1. Introduction
Innovation is considered as essential component of organizational success specifically in the competitive and dynamic economy today. Number of researchers agreed to consider leadership as one of the most essential aspects impacting creativity and innovativeness (David, Yang, Pei,
& Moosa, 2023; Mohd Fahmi, Nurhanan Syafiah, Musmuliadi, & Muhammad Alshurideh, 2023; Rafique, Hou, Chudhery, Waheed, Zia, & Chan, 2022). From previous studies, it can be seen there is a growing interest on how transformational leadership affects creativity and innovation. The growing academic interest in creative settings is also shown in genuine leadership, which has developed into a "widespread emergent social trend" and a "gold standard for leadership" (Chen, Zada, Khan, & Saba, 2022). In the education sector, innovation
International Journal of Business and Economy (IJBEC) eISSN: 2682-8359 | Vol. 5 No. 2 [June 2023]
Journal website: http://myjms.mohe.gov.my/index.php/ijbec
TRANSFORMATIONAL LEADERSHIP AND INNOVATIVE WORK BEHAVIOR: EFFECT OF PSYCHOLOGICAL
EMPOWERMENT
Sun Yishu1, Nurhafizah Zainal2*, Nor Nazeranah Omar Din3 and Chandramalar Munusami4
1 2 3 4 Faculty of Business, Nilai University, Nilai, MALAYSIA
*Corresponding author: [email protected]
Article Information:
Article history:
Received date : 4 June 2023 Revised date : 5 June 2023 Accepted date : 25 June 2023 Published date : 30 June 2023
To cite this document:
Sun, Y., Zainal, N., Omar Din, N. N.,
& Munusami, C. (2023).
TRANSFORMATIONAL
LEADERSHIP AND INNOVATIVE WORK BEHAVIOR: EFFECT OF PSYCHOLOGICAL
EMPOWERMENT. International Journal of Business and Economy, 5(2), 81-97.
Abstract: Previous studies have shown the value of innovation inside firms. One of the predictors toward innovation is good leadership. Thus, this study is conducted to examine the association between transformational leadership and innovative work behavior (IWB) among 384 employees that working in commercial banking industry in China. In addition, the effect of psychological empowerment is examined as a moderator that can alter the relationship. Set of questionnaires were used as a method to collect the data and analyzed by using PLS-SEM. The findings suggested that psychological empowerment is able to moderate the relationship between transformational leadership and IWB. The study contributes to the extent literature and practitioners on how psychological empowerment moderates the relationship between transformational leadership and IWB among employees.
Keywords: Transformational Leadership, Innovative Work Behavior, Psychological Empowerment.
in the workplace is essential for workers, businesses, and communities. At the organizational and national levels, innovation is a key driver of social and economic development. Meanwhile at the individual level, innovation at work is a need for greater job productivity and satisfaction.
There are limited studies that have been done in examining the boundary conditions on the relationships between transformational leadership in stimulating IWB through the moderating role of psychological empowerment. However, the existing work of previous researchers serves as a guideline in helping other researchers to understand what influence employee IWB (Purwanto, Purba, Bernarto, & Sijabat, 2021; Pradhan & Jena, 2019). The empirical findings on the link between leadership and innovativeness have been inconsistent, despite the study findings supporting the favourable influence the leader has in fostering creative work behavior (Hansen, 2019). In addition, the importance of employee IWB in fostering organizational innovation in many Chinese sectors is well acknowledged by academics. However, up to date there is no comprehensive study that able to explain how to trigger employee’s IWB in the Chinese banking industry. Therefore, this study is carried out to examine the role of psychological empowerment in moderating the relationship between transformational leadership and IWB.
2. Problem Statement
With the introduction of information technology, computers, and e-practices, the emergence of international banks in China has sparked innovation in banking-related activities. When analyzing the retail business via market research, the Silk Bank's motto, "Leadership and Innovation," has been another crucial strategic motivation to conduct this study (Bashir, Naqshbandi, Farooq, 2020). Since leadership is crucial in fostering creative work behavior in firms, there is a tremendous need to encourage it in the banking industry. Previous studies reported mixed findings related to leadership styles and creative work styles. For instance, according to research (Yi, Uddin, Das, Mahmood, & Sohel, 2019), creative work environments and behaviors are linked to transformational leadership. However, according to Rizki, Parashakti, and Saragih, (2019) observed no significant differences in the generation of innovative behavior, leadership styles, or creative idea generation. Therefore, there is a paucity to investigate the relationship between leadership styles and creative work styles specifically in China’s banking industry.
