ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

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The Role of Leadership Approaches in Driving Innovation

Performance within the Oil Manufacturing Sector

Amir Aris

, Nurul Hasyimah Mohamed

, Eirin Norezetty Edora Roslan

, Nor Hazana Abdullah

1,2,3

Fakulti Pengurusan Teknologi dan Teknousahawanan, Universiti Teknikal Malaysia Melaka

Fakulti Pengurusan Technology Dan perniagaan, University Tun Hussein Onn Malaysia

Corresponding Author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.92800012

Received: 10 November 2025; Accepted: 18 November 2025; Published: 18 December 2025

ABSTRACT

In an increasingly competitive global environment, organizations are under pressure to adopt strategies that

enhance innovation performance and sustain long-term growth. Leadership approaches are particularly critical,

as leaders shape organizational culture, serve as role models, and directly influence employee engagement and

innovative behaviour. Within the oil manufacturing sector, where innovation is vital for maintaining

competitiveness, leadership strategies can act as key drivers of organizational success.

This study investigates the relationship between leadership approaches and innovation performance in the oil

manufacturing industry. Using a purposive sampling method, data were collected from 103 subordinate staff

through a structured questionnaire designed to capture perceptions of leadership behaviours and their impact on

innovation. The data were analysed quantitatively to assess the strength and significance of these relationships.

The findings reveal a significant positive association between leadership approaches and innovation

performance, confirming that effective leadership strategies foster greater innovative capacity within

organizations. These results highlight the importance of cultivating leaders who demonstrate vision, role-model

behaviours, and supportive practices to drive innovation outcomes. The study contributes to the growing body

of literature on leadership and innovation, while offering practical implications for managers and policymakers

seeking to design leadership development programs that enhance organizational innovation performance in the

industrial sector.

Keywords:“Leadership Strategies” “Innovation Performance” “Oil Manufacturing Industry” “Organizational

Innovation” “Employee Engagement”

INTRODUCTION

The oil industry is undergoing rapid transformation, necessitating the adoption of new leadership strategies to

ensure sustainability and competitiveness in the future. Leadership that actively engages with the workforce is

recognized as a critical driver of innovation development within this sector (Duane, 2021). In line with the

demands of Industry 4.0, organizations are increasingly required to integrate innovation, digitalization, and

emerging technologies into their strategic frameworks, complemented by forward-looking leadership approaches

(Dengke & Minxin, 2019).

This study is designed to examine the relationship between leadership strategies and innovation performance

within the oil manufacturing sector. While existing research has extensively explored the influence of leadership

approaches such as transformational, transactional, and laissez-faire leadership on innovation performance, most

studies employ multiple linear regression for prediction and analysis. This study seeks to address this gap by

further advancing knowledge on how leadership strategies influence innovation performance, with particular

emphasis on the oil manufacturing industry in Malaysia.

The relevance of leadership strategies in driving innovation is particularly salient given the evolving industrial

and economic context. According to Jinhua (2020), the oil manufacturing industry must adopt technology-driven

ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

Page 113

www.rsisinternational.org

innovation practices to improve energy efficiency, achieve sustainable economic growth, and enhance

employees’ innovative capacity. The adoption of big data analytics, digital automation, and cloud computing has

already facilitated technology-enabled innovation in manufacturing (Kuo & Kusiak, 2019).

In Malaysia, the pursuit of innovation has been a national priority, positioned as a catalyst for long-term

economic transformation. As the nation moves toward becoming a knowledge-based economy, innovation

performance is increasingly regarded as a benchmark of progress. The Global Innovation Index (GII) 2021

ranked Malaysia 33rd globally, reflecting notable advancements in institutional frameworks, human capital

development, infrastructure, market sophistication, and knowledge outputs (World Intellectual Property

Organization, 2021). Policy initiatives such as the National Policy on Science, Technology, and Innovation (STI)

introduced in 2013 by the Ministry of Science, Technology, and Innovation (MOSTI), alongside programs such

as the National Technology and Innovation Sandbox and the Malaysia Productivity Blueprint, have been pivotal

in cultivating innovation ecosystems across diverse sectors. For policymakers and stakeholders, evaluating the

effectiveness of these policies is crucial in formulating strategies to further strengthen innovation performance.

