supported within the organisation effects their creativity and innovation.
 The significance of a supportive organisational environment in encouraging creativity and
innovation has been documented in previous studies (Gumusluoglu and Ilsev, 2009; Hsu and
Fan, 2010). According to Hunter, Bedell, and Mumford (2007), supportive working
environment for creativity and innovation is an important contributor to the workplace
climate in supporting and enhancing creativity and innovation. The findings of previous
studies (Basadur, 1997; Oldham and Cummings, 1996) suggest that individuals who are
creative and innovative are responding to working climate characteristics and norms which
are the foundation in nurturing and fostering creativity and innovation.
While it has been claimed by many researchers that creative and innovative efforts are
influenced by contextual variables such as working environment (Rosing, Frese, and Bausch,
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2011; Wang and Rode, 2010), however, evidence of the contextual determinants of human
capital in developing countries such as Iran remains a research oversight that requires to be
examined; because of this, the role of employees’ perceptions of a supportive climate for
innovation as a moderator on the transformational leadership—employees’ creativity and
transformational leadership—employees’ innovation relationships, was considered in this
study. Following this reasoning, it was hypothesised (Figure 1):
Hypothesis 3. Employees’ perceptions of a supportive climate for innovation
moderates the relationship between transformational leadership and employees’
creativity such that the relationship is more positive with high than with low
perceptions of a supportive climate for innovation.
Hypothesis 4. Employees’ perceptions of a supportive climate for innovation
moderates the relationship between transformational leadership and employees’
innovation such that the relationship is more positive with high than with low
perceptions of a supportive climate for innovation.

3. Methods
3.1 Sample and Procedures
Simple random sampling was used to gather data for this study. Data were collected from the
employees of organisations from different type of industries (retail, construction, oil, gas and
petrochemicals, electronics and computer, telecommunications, banking and tourism) in Iran.
The questionnaire was distributed among Iranian businesses located in Ardabil, Gilan,
Isfahan, Kish Island, Mashhad, Mazandaran, Shiraz, Tabriz, and Tehran.
A total of 2500 survey questionnaires were sent out to Iranian companies. A total of 1204
responses received, including 1172 useable responses, yielding a response rate of 47 per cent.
 Forty-four per cent of the respondents were women. Of the participants, 46.3 per cent were in
the age group of 41-50, 30 per cent in the age group of 31-40, 13.4 per cent in the age group
of 21-30, per cent in the age group of 51-60, 0.5 per cent in the age group of 18-20, and 0.4
per cent in the age group of over 60 years old. For education, 63.4 per cent had bachelor
degree, 20.6 per cent had postgraduate qualification, 14.6 per cent had associate degree, and 1
per cent had diploma, and 0.4 had high school or lower degree.

3.2 Measures
Transformational Leadership Inventory developed by Podsakoff et al. (1990) was utilised to
measure transformational leadership behaviours in this study. The inventory is comprised of
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six components: articulating a vision, providing an appropriate model, accepting group goals,
having high performance expectations, providing individualized support, and providing
intellectual stimulation. This construct was tested by twenty-two items (e.g., ‘In this
organisation, leaders have provided employees with new ways of looking at things which
used to puzzle them’). The items of this construct (22 items) were measured on a 5-point
Likert scale, ranging from (1) ‘strongly disagree’ to (5) ‘strongly agree’. Chronbach’s α was
0.80.
For this study employees’ perceptions of a supportive climate for innovation was
measured using an instrument developed by Scott and Bruce (1994). This construct was
examined by sixteen items (e.g., ‘In this organisation, our ability to function creatively is
respected by the leadership’). The items were measured on a 5-point Likert scale, ranging
from (1) ‘strongly disagree’ to (5) ‘strongly agree’. Chronbach’s α was 0.75.
Employees’ creativity was measured using an existing scale developed by Zhou and
George (2001). This construct was examined by thirteen items (e.g., ‘In this organisation, an
employee develops adequate plans and schedules for the implementation of new ideas’). The
items of creativity construct (13 items) were measured on a 5-point Likert scale, ranging from
(1) ‘not at all characteristic’ to (5) ‘very characteristic’. Chronbach’s α was 0.82.
To investigate employees’ innovation the researcher used a measurement instrument
developed by De Jong and Den Hartog (2010). This construct was examined by ten items
(e.g., ‘In this organisation, an employee here contributes to the implementation of new
ideas’). The items were measured on a 5-point Likert scale, ranging from (1) ‘never’ to (5)
‘always’. Chronbach’s α was 0.79.