Along the same line, there are limited studies that examine how psychological empowerment influence the relationship between leadership and individual innovation (Groselj, Cerne, Penger, & Grah, 2020). The border situations of transformational leadership in cutting-edge work contexts are therefore a useful topic to examine at this moment. By using this broad framework, the present study will be further understanding of psychological empowerment as the moderating factor (at the individual level) that affects creative work behavior. It is crucial to know the procedures and constraints by which leadership promotes innovative work behavior in order to comprehend how moderator mechanisms and boundary circumstances may affect leaders' support of such behaviors.
Additionally, Saeed, Afsar, Shahjeha, and Shah (2019) discovered that innovativeness was a crucial element of effectiveness and there was a favorable correlation between transformational leadership and work unit effectiveness. In addition, effectiveness could link to the quantity of original ideas created. As supported in the previous studies (David et al., 2023; Afsar &
Umrani, 2020) have emphasized the significance of transformational leadership on innovative work behavior in the workplace. However, the process and mechanism on how
transformational leadership influence innovative work behaviour require further investigation.
Some notable study such as Schermuly and Meyer (2020) showed the association between psychological empowerment and transformational leadership. It is believed that psychological empowerment may facilitate the transformational leadership process in empowering the employees to come up with innovative work behavior. Therefore, the aim of this study is to investigate the role of psychological empowerment in influencing the correlation between transformational leadership and innovative work behaviour.
2.1 Literature Review
2.1.1 Innovative Work Behaviour (IWB)
It is important to summarize what kind of factors have been proven to affect IWB before moving to the analysis of the relationship between constructs. IWB determinant has been the subject of much investigation by academics and professionals (Muchiri, McMurray, Nkhoma,
& Pham, 2020). Following a study of the literature, the most reliable indicators of IWB are succinctly described as follow.
The first indicator is referred to as individual factors and includes aspects pertaining to personal traits or personality traits. According to Siregar, Suryana, Ahman, and Senen (2019), the category of individual factor is shown to be the most significant factor that contribute to innovative work behaviour. Further on, education, proactivity, locus of control, and self- efficacy are the individual elements that affect workers' IWB, according to prior study (Demesko, 2017).
On the other hand, the second indicator is organizational factor. This aspect encourages employees to practice creativity, which improves their IWB. Additionally, those who live in an environment that supports innovation are free to experiment with innovations and make errors (Dong, Nguyen, & Nghia, 2019). Another category, organizational aspect, highlights the significance of corporate environment for innovation in enhancing employee IWB and igniting employee enthusiasm in innovation (Norulhuda, Rasidah, Riza Munira, Yusrizal Sufardi, 2019). Additionally, while experimenting with innovations, individuals may make blunders in an innovative environment (Siregar et al., 2019).
The last indicator is known as relationship factor. Study from Afsar and Umrani (2020) discovered the interactions between members and their leaders. It is shown connections between leaders and followers have a direct impact on creativity. Leadership seems to have a big impact on IWB. As support by Schermuly and Meyer (2020) assert that transformational leaders, in particular, motivate their followers to go above and beyond expectations.
In this research, the association between IWB and leadership specifically transformational leadership are observed. According to researchers in the leadership area, Chinese businesses often have dominating and authoritative management, which might hinder the development of new solutions (Chen et al., 2022). Therefore, it is beneficial to examine other types of leadership such as transformational leadership that could trigger the IWB.
2.2 Transformational Leadership
According to ideas of transformational leadership, the primary leadership task is encouraging innovation (David et al., 2023). On the other hand, Mohd Fahmi et al. (2023) asserts that transformational leadership takes place when leaders and followers lift one another up to inspire followers to act in accordance with their higher goals. Additionally, they thought that transformational leaders inspire team members to put the good of the whole ahead of own interests. In a similar vein, Rafique et al (2022) suggest that through inspiring followers, transformational leaders raise their moral standards. Similar to how Purwanto et al. (2021) describe transformational leaders as individuals who have an optimistic outlook on the organization's future possibilities. They also think that leaders with transformational mindsets focus largely on elevating followers' self-confidence so that they may reach their own potential.
