The Role of Transformational Leadership in Fostering Innovative Work Behavior Through Employee Engagement: Empirical Evidence from Indonesia’s Electricity Sector Toward a Green Industrial Transition

Abstract

This study aims to analyze and examine the effect of Transformational Leadership on Innovative Work Behavior with Employee Engagement as a mediating variable in the electrical industry in Indonesia. This study uses a quantitative approach with an explanatory design. Data were collected from 275 employees at four transformer manufacturing companies located in Bekasi, Bogor, Tangerang, and Surabaya. Data analysis was performed using Structural Equation Modeling (SEM) with the help of AMOS 23 software. The results indicate that Transformational Leadership has a positive and significant effect on both Innovative Work Behavior (β = 0.357) and Employee Engagement (β = 0.468). Moreover, Employee Engagement positively influences Innovative Work Behavior (β = 0.374). The study also reveals a significant indirect effect of Transformational Leadership on Innovative Work Behavior through Employee Engagement (β = 0.175), confirming the mediating role of engagement in the proposed model. Transformational Leadership has been shown to play a pivotal role in enhancing employee engagement and fostering innovative behavior within the electricity sector. These findings offer strategic insights for organizational leaders to strengthen human resource capabilities and drive the transition toward a green industry, aligned with sustainability goals and energy efficiency initiatives. This study offers an original contribution by providing empirical evidence from Indonesia’s electricity sector a strategic industry in the national energy transition that has been rarely explored from the perspectives of innovative behavior and transformational leadership. It integrates the concepts of leadership, employee engagement, and innovation into a comprehensive framework that can serve as a valuable reference for future research and human resource management practices in the era of green industry transformation. Theoretically, this study expands the understanding of the mediating role of Employee Engagement in the relationship between Transformational Leadership and Innovative Work Behavior, particularly in the context of a sustainability-oriented electricity industry. Practically, this research provides insights for organizations to design leadership policies that can foster a culture of innovation and increase employee engagement to support the achievement of the 2060 Net Zero Emissions target.