3.3 Reliability and Validity

 The aim of this study was to investigate the link between transformational leadership and the
creativity and innovation of employees. Furthermore, it was designed to appraise the
moderating role of employees’ perceptions of a supportive climate for innovation on the
above relationships. Before using structural equation modelling (SEM), the reliability of
measurement scales was examined by the gathering of data from 74 employees working in
various industries (retail, telecommunications and tourism) in Iran. All of the measurement
scales produced good reliability (ranging from 0.75 to 0.82) indicating that none of the
measurement scale items should be dropped. Thus, the reliability estimated for all the
constructs exceed the acceptable threshold of 0.70, providing proof of enough fit and internal
consistency (Bagozzi and Yi, 1988; Fornell and Larcker, 1981). The results of the reliability
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test are shown in Table 1.

Additionally, reliability of the measures was examined utilising confirmatory factor
analysis (CFA). Composite reliability (CR) and average variance extracted (AVE) were
calculated from model estimates using the formulas developed by (Fornell and Larcker,
1981). AVE and CR should be equal to or greater than 0.50 and 0.60 respectively (Bagozzi
and Yi, 1988). As displayed in Table 1, measures employed in this study were within the
acceptable levels thus supporting the reliability of the constructs.
------------------------------------
Insert Table 1 about here
----------------------------------
Furthermore, a CFA was used to test the proposed measurement model fit and construct
validity. As presented in Table 1, all 61 items were found to be statistically significant with
factor loading more that 0.40 as recommended by Chen, Tsui, and Farh (2002). This proves
good convergent validity. In addition, the findings of AVE showed in Table 1 provide an
additional support for convergent validity. According to Fornell and Larcker (1981), when
the AVE is greater than the squared correlations, discriminant validity is reached. As
displayed in Table 2, discriminant validity is achieved since all the constructs met this
requirement, where the square roots of the AVE scores all greater than the correlations
between the measurement constructs.
------------------------------------
Insert Table 2 about here
----------------------------------

4. Results of the Study

 To test the significance of the theoretical relationships in Figure 1, SEM was conducted.
Hypothesis 1 anticipated that transformational leadership was positively and significantly
associated with the creativity of employees. The fit indices are: Normed chi-square (X2/DF) =
2.75, Comparative-fit index (CFI) = 0.93, Tucker-Lewis index (TLI) = 0.93, Incremental-fit
index (IFI) = 0.92, and Root mean-square error of approximation (RMSEA) = 0.06. The
result shows that transformational leadership as perceived by employees have a positive and
significant effect on employees’ creativity (β = 0.68, p < 0.001), which explained 51 percent
of the variance. Therefore, hypothesis 1 was supported.
Hypothesis 2 predicted that transformational leadership was positively and significantly
related to employees’ innovation. The fit indices are: X2/DF = 3.04, CFI = 0.91, TLI = 0.92,
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IFI = 0.94, and RMSEA = 0.05. The finding declares that transformational leadership as
perceived by employees positively and significantly impact employees’ innovation (H2: β =
0.52, p < 0.001), which explained 43 percent of the variance. Hypothesis 2, thus, was
supported.
Hypothesis 3 anticipated that employees’ perceptions of a supportive climate for
innovation moderates the relationship between transformational leadership and employees’
creativity such that the relationship is more positive with high than with low perceptions of a
supportive climate for innovation. To examine the moderating influence, the researcher
conducted three tests as suggested by Baron and Kenny (1986). First, the finding shows that
transformational leadership (β = 0.70, p < 0.001) has a significant relationship with
employees’ creativity. Second, the result indicates employees’ perceptions of a supportive
climate for innovation (β = 0.51, p < 0.001) has a significant association with employees’
creativity. Third, the interaction of transformational leadership × employees’ perceptions of a
supportive climate for innovation (β = 0.25, p < 0.001) has a significant relationship to
employees’ creativity. Thus, all the three conditions suggested by Baron and Kenny (1986)
were satisfied. Figure 2 depicts the plot of the significant interaction term. As shown, the
association between transformational leadership and employees’ creativity is stronger when
employees have high rather than low perceptions of a supportive climate for innovation. This
result suggests that Hypothesis 3 is accepted.
------------------------------------
Insert Figure 2 about here
----------------------------------
To evaluate the moderating influence of employees’ perceptions of a supportive climate
for innovation on the transformational leadership–employees’ innovation relationship, the
 researcher followed the same guideline as discussed for the previous hypothesis. The finding
shows that transformational leadership (β = 0.55, p < 0.001) has a significant relationship
with employees’ innovation. The result indicates employees’ perceptions of a supportive
climate for innovation (β = 0.40, p < 0.001) has a significant association with employees’
innovation. The interaction of transformational leadership × employees’ perceptions of a
supportive climate for innovation (β = 0.14, p < 0.001) has a significant relationship to
employees’ innovation. Figure 2 shows the plot of the significant interaction term. As
presented, the association between transformational leadership and employees’ innovation is
stronger when employees have high rather than low perceptions of a supportive climate for
innovation. This finding recommends that Hypothesis 4 is supported.
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All of the four formulated hypotheses for this study were accepted. The findings proved
that transformational leadership as perceived by employees positively and significantly
influence employees’ creativity and innovation in organisations in Iran. Furthermore, it was
found employees’ perceptions of a supportive climate for innovation moderates the
associations between transformational leadership and employees’ creativity and innovation in
Iranian companies. Therefore, the outcomes indicated that transformational leadership and
employees’ perceptions of a supportive climate for innovation serve as two vital factors in
encouraging the creativity and innovation of employees in Iran.

