Stimulating exploitative and exploratory innovation through transformational leadership and knowledge management capability: the moderating role of competitive intensity

Abstract

Purpose Given the importance of leadership practices and knowledge resources in fostering innovation capabilities of firms, the purpose of this study is to explore the influence of transformational leadership on exploitative and exploratory innovation via mediating role of knowledge management capability. This study also attempts to increase understanding of the appropriate mechanisms for firms to pursue innovation capability by examining the moderating mechanism of competitive intensity. Design/methodology/approach This study utilized the structural equation modeling and cross-sectional design to test hypotheses in the proposed research model using survey data collected from 351 participants in 120 manufacturing and service firms. Findings The findings indicate that transformational leadership induces greater effect on exploratory innovation compared to its effect on exploitative innovation. The mediating role of knowledge management capability between transformational leadership and aspects of innovation capability is also supported. Especially, the influences of knowledge management capability on exploratory innovation capability are enhanced and depended on the degree of competitive intensity. Research limitations/implications Future research should examine the mediating mechanisms of knowledge acquisition, knowledge sharing and knowledge application to provide deeper insight on the role of specific components of knowledge management capability in linking transformational leadership and innovation capability. Practical implications The paper highlights the important role of transformational leadership practices for fostering knowledge management capability and specific aspects of innovation capability under high level of competitive pressure. Originality/value The paper is unique in the attempts to provide a prospective solution for firms to pursue and improve innovation based on the meaningful insights on the mediating role of knowledge management capability and moderating effect of competitive intensity in the relationship between transformational leadership and specific dimensions of innovation capability.