Abstract
Leadership, innovation, and performance are essential factors to achieve the desired sustainable profitability of companies. The relationship between these variables is one of the keys to organizational success, although their study has proven to be complex. The purpose of this chapter is to analyse the impact of leadership on the relationship between innovation and performance in the Portuguese hotel sector. To answer this challenge, a survey was carried out to top and middle managers of four-star and five-star hotel units. The existence of a positive correlation between innovation and performance was found; however, leadership has not been shown to have a moderating effect on the relationship. The work highlights several important contributions to the hotel industry and identifies aspects that, when well implemented and developed, can lead to superior performance in organizations.
TopIntroduction
Tourism companies operate in a competitive world, where innovation is an essential condition for the survival of companies (Sundbo et al., 2007). A more dynamic and rapidly changing business environment has forced the hospitality industry to resort to effective leadership processes as a way of motivating employees to obtain the desired results (Huertas-Valdivia et al., 2019). Considering the constant changes imposed by global competition, it is likely that the success and competitiveness of hotels depend on the ability of managers to promote innovation in their teams and organizations. Leadership plays a key role in promoting firm innovativeness (Khan et al., 2020). The definition of leadership has changed considerably in the last decades, the initially concept linked to the figure of “great man” fell out of use, the most recent approaches focus on the transformational dimension of the leader (Brownell, 2010). This dimension is reflected in a collaborative and relationship attitude, establishing open communication, forming and supporting the team effort and providing the necessary resources to fulfil a shared vision (Brownell, 2010; Humphreys & Einstein 2003; Stone et., 2004).
Leadership is a critical factor in organizations, as it can affect goals, visions, strategy, social environment and employee motivation (Yukl, 2013). Leadership is the ability to influence others to voluntarily make decisions that promote the short and long-term growth of companies (Nejad & Rowe, 2009).
Pioneering leadership studies originate from Ohio and Michigan Universities identified two main types of behavior among the surveyed leaders. Leadership oriented to people, as the leader is attentive to subordinates, respects their ideas and feelings and establishes mutual trust. On the other hand, task-oriented leadership, the degree to which the leader is task-oriented and directs subordinate work activities to achieve the goal (Daft, 2008).
The literature has shown that leaders influence creativity and innovation in different ways, increasing the intrinsic motivation of the follower (Jung et al., 2003), articulating an inspiring vision (Gupta & Singh, 2013; Jong & Hartog, 2007; Lee, 2008), providing support (Cheung & Wong, 2011), developing a relationship based on trust and respect (Volmer, Spurk & Niessen, 2012), enabling and sharing decision-making (Krause, 2004; Slåtten, Svensson & Sværi, 2011; Somech, 2006), delegating (Krause, Gebert & Kearney, 2007) and promoting high ethical standards (Valentine et al., 2011).
Innovation contributes to the financial performance of the hotel industry (Chang, Gong & Shum, 2011), sales growth and market value (Nicolau & Santa-Maria, 2013); increases customer loyalty and satisfaction (Enz et al., 2010; Ottenbacher & Gnoth, 2005; Victorino et al., 2005) and sustains a hotel's competitive advantage (Fraj, Matute & Melero, 2015).
Innovativeness in the hotel industry as the ability to respond faster and more flexibly to environmental changes (Fraj, Matute &Melero, 2015). Today’s challenging and dynamic hotel industry requires organisations to consider innovation and differentiation in their daily practices (Nagy, 2014) in response to emergent challenges (Chen, 2011; Nagy, 2014; Ottenbacher, 2007, Sandvik, Duhan & Sandvik, 2014).
Key Terms in this Chapter
Transactional Leadership: Or transactional management is the part of one style of leadership that focuses on supervision, organization, and performance. Some typical tactics of this type of management include strategy, efficiency goals, economies of scale and quality differentiation. Transactional managers focus on performance related tasks and goals ( Stajkovic, 2019 ).
Hospitality Industry: Is a broad category of fields within the service industry that includes lodging, food and drink service, event planning, theme parks, travel and tourism. It includes hotels, tourism agencies, restaurants and bars. Innovation is an idea, practice, or object that is perceived as new by an individual or other unit of adoption ( Everett, 2003 ). Leadership is the art of influencing people to attain group objectives willingly. “Leadership is influence, nothing more, nothing less” (Maxwell, 2019 AU121: The in-text citation "Maxwell, 2019" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. ). Organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on assets, return on investment, etc.); (b) product market performance (sales, market share, etc.); and (c) shareholder return (total shareholder return, economic value added, etc.) ( Richard et al., 2009 ).
Transformational Leadership: Is a theory of leadership where a leader works with teams or followers beyond their immediate self-interests to identify needed change, creating a vision to guide the change through influence, inspiration, and executing the change in tandem with committed members of a group (; This change in self-interests elevates the follower's levels of maturity and ideals, as well as their concerns for the achievement ( Bass, 1999 ).