Two Leadership Styles, One Goal: How to Actually Get Employees to Innovate

Why It Matters

Innovation is no longer optional for organisations, it is essential for survival. Yet many firms still struggle to turn leadership ambition into real employee-driven ideas.

Key Takeaways

• Not all leadership styles drive innovation in the same way; some rely on systems, others do not
• Strong HR practices can double the impact of certain leaders on innovation
• Aligning leadership style with organisational structure is critical for results

Two Paths to Innovation

Leaders often assume that inspiring employees is enough to spark innovation. This research shows a more nuanced reality. It identifies two leadership styles - transformational leadership (TL) and innovation-oriented leadership (IOL) - both of which drive innovation through a combination of direct and system-mediated pathways, albeit to different degrees.

Transformational leaders motivate through vision, trust and personal encouragement. They energise employees, build confidence and create psychological safety, enabling individuals to generate and act on ideas directly. At the same time, part of their impact is reinforced through organisational systems such as feedback and collaboration structures.

Innovation-oriented leaders take a more structurally embedded approach. They shape the organisational context for innovation by emphasising experimentation, collaboration and structured support for idea development. While this leadership style has a meaningful direct effect on innovation, its impact is more strongly amplified through aligned HR systems.

In short, both styles drive innovation directly and indirectly -the difference lies not in the type of effect, but in the degree to which each relies on organisational systems.

The Hidden Engine: People Management

At the heart of the research is innovation-oriented people management - how organisations design roles, feedback systems and work environments to support creativity and experimentation.

These practices include autonomy in decision-making, developmental feedback, teamwork structures and a culture that supports risk-taking. Rather than acting as a simple enabler, these systems interact with leadership to strengthen innovation outcomes.

The findings show that this “people management engine” plays a stronger mediating role for innovation-oriented leadership than for transformational leadership. Specifically, HR systems account for approximately 52% of IOL’s total effect on innovation, compared to about 26% for TL.

Importantly, this does not mean that IOL depends entirely on HR systems. A substantial portion of its impact remains direct. Instead, the results indicate that IOL is more strongly complemented by organisational systems, whereas TL is less reliant but still partially supported by them.

This distinction helps explain why some organisations invest in innovation programmes but see limited results - not because leadership fails, but because leadership and systems are not sufficiently aligned.

What the Data Shows

The study surveyed 158 employees across innovation-driven organisations in Singapore. The results confirm that both leadership styles significantly enhance innovative work behaviour.

Transformational leadership shows a strong direct effect, primarily through motivation, trust and psychological safety, while also benefiting from partial reinforcement through HR systems.

Innovation-oriented leadership also demonstrates a strong total effect on innovation, with both direct influence and a substantial mediated component through organisational systems.

Crucially, HR systems mediate approximately 52% of IOL’s total effect and 26% of TL’s effect. These figures reflect the relative strength of indirect pathways, not total dependence.

Business Implications

For business leaders, the message is clear: there is no one-size-fits-all approach to driving innovation.

In organisations with limited resources or rigid hierarchies such as traditional manufacturing or public sector settings, transformational leadership may be the better fit. Leaders can drive innovation through vision, trust and empowerment, even when formal systems are weak.

In contrast, fast-moving industries like technology or retail should invest in both leadership and HR infrastructure. Innovation-oriented leadership works best when supported by strong systems that encourage experimentation and collaboration.

For HR leaders, the study highlights a strategic opportunity. HR is not just a support function, it is a key driver of innovation. By designing systems that promote autonomy, feedback and teamwork, HR can amplify the impact of leadership across the organisation.

Policymakers can also take note. Supporting leadership development alone is not enough. Investment in organisational capabilities, especially HR systems, can significantly strengthen a nation’s innovation performance.

Ultimately, the research shows that innovation is not just about having the right leaders. It is about creating the right combination of leadership and systems. When these align, organisations unlock their full creative potential.

Authors and sources

Authors: Qiang Fu, Joo Seng Tan

Original article: International Journal of Innovation Science

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