The oil and gas (O&G) sector have historically played a central role in Malaysia’s economic development,

contributing significantly to national revenue and energy security. However, structural declines in the global

fossil fuel industry, frequent price volatility, and the relative growth of Malaysia’s broader economy have placed

mounting pressures on the sector. In particular, the national oil company, Petronas, faces the dual challenge of

sustaining profitability while simultaneously contributing to public finances and driving technological

advancement (Bhattacharya & Hutchinson, 2022). These structural challenges underscore the urgency of

rethinking leadership and innovation strategies within the industry to ensure resilience and competitiveness.

Against this backdrop, the present study focuses on AworldTec Engineering Sdn. Bhd., a company within

Malaysia’s oil manufacturing sector, as a case study to explore the nexus between leadership strategies and

innovation performance. By situating leadership strategies specifically transformational, transactional, and

laissez-faire approaches as independent variables, this research seeks to provide empirical insights into how

leadership influences innovation outcomes. The study is expected to contribute to both academic literature and

practical applications, offering valuable guidance for industry practitioners, policymakers, and researchers

seeking to enhance innovation capacity in Malaysia’s oil manufacturing sector.

Problem Statement

AworldTec Engineering Sdn. Bhd. (AWESB), established in 2001 and headquartered in Kerteh, Terengganu, is

a wholly Bumiputera-owned company with diversified operations in trading and supply, manpower services,

inspection and asset integrity, and ICT consultation. Despite its mission to provide innovative solutions for the

energy sector and its ambition to emerge as a global leader in petrochemicals and oil and gas (O&G), the

company faces substantial challenges in sustaining innovation performance.

The broader Malaysian O&G sector, historically a significant contributor to national revenue, is experiencing

structural pressures due to volatile global oil prices, declining fossil fuel reserves, and the global transition

toward renewable energy (Bhattacharya & Hutchinson, 2022). These dynamics place increasing financial and

technological burdens on Petronas and related firms, demanding substantial investments in research,

development, and innovation. Concurrently, environmental concerns related to emissions, resource depletion,

and sustainability further underscore the need for O&G companies to balance profitability with responsible

practices.

For AworldTec, these external challenges are compounded by internal organizational constraints. The company

struggles to foster an innovative culture among employees, largely due to gaps in intellectual capital

management, limited absorptive capacity, and insufficient collaboration within and across business units

(Mukaro, Deka, & Rukani, 2023). Financial constraints, labour shortages, and inadequate access to advanced

technologies further restrict the firm’s ability to innovate effectively. Despite revenue growth, AworldTec’s

profitability has declined sharply in recent years, revealing inefficiencies in strategic financial and operational

management. These conditions threaten the company’s ability to maintain competitiveness, attract and retain

talent, and invest in innovation-driven initiatives.

ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

Page 114

www.rsisinternational.org

At the national level, Malaysia has introduced policies such as the National Policy on Science, Technology, and

Innovation (2013), the National Technology and Innovation Sandbox, and the Malaysia Productivity Blueprint

to strengthen innovation capacity. However, inconsistent implementation and limited infrastructure support

continue to hinder firms’ ability to fully capitalize on these initiatives. For AworldTec, inadequate digital

infrastructure, constrained market access, and stiff competition from domestic and international firms exacerbate

existing limitations.

In this context, leadership strategies (transformational, transactional, and laissez-faire) are critical for driving

organizational innovation performance. Effective leadership practices influence employee engagement,

knowledge sharing, and organizational adaptability, all of which are essential to navigating the complexities of

Malaysia’s oil manufacturing industry. While prior studies have examined the relationship between leadership

strategies and innovation performance, findings have been inconsistent, fragmented across different contexts,

and insufficiently applied to the oil manufacturing sector.

Therefore, there is a clear need for a comprehensive investigation into how leadership strategies influence

innovation performance within Malaysian oil manufacturing firms, using AworldTec as a focal case. Such a

study not only addresses theoretical gaps in leadership–innovation linkages but also offers practical insights for

enhancing innovation capacity and sustaining competitiveness in an industry facing unprecedented challenges.

