Edinburgh Napier University

  PURPOSE: The purpose of this thesis is to investigate the impact of transformational leadership and ethical leadership on innovation. Drawing on social learning and social information processing theory, this research focusses on team level processes. This study considers direct effects as well as indirect and moderated indirect effects through team engagement and team developmental climate.

DESIGN: This study follows a positivist research paradigm and a survey method, using questionnaires containing items on all variables of interest. The sample consists of 325 employees of an Irish energy company. Data were analysed in SPSS23 and AMOS25, using a range of statistical tests, whereby hierarchical linear regression is used to test the hypothesised relationships.

FINDINGS: The results show that both leadership concepts are directly and indirectly related to team innovation through team engagement and through team developmental climate. Team developmental climate further moderates the relationship between both leadership constructs and innovation through team engagement. Similarly, team engagement moderates the relationship between both leadership concepts and innovation through team developmental climate. When controlling for the respective other leadership variable however, the effect of ethical leadership became statistically non-significant and therefore redundant in the presence of transformational leadership.

ORIGINALITY: This study extends the literature in several ways. First, it explores the relationship between ethical leadership and innovation as an outcome which is neglected in the literature. Second, it expands the knowledge on the relationship between transformational and ethical leadership and innovation by investigating the role of team developmental climate and team engagement, and looks at the team processes involved by conceptualising the relationship at the team level. Finally, in investigating two leadership constructs, this study contributes to current debates around the need for diverging positive forms of leadership.

IMPLICATIONS: This study has clear practical implications for leaders and HR professionals. It points towards the importance of transformational and ethical leadership for innovation, and discusses how HR and leaders can create an environment that strengthens the impact of these forms of leadership on innovation.