Strategic leadership for exploration and exploitation: The moderating role of environmental dynamism

Abstract

This study advances prior theoretical research by linking transformational and transactional behaviors of strategic leaders to two critical outputs of organizational learning: exploratory and exploitative innovation. Findings indicate that transformational leadership behaviors contribute significantly to adopting generative thinking and pursuing exploratory innovation. Transactional leadership behaviors, on the other hand, facilitate improving and extending existing knowledge and are associated with exploitative innovation. In addition, we argue that environmental dynamism needs to be taken into account to fully understand the effectiveness of strategic leaders. Our study provides new insights that misfits rather than fits between leadership behaviors and innovative outcomes matter in dynamic environments. Hence, we contribute to the debate on the role of strategic leaders in managing exploration and exploitation, not only by examining how specific leadership behaviors impact innovative outcomes, but also by revealing how the impact of leadership is contingent upon dynamic environmental conditions.