Transformational leadership and employee creativity: Mediating role of creative self-efficacy and moderating role of knowledge sharing

Among the different styles of leadership, transformational leadership has gained most attention from organisational researchers and academics. Although transformational leadership and its work-associated outcomes have been examined in previous literature, only a small number of studies highlighted the role of transformational leadership style in fostering employee creativity, mediated through their creative self-efficacy (CSE) in the context of Indian organisations. The purpose of this paper is to observe the effect of transformational leadership on employee creativity in small and medium sized IT companies, where CSE is proposed as a mediator and knowledge sharing as a moderator through which a transformational leader tends to influence the creativity of the employees.

Data were gathered from 348 manager-employee dyads of small and medium size IT companies operating in India. They replied to questions about their leader’s transformational leadership style, employee CSE, knowledge sharing and creativity.

Findings of the present study, derived from a hierarchical regression analysis, using the data of 348 manager-employee dyads from Indian IT SMEs professionals, revealed that CSE mediates the relation between transformational leadership and employee creativity. In addition, knowledge sharing acts as a moderator for CSE and employee creativity.

A sample size is one probable limitation of the study. Another limitation of the study is that factors used for the survey were self-reported by the respondents. Self-reporting may not always produce reliable and accurate response.

Based on the results, this study presents strong theoretical and managerial implications that can be used by IT organisations to evaluate the consequence of transformational leadership on employee creativity. Through transformational leadership style, leader can develop CSE and employee creativity to do things in a better way and develop knowledge sharing in employees for high performance. Therefore, the IT industry need to understand that creativity is one of the approaches to attaining and sustaining competitive advantage. In addition, it is important for them to find out more about the relation between transformational leadership, CSE and employee creativity.

The study adds to the existing literature by illuminating the process through which transformational leadership has a significant effect on fostering CSE and employee creativity.