From Leadership Relationships to Business Success: Using Innovation Management as a Mediator between LMX and Organizational Performance

This study presents the results of using innovation management as a mediator between LMX and organizational performance. The authors suggest that high-quality leader-subordinate relationships foster trust, knowledge sharing, and extra-role behavior among employees. These factors stimulate the implementation of innovation management practices and ultimately enhance organizational performance. The study employed a quantitative design. Respondents included representatives of senior and junior management, as well as their team members from service sector organizations. The statistical analysis comprised demographic analysis, reliability testing, and correlation and regression analyses of variables using SPSS and Smart PLS. It was found that LMX is positively associated with organizational success, with innovation management mediating this relationship. Specifically, strong LMX relationships facilitate adaptive decision-making process and foster managerial and process innovations, which leads to improvements in both financial and non-financial organizational performance.