Organisations have to be ambidextrous to survive in modern times. This study, therefore, aims to investigate the influence of contextual leadership on exploratory and exploitative innovation. Environmental dynamism was the moderator in this relationship, and innovation climate was the mediator.
The research design was a quantitative study, using a Web-based survey questionnaire, which consisted of valid and reliable scales. There were 1,204 respondents who completed the survey. Analyses included reliability, validity tests and structural equation modelling to test the hypothesised relationships among the variables.
The results show that exploitative and exploratory innovation is predicted by the innovation climate, which in turn is predicted by contextual leadership. The findings include a slight moderating effect of environmental dynamism on these relationships. The results suggest that contextual leadership is a significant predictor for improving innovation climate.
As contextual leadership explains 33% of the variance in organisational climate, companies can benefit from developing their leaders to create climates that promote innovation. At increased levels of environmental dynamism, innovation efforts should increase.
Contextual leadership is a crucial element to build innovation-friendly workplaces. The study addresses the gap in research on the influence of contextual leadership on exploitative and exploratory innovation with the mediating and moderator effect on this relationship.
