Driving innovation in banking sector: the role of transformational leadership and knowledge sharing

Purpose This study aims to investigate the influence of transformational leadership (TL) on product and process innovation in the banking sector, emphasizing the moderating role of knowledge sharing (KS). While TL has been recognized for fostering innovation through mechanisms such as idealized influence, intellectual stimulation, and individualized consideration, its interplay with KS remains underexplored in the context of developing economies. Design/methodology/approach A quantitative, cross-sectional research design was adopted. Data were collected from 418 employees working in banks in Jordan, using self-administered in person survey. Partial Least Squares Structural Equation Modelling (PLS-SEM) was employed to test the hypotheses and validate the proposed conceptual framework. Findings The findings affirm a direct positive relationship between TL and both product and process innovation. Moreover, KS showed a moderation effect on the relation between TL on one side and both process and product innovation on the other. The impact of TL on the ProdInn and ProcInn was strengthened with the moderation of KS among employees with banking sector. Originality/value The study provides valuable insights for both theory and practice, recommending enhanced TL practices and organizational strategies to foster innovation, including building trust and encouraging knowledge-sharing behaviors. Future research should explore these dynamics across diverse sectors and longitudinal contexts to deepen understanding of TL’s role in driving innovation. Practically, the findings underscore crucial considerations for banking sector aiming to effectively leverage TL to improve process and product innovation that will lead to improved performance and competitive advantage.