Open Journal of Business and Management, 2023, 11, 238-259

https://www.scirp.org/journal/ojbm
ISSN Online: 2329-3292
ISSN Print: 2329-3284

The Impact of Authentic Leadership on

Employee Innovation Behavior and Work
Engagement in Specialized, Fined, Peculiar
and Innovative SMEs

Hongpeng Zhang1, Xueying Li2, Yannan Li2*

1
College of Economics and Management, Zhejiang Ocean University, Zhoushan, China
2
Department of Graduate, School of Technology Management, Kyung Hee University, Yongin, Korea

How to cite this paper: Zhang, H. P., Li, X. Abstract

Y., & Li, Y. N. (2023). The Impact of Au-
thentic Leadership on Employee Innova- Existing firms are undergoing rapid and substantial change as a result of dig-
tion Behavior and Work Engagement in ital transformation. Dealing with accelerating digital transformation is a dif-
Specialized, Fined, Peculiar and Innovative
ficult process for business leaders. The digital transformation process presents
SMEs. Open Journal of Business and Man-
agement, 11, 238-259. both an opportunity and a challenge. This paper examines how authentic
https://doi.org/10.4236/ojbm.2023.111014 leadership may contribute to increased work engagement and innovative be-
haviors during times of digital change, both theoretically and empirically.
Received: December 5, 2022
This study investigated data from an online survey of 305 current employees
Accepted: January 17, 2023
Published: January 20, 2023 of enterprises in the fields of specialized, fined, peculiar and innovative SMEs,
include information technology, media, and networking and so on. SPSS 21.0
Copyright © 2023 by author(s) and and AMOS 23.0 were used to analyze the data. The findings indicate that
Scientific Research Publishing Inc.
authentic leadership positively impacts employee innovation behaviors and
This work is licensed under the Creative
Commons Attribution International engagement, and that digital transformation moderates the relationship be-
License (CC BY 4.0). tween authentic leadership and innovation behavior and engagement. Not
http://creativecommons.org/licenses/by/4.0/ only do these findings contribute to our understanding of digital transforma-
Open Access
tion and extend and broaden applicable theories of authentic leadership, but
they also open the way for corporate leaders to adopt appropriate behavioral
techniques to encourage work engagement and innovation. Enhancing em-
ployee innovation performance, maximizing management leadership beha-
viors, and offering practical inspiration all contribute to the long-term suc-
cess of the firm. The findings are conceptually significant and provide corpo-
rate leaders with a practical roadmap.

Keywords
Digital Transformation, Authentic Leadership, Innovative Behavior, Work

DOI: 10.4236/ojbm.2023.111014 Jan. 20, 2023 238 Open Journal of Business and Management
 H. P. Zhang et al.

Engagement, SFPI SMEs

1. Introduction
Existing businesses are fast changing because of digital transformation, and it is
widely understood that organizations miss the digitalization pattern today will
be slower, less adaptable, and have fewer chances in the future than advanced
pioneers (Westerman et al., 2014). The outbreak of COVID-19 caused signifi-
cant changes in the way businesses to operate. They had to rethink key elements
of their business processes and use of technology to maintain operations (Stal-
machova, Chinoracky, & Strenitzerova, 2021). Utilizing opportunities alone is
insufficient; overcoming digital disruption concurrently is also vital (Varshney,
2020). Digital transformation processes are widely regarded as a primary source
of contention for leaders and top management responsible for reforming enter-
prises (Zeike et al., 2019). The labour market has seen certain occupations fade
into obscurity while new ones have exploded in popularity, necessitating the ur-
gent need to develop job-specific abilities (Gurkina, 2017). As a result, academics
and practitioners alike are concerned with increasing an organization’s capacity
for innovation in order to thrive in this dynamic business environment. Thus, an
organization’s capacity for innovation is vital to its long-term success. Employees
are viewed as a critical enabler of innovation (Gao et al., 2021). The digital trans-
formation process is both an opportunity and a threat, a turning point and a cri-
sis (Akhmetshin et al., 2019). The majority of polarisation within industries is
attributable to the loss of middle-skilled positions. Both technological advance-
ment and globalisation have played a significant influence in promoting divi-
siveness (Braña, 2019). Technological unemployment consequently becomes a
worry for “blue collar” employees as well as “white collar” ones. (Bertani, Ra-
berto, & Teglio, 2020). The more businesses grow in the digital world, the more
anxious employees are about their skills becoming obsolete, given that new talents
emerge while existing skills evolve and expire (Syahroni, 2021). Nowadays, em-
ployees may quickly obtain information about job openings and compare em-
ployee benefits between firms, resulting in a decline in work engagement (Wina-
sis et al., 2021). Recently, academic scholars and company entrepreneurs have
shifted their focus to employee engagement, which has become a critical issue
in the modern business climate (Adekanmbi & Ukpere, 2021). Concentrating
on work engagement can assist businesses in surviving, and possibly even thriv-
ing, during difficult economic times (Akhmetshin et al., 2019). As a result of
these dual possibilities and problems confronting company management during
the digital transformation process, there is an urgent need to identify the op-
timal solution (Cabell, 2021). Given the apparent link between leadership beha-
viours and work engagement, it is critical to determine which leadership beha-
viours maximise work engagement (Ferrell, 2020).

