This study examines the impact of empowering leadership on employee innovation, with perceived pay equity as a key mediating mechanism. Drawing on data from a behavioral experiment and a survey, the results indicate that perceived pay equity significantly mediates the relationship between empowering leadership and innovation. Furthermore, moderated mediation analysis reveals that psychological safety moderates this relationship, such that the effect of empowering leadership is stronger among employees with lower levels of psychological safety. This finding suggests that psychologically less safe employees are more sensitive to leadership behaviors, highlighting the importance of fostering a supportive work environment alongside empowering leadership. Overall, this study contributes to the literature on leadership and innovation and offers practical implications for managers in organizations.
Jeon et al. (Tue,) studied this question.