Abstract

A climate for innovation has become a critical resource for service organisations seeking to differentiate themselves through customer experience, yet the leadership conditions that shape this climate remain only partially understood. This paper examines the role of leadership – at senior management, Chief Executive Officer (CEO), and line manager level – in shaping an innovative atmosphere within a service organisation. Adopting a qualitative single case study design, thirty-five in-depth semi-structured interviews were conducted with employees and managers of a major telecommunications company in Egypt, a market characterised by economic and political turbulence. Findings reveal that senior leadership and CEO sponsorship, high-quality leader-member relationships between line managers and subordinates, and leadership-driven customer centricity are among the most influential leadership dimensions fostering an innovative organisational atmosphere. The study identifies specific leadership behaviours – including intellectual stimulation, participative decision-making, non-controlling supervision, and the communication of a customer-centric vision – that employees associated with the differentiated products and services the organisation brought to market. Because customers were not participants in this study, these associations with customer experience are reported as employees' own perceptions and interpretations rather than as independently verified customer-side outcomes. The paper contributes to leadership and innovation management literature by offering an in-depth, qualitative account of how leadership shapes an innovative organisational atmosphere, and offers managers a diagnostic framework of leadership practices for building innovative, customer-oriented organisations in turbulent emerging markets.

1. Introduction

Service organisations increasingly compete on the quality of the experience they deliver rather than on price or product features alone ^{1, 2}. As customer expectations rise and markets become more turbulent and competitive, understanding what drives superior customer experience has become a priority for both academics and practitioners ^{3, 4}.

While a growing body of research has examined the outcomes of customer experience – satisfaction, loyalty, word-of-mouth – and the touch points through which it is co-created with customers ^{2, 5}, comparatively little is known about the internal organisational forces that enable employees to deliver it. One force repeatedly identified in the innovation literature, but rarely connected explicitly to customer experience, is leadership ^{6, 7}. Leaders shape the climate in which employees decide whether to take initiative, propose new ideas, and go beyond their formal job requirements to serve the customer ^{8, 9}.

Leadership research distinguishes between the influence of senior leadership and the Chief Executive Officer (CEO), who set the strategic tone and legitimise innovation ^{10, 11}, and the influence of line managers and supervisors, whose day-to-day relationship with employees – captured in leader-member exchange (LMX) theory – shapes whether employees feel supported enough to be creative ^{12, 13}, and leadership styles centred on serving others have been shown to directly improve frontline customer service performance ¹⁴. Transformational leadership behaviours, in particular, have consistently been linked to employee creativity and innovative work behaviour ^{15, 16, 17, 18, 19}. Yet, despite this rich body of leadership and innovation research, no study to date has explicitly examined how these different leadership levels and behaviours translate into customer experience outcomes.

This paper addresses this gap by investigating how leadership – at senior, CEO, and line manager level – shapes an innovative organisational atmosphere. We adopt a qualitative single case study approach, conducting thirty-five in-depth interviews with employees and managers of a major telecommunications company in Egypt. The Egyptian telecommunications market provides a particularly relevant context: it combines intense competition and a large, fast-growing customer base with significant economic and political instability following the 2011 revolution ²⁰, making leadership's role in sustaining innovation especially salient. Employees frequently linked this innovative atmosphere, in their own accounts, to the customer experience the organisation was able to deliver; because customers themselves were not interviewed as part of this study, these accounts are treated throughout as employees' perceptions of that link rather than as independently verified customer-side evidence.

The paper contributes to leadership and innovation management research in three ways. First, it provides an in-depth, qualitative account of how different leadership levels and behaviours shape an innovative organisational atmosphere, including the ways in which employees themselves connect that atmosphere to the customer experience they believe it produces. Second, it identifies specific leadership practices – CEO sponsorship of customer-centric innovation, high-quality leader-member relationships, and participative, non-controlling supervision – that employees found particularly influential in shaping this atmosphere. Third, it offers insights from a non-Western, turbulent emerging market context, extending a literature that has been dominated by studies of stable Western economies.

2. Literature Review

Customer experience refers to the internal, subjective response of customers to any direct or indirect contact with a company ¹. It is holistic, encompassing customers' cognitive, emotional, sensory and social reactions across every touch point of their journey with an organisation, from search and purchase to after-sales service ^{2, 5}. Because of its multidimensional nature, customer experience has become recognised as a key basis for differentiation, particularly in service industries where products can be easily imitated ^{3, 21}. Superior customer experience has been linked to a wide range of positive outcomes for organisations, including satisfaction, loyalty, positive word-of-mouth and, ultimately, firm performance ^{2, 5}.

