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This purpose of this study is to examine the role played by transformational leadership in reinforcing product service and innovation and the mediating effect of job satisfaction.

Data was gathered from the responses of 486 employees working in three telecom companies providing mobile phones and internet services in Jordan to a questionnaire survey and from semi-structured in depth interviews with 15 team leaders.

The results suggest that all four aspects of transformational leadership behaviors are positively and directly associated with product and service innovation. In addition, transformational leadership behaviors have a positive and direct effect on job satisfaction. Finally job satisfaction does act as mediator between transformational leadership and innovation.

Therefore for organizations to improve performance and encourage innovative behaviors middle management and employees should be trained to use a transformational leadership style and measures to improve job satisfaction should be put in place.

This paper adds to the understanding of how leaders can develop innovation through developing appropriate workplace cultures and conditions. 10; 10.