The transformational leadership dimensions from Bass and Avolio (1993) are discussed as follow:
2.2.1 Idealized Influence
The behavior of leaders will attract their followers and thus earn a certain degree of respect from the followers. Idealized influence indicates that leaders make themselves as idol to their employees, and such image help the leaders to influence the followers to achieve the goal and objectives of the organization. In line with Bass (1985), charismatic is another name of idealized influence which is an essential element in the process of transformation (Antonakis, Bastardoz, Jacquart, & Shamir, 2016). However, in the literature, two terms are used interchangeably because of the associated frequency of transformational leadership with charismatic leadership. Yet, some of the researchers do not agree upon that fact that these two leadership styles are similar.
2.2.2 Inspirational Motivation
Inspirational motivation includes expressing an energizing vision to employees. Moreover, inspirational motivation occurs when employee feel that their leaders are paying attention to each activity (Antonakis et al., 2016). Jensen and Bro (2018) postulate that the leaders who follow inspirational motivation tend to show they believe in their employee’s skills. From the perspective of the leaders, it has been discovered that the crucial factor for triggering employee performance beyond expectation is inspirational motivation (Asma, Sunan, & Mahmud, 2021).
2.2.3 Intellectual Stimulation
By using intellectual stimulation leaders encourage their followers to think out of the box and accept new challenges for the sake of innovation. Moreover, this is an opportunity for employees to give their leaders the support to solve the problems and thus the result is enhancement of employee decision-making ability (Asma et al., 2021).
2.2.4 Individualized Consideration
The leader who has the individualized characteristics, encourage their followers by communicating with them individually and the result of such approach is the development of individual capability of creative and innovative thinking. In addition, individualized consideration also refers to the leader behavior which expresses that the individual employee is an important asset to the organization. In return each individual will contribute to enhance the motivation towards achieving the organizational goals. Previous studies found that the
essential elements of transformational leadership for individual innovation is individualized consideration (Asma et al., 2021).
2.3 Past Research on Transformational Leadership
Based on the previous research, study about transformational leadership has been investigated in various setting such as education, service, and engineering industry. Many researchers investigated the relationship of transformational leadership with various job outcome such as innovative work behaviour (David et al., 2023; Rafique et al., 2022; Chen et al., 2022), organizational commitment (Mehmet, Umut, & Necati, 2019; Zawawi, Putrawan, & Hamidah, 2019), and organizational innovation (Mohd Fahmi et al., 2023). Transformational leadership is believed to have an effect on or affect organizational commitment (Mehmet et al., 2019).
Based on the Mehmet et al. (2019) study, the principal's job is crucial in maintaining teachers' organizational commitment by paying attention to the elements affecting their personal and school contexts. The principal's involvement in resolving system context problems that might weaken organizational commitment is also crucial. On the other hand, Zawawi et al. (2019), claim that a company's leadership style has an impact on how committed its workers are to the organization. Organizational commitment and leadership behavior have a good, direct link.
Therefore, it is believed that the growth of organizational commitment will be significantly influenced by leadership behavior. It is clear that transformational leadership is often linked to the desired organizational results, such followers who are prepared to put in additional effort.
When workers put extra effort into completing school-related responsibilities, it shows some level of devotion. Along the same line, David et al. (2023) discovered evidence that supports the beneficial effects of transformational leadership on innovative work behaviour at the workplace. They found the connection between transformational leadership and innovative work behaviour. Leaders that practice transformational styles are able to motivate their employees to produce creative and innovative works due to encouragement that they received from their leaders.
2.4 Psychological Empowerment
The term psychological empowerment (PE) has many different definitions. The majority of academics and professionals have long been moved by the concept of employee empowerment.
PE's direct connection to individual invention has drawn a lot of scholarly interest.
Additionally, according to the Zimmerman (1995), psychological empowerment is a mental state that people have that reflects an active orientation toward a certain job. Zimmerman (1995) claims that psychological empowerment is made up of four elements: significance, competence, autonomy, and effect. Using this methodology, Spreitzer (1995) develops four cognitive dimensions: meaning, competence, self-determination, and impact.
