Analyzing the Effect of Transformational Leadership on Innovation and Organizational Performance

The purpose of this study was to analyze the effect of transformational leadership on innovation and business performance, while analyzing other work environment variables such as empowerment and climate for innovation in an integrated model. The employees of a private Nicaraguan company called Casa Pellas participated in this research and 292 online questionnaires were received and analyzed by using Partial least square (PLS) technique. The findings indicate transformational leadership does have a positive and highly significant relationship with empowerment and climate for innovation, which in turn climate for innovation does have a positive and highly significant relationship with innovation. Innovation has a positive and significant relationship with organizational performance as well.