Final answer:
The leadership style that enhances team capabilities and inspiration is transformational leadership. This style is known for motivating individuals beyond their expectations, in contrast to democratic or laissez-faire leadership styles.
Step-by-step explanation:
The leadership style that is known to expand the team's capabilities, create a team identity, and inspire team members is transformational leadership. Transformational leaders are known for their ability to encourage and motivate team members to exceed their goals and work towards the collective success of the group. This approach often involves a leader who fosters an inspiring vision and challenges team members with high expectations while providing support and recognition for individual contributions.
Transformational leaders differ from transactional leaders who focus on exchanges of rewards for performance, and laissez-faire leaders who are more hands-off, allowing team members to steer their direction. The research by Eagly, Johannesen-Schmidt, & van Engen highlights the effectiveness of transformational approaches in leadership. In contrast, democratic leaders work toward consensus building and can operate effectively in settings where group participation is valued, even though it can sometimes slow decision-making.