On the other hand, Menon (2002) develops a comprehensive psychological empowerment measure. The author also describes psychological empowerment as a cognitive condition in which workers strongly believe their own competence and control. The writers also claim that workers passionately believe in the internalization of the organization's goals.
However, due to its well-known evaluation in the literature, the study would want to emphasize the Spreitzer (1995) model. Psychological empowerment, according to Sprietzer (1995), is a motivating concept that exists when workers believe they can do the job effectively, can have an influence on the environment, and that their work is worthwhile. Additionally, according to Sprietzer's idea of psychological empowerment, a person's view of their workplace
influences how empowered they feel, and structurally empowering circumstances cannot be completely realized until the person is psychologically acceptable.
2.4.1 Dimension of Psychological Empowerment
Spreitzer (1995) postulates four dimensions of psychological empowerment. She also says that if any one factor is overlooked, the impact of psychological empowerment cannot be accurately measured. However, even if one element is absent, the overall empowerment may not be negatively impacted. Even if the lack of one component will lessen the empowerment impact, the total empowerment effect will still be there. The previous research showed that one aspect of empowerment does not alone predict an organizational outcome like satisfaction or effectiveness (Spreitzer, 1995). The previous research discovered that the individual must feel all four psychological empowerment aspects in order for the business to accomplish goals like effectiveness, contentment, innovation, and job-related tension. The core of psychological empowerment must be really conveyed in these four aspects. These four aspects of psychological empowerment are widely supported and endorsed. For the aim of the research, these four aspects of psychological empowerment are thoroughly examined.
a) Meaning:
A person has an experience of meaning when he/she feels that the work he/she does is consistent with beliefs, attitude and values. They also take care of their work and highlight it as important. The task become meaningful if the person considers that the task is important.
On the other side, if the work is not seen as significant, it loses all significance. Only when the corporate purpose and goals align with their own set of values will a worker feel that their job is significant. A worker will feel that their job matters if the organization's purpose and goals align with their own set of values.
b) Competence:
Spreizer (1995) asserts that competence refers to a person's capacity for effective performance.
When a person has confidence in their talents and abilities and feels they can do the work successfully, they are said to have shown competence. Additionally, self-efficacy, or people's convictions that they are capable of completing the task with assurance, can be used to define competence. When workers are certain of their capacity to do their task satisfactorily, they feel competent. For people to feel empowered, they must believe in their own ability to be productive or competent. It is subjective to what extent a person can carry out his or her task utilizing a high degree of ability known as competence. The same authors detail how someone with high levels of competence exhibits an elevated feeling of confidence, which in turn encourages more effort and tenacity in the face of challenges.
c) Self- Determination:
A person experience self-determination when the individual feels that he/she have freedom of choice to fulfil the tasks in an appropriate way. Moreover, self-determination reflects a continuation of work behavior and process. A person who feels high levels of self- determination have a positive effect on individual and organizational levels. The stage of self- determination provides an opportunity for the individuals to select and perform the tasks in ways that seem appropriate to the person with comfort.
d) Impact:
Impact may be described as the degree to which a person believes they have the power to affect the workplace. Spreitzer (1995) assert that an individual's sense of achievement in completing objectives may be referred to as its effect. A person who experienced impact believes that the task accomplished by him/her is an important outcome for an organization. Consequently, individuals who experienced impact become more motivated.
2.5 Social Cognitive Theory
In this study, Social Cognitive Theory is used as a foundation to understand the relationship between transformational leadership and innovative work behaviour. In Social Cognitive Theory (SCT), it posits that learning occurs in a social context with a dynamic and reciprocal interaction between person, environment, and behaviour (Bandura, 1985). In addition, Bandura argued humans act ‘within an interdependent causal structure involving triadic reciprocal causation”. In this research, it focused on the direction between environment factor, personal factor, and behaviour of the employees. In this study, transformational leadership act as an environment factor that may motivate the employees to produce innovative work behaviour (behaviour of employees) with the intervention of psychological empowerment (personal factor). As such, the style of leadership may engender follower’s motivation to perform and guide their proactive behaviour with the intervention of personal factor.
2.6 Conceptual Framework
Figure 2.6 shows the conceptual framework for this study. The independent variable is transformational leadership. Meanwhile, the dependent variable is employee’s innovative work behaviour. The moderating variable for this study is employee’s psychological empowerment.