LITERATURE REVIEW

To establish a clear research direction, the study is positioned within a broader scholarly and practical

perspective. This chapter begins by outlining the background of innovation performance, followed by an

overview of innovation that traces its historical focus, current priorities, and the challenges associated with its

implementation. Then examines the value of leadership strategies and their contribution to enhancing innovation

performance. This is followed by a review of prior studies, which explores the relationship between leadership

strategies, organizational values, and innovation performance, culminating in the formulation of hypotheses. The

conceptual model underpinning the current study, reflecting the proposed linkages between the constructs. The

final section offers a summary of the anticipated relationships, providing a foundation for the subsequent

empirical analysis.

CONCEPTUAL FRAMEWORK

ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

Page 115

www.rsisinternational.org

Leadership Strategies and Innovation Performance

Leadership strategies are widely acknowledged as a critical determinant of innovation performance across

industries. They influence how organizations allocate resources, encourage creativity, and integrate knowledge

into practice. Leadership serves not only as a guiding force for corporate vision but also as a catalyst for

innovation by shaping culture, motivating employees, and aligning strategic objectives with market realities

(Sethibe & Steyn, 2015). In the context of highly dynamic industries, such as oil and gas, leadership strategies

provide the structural and cultural foundation necessary to maintain competitiveness.

Transformational, Transactional, and Laissez-Faire Leadership

Different leadership styles exert varying effects on innovative outcomes. Transformational leadership,

characterized by vision-building, intellectual stimulation, and individualized consideration, is strongly

associated with enhanced creativity and innovative capacity (Alblooshi, Shamsuzzaman, & Haridy, 2021).

Transactional leadership, focused on contingent rewards and performance monitoring, contributes to efficiency

and short-term performance but may limit exploration innovation if overly dominant. In contrast, laissez-faire

leadership, marked by avoidance of decision-making, is generally linked to weaker innovation performance due

to lack of guidance and accountability. Collectively, these approaches underscore the importance of leadership

strategy selection in fostering innovation within organizations.

Strategic Leadership and Innovation in Manufacturing Firms

Beyond specific leadership styles, strategic leadership is considered fundamental to aligning innovation

initiatives with organizational goals. O’Regan, Ghobadian, and Sims (2004) highlighted that strategic leadership,

when integrated with corporate planning, enables manufacturing firms to adapt to environmental change and

sustain performance. Similarly, Ilyas, Munir, and Sobarsyah (2017) found that strategic leadership coupled with

entrepreneurial orientation enhances small and medium enterprise (SME) performance, with innovation acting

as a mediating factor. Schaedler, Graf-Vlachy, and König (2022) further emphasized that strategic leadership

fosters resilience, allowing firms to maintain innovation capacity during crises. These studies collectively affirm

that leadership strategies must balance visionary guidance with operational execution to achieve innovation

success.

Leadership, Human Capital, and Organizational Sustainability

Leadership strategies also play a crucial role in developing human capital, which is essential for sustaining

innovation. Muthimi and Kilika (2018) demonstrated that leadership strategy creates a roadmap for integrating

human resource development with long-term sustainability goals. By investing in knowledge, skills, and

innovative capabilities, leaders strengthen organizational absorptive capacity and improve responsiveness to

technological and market changes. This highlights the interdependence between leadership, employee

engagement, and innovation outcomes.

Innovation Performance in the Malaysian Context

In Malaysia, innovation performance has been strongly linked to national development policies and industrial

practices. The National Policy on Science, Technology, and Innovation (STI) introduced in 2013 emphasizes

innovation as a driver of economic transformation (MOSTI, 2013). At the same time, Malaysia’s oil and gas

sector faces mounting challenges due to resource depletion, global market volatility, and the structural decline

of fossil fuels (Onn, 2022; Saad, 2016). These conditions place pressure on firms to pursue technological

innovation and sustainability practices to remain viable. However, empirical studies suggest that inconsistent

policy implementation, infrastructure limitations, and resource constraints hinder the translation of policy into

firm-level innovation outcomes. Within this context, effective leadership strategies become essential for

mobilizing resources, encouraging innovative practices, and aligning organizational goals with broader national

innovation agendas.

ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

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Synthesis and Research Gap

The reviewed literature consistently emphasizes the importance of leadership strategies in driving innovative

performance across various organizational settings. Transformational and strategic leadership approaches, in

particular, have been shown to positively influence creativity, knowledge sharing, and adaptability, while

transactional and laissez-faire approaches demonstrate more limited or negative effects. Despite these insights,

prior studies often examine leadership and innovation separately, across different sectors and contexts, resulting

in fragmented and sometimes inconclusive findings (Sethibe & Steyn, 2015).