A stream of research has focused on how organisations can manage customer experience, highlighting the importance of customer-centric capabilities such as customer journey design and cross-functional coordination ^{4, 22}, and more recent work has extended the conceptualisation and measurement of customer experience to omnichannel service environments ²³. This research stream has, however, tended to focus on external, customer-facing processes, leaving the internal organisational conditions that enable employees to create these experiences comparatively under-explored. Given that employees are typically the ones who conceive, propose and deliver the innovations that ultimately reach the customer, understanding the leadership conditions that encourage them to do so is an important, and largely missing, piece of the customer experience puzzle. It is worth noting from the outset that the present study examines this puzzle from the employee side only: customers were not interviewed or otherwise sampled as participants, so any connection this paper reports between leadership, climate for innovation, and customer experience reflects employees' own perceptions and interpretations of that connection, corroborated where possible against organisational documents and archival records, rather than an outcome independently verified with customers.

Climate for innovation refers to employees' shared perceptions of the extent to which their organisation's practices, procedures and behaviours support and encourage innovation ^{8, 24}. Leadership has consistently been identified as one of the most influential dimensions of climate for innovation, operating at multiple levels of the organisation ^{6, 7, 11}.

At the senior and CEO level, leaders shape climate for innovation through the behaviours and values they model and legitimise. Transformational leadership – characterised by intellectual stimulation, individualised consideration, inspirational motivation and idealised influence ¹⁵ – has been shown to be particularly effective in fostering employee creativity and innovative work behaviour ^{16, 17, 18}. By questioning assumptions, reframing problems and encouraging employees to approach situations in novel ways, transformational leaders stimulate employees to think and act more creatively ⁹. CEO support, in particular, has been found to determine whether an organisation sustains a climate for innovation over time, as changes in CEO priorities can either strengthen or undermine employees' willingness to innovate ^{10, 25}, and CEO transformational leadership has more recently been shown to shape firm performance specifically through the exploratory innovation it stimulates ²⁶.

At the line manager level, the quality of the relationship between leaders and their subordinates – conceptualised through leader-member exchange (LMX) theory ¹² – has been found to influence employees' innovative behaviour. High-quality leader-member relationships, characterised by trust, mutual respect and reciprocal obligation, are associated with greater employee creativity ¹³, while supportive, non-controlling supervision that grants employees autonomy over how they carry out their work has been shown to enhance innovative behaviour, whereas close monitoring and micromanagement tend to suppress it ²⁷. Line managers who mentor, coach and provide continuous feedback are, therefore, considered central to translating a senior leadership vision for innovation into day-to-day employee behaviour ⁶.

While these studies establish a robust link between leadership and employees' innovative behaviour, and separately between innovation and organisational performance, they stop short of examining whether and how leadership-driven innovation translates into customer experience outcomes specifically. This is the gap that the present study addresses.

3. Methodology

This study adopts a qualitative research method using a single case study approach to investigate the relationship between leadership, climate for innovation, and customer experience, and the underlying mechanisms that connect them. A case study approach enabled an in-depth understanding of how leadership operates in practice and how it translates into innovative, customer-centric outcomes ^{28, 29}.

To examine this relationship in a turbulent market context, the study focused on a telecommunications company based in Egypt. The Egyptian telecommunications market is characterised by intense competition, a rapidly growing customer base, and significant political and economic turbulence following the 2011 revolution, which weakened the local currency and reduced capital expenditure across the sector even as revenues remained comparatively stable ²⁰. The selected organisation is the market leader in terms of active subscribers in Egypt and the wider Middle East, and has been recognised for six consecutive years as one of the country's Best Employers. According to the organisation's profile, senior management places strong emphasis on developing an innovative work environment and aspires to be a customer-obsessed organisation delivering the best possible customer experience, making it a particularly information-rich case for examining the leadership-customer experience relationship.

Data collection combined in-depth interviews, non-participant observation, and company documents and archival records ²⁸. Thirty-five semi-structured interviews were conducted with employees across different functional departments and organisational levels, based on purposive sampling: junior employees (7 interviews), managers (9), team leaders (5), and heads and directors of departments including consumer marketing, enterprise marketing, human resources, internal communication, strategy and innovation, customer experience, enterprise business, and technology (14). This range of interviewees allowed the study to integrate perspectives from across the organisational hierarchy on how leadership, at each level, shapes innovation and customer experience, and helped the study reach theoretical saturation ³⁰. Interviews used a flexible interview guide covering: (i) perceptions of senior, CEO, and line manager leadership behaviours; (ii) the organisation's innovations that enhanced customer experience; and (iii) reflections on how specific leadership practices were, or were not, related to customer experience. Interviews lasted 60-120 minutes, were digitally recorded and transcribed verbatim.

