Background Since the industrial revolution, pursuing globalization, digitalization, rapid technical changes in the markets, and free trade agreements, innovation has been pondered as a crucial element for coping with the challenges of uncertainty, strong competition, and acquiring competitive advantage so that survival and prosperity in the global market can be ensured (Vargas, 2015). Failing to innovate can raise the threat to sustainability; therefore, organizations, business firms, universities, and their leadership consider it overwhelmingly significant for nurturing a climate where innovation can be created among employees (Shanker et al., 2017) urging the dire need of new learning procedures for creativity and innovation in academic and research institutes (Sutanto, 2017). This study approaches the issue of how organizational innovation can be accelerated with the support of leadership structures and the organizational climate, specifically taking into account the top innovative universities of the world, which has not been found in previous empirical studies. Research questions. This paper attempts to explain how leadership and organizational culture in top innovative universities foster organizational innovation in order to diffuse knowledge and creativity for growth and economic prosperity, which is rarely found in other empirical studies across the world. Therefore, the main research questions of this study are as follows: RQ1. How organizational culture mediates between transformational leadership, transactional leadership, and organizational innovation in top innovative universities? RQ2. Which leadership styles are highly related and interconnected with organizational culture mediating to foster innovation? RQ3. Can transformational leadership foster organizational innovation directly? Finally, this study, based on research, will determine some guidelines for other non-innovative universities to begin being innovative.

Literature review

Innovation is counted among the growth engines in the world that have accelerated growth with a double pace, as recorded during 1945-2001, in the high technology sector (Leary, 2002), and no doubt, innovation is pondered to be vital for competitiveness, prosperity, and economic growth. This is evident in the developed nations across the world, with the pace of change being swift enough that those technology-based firms that could not meet the innovation challenges were found creeping after reaping the benefits of their hegemony in the industry (Buekens, 2013). In the rapidly changing world, one will fall behind if he/she is not innovative. Universities and research institutions are pondered to be the factories of innovation where scientific knowledge and creativity result in scientific advancement that ultimately leads to market and commercial success (Chen and Kenney, 2007).