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H. P. Zhang et al.

Recent research consistently demonstrates that authentic leadership has a bene-

ficial effect on employee attitudes, behaviour, and work outcomes such as job sa-
tisfaction, job dedication, innovation, organisational citizenship behaviour, and
engagement (Ferrell, 2020). Zhou et al. (2014) examined the relationship be-
tween authentic leadership and innovation behaviour, considering the interven-
ing effects of pleasant attitudes among employees. Genuine leaders with vision
and perspective in Industry 4.0 who are confronted with pandemics will increase
the level of innovation (Yunita et al., 2021). Not only can authentic leaders place
a premium on specific contributions of inventiveness and creativity, but authen-
tic leadership may also have a favorable effect on representative job satisfaction
and engagement (Kirkpatrick, 2021).
As a result, we theories that immediate supervisor who model authentic lea-
dership will seek to influence their employees through their correspondence and
candour, as this should be visible as a means of instilling trust in their chief’s
capacity to meet, for example, their needs and concerns regarding a change in-
teraction (Kleynhans et al., 2022). Bakari et al. (2017) discovered that when em-
ployees witness their supervisor demonstrate authentic leadership, they demon-
strate increased readiness for hierarchical change, which might result in an in-
creased obligation to change, which results in additional social support for the
change. This demonstrates that real pioneers may have an effect on employees’
responses to a change encounter, causing them to become more committed to the
change. To make the “great leap” to digitalized business, almost all employees at all
organizational levels must alter their work methods and thereby participate in
planning, designing, and executing changes (Larjovuori et al., 2016). This consis-
tency of action/perception and trust fosters collaboration between supervisor and
employee, hence increasing employee work engagement (Hsieh & Wang, 2015).
Until now, few people are aware of the critical role that job leadership plays in
careers in digital transformation (McCarthy et al., 2021). Based on the foregoing,
this article undertakes a theoretical and empirical examination of how authentic
leadership positively impacts work engagement and inventive behaviour in an
accelerated digital transformation environment. The findings not only contri-
bute to our understanding of digital transformation and to the enrichment and
expansion of relevant theories of authentic leadership, but also pave the way for
organizational leaders to adopt appropriate behavioral methods to motivate work
engagement and innovation, which is conducive to employee improvement. To
improve managers’ performance and leadership behavior, and to provide specif-
ic practical insights for advancing the organization’s long-term development, it
has significant theoretical value and practical guiding relevance.