Non-participant observation across the organisation's Cairo sites allowed the researcher to observe leader-employee interactions in a natural setting, recorded through field notes, photographs and videos. Secondary data - annual reports, mission statements, culture and values documents, press releases, and market reports from the Egyptian National Telecommunications Regulatory Authority and independent research agencies - were used to corroborate interview findings on customer experience outcomes. Data were analysed inductively following Miles and Huberman's ³¹ approach: an initial coding stage generated categories from the literature and interview transcripts, followed by axial coding to identify connections between leadership behaviours, climate for innovation and customer experience. Two independent external coders undertook two rounds of coding, reaching an 85% inter-coder agreement, and NVivo software was used to support the analysis.

4. Data Analysis & Discussion

Thirty-two of the thirty-five interviewees identified senior leadership as a crucial influence on the organisation's climate for innovation and, ultimately, on customer experience. Employees consistently described senior leaders as setting an explicit expectation of creativity and differentiation, which employees experienced as a form of positive pressure to innovate on behalf of the customer:

“The senior management places huge emphasis on creativity and innovation and always challenges our ideas; the company’s leaders are seeking extraordinary and creative ideas. The company is always ahead of the game and the other players in the market are behind us. I believe that the extreme support and encouragement of the senior management and emphasis on the importance of innovation is very crucial.” (Team Leader, Enterprise Marketing)

Beyond setting expectations, senior leaders were described as intellectually stimulating employees by questioning assumptions and pushing them to reframe problems – behaviours characteristic of transformational leadership ^{9, 15}:

“I haven’t seen anyone in the top management team who settles for less. They are always looking for better and new innovations and differentiation in the market. This causes the environment for innovation. This is the best thing that encourages employees to innovate. It is a kind of positive pressure that encourages employees to be innovative.” (Manager, Consumer Marketing)

Senior leaders were also described as fostering participative decision-making, involving employees at every level in decisions about new ideas and product launches – a practice consistent with the participative dimension of transformational leadership ¹⁷:

“Leaders appreciate involving all layers in whatever decision it is … especially when it comes to new ideas and launching of an innovation. The senior leadership in the organisation is very inspiring and really encouraging to innovate.” (Junior, Consumer Marketing)

The role of the CEO specifically emerged as decisive. Employees reported that the organisation had had three CEOs over six years, and that each brought a markedly different orientation toward innovation – some prioritising long-term innovation investment, others focusing more narrowly on short-term revenue. This variation offered participants a natural point of comparison, and employees were unambiguous that CEO orientation cascaded down through the organisation’s innovative behaviour and, by extension, its ability to serve customers well:

“In the last 6 years, we have witnessed three CEOs. Each CEO had his own way of managing innovation. Some encouraged innovation while others did not … when the CEO does not support innovation, this cascades down to all employees. The CEO should emphasise the importance of innovation to the company. He should always encourage the employees to be innovative and creative and to come up with new ideas of products and services to compete in the market and to be ahead of our competitors.” (Manager, Technology)

The Head of Strategy and Innovation illustrated this with a concrete example, describing how the CEO’s personal sponsorship made possible the launch of the region’s first Arabic digital e-Bookstore – an innovation whose customer base subsequently grew forty-five-fold and which directly enhanced customer experience scores:

“The digital e-Bookstore innovation is one of our top innovations… I believe that the sponsorship from the CEO at that point really made it happen because he was really passionate about it. He was passionate about the idea and the role the company can play in the domain of education as well as cultural value, not just the commercial value of the innovation.” (Head, Strategy and Innovation)

These findings are consistent with previous research showing that senior leaders’ support for innovation, and specifically CEO sponsorship, is critical to sustaining a climate for innovation ^{10, 11, 25, 26}. The findings extend this literature by showing that CEO orientation does not only affect internal innovation outcomes, but is directly visible to, and experienced by, customers through the products and services that reach the market.

