IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i5p1879-d1597474.html
   My bibliography  Save this article

Impact of Democratic Leadership on Employee Innovative Behavior with Mediating Role of Psychological Safety and Creative Potential

Author

Listed:
  • Muhammad Imran

    (School of Economics and Management, Taiyuan University of Technology, Taiyuan 030000, China)

  • Jizu Li

    (School of Economics and Management, Taiyuan University of Technology, Taiyuan 030000, China)

  • Sher Bano

    (School of Economics and Management, Taiyuan University of Technology, Taiyuan 030000, China)

  • Waqas Rashid

    (School of Economics and Management, Taiyuan University of Technology, Taiyuan 030000, China)

Abstract

While leadership influence has been linked to organizational performance, the mechanism through which leadership development can foster sustainable innovation in SMEs with distinctive cultural contexts, including individualism/collectivism, is still not well understood. The purpose of this study is to investigate the role that democratic leadership plays in increasing employee innovative behavior (EIB) when organizations are working in situations that are characterized by high levels of hierarchical and collectivist cultures. This study fills a gap in the literature by investigating the ways in which leadership influences innovation in small- and medium-sized textile enterprises (SMEs) in Pakistan, including psychological safety and creative potential. This study discloses that participative leadership practices effectively drive sustained innovation especially in countries that embrace hierarchy and collectivism. The participants in this study comprised 389 employees from the textile industry, who completed validated self-report surveys of democratic leadership, psychological safety, creative potential, and EIB. This study used Structural Equation Modeling (SEM) to examine the direct and indirect effects of the variables using Smart PLS 4.1.0.8 software. The findings reveal that democratic leadership positively and significantly impacts EIB. Psychological safety mediates this relationship by creating a supportive environment for idea sharing, while creative potential acts as a stronger mediator, enabling employees to generate and implement novel ideas. These results highlight the critical role of democratic leadership in driving innovation through safe and creative organizational climates. This study extends leadership and innovation research by demonstrating the mechanisms through which democratic leadership fosters EIB. This study contributes to the understanding of leadership effectiveness in non-Western hierarchical cultures, providing actionable insights for managers and policymakers to promote sustainable innovation in SMEs.

