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