Innovation Capabilities and Authentic Leadership: Do They Really Matter to Firm Performance?

The purpose of this article was to examine the impact of innovation capabilities and authentic leadership on firm performance in the banking sector. A quantitative approach was employed in this study for collecting data from 220 employees of several banks in the east coast of Malaysia using a survey method. To analyze the data and reach conclusions, SPSS and structural equation modeling (AMOS) were used. The results showed that product innovation and service innovation have significant positive effects on firm performance. Furthermore, the outcomes confirmed that process and marketing innovations play important roles in affecting firm performance. Finally, the results revealed that authentic leadership has a significant positive effect on firm performance. The outcome increases our understanding with regards to the role of innovation capabilities and authentic leadership in affecting firm performance in the banking sector.