The Mediating Effect of Employee Performance on Transformational Leadership Style and Organisational Innovation: A Case Study of the Hotel Industry in Saudi Arabia

Rapid changes in the global environment, as well as the fierce competition among hospitality companies to obtain competitive benefits are well-prepared leadership, high-performing employees and innovative approaches. Leadership, employee performance, and innovation are key factors that help the hotel industry remain competitive and provide excellent services. This paper aims to investigate the mediating effect of employee performance on transformational leadership style and organizational innovation in the hotel industry in Makkah and Madinah, Saudi Arabia. In this regard, studies that are related to the hotel industry in Saudi Arabia are scarce. This research, therefore, contributes to the hospitality industry studies, as well as the hoteliers. Seventy-two local and international five-star hotels in Makkah and Madinah are selected for the study analysis, and rank-and-file employees are targeted as the respondents. A total sample of 371 respondents is studied. A Google link containing the survey form is administered to the employees through the departments' heads at the selected hotels. The obtained data are statistically analyzed using SmartPLS. The findings showed that there is a positive mediation of creativity between intellectual stimulation and inspirational motivation on product innovation. This will, in turn, promote organizational innovation.