2. Theoretical Background and Hypothesis

2.1. Authentic Leadership
Authentic leadership has been defined as an example of pioneer behavior that
draws on and advances both positive mental limits and a positive moral envi-

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 H. P. Zhang et al.

ronment in order to cultivate more prominent mindfulness, a disguised moral

point of view, adjusted data handling, and social forthrightness with regard to
pioneers working with adherents, thereby encouraging positive self-improvement
(Walumbwa et al., 2008). Walumbwa et al. (2008) defined authentic leadership
as having four components: self-awareness, relational transparency, balanced
processing, and an internalized moral perspective.
Self-awareness suggests that the leader demonstrates their own comprehen-
sion strengths and weaknesses, which implies that they assist others in realizing
themselves and are conscious of their influence on others (Walumbwa et al.,
2008). This may also initiate a dialogue between leaders and employees on im-
proved methods for cooperating during the change cycle, hence increasing em-
ployee interest in the digital transformation (Alavi & Gill, 2017). Relational
transparency refers to the leader’s authentic presentation to others. This entails
conversing candidly with devotees and having the pioneer reveal their true
thoughts and feelings (Walumbwa et al., 2008). Balanced processing entails the
leader remaining objective while weighing many options prior to making a deci-
sion. Additionally, these executives solicit employee attitudes that contradict their
own suspicions (Walumbwa et al., 2008). Internalized moral perspective refers to
the self-discipline that supports the pioneer in making decisions based on their
concealed characteristics and moral ideals. Authentic leaders will be perceived in
this light as someone who is consistent with their perspectives (Walumbwa et al.,
2008). Authentic leadership entails pioneers treating employees with integrity,
being predictable in their attributes and activities, and collaborating with em-
ployees to advance the organization (Walumbwa et al., 2008).

2.2. Digital Transformation

The term “digital transformation” refers to changes and transformations that are
fueled by and based on technological advancements. Digital transformation is a
broad term that refers to the change that occurs within an organization as a re-
sult of digital technology (such as the Internet of Things, artificial intelligence/
machine learning, augmented reality, and in-memory computing) (Vial, 2019).
Since the COVID-19 outbreak, we’ve seen a surge in the use of new and digital
technologies by businesses seeking to communicate with their customers. Some
businesses are collaborating with business partners to accelerate their digital
transformation; others have built their own IT infrastructure and systems capa-
ble of serving customers and markets in the digital age; and still others have
adapted changing business models to make product and service solutions more
digital in order to meet future customer and market needs. Certain businesses
are altering their corporate cultures in order to disrupt the status quo and acce-
lerate their digital transformation (Nwankpa & Roumani, 2016). The sudden ac-
celeration in the adoption of digital transformation in this manner suggests that
its sluggish pre-pandemic acceptance was not due to technical impediments, but
rather to individual-level impediments (Guenzi & Nijssen, 2021). Regularly ac-

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H. P. Zhang et al.

companied by the simultaneous presentation of agile working strategies that

adapt employees’ work schedules, digital transformation executions stand in stark
contrast to the mere acceptance of any single innovation (Kalaignanam et al.,
2021). The digital transformation that occurs is critical, since it alters old sys-
tems and practices, so creating a new business environment. It requires the en-
tire cooperation and accountability of laborer’s to alter an organization. Addi-
tionally, the relationship should be facilitated by professional pioneers, in keep-
ing with the spirit of advancement (Purba, 2021). As a result, pioneers should be
adaptable and supportive of their employees who can make a difference before
and after a digital transformation, while also appreciating what they bring to the
table and the long-term impact they can have on the organization (Sow & Abor-
bie, 2018). Organizations that truly need to undergo a digital transformation
should have the appropriate innovators in place to ensure reliability and victory
both during and after the transformation (Sow & Aborbie, 2018).
Organizations and their leaders are facing overwhelming challenges that arise
from digital transformation (Hanelt et al., 2020). The digital pioneer and the in-
novator have in common that they focus on digital transformation and share the
primary objective of staying abreast of change (Weber, Krehl, & Buttgen, 2022).
Frick et al. (2021) contends that an empowered leader is incompatible with pro-
moting digital transformation since such leaders anticipate rapid change and an
undeniable degree of self-obligation on the part of staff. However, when it comes
to digital transformation, employees are unlikely to have the option of self-suffi-
ciency. Genuine leaders contribute to the establishment of a more positive cli-
mate within the organization, where individuals increase their confidence, ex-
pectations, and strength in their work (Tak, Seo, & Roh, 2019). Due to the fast-
paced nature of the corporate world, which has resulted in lessened tenacity and
vulnerability, genuine pioneers may contribute to a climate of dependability (Cift-
ci, 2020).

