[Podcast] The impact of transformational leadership on employees’ innovative behavior: The mediating role of innovation climate and the moderating role of psychological empowerment
4 November, 2024
Key words: Innovative behavior, Transformational leadership, Innovation climate, Psychological empowerment, State-owned enterprises
Limited studies that evaluate employee innovation behavior from a comprehensive perspective only cover all levels in the organization, specifically the organizational, leadership and employee levels. State-owned corporations often play an important role in shaping national economies and have the potential for innovation; nevertheless, an understanding of their unique factors can influence them. The innovation process has been limited. By examining the innovation behavior of employees in state-owned corporations, this research by the author group of Ho Chi Minh City University of Economics (UEH) has contributed to the understanding of employees’ innovation behaviors at public organizations – entities that have attracted relatively little attention.

Research context
In the context of increasingly fierce economic competition, employee creativity becomes an important factor to help organizations achieve sustainable development. Creativity, in this context, is understood as the ability to create new, creative and effective ideas at work, contributing to enhancing the competitiveness of businesses, improving work productivity and promoting organizational development. In Vietnam, the issue of innovation receives special attention from the government and functional agencies at all levels. In accordance with WIPO’s 2021 Global Innovation Index (GII) Report, Vietnam was ranked at the 44th position among 132 economies and the 4th place among ASEAN countries. With efforts to improve the innovation index, it can be stated that Vietnam’s current ranking has increased significantly compared to the 2014-2016 period.
The theoretical overview presents that many antecedents of Innovative Behavior have been studied, however, very few studies have evaluated these theories from a comprehensive perspective, including the organizational level (innovation climate), leadership level (transformational leadership) and individual level (perceived psychological empowerment) impacting employees’ innovative behavior. In addition, state-owned corporations often play an important role in shaping national economies and have the potential for innovation, on the other hand, understanding how their unique factors may affect the innovation process has been being limited.
From the above analysis, the author group conducted the research topic “The impact of transformational leadership on employees’ innovative behavior: The mediating role of innovation climate and the moderating role of empowerment psychology” to explore the relationship among transformational leadership, innovation atmosphere, and psychological empowerment to the creativity of employees in state-owned corporations in the Southern region.
Empowerment theory and research concepts
* Empowerment Theory (ET)
In accordance with ET, empowerment is promoted in work environments that provide employees with access to information, resources, support and opportunities for learning and developing. Empowerment refers to both providing power to an individual or group and promoting their comprehensive development by improving conditions and creating a favorable environment for their development. Empowerment is stated to occur when an organization engages people sincerely and gradually responds to this engagement with interest and intention to promote overall growth. Empowerment evolves over time as employees gain more control over their lives and become more and more involved in decisions that affect them. Therefore, with their positive tendencies and high autonomy, mastery-oriented employees may be less affected by unclear direction from unit leaders.
*Innovative behavior
Innovative behavior is the intentional proposal and application of new and improved ideas, processes, practices and policies to achieve organizational effectiveness, business success and long-term sustainability. Different from creativity (which defines the novelty and radicalness of ideas), innovative behavior involves an interpersonal psychosocial process, more concerned with implementation and realization. ideas. Innovative behavior often occurs during planned change with certain goals and includes actions listed as seeking new ideas, supporting new initiatives, and ensuring planning/funding for implementation of ideas.
*Psychological empowerment
Psychological empowerment, a concept associated with positive psychology, is a feeling of control over situations in the workplace. Psychological empowerment is an individual’s proactive orientation toward a work role with the desire to shape the context, processes, and work environment of the organization. Psychological empowerment has been identified as a significant predictor of attitudes, performance, and turnover intentions. Psychological empowerment tends to be motivating, and psychologically empowered employees have a greater sense of self-efficacy, autonomy, and ability to perform work tasks, leading to positive changes in the organization.
