Moderating Role of Organizational Climate between Leadership and Employee Innovative Work Behavior: An Empirical Investigation at National Level

Abstract

Business and service sectors are facing challenges because of a competitive market with incredible innovation. Banking sector is also rapidly changing with fast paced technological advancements and innovative systems. Islamic banking sector has to increase innovation in its products and services to compete with an already well-established conventional banking sector. As per the past studies, leaders’ behaviors are vital to increase employee innovative work behavior (EIWB). Whereas Organizational Climate plays the role of a moderating variable between leaders’ behaviors and EIWB, especially in Western countries. This study aimed to explore the moderating role of organizational climate in Pakistani banking environment. Qualitative techniques were used to conduct this empirical study in non-contrived settings. Nation-wide data was collected to generalize the results at a larger scale. Findings of this study indicate that organizational climate does not play a significant moderating role between leaders’ behaviors and EIWB. These findings are contrary to the some of the past studies conducted in the Western countries. Cultural differences and a weaker organizational climate at the local level might be the reasons behind these unexpected results. The results indicate a substantial need to develop organizational climate in the banking sector of Pakistan to produce more innovative outcomes. Policy implications for the banking sector are also discussed in this study.