Abstract:

To stay competitive and viable in today's rapidly evolving and highly hostile market climate, companies need to concentrate more on innovation. In this regard, the specific quality of transformational leadership has been strongly linked to organizational innovativeness. However, the purpose of this study is to examine the relationship between transformational leadership and the innovation behavior of employees. The literature review developed in the current study is fundamentally centered on how transformational leaders value innovation by facilitating organizational learning to foster innovative behavior among employees. Corporate social responsibilities as an organizational level factor that can drive employee attitudes were also examined as a moderating effect in this relationship. The rationale of the relationship of the variables is supported by both transformational leadership theory (TFL) and social exchange theory (SET). Data were collected from corporate social responsibility engaged SMEs operating in Rwanda. Using Cranach’s alpha reliability and validity were tested while structural equation modeling (SEM) was used in analyzing data. The findings of this study intend to fill some gaps in the current literature such as the introduction of CSR in the relationship between top managerial level leadership, organizational learning, and innovation behavior of employees, also introducing SET to explain such important relationship

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