2.3. Authentic Leadership and Innovative Behavior

From the organizational perspective, a proactive personality is helpful and im-
portant to improve creativeness and generate novelty to offer useful beneficial
ideas (Song & Lee, 2020). Scott & Bruce (1994) describe innovative behavior as
“the invention or adaption of beneficial ideas and their execution, which begins
with the identification of issues and the generation of novel ideas or solutions to
those problems.” Employees’ innovative behaviors, i.e., the invention and execu-
tion of novel arrangements in the work environment as demonstrated in routine
activities, serve as a significant small reinforcement of the firm’s creativity (Lukes
& Stephan, 2017). Innovative actions are a challenging endeavor that require risk
aversion and a departure from one’s regular range of familiarity. These demand
a positive climate as well as consistent leadership assistance (Fateh, Mustamil, &
Shahzad, 2021). Leadership is considered as a rational factor influencing em-
ployees’ creative performance and innovation (Yunita et al., 2021). Leaders that

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 H. P. Zhang et al.

are consistent and make their followers feel terrific without undermining them
are in a better position to work with imaginative execution, which encourages
them to constantly come up with original and brilliant ideas (Fateh, Mustamil, &
Shahzad, 2021).
Authentic leaders communicate their perspectives and thoughts candidly and
use language to organize operations. Appropriate criticism, whether positive or
negative, supports employees in refining and reexamining their unique perspec-
tives (Phuong & Takahashi, 2021). When employees perceive their leaders de-
monstrating genuine concern for them, they develop a sense of self-identity with
them and are more willing to provide new ideas and strive toward their adoption
(Khan, Ahmed, & Khan, 2021). Employees may not be able to safeguard their
wacky revolutionary ideas, nor may they be able to protect themselves from fear
of losing face or jeopardizing the resulting relationship. As a result, employees
may have high levels of freedom and self-efficacy, which enable them to engage
in creative behaviors (Phuong & Takahashi, 2021). As a result, honest leaders
inspire their employees’ creative abilities and actions (Zhang & Han, 2021). Ad-
ditionally, scholars have established that authentic leadership has a beneficial ef-
fect on employees’ innovative behavior (Semedo, Coelho, & Ribeiro, 2017; Javed
et al., 2018; Ribeiro, Duarte, & Filipe, 2018; Ribeiro et al., 2019). As a result, the
following hypothesis has been advanced:
H1: The authentic leadership has positive significant effects on innovative be-
havior.

2.4. Authentic Leadership and Work Engagement

Work engagement is defined as a good, fulfilling state of mind associated with
work that is characterized by vitality, commitment, and absorption (Schaufeli et
al., 2002). Leaders should always strive to strike a balance between the intellec-
tual and emotional sentiments of their employees in order to maintain their en-
gagement and urge them to give their all to the change and progress (Bhardwaj,
Mishra, & Jain, 2021). Employees are more interested in their job when they be-
lieve their leaders to be consistent in their words and behavior and to hold moral
convictions (Wang & Hsieh, 2013). Leaders demonstrated a stronger level of
sincerity; employees gained increased credibility with their leaders, which re-
sulted in increased engagement (Tak, Seo, & Roh, 2019). The behavioral qualities
of authentic leaders include walking the talk, attempting to do the right thing,
owning one’s limits, actively leading, communicating clearly, and developing the
team (Meskelis & Whittington, 2020). According to Iqbal et al. (2020), when
employees believe their leader’s behavior indicates authenticity, they demon-
strate increased engagement in their work. Authentic leadership at all levels and
honest organizational communication can foster mutual understanding between
leaders and employees, hence increasing work engagement at work for the or-
ganization’s benefit (Jiang & Shen, 2020).
According to Meskelis & Whittington’s (2020) research, authentic leadership

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H. P. Zhang et al.

increases followers’ hope, trust, and positive emotions, resulting in improved

work engagement. Authentic leadership is being advocated to address the trust
deficit created by the required modifications to the organization’s leadership de-
cisions. Genuine leaders who work for the common good may unite their subor-
dinates (Khan, Ahmed, & Khan, 2021). Furthermore, empirical data from vari-
ous studies established the link between authentic leadership and work engage-
ment. For example, employees’ perception of authentic leadership positively af-
fects their perception of work engagement (Anantha et al., 2022). As a result, the
following hypothesis has been advanced:
H2: The authentic leadership has positive significant effects on work engage-
ment.

