Abstract: “Relationship between organizational culture/climate and creativity/innovation and the role of leadership to transform organizations is discussed based on a literature review. Then, a critical analysis of leadership, organizational culture and innovation capacity of Turkish university system is presented. Long-term sustainability and growth of an organization largely depend on its innovation capacity. Innovation is a direct consequence of various intrinsic and extrinsic factors for an organization, just like for a human being. In order to be innovative, an organization should grow, keep and flourish creative individuals; it must establish and maintain a transparent, open, functional, minimum-hierarchical culture where collective decision-making, risk taking and rewarding for merit are valued. Transformative or charismatic leadership can transform a stagnant organization into a dynamic and innovative form if only a critical mass in the organization supports it.”

Keywords: leadership, innovation capacity, higher education, Turkey