The effect of ethical leadership on employee social innovation tendency in social enterprises: Mediating role of perceived social capital

Although social innovation has gained prominence in policy, academic, and practitioner debates, there remains a lack of understanding of how leader aspects such as behavior and ethics contribute to fostering social innovation among employees in the social enterprise, owing primarily to a dearth of empirical research on this subject. The goal of this study is to empirically examine the effect of ethical leadership on the social innovation tendency among employees in social enterprises; also, employees' perceived social capital is hypothesized as a mediator through which the ethical leader is likely to influence their social innovation tendency. Using data collected from 189 employees associated with a variety of social enterprises, the results of structural equation modeling indicate that ethical leadership has both a direct and indirect effect on the social innovation tendency among employees, where the indirect effect of ethical leadership involves influencing the employees' perceived social capital, which subsequently influences their tendency for social innovation. Accordingly, the study offers key implications for social enterprise leaders aspiring to boost innovation in their endeavors aimed at achieving the enterprise's objective of creating positive social impact.