In the Malaysian oil manufacturing industry, where structural and competitive pressures are particularly acute,

there remains limited empirical evidence on how leadership strategies influence innovation performance.

Addressing this gap is essential not only for advancing theoretical understanding but also for providing practical

guidance to industry leaders seeking to sustain competitiveness in a rapidly changing energy landscape.

METHOD

This study employed a quantitative research design to investigate the relationship between leadership strategies

and innovation performance within the oil manufacturing sector. A structured survey was adopted as the primary

method of data collection, enablin1g the systematic measurement of respondents’ perceptions regarding the key

constructs of interest. Quantitative analysis was selected to ensure objectivity, replicability, and statistical rigor

in evaluating the hypothesized relationships. The target population comprised employees of AworldTec

Engineering Sdn. Bhd., a firm operating within Malaysia’s oil manufacturing industry. Using purposive

sampling, a total of 103 subordinate staff were selected as respondents. This sampling strategy was appropriate

given the study’s aim of examining employee perceptions of leadership strategies and their effects on innovation

performance within a specific organizational context. Data were collected using a structured questionnaire

designed to capture information on leadership strategies transformational, transactional, and laissez-faire as well

as innovation performance. All items were adapted from established measurement scales in prior studies to

ensure validity and reliability. A five-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree),

was employed to capture the extent of respondents’ agreement with each statement.

The questionnaire was distributed directly to the identified respondents within the organization. Participation

was voluntary, and confidentiality was assured to encourage honest and unbiased responses. Prior to full

deployment, the instrument was pilot tested to refine wording, improve clarity, and confirm internal consistency

of the constructs. The collected data were analysed using the Statistical Package for the Social Sciences (SPSS).

Several statistical techniques were employed. Descriptive statistics were used to summarize the demographic

characteristics of respondents and to provide an overview of the dataset. Reliability and validity tests were

conducted to assess the internal consistency of the measurement items and to ensure that the constructs

adequately captured the intended dimensions. Pearson correlation analysis was performed to examine the

strength and direction of relationships among the variables. Multiple regression analysis was applied to identify

the extent to which leadership strategies predicted innovation performance, thereby testing the proposed

hypotheses. The study adhered to ethical research standards. Respondents were informed of the purpose of the

study and assured of the anonymity and confidentiality of their responses. Informed consent was obtained prior

to participation, and data were used exclusively for academic purposes.

This study is grounded in a positivist research paradigm, which assumes that social phenomena can be

objectively measured and examined through empirical evidence. Consistent with this paradigm, the research

adopts a deductive approach, developing hypotheses from established theories and validating them through data

collection and statistical analysis.

The research design aligns with the methodological framework proposed by Saunders et al. (2019), incorporating

key layers of the research onion: philosophy, approach, strategy, methodological choice, and time horizon. A

survey strategy was employed to gather a large volume of quantifiable data from manufacturing firms in

Malaysia, enabling the systematic examination of relationships between employer branding, talent management,

and transformational leadership. Data collection was cross-sectional, with measurements obtained at a single

point in time to reflect current organizational practices and employee perceptions.

ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

Page 117

www.rsisinternational.org

Overall, the methodological choices ensured coherence between the philosophical stance, research objectives,

and analytical procedures, providing a rigorous framework for evaluating the proposed conceptual model.

RESULTS AND DISCUSSION

In general, the results indicate that transactional leadership positively correlates strongly with innovation

performance (r = 0.786, p < 0.001). This suggests that leaders who focus on structured tasks, rewards, and goal

setting significantly enhance innovation. Transformational leadership also demonstrates a strong positive

relationship with innovation performance (r = 0.651, p < 0.001), highlighting the effectiveness of inspiring and

motivating employees toward innovation. In contrast, laissez-faire leadership exhibits a moderate positive

correlation (r = 0.500, p < 0.001), implying a weaker, yet still significant, impact on innovation.

Innovation

Performance

Transformational

Leadership

Transactional

Leadership

Laissez-Faire

Leadership

Innovation Performance

Transformational Leadership

0.651

Transactional Leadership

.786

0.831

Laissez-Faire Leadership

0.500

0.452

0.481

Furthermore, transformational and transactional leadership strategies show a powerful correlation (r = 0.831),

reflecting their complementary nature, while laissez-faire leadership shows weaker correlations with both

transformational (r = 0.452) and transactional leadership (r = 0.481). These findings underscore the varying

degrees to which different leadership styles influence innovation performance.

