A Study of Innovation Culture: The Effect of Transformational Leadership on Employee's Performance

The background of this research is the importance of an organization building a culture of innovation as a tool to increase the growth of an organization on the one hand, on the other hand, the growth of an organization certainly cannot be separated from employee performance and the leadership model applied in the organization. This study aims to reveal the effect of transformational leadership on employee performance with a culture of innovation as a mediating variable. This research uses a quantitative approach with a survey method. Respondent research as many as 78 employees of a private bank in the city of Magelang central Java Indonesia. The data collection technique was a questionnaire and the data was analysed with Partial Least Square (PLS). The results revealed that transformational leadership influences both directly and indirectly through innovation culture as an intervening variable on employee’s performance. The results of this study emphasize the important role of a leader who applies a transformational leadership model to be able to foster a culture of innovation and improve employee performance.