Research pick: Leading innovation - "The effect of leadership and organisational culture on organisational innovation"

A study in the International Journal of Services Technology and Management has investigated the effects of leadership style and organisational culture on innovation within companies. The research used qualitative interviews across diverse organizations in Sweden and Sri Lanka and suggests a nuanced relationship between leadership, organizational culture, and innovation and hints at how these might be nudged to boost innovation.

Ruzlin Akter, Shashiprabha Rathnayaka, and Zahra Ahmadi of the University of Gävle in Gävle, Sweden, surveyed six different organisations and found from their analysis of the results that specific organizational cultures, such as process- and job-oriented cultures, and certain leadership styles, like transactional leadership, can have either a positive or a negative effect on the development of innovation within those companies. However, they demonstrated that result-oriented, employee-oriented, and a pragmatic organisational culture when combined with transformational leadership can be much more effective in fostering innovation.

Of particular interest, in Sweden is that there can be a unique influence of organizational culture and leadership on specific companies as was found to be the case with one Swedish outlier when compared with its global counterparts. Indeed, whereas many companies have adapted their organizational cultures and leadership styles to enhance innovation, this outlier has adhered to a staid and traditional approach to management and organisational culture and has suffered the negative impact of such a stance on how well it innovates when compared with more forward-looking companies elsewhere.

From a managerial perspective, the team suggests that the study underscores the part leaders can play within a company as role models. Companies benefit, it seems from a management style that emphasizes openness, flexibility, appreciation of ideas, and the encouragement of employee creativity and empowerment.

These insights might be used to offer companies that are less innovative, but nevertheless aspirational, a practical approach to the identification of obstacles to innovation within their organisation. This could help them improve their management style by removing constraining processes, unlocking communication channels, improving transparency, and removing any culture of fear of change and mistakes. Such an approach should stand any company in good stead for becoming more competitive, more innovative, and making a greater contribution to the economy.

Akter, R., Rathnayaka, S. and Ahmadi, Z. (2023) ‘The effect of leadership and organisational culture on organisational innovation’, Int. J. Services Technology and Management, Vol. 28, Nos. 5/6, pp.360–388.