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Organizational innovation has always been considered as a powerful tool to sustain competitive advantage and to provide high value to customers. The purpose of this study is to empirically investigate the role of transformational leadership and knowledge management process on predicting product and process innovation. Data collected from 119 service firms located in Kingdom of Bahrain were used to test a conceptual model encompassing the linkages among transformational leadership, knowledge management process, product innovation, and process innovation. Results of hierarchical regression analyses showed that transformational leadership has direct influence over product and process innovation, and employees’ day-to-day involvement in the knowledge management process such as acquiring, transferring, and applying knowledge have positive associations with product and process innovation …