Suggested Citation

  • Muhammad Imran & Jizu Li & Sher Bano & Waqas Rashid, 2025. "Impact of Democratic Leadership on Employee Innovative Behavior with Mediating Role of Psychological Safety and Creative Potential," Sustainability, MDPI, vol. 17(5), pages 1-22, February.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:5:p:1879-:d:1597474
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/5/1879/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/5/1879/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ki-Soon Han & Pooja Garg, 2018. "Workplace democracy and psychological capital: a paradigm shift in workplace," Management Research Review, Emerald Group Publishing Limited, vol. 41(9), pages 1088-1116, July.
    2. Sarstedt, Marko & Hair, Joseph F. & Cheah, Jun-Hwa & Becker, Jan-Michael & Ringle, Christian M., 2019. "How to specify, estimate, and validate higher-order constructs in PLS-SEM," Australasian marketing journal, Elsevier, vol. 27(3), pages 197-211.
    3. Kansu Ercantan & Şerife Z. Eyupoglu & Özlem Ercantan, 2024. "The Entrepreneurial Leadership, Innovative Behaviour, and Competitive Advantage Relationship in Manufacturing Companies: A Key to Manufactural Development and Sustainable Business," Sustainability, MDPI, vol. 16(6), pages 1-18, March.
    4. Razika Malek & Qing Yang & Sahraoui Dhelim, 2024. "Toward Sustainable Global Product Development Performance: Exploring the Criticality of Organizational Factors and the Moderating Influence of Global Innovation Culture," Sustainability, MDPI, vol. 16(10), pages 1-25, May.
    5. Newman, Alexander & Tse, Herman H.M. & Schwarz, Gary & Nielsen, Ingrid, 2018. "The effects of employees' creative self-efficacy on innovative behavior: The role of entrepreneurial leadership," Journal of Business Research, Elsevier, vol. 89(C), pages 1-9.
    6. Ki-Soon Han & Pooja Garg, 2018. "Workplace democracy and psychological capital: a paradigm shift in workplace," Management Research Review, Emerald Group Publishing Limited, vol. 41(9), pages 1088-1116, July.
    7. Joana Costa & Mariana Pádua & António Carrizo Moreira, 2023. "Leadership Styles and Innovation Management: What Is the Role of Human Capital?," Administrative Sciences, MDPI, vol. 13(2), pages 1-21, February.
    8. Bilal Bin Saeed & Bilal Afsar & Asad Shahjehan & Syed Imad Shah, 2019. "Does transformational leadership foster innovative work behavior? The roles of psychological empowerment, intrinsic motivation, and creative process engagement," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 254-281, January.
    9. Hernaus, Tomislav & Černe, Matej & Vujčić, Maja Tadić, 2023. "Leader–member innovative work behavior (in)congruence and task performance: The moderating role of work engagement," European Management Journal, Elsevier, vol. 41(5), pages 687-699.
    10. Xiaofeng Su & Xiaoli Jiang & Wenhe Lin & Anxin Xu & Qiujin Zheng, 2022. "Organizational Innovative Climate and Employees’ Improvisational Behavior: The Mediating Role of Psychological Safety and the Moderating Role of Creative Self-Efficacy," SAGE Open, , vol. 12(4), pages 21582440221, October.
    11. Azeem, Muhammad & Ahmed, Munir & Haider, Sajid & Sajjad, Muhammad, 2021. "Expanding competitive advantage through organizational culture, knowledge sharing and organizational innovation," Technology in Society, Elsevier, vol. 66(C).
    12. Qinghua Fu & Jacob Cherian & Naveed Ahmad & Miklas Scholz & Sarminah Samad & Ubaldo Comite, 2022. "An Inclusive Leadership Framework to Foster Employee Creativity in the Healthcare Sector: The Role of Psychological Safety and Polychronicity," IJERPH, MDPI, vol. 19(8), pages 1-13, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jiatong Yu & Jiajue Wang & Taesoo Moon, 2022. "Influence of Digital Transformation Capability on Operational Performance," Sustainability, MDPI, vol. 14(13), pages 1-20, June.
    2. Carlos Bazan, 2022. "Effect of the University’s Environment and Support System on Subjective Social Norms as Precursor of the Entrepreneurial Intention of Students," SAGE Open, , vol. 12(4), pages 21582440221, October.
    3. Hayford Asare Obeng & Richard Arhinful & Leviticus Mensah & Jerry Seth Owusu-Sarfo, 2024. "Assessing the Influence of the Knowledge Management Cycle on Job Satisfaction and Organizational Culture Considering the Interplay of Employee Engagement," Sustainability, MDPI, vol. 16(20), pages 1-28, October.
    4. Zhikun Ding & Xinyue Huang & Xinrui Wang & Qiaohui Chen & Jiasheng Zhang & Zezhou Wu, 2024. "Investigating the Determinants of Construction Stakeholders’ Intention to Use Construction and Demolition Waste Recycling Products Based on the S-O-R Model in China," Sustainability, MDPI, vol. 16(6), pages 1-17, March.
