In this paper, we examined aspects of contextual leadership [Osborn, R. N., Hunt, J. G., & Jauch, L. R. (2002). Toward a contextual theory of leadership. The Leadership Quarterly, 13, 797-837] and transformational leadership . Leadership and performance beyond expectations. New York: Free Press] by alliance heads and by executives in the sponsoring firms for a sample of innovation seeking U.S./Japanese alliances in research-intensive sectors. We identified three aspects of performance (a) alliance innovation, (b) the strategic contributions to the U.S. sponsor and (c) the strategic contributions to the Japanese sponsor. We found that (a) knowledge/ information based (contextual dimensions) leadership by the alliance head was associated with higher innovation and strategic contributions to the sponsors and (b) transformational leadership by sponsoring executives was dysfunctional for alliance innovation but contributed positively to the strategic contribution the alliance provided a sponsor and, (c) the linkage between leadership by the alliance head and performance was much more important for some types of alliance governance (administrative) structures than others. That is, we argue that appropriate leadership is embedded in its context.