LAUSR

The purpose of this paper is to examine the nature of the relationship between leadership styles, organisational climate, innovation and organisational performance. The study was quantitative in nature using questionnaires submitted by 231 participants from various companies in South Africa. The statistical analysis was based on Structural Equation Modelling (SEM) using the path analysis. The results from SEM reveal that transformational leadership style influences the climate for innovation and organisational performance directly and innovation indirectly. Similarly, a direct relationship between transactional leadership style and organisational performance was found, but no relationship was found between transactional leadership style and innovation. The findings assist managers to better understand which leadership style to adopt when the aim is to increase organisational performance using innovation as an enabler. This is the first study that investigated the nature of the relationship between leadership styles, organisational climate, innovation and organisational performance taking into account the nature of innovation (i.e., incremental and radical) and the stage at which innovation is operating in the innovation process.