Exploring the mediating effect of intellectual capital on the relationship between ethical leadership and innovative performance

Purpose The study examines the role of ethical leadership in the innovative performance of employees. Further, the purpose of the study is to investigate the mediating effect of human capital and social capital on the relationship between ethical leadership and the innovative performance of employees. Design/methodology/approach The study collected primary data from 386 managerial-level employees of information technology (IT) companies in the northern region of India. Structural equation modelling (SEM) was used to analyse the data and derive the direct and indirect effects. Findings The findings indicate a significant positive impact of ethical leadership on the innovative performance of employees. Further, it was found that ethical leadership has both direct and indirect effects on the innovative performance of employees, where the indirect effect was mediated through intellectual capital (IC). The research confirms that IC and ethical leadership are crucial resources for fostering a knowledge-driven culture and innovative performance amongst employees. Originality/value The research has made a novel attempt to explore the interplay between ethical leadership, IC and innovative performance in the Indian context. Further, the study provides actionable strategies for business leaders to optimise business processes and encourage innovative practices amongst employees in the company.