Leadership style, emotional intelligence and innovative work behaviour in microfinance institutions in Kenya

Abstract

Emotional intelligence is a person’s ability to recognize personal feelings and those of others and to manage their emotions. Despite the extensive research on the emotional intelligence and innovative work behavior, little has been done on the mediating effect of leadership styles in microfinance institutions. Studies on the effect of emotional intelligence and innovative work behavior have borne contradictory results. The purpose of this study is to determine the mediating effect of leadership styles on the relationship between manager’s emotional intelligence and innovative work behaviour. The specific objectives were: to determine the effect of; emotional intelligence on innovative work behavior, emotional intelligence on transformational leadership style, transformational leadership style on innovative work behavior, emotional intelligence on transactional leadership style, transactional leadership style on innovative work behaviour, and to establish the mediating effect of transformational and transactional leadership style on the relationship between emotional intelligence and innovative work behavior. The study was based on three theories namely; Kirton adaptive innovation theory, emotional intelligence leadership theory, and the full range theory of leadership. The study employed cross-sectional survey design. Questionnaires were used to collect data from 155 branch managers and 465 support staff. Data was analyzed using both descriptive and inferential statistics. Hierarchical regression analysis was used to test the hypotheses. The study found positive and significant relationship between emotional intelligence and innovative work behavior, emotional intelligence and tr ansformational leadership as well as transformational leadership style and innovative work behavior. A negative and significant relationship was found between emotional intelligence and transactional leadership style. It was also established that transactional leadership style negatively and significantly affects innovative work behavior. The results also indicated that transformational leadership style mediates the relationship between emotional intelligence and innovative work behavior while transactional leadership style had partial mediating effect. The results provide evidence on new theoretical insight into factors affecting innovative work behaviour by incorporating leadership style as intermediary that strengthen innovative behaviors. This study recommends that microfinance institutions should consider engaging transformational leaders. Policy makers should provide measures of incorporating and building transformational leadership style, emotional intelligence and innovative work behavior to gain competitive advantage and provide innovative solutions in dynamic business environment