TRANSFORMATIONAL LEADERSHIP AND BOOTLEGGING INNOVATION: UNLOCKING EMPLOYEE INITIATIVE THROUGH PSYCHOLOGICAL SAFETY

Abstract

In modern organisations, the conflict between structure and creativity frequently compels employees to participate in informal, self-directed innovative activities referred to as bootlegging. Although it is recognised that leadership influences employee innovation, there is limited understanding regarding how particular leadership styles promote or inhibit unauthorised yet advantageous creative initiatives. This study looks at how transformational leadership affects bootlegging innovation behaviour through the mediating role of psychological safety. Utilising transformational leadership theory and psychological safety theory, it contends that leaders who inspire, intellectually stimulate, and exhibit individualised consideration cultivate a sense of psychological security that enables employees to engage in covert innovation. The study uses Partial Least Squares Structural Equation Modelling (PLS-SEM) and thematic analysis. It uses a mixed-methods design that includes survey data from 220 Chinese technology and manufacturing workers and qualitative interviews. The findings demonstrate that transformational leadership markedly improves psychological safety, which subsequently mediates its influence on bootlegging behaviour. The results add to research on leadership and innovation by showing that psychological safety is an important way that transformational leaders can help structured organisations find new creative ideas.