The mediating role of innovative climate on the relationship between transformational leadership and firm performance in developing countries: the case of Ghana

Purpose: Innovative climate has now become a necessity to developing creative behaviours amongst employees. Hence, this study examines the mediating role of innovative climate on the relationship between transformational leadership and organizational performance in a developing context, Ghana. Design/methodology/approach: The study employs quantitative research approach and cross-sectional survey design to collect data from 400 employees in 10 selected manufacturing companies in Ghana. The data were analysed using descriptive statistics, correlation and macro-PROCESS regression techniques in SPSS. Findings: It is established that all the dimensions of transformational leadership have direct positive and significant effect on organizational performance. At the same time, innovative climate significantly mediated the causal relationship between all the dimensions of transformational leadership and organizational performance, thus creating indirect effect of transformational leadership on organizational performance which is greater than the direct effect. Originality/value: This study provides new findings to bridge the gap in the general leadership literature by revealing that innovative climate is an effective mediator in the relationship between the dimensions of transformational leadership and organizational performance in a developing country context. Therefore, this study provides evidence for enhancing organizational performance with transformational leadership through innovative climate.