Toward Business Leadership Through Innovative Work Behavior: How Employee Engagement Mediates and Strengthens the Interrelations Between Psychological Empowerment, Work–Life Balance, and Creative Self-Efficacy

This research aims to investigate the influence of psychological empowerment, work-life balance, and creative self-efficacy on the innovative work behavior of workers at regionally owned enterprises (BUMD), with employee engagement serving as a mediating variable. The research was conducted in 2025 in Indonesia, primarily targeting workers of regionally owned enterprises in North Sumatra Province. Data were collected from 190 respondents using a quantitative study design and survey methodology, employing structured questionnaires issued to permanent BUMD workers who met specific requirements. The data gathered were analyzed using structural equation modelling with the partial least squares method (SEM-PLS) to investigate both direct and indirect correlations among variables. The results demonstrate that psychological empowerment, work-life balance, and creative self-efficacy have a positive and significant influence on innovative work behavior, either directly or indirectly through employee engagement. The findings highlight the essential function of employee engagement as a mediating factor that enhances the influence of individual psychological and work-related elements on creative behavior. The findings underscore the significance of managerial policies that bolster psychological empowerment, facilitate work-life balance, and cultivate employees’ creative self-efficacy, while concurrently enhancing employee engagement, as strategic initiatives to establish a flexible, productive, and innovation-driven work environment within regionally owned enterprises.