The Influence of Authentic Leadership on Innovation Capability: The Mediating Effect of Employee Empowerment in Telecom Companies in Pakistan

Abstract

In today’s competitive and technology-driven business environment, fostering innovation has become a strategic imperative, particularly in fast-paced sectors such as telecommunications. This study investigates the influence of authentic leadership on employees’ innovation capability, with a specific focus on the mediating role of employee empowerment. Drawing on social exchange theory and self-determination theory, the research proposes a conceptual framework linking leadership behaviour to innovation outcomes through psychological empowerment. Data were collected from 379 executive-level employees working in major telecommunication companies in Pakistan. Structural Equation Modelling (SEM) using AMOS was employed to test the hypothesized relationships. The results indicate that authentic leadership has a significant positive impact on both employee empowerment and innovation capability. Furthermore, employee empowerment was found to partially mediate the relationship between authentic leadership and innovation, highlighting its critical role as a psychological enabler of innovative behaviour. These findings contribute to leadership and innovation literature by emphasizing the importance of empowering work environments, and they offer practical insights for telecom organizations aiming to enhance innovation through ethical and empowering leadership practices.