The Effect of Leadership and Innovation on Differentiation Strategy and Company Performance

This study examined the effect of leadership and innovation on differentiation strategy and company performance of hotels in Surabaya, Indonesia. The study used quantitative research methods and data was collected by distributing questionnaire to respondents having level of position from supervisor up to CEO within the organization. Descriptive statistical analysis was performed using SPSS, whereas hypotheses testing used SEM (Structural Equation Modelling) and Partial Least Square (PLS). The results showed that leadership affect the performance of hotels, either directly or indirectly through innovation and differentiation as an intervening variable. While leadership does not affect directly differentiation strategy, but it affects indirectly through innovation.