The impact of transformational leadership on business model innovation

Abstract

Leadership and leadership style are critical drivers of the business model innovation process. Business model innovation research has singled out transformational leadership as best suited for driving business model innovation. There is, however, an apparent lacuna in extant research in understanding how transformational leadership impacts the business model innovation processes and practices. This research investigated the nature of the relationship between the transformational leadership style and firm business model innovation processes. In this quest, the study explored how the components of transformational leadership of vision, intellectual stimulation, inspirational communication, supportive leadership, and personal recognition impact business model innovation. This breaking down of the transformational leadership style into its components enhanced the aim of understanding the relationship between transformational leadership and business model innovation in the face of environmental uncertainty. An online survey was conducted, and a questionnaire was sent to participants working across all industries in junior, middle, executive management, and supportive roles in South Africa. Purposive sampling with snowballing data collection technique was used to collect data from 113 respondents, and the data was used to assess the measuring instrument’s validity and reliability. Based on hierarchical multiple and moderated regression analyses, the study confirmed that the transformational leadership style positively impacted the business model innovation process. The transformational components of vision, inspirational communication, and supportive leadership positively impact business model innovation. Environmental uncertainty negatively moderates all the relationships. The study’s findings therefore proffered empirically validated evidence to suggest that transformational leadership positively impacts business model innovation