The role of psychological climate factors in stimulating creativity through workplace innovation in the service sector of a transitional economy

In knowledge-intensive service environments, especially in transitional economies like Iraq’s Kurdistan Region, businesses are increasingly depending on creating creative work environments to boost employee innovation and productive thinking. This research intends to examine the connection between certain elements of innovative workplace characteristics, namely, diversity, playfulness, debates, freedom, and idea time/support, and their effects on employees’ innovative thinking and creativity. Using stratified random sampling, 160 respondents were selected from Erbil’s service sector companies as part of a quantitative study design. Both the innovative working climate and employee creativity were measured using standard instruments. The study used regression analysis and correlation to evaluate a set of hypotheses that looked at how each innovation climate characteristic affected creative and productive thinking on an individual and group level. The results confirm a robust and statistically significant correlation between employee creativity and innovative workplace characteristics. Diversity and debates had the greatest impact among the five dimensions. These findings support the conceptual model that was employed and emphasize how important psychological and cognitive factors are in influencing creativity in service-oriented businesses. the findings add novelty by showing that ideas that were primarily developed in Western economies are still applicable in transitional contexts. The study emphasizes how crucial it is to create inclusive, open, and interactive work environments in order to encourage employees’ creativity. It supports the importance of workplace innovation elements in transitional economies and contributes to the expanding literature of regional studies.