Inclusive Leadership and Innovative Work Behavior: Examination of LMX Perspective in Small Capitalized Textile Firms

The purpose of this paper is to explore the relationship between inclusive leadership, Leader-Member Exchange (LMX) and innovative work behavior (IWB) in employees of small capitalized textile firms of Pakistan. We hypothesized that LMX mediates the relationship between inclusive leadership and IWB. We collected data from 150 supervisors–subordinate dyads to test our hypotheses. We selected small capitalized firms because they are more innovative and change-oriented in order to enhance their innovativeness. Moreover, these firms enjoy the benefits of lack of bureaucracy and low resistance to change. Therefore, employees are better able to experience a close relationship with entrepreneurial leaders who tend to be inclusive, in order to facilitate the process of innovation. In line with these facts, our results also suggest that inclusive leadership is positively related with IWB and LMX partially mediates this relationship. The theoretical and practical implications of our findings are also discussed.