Figure 2.1: Conceptual Framework
2.7 Hypotheses Development
2.7.1 Transformational Leadership and Innovative Work Behaviour
Early study has mentioned that organizational innovation is positively impacted by transformational leaders (Bass & Avolio, 1993). It is believed that the personnel are motivated by these transformative leaders to actively seek an organizational vision beyond their own self- interests. This is supported by Afsar and Umrani (2020) claim that via motivation, inspiration,
Transformational Leadership
Employee’s Innovative Work Behaviour
Employee’s Psychological Empowerment
and customized considerations, transformational leaders build a supportive environment.
When working in a supportive atmosphere, workers are more motivated to come up with and carry out fresh, innovative ideas. Additionally, this setting offers assistance and suggestions for finding novel and effective solutions. Therefore, based on the above arguments, it is hypothesized:
H1: There is a significant relationship between Transformational Leadership and Innovative Work Behaviour.
2.7.2 Psychological Empowerment as Moderator
Psychological empowerment is a psychological state at individual level towards his or her work orientation. It is a different concept from the empowerment where the authority and responsibility are given by the leader. Therefore, psychological empowerment act as a motivational tool within the individual in performing their work task. Several factors could be contributing to the employee’s psychological empowerment. For instance, peers, leaders, organizations and any other facets could be antecedents to psychological empowerment.
Previous study indicated transformational leadership has positive significant relationship toward innovate work behaviour. However, this relationship only exists when the psychological empowerment is high (Groselj, Cerne, Penger, & Grah, 2020). In this study the researcher expanding to a different context. Therefore, the following hypothesis can be developed:
H2: Psychological empowerment moderates the relationship between transformational leadership and innovative work behaviour.
3. Method
This study used quantitative method. A quantitative method yields information that may be extensively statistically analyzed, tested against hypotheses, and extrapolated beyond the study group. In addition, to fill a vacuum in the literature, a quantitative methodological approach was used in this study. In previous study, mixed-method was used to examine the relationship between transformational leadership and innovative work behaviour. Quantitative method is used in this study because the research has to assess more than one variable to analyze the link between the variables. As a result, as it enables researchers to quantify several variables, quantitative research is employed to achieve the study's goal.
3.1 Materials 3.1.1 Samples
The total 384 permanent employees that working in commercial banking industry in China are selected as sample in this study. Therefore, the unit of analysis in this study is targeted at individual level. The non-probability sampling specifically cluster sampling was used to draw the sample in this study. Cluster sampling has been chosen as the study select geographically two cities (Beijing and Guangzhou) as both cities are known as business commercial cities.
Only, the permanent employees, who are working in the commercial banks are selected as the participants in this study. Additionally, the focal point in this study is the innovative work behaviour of the employees, the sample frame is narrowed to focus on the employees (in context of how psychological empowerment (PE) with the relationship between the Transformational Leadership on the Innovative Work Behaviour). Thus, the target population
of the study are permanent employees who will provide their insights on the association between transformational leadership, psychological empowerment, and innovative work behaviour. Permanent employees are selected because they know their leaders better. Each commercial bank in China has a branch manager including some other managers according to the departments such as finance, marketing, HR etc. It is assumed that the managers of the organizations always adopt some leadership approaches that are mostly related to the transformational leadership. Therefore, the objective of the study is to identify to what extent the psychological empowerment has an impact on the innovative work behaviour of the employees under the transformational leadership of bank managers in China.
3.1.2 Site
This study conducted in commercial banking industry in China specifically in the two regions;
Beijing and Guangzhou. The importance of employee innovative work behavior (IWB) in fostering organizational innovation in many Chinese sectors is well acknowledged by academics. To present a comprehensive image of how to trigger employee IWB in the Chinese banking business, the existing understanding is far from full. This is because changing from hierarchical leadership to more employee-centered leadership styles is difficult for many Chinese banks since the two have differing impacts on workers' IWB (Yi et al., 2019).
Therefore, this study could complete and clarify the blurry image. This research presents and evaluates a moderating model that investigates the expected beneficial impact of transformational leadership styles on employee IWB through psychological empowerment.
According to researchers in the leadership area, Chinese businesses often have dominating and authoritative management, which might hinder the development of new solutions (Phung, Hawryszkiewycz, & Chandran, 2019). It is congruent with the evolving demands of present and future employee management in China in that it places a strong focus on servicing followers by showing concern and putting them first.
