Organizations must learn to adapt to a rapidly changing business environment characterized by uncertainty and turmoil. Globalization and accessibility to goods and services are two environmental factors that may serve as the locus of such disturbances. The key to effective leadership in organizational adaptability is to create an innovative culture in the face of environmental uncertainty (Schmitt et.al., 2010).
The innovative culture comprises exploitation of existing competencies and exploration of novel innovations (Abidin et al., 2011). Exploitative and explorative innovations, also referred to as ambidextrous innovations, work in the balance between these two competencies, bringing competitive advantage and sustainable profitability (Schmitt et.al., 2010).
The relationship between leadership style and the likelihood of innovative success has been studied broadly. For example, in a study of public organizations in the United States, Damanpour and Schneider (2006) found that the adoption of innovation, organizational characteristics, and top managers’ attitudes toward innovation evidenced a stronger influence than the environment or demographic characteristics of high-level leaders. Regarding alignment between leadership style and innovation remains unclear (Rosing et al., 2011). The effectiveness of leadership according to Bledow et al. (2011) is subject to the degree of functionality of a leaders’ behavior “in stimulating and balancing the activities underlying innovation” (p.4). McGregor (1960) once claimed that organizations led by Theory Y leaders were innovative and creative; however, failure to innovate in most organizations led by theory Y leaders appeared both inevitable and “puzzling” (Senge, 1998, p.17).
It is asserted that the effectiveness of leadership cannot be predicted in an isolated environment (Thomas and Bendoly, 2009). While studying the relationship between leadership styles and ambidextrous innovations it would be beneficial to consider the uncertainty of the environment as the moderator. With similar point of view, Abidin et al. (2011) underline the firms' need to pursue ambidextrous innovations regarding their environments. If the environment is dynamic, it's better to introduce exploratory innovations. Otherwise, exploitative innovations seem to be appropriate, particularly in less competitive environments.
Perceived Environmental Uncertainty
Environmental uncertainty is characterized by unpredictable and rapid change, and believed to have an impact on individuals and firms operating within their sectors (Ensley et al., 2006). Waldman et al. (2001) argue that perceived environmental uncertainty, as a strong moderator variable, affects the relationship between charismatic leadership and organizational performance in a positive way. Ensley et al. (2006) used environmental dynamism as a moderator variable as well, but they found that, in contrast to Waldman et al. (2001) the effectiveness...