Twenty-two employees discussed the role of line managers and supervisors, distinct from senior and CEO-level leadership, in shaping their willingness to innovate on behalf of customers. Consistent with LMX theory ¹², employees who described a high-quality relationship with their direct manager – characterised by trust, mentoring and recognition – also reported more positive perceptions of the climate for innovation and greater willingness to go beyond their formal role for the customer:

“I am working under the supervision of a good supervisor that can spot a talent, correct me, allocate me where I fit best and pushes me forward. He is always encouraging and supporting and keen to get out the best of me … he is just an observer in which I have the space to conduct my job in my own way. He is always keen to enhance our team’s capabilities and know-how.” (Team Leader, Enterprise Business Unit)

Employees also emphasised that supportive, non-controlling supervision – as opposed to close monitoring – allowed them the autonomy to exercise creative judgement in customer-facing decisions, consistent with prior findings that micromanagement suppresses innovative behaviour ²⁷:

“Every group or team of agents has a supervisor who is equipped with all the competencies and skills who provides them with continuous training … there is also a monthly one-to-one meeting between the agent and the supervisor for mutual feedback. The agent receives feedback about his performance and the supervisor gets feedback as well from the agent about what is going right and what is going wrong … and this establishes a strong relationship between the supervisor and the agent.” (Head, Customer Experience - Call Centres)

These findings support the view that line managers act as the operational link between a senior leadership vision for innovation and its translation into everyday customer-facing behaviour ^{13, 24}. Notably, the fact that line manager relationships were raised spontaneously by newer and more junior employees suggests that the quality of leader-member exchange may be particularly influential early in an employee’s tenure, when formal training and organisational socialisation are still incomplete.

A recurring finding across interview levels was that leaders – senior managers and line managers alike – actively embedded customer centricity as an organisational value, and that this leadership-driven customer centricity was one of the most direct paths from leadership to customer experience. Thirty-one of the thirty-five employees discussed customer centricity, describing it as a leadership priority that shaped how they approached their day-to-day work:

“Our strategy is simple … it is to win the market through a few things based on customer centricity. Everything that we do should be customer centric. If the idea is not customer centric, we don’t do it.” (Head, Consumer Marketing)

Employees explained that leaders translated this customer-centric orientation into concrete practices, such as a customer experience excellence programme, that explicitly required employees to think from a customer’s perspective when generating and evaluating new ideas:

“The best thing that encourages me to be innovative is the customer understanding. When we think of innovating new propositions to our customers, we think first which segment we are targeting … we conduct intensive research to get customer insights. The in-depth understanding of the customers and what they need is really important in giving us insights for coming up with creative and innovative ideas.” (Junior, Consumer Marketing)

When customer centricity was clearly modelled and reinforced by leaders, employees reported being more inclined to prioritise customer needs when generating and pursuing new ideas, which several participants linked directly to the organisation’s above-average customer experience scores in the local market. This is consistent with more recent evidence that leadership styles oriented toward serving employees and customers translate into measurably better frontline customer service performance ¹⁴.

Across the leadership dimensions discussed above, interviewees described a consistent causal chain: leadership behaviours shape employees’ perceptions of climate for innovation, which in turn encourages employees to generate and pursue new ideas, which then translates into differentiated products, services and processes that enhance customer experience. This chain was described explicitly and unprompted by multiple interviewees:

“To describe the relationship between climate for innovation and customer experience, they are directly proportional. To have a very high climate for innovation in your company, this will definitely have a very positive impact on customer experience … The more the company is innovative, the more it is differentiated in the market and is able to deliver a distinguished customer experience at all touchpoints.” (Head, Internal Communications)

Employees further linked this chain back explicitly to leadership, noting that without visible leadership support for innovation, employees would not exhibit the innovative behaviours that ultimately reach the customer:

“If the company was not promoting innovation among its employees, we would have been unable to come up with new innovative services and products that enhance the customer experience. Customer experience starts from the climate that employees perceive; it starts from the bottom-up.” (Junior, Consumer Marketing)

The organisation's own market performance is at least consistent with employees' accounts: the case organisation held the largest market share among telecommunications operators in Egypt in the four years preceding the study ²⁰, a period during which interviewees attributed several of its most commercially successful innovations – most originating from junior and mid-level employees rather than senior management – to a leadership-sustained climate for innovation. Because no customer-level data were collected as part of this study, this market performance can only be treated as corroborating context, not as independent confirmation of employees' claims about customer experience. Taken together, these findings suggest that leadership shapes an innovative organisational atmosphere rather than customer experience directly: leaders who model transformational behaviours, build high-quality relationships with subordinates, and embed customer centricity as a value, cultivate the conditions under which employees choose to innovate — and, in employees' own accounts, on behalf of the customer.