3.1.3 Procedures
The researcher utilizes the data gathered from the survey to extrapolate conclusions from a chosen sample that accurately reflects the population. In 2022, there were 4,602 financial organizations in China (Statista, 2022), and Bank of China employed around 310,000 employees across a variety of divisions. Therefore, it can be estimated 384 sample size when the population is more than 100,000 (Krejcie & Morgan, 1970).
A questionnaire used to collect the data. After getting the consent from the participants to participate in this study, a set of questionnaires were distributed to the respondents. The questionnaire consists four sections; Section A (Demographic Information), Section B (Transformational Leadership), Section C (Psychological Empowerment), and Section D (Innovative Work Behavior). The researcher remains on site to collect completed questionnaires from participants. However, the remaining respondents who were unable to complete the survey on that day were contacted later.
3.2 Measurement
Questionnaire used five-point Likert-scale in order to measure transformational leadership, psychological empowerment, and innovative work behaviour. The five-point Likert-scale are ranging from 1 as strongly disagree to 5 as strongly agree. All the constructs have high validity and reliability with Cronbach’s alpha more than 0.7. Total 10 items were used in each construct. All the constructs are adopted from previous studies. In order to measure transformational leadership, the MLQ (5X) scale established by Bass & Avolio (1993) was used. Meanwhile, to assess the employee’s psychological empowerment, questionnaire developed by Spreitzer (1995) was used. On the other hand, to measure innovative work behaviour, questionnaire from De Jong and Den Hartog (2010) was used.
3.3 Data Analysis
In this study, Statistical Packages for Social Sciences (SPSS) and Partial Least Square Structural Equation Modeling (PLS-SEM) in particular Smart-PLS were used. The SPSS is used for descriptive and statistical inferences in respect of data preparation, editing and coding, missing data and outliers (univariate and multivariate) and analysis of common method bias.
Meanwhile, SmartPLS tools was chosen to run the SEM analysis to examine how the loading and route relate to one another. Additionally, the PLS technique is appropriate for models with complicated linkages (i.e., numerous indicators, constructs, and the relationship among variables). Along the same line, SEM differs from multiple regression approach in that it evaluates moderator and mediator connections concurrently.
According to Hair, Hult, Ringle, and Sarstedt (2017), moderation is an instance when the values of a third variable, known as a moderator variable, affect the connection between the two constructs rather than being constant. The strength or even the direction of a link between two constructs in the model may change depending on the moderator variable. How the moderating relationship is quantified depends on whether the researcher tests the hypothesis that one specific model connection or all model links depend on the moderator's scores. In this research, the relationship between transformational leadership and innovative work behavior is moderated by psychological empowerment.
Additionally, SEM permits the analyst to figure out whether the path coefficients between variables are noteworthy and if the proposed model is good and fit for the gathered data.
Furthermore, direct and conditional pathways between variables can be investigated, with the confusions of estimation error being checked. SEM strategy is the most extreme likelihood technique, which is utilized as a part of this study since this methodology grants displaying of an arrangement of relations among construct, simulation estimation of all hypothesis, and estimation of moderation, mediation or indirect impacts.
Transformational leadership is observed as exogenous variable in this study. Meanwhile, Innovative work behaviour is observed as endogenous variable. Parameters demonstrate the immediate impacts, for example, the impact of an endogenous component on a deliberate variable, and the fluctuations and covariance between variables inside the model (Hair et al., 2017).
4. Results and Discussion 4.1 Demographic Information
Table 4.1 shows the summary of demographic information of the respondents. There are 319 (83.1%) male and 65 (16.9%) female respondents. Majority of the respondents are from the age group of 31-35 years with 142 (37.0%) and followed by the 36 years to 40 years (29.1%).
In terms of education level, more than half of the respondents (n=246; 64.1%) are Master degree holder. Most of the employees were from China Development Bank (n=266; 69.3%), followed by Bank of Communications (n=74; 19.3%) and China Construction Bank (n=44;11.5%). In terms of respondent’s experiences, 54.4% (n=209) were employed for more than 10 years.
