The influence of leadership on product and process innovations in China: The contingent role of knowledge acquisition capability

• Transformational leadership has stronger effect on product innovation than transactional leadership.
• Transactional leadership has stronger effect on process innovation than transformational leadership.
• Knowledge acquisition capability (KAC) strengthens the effect of transformational leadership on process innovation.
• KAC strengthens the effect of transactional leadership on product innovation.
• KAC attenuates the positive relationship between transformational leadership and product innovation.
• KAC attenuates the positive relationship between transactional leadership and process innovation.

Building upon upper echelon theory and a dynamic capability perspective, this study investigates the relative effectiveness of two types of leadership on product and process innovations in emerging economies. The authors found that in China transformational-charismatic (TC) leadership has a stronger effect on product innovation, while transactional leadership has a stronger effect on process innovation. The authors further study the boundary conditions of leadership and empirically examine the contingent effects of organizational level capability on the relationships between leadership and innovation. The moderating effects are intriguing: knowledge acquisition capability strengthens the effect of TC leadership on process innovation and that of transactional leadership on product innovation. However, knowledge acquisition capability attenuates the positive relationship between TC leadership and product innovation as well as the positive relationship between transactional leadership and process innovation.