This study aims to analyze the effect of leadership styles and innovativeness on business performance. Theory and research suggest that both leadership and innovativeness have important consequences for business performance. However this relationship is not the same because of sector, location, size and other variables. The leadership styles undertaken are transformational and transactional leadership. This study is designed as explanatory and its data gathering method is questionnaire. 576 people working in service sector and industry sector from Istanbul comprise the case study. The results show that two leadership styles and innovativeness have positive effect on business performance. It is found that innovativeness, transformational leadership and transactional leadership have higher effects on business performance, respectively. (C) 2014 The Authors. Published by Elsevier Ltd.