The Effect of Paternalistic Leadership on Employee Innovative Behavior in Indonesian Startup Companies: The Mediating Role of Psychological Empowerment

Abstract

Companies can become more innovative by leveraging the ability of employees to innovate. It is operationalized through innovative behavior and highly influenced by the leader. Empowerment is considered capable of mediating the effect of leadership on innovative behavior. Employees with innovative behaviors can be fast and accurately respond to customers, develop new ideas, and create new products. This study aims to examine effect of paternalistic leadership (benevolent, moral, and authoritarian) on innovative behavior, the effect of psychological empowerment on innovative behavior; and the effect of paternalistic leadership's on employees' innovative behavior mediated by psychological empowerment. The data were collected from 119 employees of several startup companies in Indonesia. Researchers used Hayes Process method to assess the proposed hypotheses and evaluate the mediating role. The findings suggest that psychological empowerment mediates the effect of benevolent and authoritarian leadership on innovative behavior. However, this study indicates that psychological empowerment does not mediate moral leadership and innovative behavior. This study provides recommendations to leaders and the organization's management in formulating HR management practices to improve company’s innovation performance through leadership style by creating a positive work environment that affects employee innovative behavior through psychological empowerment.