Purpose - To highlight the importance of leadership through identifying the leadership styles and practices in the Palestinian industrial sector and to find out the optimal style most suitable to this country so as to help its business leaders lead their business ventures effectively and efficiently. Design/methodology/approach - The triangulation methodology and Bass' (1985) full range model of leadership was utilized because it covers a full range of leadership behaviors and styles from the highly transformational to the highly avoidant (Avolio and Bass, 1991). The multifactor leadership questionnaire and a structured interview were used as the main instruments to elicit the data of the study. Findings - Transactional leadership style was found to be the most frequently used leadership style; transformational leadership was exhibited less frequently; and laissez-faire was noted as the least commonly occurring leadership style and more frequently among the leaders with low educational background, low previous managerial experience, and employee leaders. Transformational leadership was found to induce the greatest satisfaction, willingness to exert extra effort, and effectiveness among employees. Research limitations/implications - The exclusion of the small and medium scale industries, the exclusion of Gaza Strip from the survey, and the unavailability of a complete and official list of Palestinian industrial companies. Practical implications - The utilization of the transactional leadership style in the Palestinian industrial institutions resulted in high degree of dissatisfaction among employees, which in turn, has dangerous effects and consequences on the overall performance of the organizations. This issue should be given the greatest care, concern, and attention of both the leaders of the Palestinian organizations and the related decision makers if they want to develop and enhance the competitive capacity of the Palestinian economy. Additionally, educators in higher management education in Palestinian universities should include the teaching of leadership theory as an important part of the graduate curriculum. Originality/value - Many factors were found to have an important impact on the choice of the leadership style. Among these: education, past experience, culture, political and economic stability, and mutual trust. Another important issue revealed by the study is that transformational leadership can be effectively and efficiently implemented in the transitional economies.