    5. Febrianur Ibnu Fitroh Sukono Putra & Awanis Linati Haziroh & Risanda Alirastra Budiantoro & Selvia Puji Lestari & Tiara Daffa Arsanda, 2023. "AMOBA: Innovation barriers of the millennial generation," Asian Management and Business Review, Master of Management, Department of Management, Faculty of Business and Economics Universitas Islam Indonesia, vol. 3(1), pages 1-13.
    6. Hunger, Tom & Arnold, Marlen Gabriele & Engesser, Sven & van den Boogaart, K. Gerald, 2024. "Integrating sustainability facets into the early stages of new product development - a critical review," OSF Preprints qmg76_v1, Center for Open Science.
    7. Diego Norena-Chavez, 2022. "Influence of SARS-CoV-2 on the Mediating Effect of Entrepreneurial Passion in the Relationship between Entrepreneurial Self-Efficacy and Innovative Behavior," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 125-139.
    8. Rahila Huma Anwar & Sajida Zaki & Natasha Memon & Ramayah Thurasamy, 2021. "Exploring the Interplay of Trait Emotional Intelligence and ESL Teacher Effectiveness: Is Self-Efficacy the Mechanism Linking Them?," SAGE Open, , vol. 11(4), pages 21582440211, November.
    9. Tarcia Camily Cavalcante Quezado & Nuno Fortes & William Quezado Figueiredo Cavalcante, 2022. "The Influence of Corporate Social Responsibility and Business Ethics on Brand Fidelity: The Importance of Brand Love and Brand Attitude," Sustainability, MDPI, vol. 14(5), pages 1-20, March.
    10. Luther Yuong Qai Chong & Thien Sang Lim, 2022. "Pull and Push Factors of Data Analytics Adoption and Its Mediating Role on Operational Performance," Sustainability, MDPI, vol. 14(12), pages 1-19, June.
    11. Meena Madhavan & Mohammed Ali Sharafuddin & Thanapong Chaichana, 2022. "Impact of Business Model Innovation on Sustainable Performance of Processed Marine Food Product SMEs in Thailand—A PLS-SEM Approach," Sustainability, MDPI, vol. 14(15), pages 1-33, August.
    12. Samir Marwan Hammami & Tareq Muhammad Alhousary & Ahmad Taha Kahwaji & Syed Ahsan Jamil, 2022. "The status quo of omani female entrepreneurs: a story of multidimensional success factors," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(4), pages 2063-2089, August.
    13. Siti Rohana Daud & Azira Rahim & Muhammad Syukri Abdullah & Nani Shuhada Sehat & Saida Farhanah Sarkam & Norlela Abas & Intan Liana Suhaime, 2024. "A Conceptual Framework for the Individual Factors Fostering the Innovative Work Behaviour of STEM Teachers," Information Management and Business Review, AMH International, vol. 16(1), pages 252-261.
    14. David Giauque & Frédéric Cornu & Karine Renard & Yves Emery, 2023. "Opportunity to Use New Ways of Working: Do Sectors and Organizational Characteristics Shape Employee Perceptions?," Sustainability, MDPI, vol. 15(14), pages 1-21, July.
    15. Baoting Peng & Xin Shen, 2024. "Does Environmental Regulation Affect Circular Economy Performance? Evidence from China," Sustainability, MDPI, vol. 16(11), pages 1-19, May.
    16. Luo, Xi & Cheah, Jun-Hwa & Hollebeek, Linda D. & Lim, Xin-Jean, 2024. "Boosting customers’ impulsive buying tendency in live-streaming commerce: The role of customer engagement and deal proneness," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    17. Amol Adkonkar & Anand Sharma & Pooja Arora, 2024. "Validation of Instrument Measuring the Impact of SCM Practices and SCM Agility on Competitive Advantage and Organization Performance in Indian Pharmaceutical Firms," Paradigm, , vol. 28(1), pages 65-83, June.
    18. Lluc Vila-Boix & Alicia Blanco-González & Giorgia Miotto & Felipe Hernández-Perlines, 2024. "The impact of social media advertising on brand’ legitimacy," International Entrepreneurship and Management Journal, Springer, vol. 20(3), pages 2115-2138, September.
    19. Abdullah J. Sultan, 2022. "Aligning employees’ work engagement and behavioral performance with internal branding: the missing link of employees’ perceived brand authenticity," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 27(1), pages 52-64, March.
    20. Halpern, Nigel & Mwesiumo, Deodat & Suau-Sanchez, Pere & Budd, Thomas & Bråthen, Svein, 2021. "Ready for digital transformation? The effect of organisational readiness, innovation, airport size and ownership on digital change at airports," Journal of Air Transport Management, Elsevier, vol. 90(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:17:y:2025:i:5:p:1879-:d:1597474. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.