5. Discussion and Conclusion

Employees’ creativity and innovation only achieve if there is an effective leadership style and
a supportive climate or culture in the workplace (McAdam, Moffett, Hazlett, and Shevlin,
2010; West and Sacramento, 2012). According to Tidd, Bessant and Pavitt (2004), leadership
plays a key role in encouraging creativity and innovation in workplaces. Furthermore,
organisational climate is an important predictor of creativity and innovation (Amabile, 1983;
Woodman, Sawyer, and Griffin, 1993). This study contributes to the literature by testing: the
associations between transformational leadership and employees’ creativity and innovation,
and the moderating effect of employees’ perceptions of a supportive climate for innovation
on the relationships between transformational leadership and employees’ creativity and
innovation.
The role of leadership is significant for creativity and innovation in workplaces. It has
been documented that leaders with transformational leadership style show support and
consideration for staff. These behaviours assist employees to overcome their fears of
challenging the routine ways of working, which directs to higher creativity and innovation
 (Jyoti and Dev, 2015). The positive and significant associations reported in this paper
between transformational leadership, and employees’ creativity and innovation, are consistent
with the findings of studies by Cheung and Wong (2011), Choi, Kim, Ullah and Kang (2016),
Mohamed (2016), Nusair, Ababneh and Bae (2012), Qu, Janssen and Shi (2015), Slåtten and
Mehmetoglu (2015), and Wang, Tsai and Tsai (2014). For instance, drawing from a sample
of 182 supervisor–follower dyads from a restaurant, hotel, retail store, travel agent and bank,
Cheung and Wong (2011) found a positive relationship between transformational leadership
and employees’ creativity. They argued that employees tend to be loyal, and to rely heavily
on a transformational leader to support and inspire them in an Asian context. In other words,
they found that the attributes of a transformational leader could be adapted to accommodate
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the needs of creative followers. In a study of 420 leader–follower dyads in an energy

company in China, Qu, Janssen and Shi (2015) demonstrated that transformational leadership
was an important enabler of employees’ creativity. In a study of 500 employees and 150
supervisors working in five-star hotels in Egypt, Mohamed (2016) found that
transformational leadership positively impacts on employees’ creative behaviour. They
argued that transformational leaders provide workforce with support and encouragement to
think more creatively. Choi et al. (2016) in a study of 356 employees working in
manufacturing firms in South Korea discovered that transformational leadership positively
influences the innovation of employees. They claimed that leaders with transformational
behaviours encourage employees’ innovation by motivating them intellectually to create
solutions to problems which invigorate their innovation. Similarly, in a study of 345 frontline
employees working in hospitality organisations in Norway, Slåtten and Mehmetoglu (2015)
found that transformational leadership positively relates to employees’ innovation. They
argued that transformational leaders stimulate their employees and challenge them to adopt
innovative solutions in their work.
A supportive climate and culture for creativity and innovation is vital to advance and
enhance these facets of employees’ behaviours. Wan, Ong, and Lee (2005, p. 267) discussed
that ‘what is ultimately of crucial importance to organisations is the nurture and development
of an innovation-supportive culture’. The positive and significant associations reported
between perceptions of a supportive climate for innovation, and employees’ creativity and
innovation are consistent with the results of studies by Açıkgöza and Günsel (2011); Paulsen,
Callan, Ayoko and Saunders (2013); and Rosing, Frese and Bausch (2011). For example,
drawing from a sample of 104 participants in a large research and development (R&D)
company in Australia, Paulsen et al. (2013) found a positive and significant relationship
 between the perception of support for innovation and employees’ innovation. They argued
that in a supportive and encouraging climate each member of the workplace could feel
comfortable taking risks, examining new thoughts, and exchanging knowledge, ultimately
leading to creativity and innovation. In a study of 23 group leaders and 289 group members
in a manufacturing and processing company Černe, Jaklič and Škerlavaj (2013) argued that a
supportive climate for innovation is important in encouraging creativity in individuals and
that employees who work in a climate supporting creativity and innovation display high
degrees of creative performance. In a similar vein, Imran and Anis-ul-Haque (2011) noted
that creative and innovative behaviours usually involve making risky choice, and the climate
cannot be considered supporting if it does not provide proper structure and guidance.
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The results of this study show that transformational leadership has positive and
significant influences on the both creativity and innovation of employees in Iranian
organisations. Quantitative data provides evidence that people in management positions in
companies in Iran must practise and develop the behaviours of the transformational
leadership style in order to encourage and sustain subordinates’ creativity and innovation.
Furthermore, the findings of this study indicate that employees’ perceptions of a supportive
climate for innovation have a moderating effect on the relationships between transformational
leadership and employees’ creativity and innovation in organisations in Iran. Employees’
creativity and innovation can be facilitated by enhancement of the organisational climate, like
providing adequate time and resources for creativity and innovation. Leaders should improve
the perceptions of employees by valuing creative and innovative work. This suggests that
people in management positions need to provide an enough level of support for innovation in
order to have a positive impact on employees’ creativity and innovation. The results of this
study corroborate these ideas. However, to generalise these results, additional empirical
investigation is needed in the context of developing countries.