5. Conclusion & Managerial Implications

This study set out to understand how leadership shapes an innovative organisational atmosphere, addressing a gap between two literatures: leadership and innovation research, which has established a strong link between leadership and employee creativity, and customer experience research, which has largely overlooked the internal leadership conditions that enable it. Drawing on thirty-five in-depth interviews in a major Egyptian telecommunications company, the findings show that leadership operates at three interconnected levels to build this atmosphere: senior leaders and the CEO set and sustain the strategic legitimacy of innovation; line managers translate this legitimacy into supportive day-to-day relationships and autonomy; and leaders at all levels who actively model customer centricity give employees a clear direction for their innovative efforts. Employees consistently and, in many cases, spontaneously connected this atmosphere to what they perceived as the organisation's superior customer experience; as no customers were interviewed as part of this study, this connection is best understood as a well-corroborated employee perception rather than a demonstrated customer-side effect, and is reported accordingly throughout; Section 6 sets out how future research could close this gap by including customers directly as participants.

Senior leaders and CEOs should be visible and consistent sponsors of innovation, since interview findings suggest employees closely track and respond to shifts in senior leadership orientation over time. Sponsorship should extend beyond rhetorical support to allocating budget, time and recognition to new ideas, even when short-term returns are uncertain, and senior leaders should be visibly willing to take risks on new ideas rather than defaulting to short-term revenue priorities.

Organisations should invest in the quality of line manager-subordinate relationships, particularly for newer and more junior employees, for example, through structured mentoring, regular two-way feedback, and training line managers to grant autonomy rather than closely monitor customer-facing work. Because line managers were found to be the operational link between senior leadership vision and everyday employee behaviour, organisations that neglect this level risk seeing senior leadership commitment to innovation fail to reach frontline, customer-facing employees.

Leaders should explicitly and repeatedly communicate a customer-centric vision and translate it into concrete mechanisms, such as customer experience programmes or idea-support tools, that require employees to evaluate new ideas from the customer’s perspective. Because employees, rather than senior management, generated the majority of the organisation’s most successful customer-facing innovations in this study, managers should ensure that idea-support processes are genuinely accessible to junior and frontline staff, not only to management.

Taken together, these findings suggest that leadership is not simply one input among many into an organisation's innovative atmosphere, but a foundational condition for it: without visible, consistent and customer-oriented leadership at multiple organisational levels, employees in this study reported that the innovative behaviours they associate with serving the customer well would be unlikely to be sustained, particularly in turbulent market conditions such as those characterising the Egyptian telecommunications sector.

6. Limitations and Future Research

This study has several limitations that open avenues for future research. The most important is that customers were not sampled as participants at any stage of this research: the claims reported here about leadership's connection to customer experience rest entirely on employees' own accounts, corroborated only indirectly through organisational documents, archival records, and aggregate market performance data. This is why the paper frames its central contribution around how leadership shapes an innovative organisational atmosphere, treating employees' perceived connection between that atmosphere and customer experience as an important but unverified finding rather than as the paper's core claim. Future research should pair employee interviews of this kind with customers as direct participants, rather than relying on customer-level data alone. A particularly informative design would recruit customers of the specific business units, products, or services whose leadership and line managers were studied here, and ask them directly whether and how they experienced the differentiation, responsiveness, or service quality that employees attributed to leadership-driven innovation — for example, through customer interviews or satisfaction surveys administered around the same innovations discussed by employees in this study, and, where possible, matched to the specific line managers and teams responsible for delivering them. Such a design would make it possible to establish whether leadership and line-manager practices that employees experience as fostering an innovative environment are actually perceptible to, and valued by, the customers that environment is intended to serve, rather than remaining an internally consistent but customer-unverified account. Second, as a qualitative single case study, its findings are context-specific and should be tested for transferability in other service sectors and national contexts; future research could adopt a quantitative approach to test the relationships identified here across larger, cross-organisational samples. Third, the cross-sectional design captures employees' perceptions of leadership and its perceived outcomes at a single point in time; longitudinal research could examine how leadership transitions – such as CEO succession – affect these perceptions over time, and how they align with customer-side outcomes as they become available. Finally, future research could examine potential boundary conditions of the leadership-innovative atmosphere relationship, such as industry turbulence, organisational size, or national culture, to establish when leadership's influence is likely to be strongest.

References