*Innovative atmosphere
An organization’s innovation climate, an important factor in the organizational system, includes the following elements listed as team collaboration, outstanding support, autonomy, and sufficient resources. Organizational environment is one of the important factors affecting innovation. To promote innovation, it is especially important to create an organizational climate that is psychologically non-threatening, supports risk-taking, and encourages employees to adopt innovation.
*Transformational leadership
Transformational leadership emphasizes participative management, autonomy, negotiation, information sharing and empowerment in the workplace, helping organizations foster long-term relationships with employees. Transformational leadership is a modern approach that focuses on analyzing organizational direction and determining how to handle internal and external changes, as well as what employees need to do to achieve goals of the organization.
Transformational leadership is described as a process in which leaders act as role models, stimulating and encouraging creative work behavior, motivating, inspiring and supporting followers to achieve the overall goals of the organization. These leaders encourage intellectual thinking and creativity through questioning and challenging the assumptions of their followers, encouraging them to participate in the generation and the implementation of new ideas.
Creative, innovative, and empowering working environment ensuring sustainable development
According to research results, creating a creative and innovative working environment, as well as psychological empowerment of employees, plays an important role in ensuring the sustainable development of the organization. Building processes that encourage innovative behavior within businesses is not only an important priority for managers but also key to thriving in an increasingly competitive business environment.
The fact that manifestations of creative activity are often discovered in an atmosphere of innovation suggests that businesses with a strong internal creative environment can foster breakthrough thinking and a willingness to take risks, encouraging the use of external knowledge in the work process. Therefore, creating an innovative atmosphere should be a priority for businesses by providing time and resources to employees, promoting open and free communication among team members, striving to design work that is non-repetitive and challenging, along with evaluating and rewarding creative and innovative ideas. In addition, encouraging flexibility, taking reasonable risks and being willing to accept failure as part of the learning and development process plays a very important role. Therefore, to build and to maintain an innovative climate, companies need to invest in developing a cultural environment that encourages creativity.
The direct influence of transformational leadership on innovation climate is confirmed. This result means that when managers and leaders have a transformational leadership mindset, employees tend to perceive that the environment they are working in is an innovative atmosphere and will tend to tend to perform innovative and creative behaviors higher than other individuals. Therefore, managers can use the essence of transformational leadership to improve employees’ innovative work behavior in organizational contexts. Managers should provide autonomy, growth opportunities, and skill diversity in the workplace to motivate employees so as to learn new things at work, which will increase their employee engagement into creative and innovative pursuits.
From these results, psychological empowerment not only has the strongest impact on innovation behavior but also demonstrates its moderating role. As mentioned previously, this study determined that innovation climate has a stronger impact on innovation behavior when psychological power is high. Because of this importance, organizations should build psychological empowerment mechanisms to unleash employees’ innovative behavior. Psychological empowerment is a general construction that includes meaning, autonomy, competence, and impact. Therefore, companies should empower employees by giving them greater responsibility and autonomy to take actions. By providing employees with greater responsibility and autonomy, they can gain a sense of control over their work environment which can reduce feelings of alienation and be more creative (Afsar & Badir, 2016). Furthermore, if employees perceive meaning in their work as well as compatibility between their talents and aspirations, the fact that they may feel more valued and invest mental energy in their work can further encourage positive mental energy and creativity. Therefore, managers should recognize their employees’ strengths and assign them suitable positions. By prioritizing a sense of competence, trust, choice, control, meaning, and a fearless environment for employee creativity, organizations can foster innovative behavioral tendencies.
Please refer to the full research titled The impact of transformational leadership on employees’ innovative behavior: The mediating role of innovation climate and the moderating role of psychological empowerment HERE.
Author group: Dr. Dang Huu Phuc, Nham Thanh Chung – University of Economics Ho Chi Minh City (UEH).
This article is part of the series spreading research and applied knowledge from UEH with the message “Research Contribution For All”. UEH cordially invites readers the upcoming UEH Research Insights issue.
News, photos: Author group, UEH Department of Communications and Partnerships

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