Effective leadership and innovation: Key factors of sustainable competitive advantage

Leadership has been the focus of social science research since the early 1930s. Specific domains of leadership later got their significant place in research and discussions worldwide. In the late 80's the concept of transformational leadership opened domains of new leadership theories. Contemporary literature is increasingly dealing with topics about strategic, innovative, adaptive, team, emotional and ethical leadership. In modern business environment, leadership emphasises flexibility and encourages strategic change, and through the aspects associated with opportunity recognition and exploitation, leadership has an entrepreneurial component. On the other hand, organizational proactivity and innovations have marked a new competitive landscape and they represent a base for successful strategy execution and creation of sustainable competitive advantage. Effective leaders are expected to develop innovative potential, motivate employees to act proactively, create opportunities, and question business logic and business strategy. Leader's ability to communicate appropriately with other people and motivate them significantly influences effective strategic change and drives innovation. Leaders influence on organizational revitalization is another significant challenge in today's business practice.