6. Limitations and Suggestions for Further Research

This study has different limitations that should be taken into consideration when interpreting
the results. This research is cross-sectional, and thus its design is a limitation as it may not
provide any conclusions on the causal associations between variables. A longitudinal design
would better explain the direction of connections between the variables. Also, the researcher
used perceptual data based on employees’ appraisal of their leaders, without consideration of
leaders’ evaluation.
 The findings of this study emerge from a particular national context, Iran; findings might
be different for employees working in different cultural, economical and environmental
conditions. Additionally, there is a lack of clarity of prior researches examining the direct
influence of transformational leadership and the moderating effect of employees’ perceptions
of a supportive climate for innovation in Iran for the purpose of comparing.
Since this study limited itself to survey method, a follow-up qualitative research would be
helpful to discover what leaders’ behaviours nurture and enhance employees’ creativity and
innovation. Also, while mostly transformational leadership style is compared with
transactional leadership style, the coming studies should evaluate the influence of both
leadership styles to find out which one is more pivotal in terms of employees’ creativity and
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innovation.
Last but not least, other data collection techniques such as focus group and interview
might be useful to comprehend the direct effect of transformational leadership on employees’
creativity and innovation, as well as, the moderating influence of employees’ perceptions of a
supportive climate for innovation on the transformational leadership—employees’ creativity
and transformational leadership—employees’ innovation relationships in depth.
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Author Biography

Dr Ashkan Khalili received his PhD in Management from RMIT University, Melbourne,
Australia. His research interests concern leadership and followership in organisation.
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Figure 1

Research Model

TL: Transformational Leadership; EPSCI: Employees’ Perceptions of a Supportive Climate

for Innovation; EC: Employees’ Creativity; EI: Employees’ Innovation.
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Figure 2

Scree Plots of the Moderating Effect

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TL: Transformational Leadership; EPSCI: Employees’ Perceptions of a Supportive Climate

for Innovation; EC: Employees’ Creativity; EI: Employees’ Innovation.

Table 1

Findings of the Measurement Model

Construct Factor AVE CR Cronbach’s

Loading Alpha
TL 0.62 0.70 0.80
1 0.50
2 0.62
3 0.63
4 0.47
5 0.51
6 0.52
7 0.63
8 0.55
9 0.49
10 0.50
 11 0.59
12 0.62
13 0.52
14 0.53
15 0.61
16 0.61
17 0.57
18 0.58
19 0.50
20 0.55
21 0.59
22 0.47
EPSCI 0.54 0.66 0.75
1 0.47
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2 0.53
3 0.53
4 0.54
5 0.60
5 0.62
7 0.58
8 0.48
9 0.57
10 0.50
11 0.64
12 0.52
13 0.69
14 0.55
15 0.64
16 0.59
EC 0.61 0.71 0.82
1 0.52
2 0.60
3 0.66
4 0.54
5 0.53
6 0.62
7 0.53
8 0.54
9 0.48
10 0.52
11 0.60
12 0.61
13 0.51
EI 0.56 0.68 0.79
1 0.60
2 0.61
3 0.58
4 0.52
5 0.45
6 0.44
 7 0.52
8 0.45
9 0.56
10 0.54
TL: Transformational Leadership; EPSCI: Employees’ Perceptions of a Supportive Climate
for Innovation; EC: Employees’ Creativity; EI: Employees’ Innovation.
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Table 2

Correlations between the Constructs and AVE

TL EPSCI EC EI
TL 0.683
EPSCI 0.431*** 0.671
EC 0.353*** 0.420*** 0.622
EI 0.221*** 0.333*** 0.348*** 0.586
Notes: Bold numbers on the diagonal represent the average variance extracted.
TL: Transformational Leadership; EPSCI: Employees’ Perceptions of a Supportive Climate
for Innovation; EC: Employees’ Creativity; EI: Employees’ Innovation.
***p < 0.001.
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