Table 4.1: Demographic Information
Demographic Profile Sub-Category N %
Gender Female 65 16.9
Male 319 83.1
Age 31 - 35 years 142 37.0
36 - 40 years 112 29.1
41 - 45 years 61 15.9
46 - 50 years 36 9.4
51 and above 33 8.6
Educational Level Diploma 55 14.3
Master 246 64.1
Doctorate 83 21.6
Banks China Construction Bank 44 11.5
China Development Bank 266 69.3
Bank of Communications 74 19.3
Working Experiences Below 5 years 40 10.4
6-7 years 54 14.1
8-9 years 81 21.1
More than 10 years 209 54.4
4.2 Common Method Variance
Table 4.2 shows the first component accounted for 40% of the overall variation. There was no generic component, as the factor analysis showed. Furthermore, this dataset showed no substantial common technique bias.
Table 4.2: Common Method Variance
4.3 Descriptive Analysis
Table 4.3 illustrates the descriptive statistics of the variables in this study. The mean score for each of the variables (Transformational Leadership; Psychological Empowerment; Innovative Work Behaviour) are ranging between 4.32 and 4.51. In addition, the standard deviations of the independent variables are between 0.48 and 0.57. The mean score suggests that most of the participants were agreed on the statements of the questionnaire.
Table 4.3: Descriptive Analysis
Constructs Mean Std. Deviation
Transformational Leadership 4.44 0.48
Psychological Empowerment 4.51 0.55
Innovative Work Behaviour 4.32 0.57
4.4 Normality
One of the fundamental presumptions when utilizing the maximum likelihood estimates in SEM analysis is the normality of the distribution. Based on the result shown in Table 4.4, it can be seen that the Skewness values are ranging between -2 and +2. Meanwhile the values for Kurtosis are ranging between -7 and +7. Therefore, it can be concluded the study’s data were normally distributed (Hair, Black, Babin, & Anderson, 2010). Therefore, the research complies with the standards for normality.
Table 4.4: Normality Test
Construct N Skewness Std. Error Kurtosis Std. Error
Transformational Leadership 384 -2.264 0.125 7.472 0.248
Psychological Empowerment 384 -2.792 0.125 7.784 0.248
Innovative Work Behaviour
384 -1.332 0.125 7.546 0.248
4.5 Measurement Model Analysis
The overall analysis of the three study measuring variables namely Transformational Leadership (TL), Psychological Empowerment (PE), and Innovative Work Behavior (IWB were covered in this part. Figure 4.1 shows the measurement model for all the constructs. On the other hand, Table 4.5 describes the measurement model validation. It can be seen that all variables show high reliability with Cronbach’s alpha values more than 0.8 (Hair et. al., 2017).
Meanwhile, the composite reliability values for each construct are above 0.7 which indicates the internal consistency (Hair et. al., 2017). In addition, the Average Variance Extracted (AVE) values for each construct are above 0.50 which confirms the convergent validity (Fornell &
Larcker, 1981). There are few items removed from the constructs due to low factor loadings.
The items are TL7, IWB6, IWB8, and IWB9.
Table 4.5: Measurement Model Analysis Constructs Items Loadings Cronbach’s
Alpha
Composite Reliability
AVE Transformational
Leadership (TL)
TL1 0.779 0.881 0.908 0.585
TL2 0.825
TL3 0.730
TL4 0.762
TL5 0.732
TL6 0.772
TL8 0.748
Innovative Work Behaviour (IWB)
IWB1 0.794 0.899 0.920 0.623
IWB2 0.791
IWB3 0.845
IWB4 0.848
IWB5 0.762
IWB7 0.748
IWB10 0.730
Psychological Empowerment (PE)
PE1 0.848 0.922 0.934 0.585
PE2 0.762
PE3 0.853
PE4 0.755
PE5 0.701
PE6 0.760
PE7 0.747
PE8 0.724
PE9 0.721
PE10 0.766
Figure 4.1: Measurement Model
4.6 Goodness-of-Fit Indices
After deletion of low factor loadings on indicators, the goodness-of-fit indices were recorded to assess the model fit. In this study, the goodness-of-fit indices were evaluated based on several indices which includes RMSEA and GFI (absolute fit), CFI (incremental fit), and χ²/df and PGFI (parsimony fit). There is no consensus on which model fits are ‘good’ or ‘bad’ as this issue can be interpreted subjectively (Browne & Cudeck, 1993). However, several indices were used to determine whether a model is acceptable as suggested in the literature. In this study, RMSEA value shown acceptable value which was .08. In addition, GFI value was .90 and CFI was .95. Both figures are higher than .90 which indicates acceptable values.
