Leadership that sparks innovation: exploring parallel mediation of empowerment and trust using PLS-SEM and fsQCA

Purpose Building upon transformational leadership theory, psychological empowerment, and leader-member exchange frameworks, this research seeks to investigate the relationship between transformational leadership and employees' innovative readiness, while concurrently assessing the parallel mediating effects of psychological empowerment and trust in leadership within this dynamic. Design/methodology/approach The study conducted a comprehensive survey, collecting 400 responses from employees across various tiers of the organizational hierarchy in Delhi (National Capital Region of India). A mixed-methods approach was employed to test the model, incorporating partial least squares structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA). Findings PLS-SEM results indicate that transformational leadership positively influences employees' innovative readiness, with psychological empowerment and trust in leadership serving as significant parallel mediators. Complementary fsQCA findings reveal four configurations fostering innovation readiness: (P1) individualized consideration and intellectual stimulation, (P2) psychological empowerment and trust in leadership, (P3) psychological empowerment and charismatic leadership and (P4) trust in leadership and intellectual stimulation. Together, these results highlight that transformational leadership enhances innovation readiness through multiple, reinforcing pathways, demonstrating the complementary value of PLS-SEM and fsQCA in uncovering both symmetrical and configurational relationships within organizational contexts. Research limitations/implications The study conducted an importance–performance map analysis to identify the most influential drivers of employees' innovative readiness. Based on these insights, the theoretical, managerial and practical implications have been carefully customized to enhance employee engagement, foster a culture of innovation, and improve organizational strategies for supporting innovative readiness. Originality/value The research presents a strong methodological contribution by combining linear (PLS-SEM) and nonlinear (fsQCA) methods, demonstrating that both approaches help to better grasp the issue and offer a clearer insight into the patterns of preceding factors. PLS-SEM determines the net impacts of psychological empowerment and trust in leadership, whereas fsQCA uncovers many equally sufficient combinations of these elements that can foster creativity.