Enhancing innovation: the moderating role of hierarchy of authority between organizational leaders and organizational innovation

Purpose This study examines the moderating role of hierarchy of authority in the relationship between transformational and transactional leadership styles and organizational innovation. Design/methodology/approach A quantitative research design is applied. Data are collected from 118 employees from three firms (steel, textile and architecture) in Oman. SmartPLS based SEM and process macro by Hayes are used for data analysis. Findings Findings show that transformational leaders have a significant positive impact on organizational innovation (beta = 0.569) but transactional leaders have a significant negative impact (beta = −0.389). Hierarchy of authority does not have a significant impact on organizational innovation (beta = −0.008); however, it moderates the relationship between organizational leaders and organizational innovation (beta = 0.14). Practical implications This research provides insights for business owners to choose the suitable leaders and appropriate design for their businesses to achieve innovation strategy. They are required to have transformational leaders who inspire and encourage employees’ autonomy and adopt less hierarchical of authority. Originality/value Although the impact of leadership on organizational innovation is already established, the moderating impact of hierarchy of authority has not been investigated yet. This research aims to fill the gap. Furthermore, this research examines a hybrid of individual (leadership type) and organizational-level factors (hierarchy of authority) in anticipating organizational innovation. It confirms the usage of behavioral leadership theory and contingency theory to explain the relationship at both individual and organizational levels.