Paternalistic Leadership and Innovative Behavior in SMEs: Mediating Role of Work Engagement

Leadership is a critical component in maintaining and developing employee innovative behavior so that businesses can survive in increasingly complex market conditions. This study investigates the role of paternalistic leadership dimensions (i.e., authoritarian, benevolent, and moral) in strengthening the innovative behavior of SME employees. In addition, the mediating function of employee engagement in these relationships is also taken into account in this study. A total of 281 responses from SME employees in Indonesia were collected through distributing questionnaires using purposive sampling. The PLS-SEM technique was then used to validate the hypothesis in this research. The outcomes indicate that authoritarian leadership exerts a detrimental influence on employee engagement with their work. On the other hand, benevolent leadership and moral leadership have a good impact on work engagement. Furthermore, work engagement was found to positively affect employee innovative behavior. Also, work engagement was found to mediate the relationship between paternalistic leadership dimensions (i.e., authoritarian, benevolent, and moral) and employee innovative behavior. The current study provides important contributions both theoretically and practically regarding the mechanism underlying the aspects of paternalistic leadership (i.e., authoritarian, benevolent, and moral) and employee innovative behavior.