Meanwhile, the result for χ²/df shown in the range of acceptable value with 3.61 which is low than 5.0. In addition, the value of PGFI also indicates in an acceptable range with .60 which is higher than .50. Thus, it can be concluded that the model shows a good fit. Table 4.6 indicated the measurement model fit statistic for this study.
Table 4.6: Measurement Model Fit Statistic Single Measurement
Model
Absolute Fit Incremental Fit Parsimony Fit Initial estimation RMSEA = .126
GFI = .75
CFI = .83 χ²/df = 6.96 PGFI = .58
Final model RMSEA = .08
GFI = .90
CFI = .95 χ²/df = 3.61 PGFI = .60
4.7 Structural Model
Table 4.7 shows the result of path coefficient assessment. Result shown the Beta-value for the relationship between transformational leadership and innovative work behaviour is 0.196 and it is significant, less than 0.05. Therefore, it can be concluded that H1 is supported. This finding is in line with study from Rafique et al. (2022) who found significant result between transformational leadership and innovative work behaviour. The plausible reason behind this significant finding could be because transformational leader will encourage and motivate employees to challenge their capability which lead to trigger innovative and creative work by employees. In addition, other study also captured significant finding between transformational leadership and innovative work behaviour (Purwanto et. al., 2021). Transformational leader is considered as influential leadership style that able to provide impacts on organizational outcome such as innovative work behaviour among employees as leader encourage the follower readiness to perform better.
Table 4.7: Path Coefficient Assessment
Hypothesis Relationship Beta SD t-value p-value Finding H1 Transformational
Leadership and Innovative Work Behaviour
0.196 0.036 5.448 0.000 Supported
4.8 Moderating Role of Psychological Empowerment
Table 4.8 shows the bootstrapping result to test the moderation role of psychological empowerment. It can be concluded that psychological empowerment able to moderate the relationship between transformational leadership and innovative work behaviour, as the p- value is lower than 0.05. The finding indicates psychological empowerment given to the employees will act as mechanism to foster the innovative work behaviour through transformational leadership style. Employees with psychological empowerment would have competency and self-determination in producing innovative work with support transformational leadership style.
Table 4.8: Bootstrapping Result
Hypothesis Path Beta SD t-value p-value Finding
H2 Psychological
Empowerment x Transformational Leadership→
Innovative Work Behaviour
-0.030 0.013 2.324 0.021 Supported
5. Conclusion
The study aims to investigate the role of psychological empowerment on the relationship between transformational leader and innovative work behaviour among employees in commercial banking industry in China. The finding confirmed that psychological empowerment act as moderating role in the relationship between transformational leader and innovative work behaviour. In addition, the finding also confirmed that transformational leadership has positive significant effect toward employee’s innovative work behaviour in commercial banking industry, China. The findings contribute to the theoretical and practical perspectives. The findings provide insights into how transformational leadership may be used to foster innovative work behaviour among employees. The leaders that often apply transformational leadership practices provide their staff members freedom to perform and are encouraged to create chances to have an influence on their work responsibilities, which may result in greater levels of innovative work behaviour. In addition, with the support of psychological empowerment, employees will be motivated to show their innovative and creative work output. Positive relationships between transformational leadership and innovative work behaviour develop when people feel empowered. On the other hand, findings of this study have a number of practical applications. First, the finding suggested that a leader should comprehend what encourages employee's innovative work behaviours in China's commercial banking industry. Second, the leader needs to know what types of leadership style that is appropriate to trigger creativity and innovation among employees. Third, the leader or organization should consider how the process or mechanism to encourage the innovative work behaviour among employees by looking into the factor that foster the transformational leadership. In this case, employees with high psychological empowerment will show creative and innovative output in their work. Highly empowered employees are having role clarity on what they should perform. Therefore, the organization may consider the relevance training and courses such as leadership training and employee empowerment in order to encourage the development of innovative work behaviour.
6. Acknowledgement
The authors greatly appreciate those involved in the study specifically to the selected commercial bank in China and committed respondents in ensuring the success of this study.
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