2.5. The Moderator Role of Digital Transformation

New technologies are constantly being integrated into our daily lives, offering
new shapes for traditional and unique types of enterprises (Gomes, Santoro, &
Silva, 2019). The intersection of digital transformation and innovation manage-
ment is still in its infancy in terms of research. Digital transformation has the
potential to have a profound effect on the innovation process at many phases
(Appio et al., 2021). Due to the fact that the convergence between digital trans-
formation and innovation management is complex and multi-dimensional (Broek-
huizen et al., 2021). In many firms, digital innovation is about figuring out how
to engage employees effectively with technology (Cetindamar, Abedin, & Shira-
hada, 2021). Through its role in optimism and innovativeness, technology rea-
diness benefits employees by providing them with improved control, flexibility,
and efficiency in their job (Parasuraman, 2000). The objective of digital trans-
formation is to leverage innovation in order to not only recreate present assis-
tance in a digital structure, but also to transform that assistance into a more
likely structure and more notable extension (Goswami & Upadhyay, 2019). When
we consider the scope of digital transformation, we frequently consider the busi-
ness component with new capabilities, which revolves around fostering the au-
thoritative bounds that should be dexterous, people-centered, and innovative
(Goswami & Upadhyay, 2019). Episodic evidence suggests that firms that have
successfully implemented digital transformation are more adept at generating
revenue from their existing assets (Westerman et al., 2014). Sow & Aborbie
(2018) determined that a transformational leadership style was at least partially
conducive to the desired outcomes during a digital transformation, and leadership
characteristics had a significant impact during a digital transformation. There-
fore, the following hypothesis has been put forth:
H3: The digital transformation moderates the relationship between authentic
leadership and innovation behavior.
During the COVID-19 pandemic, several company executives expressed con-
cern about the changes associated with moving their firms’ daily operations on-
line and giving resources for employees to work from home (Jestine, 2021).

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 H. P. Zhang et al.

Businesses leverage digital technology to ensure that workers can work com-
fortably and efficiently from any location (Purba, 2021). However, the introduc-
tion of several uncertainties as a result of technology advancements can result in
elevated levels of occupational stress. Workplace stress has a direct impact on
work engagement and, as a result, jeopardizes organizational effectiveness (Wi-
nasis, Wildan, & Sutawidjaya, 2020). Of course, digital transformation can also
be beneficial, and businesses can use technology to create new jobs. There are
two explanations for this. To begin, it improves engagement and enables people
to naturally add value. Second, employees are more likely to value the tangible
benefits of digital transformation, which increases work engagement (Syahroni,
2021). If staff are motivated and engaged in the process of system and process
adaptation. And it is against this backdrop that the research of work engagement
gains significance (Goswami & Upadhyay, 2019). Employee buy-in and a sense
of being involved, valued, and becoming an important part of the organization
are critical when it comes to digital transformation plans and journeys. Open
and transparent communication with employees, as well as the exchange of opi-
nions and thought between management and employees, are critical for em-
ployee buy-in and a sense of being involved, valued, and becoming an important
part of the organization (Syahroni, 2021). In other words, firms raise employee
knowledge of future digital transformation requirements and the importance of
completing current duties. Employees are more receptive to the practical bene-
fits of digital transformation, which benefits work engagement. Therefore, the
following hypothesis has been put forth:
H4: The digital transformation moderates the relationship between authentic
leadership and work engagement (Figure 1).