Unstandardized Coefficients

Standardized Coefficients

Model

Std. Error

Beta

Sig.

(Constant)

1.037

0.336

3.088

0.003

-0.50

0.154

-0.036

-0.325

0.746

0.999

0.150

0.738

6.639

<001

0.153

0.066

0.161

2.322

0.022

The findings of these analyses the three strategies which include transformational leadership, transactional

leadership, and laissez-faire leadership. To ascertain the causal factor of significant influence factors towards

innovation performance, each independent variable was analysed to reveal whether these predictors contribute

to the dependent variable. On the other hand, innovation performance did not show a positive or significant

relationship with transformational leadership. There was no evidence to support the hypothesis that

transformational leadership improves innovation performance, as indicated by the negative beta value (β = -

0.050), t-value (-0.325), and p-value (Sig. = 0.746). In this investigation, transactional leadership showed the

highest correlation with innovation performance. With a t-value of 6.639, a p-value of Sig. This leadership

strategy had a strong and noteworthy impact of < 0.001 and a beta value of β = 0.999. In contrast, there was a

modest correlation between innovation success and laissez-faire leadership. In contrast to transactional

leadership, a substantial but less significant effect is shown by a beta value (β = 0.153), t-value = 2.322, and p-

value (Sig. = 0.022).

ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

Page 118

www.rsisinternational.org

CONCLUSION

This study examined the relationship between leadership strategies and innovation performance within

Malaysia’s oil manufacturing industry. The findings confirm that leadership strategies exert a significant

influence on organizational innovation outcomes, shaping employee engagement, knowledge sharing, and

adaptability. By answering the research questions, the study demonstrates that leadership approaches particularly

transformational and transactional are instrumental in fostering innovation, while laissez-faire leadership is less

effective in achieving positive outcomes. From a theoretical standpoint, this study extends existing literature by

contextualizing leadership–innovation linkages within the Malaysian oil manufacturing sector, thereby

contributing to the broader discourse on leadership strategies in emerging markets. Practically, the findings

provide valuable insights for managers and policymakers, emphasizing that leadership strategies not only drive

employee motivation but also act as a critical lever for strengthening competitiveness and sustainability in a

rapidly evolving industry. By adopting innovation-oriented leadership practices and investing in workforce

support, firms can cultivate a culture of creativity and resilience.

Despite its contributions, this study is subject to certain limitations. First, the research focused on a single

company, which may limit the generalizability of findings across the broader oil manufacturing sector in

Malaysia. Second, the use of purposive sampling and self-reported survey data introduces potential biases, such

as respondent subjectivity and social desirability effects. Third, the cross-sectional research design restricts the

ability to capture how leadership strategies and innovation performance evolve over time. Future research could

address these limitations by expanding the scope to include multiple firms across diverse regions and sub-sectors

of the oil and gas industry. Longitudinal studies would provide richer insights into the dynamic interplay between

leadership and innovation over time. Additionally, integrating qualitative approaches such as interviews or case

studies could uncover deeper contextual and cultural dimensions of leadership influence on innovation. Future

studies may also consider additional variables such as organizational culture, digital readiness, and sustainability

practices as mediators or moderators in the leadership–innovation relationship. By addressing these avenues,

future scholarship can build a more comprehensive understanding of how leadership strategies contribute to

innovation performance in the oil manufacturing industry and beyond.

ACKNOWLEDGEMENT

The study is funded by the Ministry of Higher Education (MOHE) of Malaysia through the publication incentive

and the Fakulti Pengurusan Teknologi dan Teknousahawanan, Universiti Teknikal Malaysia Melaka. The

authors also would like thanks to Centre of Technopreneurship Development (C-TeD) for the support

Acknowledge any research grants, organizations, or scholarships that supported the study, if applicable.

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ICTMT 2025 | International Journal of Research and Innovation in Social Science (IJRISS)

ISSN: 2454-6186 | DOI: 10.47772/IJRISS

Special Issue | Volume IX Issue XXVIII November 2025

Page 119

www.rsisinternational.org

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