Transformational leadership and innovative work behavior in Chinese SOEs: the mediating role of employee satisfaction

Chinese central state-owned enterprises (SOEs) are under mounting pressure to lead technological innovation, yet their multilayered approval routines, accountability regimes and cadre-style evaluation can raise the personal cost of employee initiative. Because these conditions are experienced through direct supervisors, this study asks whether transformational leadership is associated with employees’ innovative work behavior in central SOEs and whether employee satisfaction, treated from a social exchange perspective as an attitudinal response that partly reflects the quality of the supervisor–employee exchange, carries part of that association. Survey data from 700 employees in 22 central SOEs were analyzed with partial least squares structural equation modeling. Transformational leadership was positively associated with employee satisfaction and innovative work behavior, and employee satisfaction was also positively associated with innovative work behavior. The indirect association through satisfaction was significant but small, about 17% of the total association, indicating partial mediation. The study extends leadership–innovation research to a multi-firm sample of central SOEs, specifies employee satisfaction as an exchange-based route while quantifying its limited share and translates the findings into practices aligned with current SOE reform instruments such as fault-tolerance mechanisms and open-competition project schemes. The single-wave self-report design supports an associational rather than causal interpretation.