3. Methods
3.1. Sample and Data Collection
To objectively validate the effects of digital transformation and authentic lea-
dership on employee innovation and engagement, this study performed a
survey of Chinese company employees. We obtained data from a sample of
305 Chinese employees in SFPI SMEs of Zhejiang province who work in the
information technology, media, service, and manufacturing industries. Among
them, 31 are in the IT field, 86 in the media field, 79 in the service field, 16
people in the field of Production, and 83 people in other areas. Between Janu-
ary 3rd and February 20th, 2022, data were collected using an online survey.
Due to the constraints of the online survey, only 349 of the 600 potential res-
pondents responded. Due to missing data on 44 surveys, the final sample size
was 305 (58.1 percent response rate). Table 1 summarises the responder sam-
ple profile. As stated in Table 1, 53.4 percent of respondents were male, around
47.2 percent were between the ages of 25 and 35, and more than 77 percent
had earned a university degree. Additionally, approximately 35% have more

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H. P. Zhang et al.

Figure 1. Research model.

Table 1. Sample profile.

Categories N %
Male 142 46.6
Gender
Female 163 53.4
~25 41 13.4
25 - 30 78 25.6
Age 30 - 35 66 21.6
35 - 40 45 14.8
40~ 75 24.6
High school 7 2.3
College 38 12.5
Education
Bachelor 235 77.0
Master & Doctor 25 8.2
1-3 70 23.0

Career 3-6 76 24.9

(Years) 6-9 52 17.0
9~ 107 35.1
IT 31 10.2
media 86 31.5
Industry service 79 25.9
Production 16 5.2
Other 83 27.2
Sales & AS 41 13.4
HR & HRD 13 4.3
Financial affairs 27 8.9
functional areas Operation 43 14.1
Administrative planning 42 13.8
R&D 59 19.3
Other 80 26.2

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 H. P. Zhang et al.

than 9 years of professional experience in their current position.

3.2. Measures
Authentic leadership, developed by Walumbwa et al. (2008) has four dimen-
sions and 16 question items. In this paper, Authentic leadership was measured
using eight items taken from Walumbwa et al. (2008), with a 5-point response
scale from 1 (strongly disagree) to 5 (strongly agree). A sample item of the scale
is “My leader seeks feedback to improve interactions with others.”
Digital transformation was measured using eight items taken from Nwankpa
& Roumani (2016), with a 5-point response scale from 1 (strongly disagree) to 5
(strongly agree). A sample item of the scale is “Our firm is driving new business
processes built on technologies, such as big data, analytics, cloud, mobile and
social media platform”.
Innovative behavior was measured using six items taken from Scott & Bruce
(1994), with a 5-point response scale from 1 (strongly disagree) to 5 (strongly
agree). A sample item of the scale is “I generate creative ideas at work”.
Work engagement was measured using nine items taken from Schaufeli,
Bakker, & Salanova (2006), with a 5-point response scale from 1 (strongly dis-
agree) to 5 (strongly agree). A sample item of the scale is “I am enthusiastic
about my job.”

3.3. Measurement Reliability and Validity Assessment

We used an exploratory factory analysis (EFA) followed by a confirmatory factor
analysis to determine the measurement’s reliability and validity (CFA). Table 2
summarises the findings from the exploratory factor analysis. Four factors were
identified as a consequence of exploratory factor analysis. Due to the fact that all
variables measured had a value of 0.50 or more, the internal consistency re-
quired for hypothesis verification was established (generally, when the value is
0.40 or above, it is judged to be significant). Cronbach’s alpha values were calcu-
lated to determine the scales’ reliability (authentic leadership = 0.909; digital
transformation = 0.908; work engagement = 0.876; and inventive behaviour =
0.894). Cronbach’s alpha scores for each scale exceeded the crucial value of 0.70,
suggesting that the questionnaires were highly dependable and could be used in
our study.
Additionally, we investigated the construct reliability and validity of our per-
ceptual measures by doing a confirmatory factor analysis on an overall four-
component structure. Table 3 summarises the results of our confirmatory factor
analysis. As expected, the model fits the data satisfactorily (CMIN/DF = 1.684, p
< 0.01; comparative fit index [CFI] = 0.947; Tucker-Lewis index [TLI] = 0.942;
incremental fit index [IFI] = 0.947; root mean square error of approximation
[RMSEA] = 0.047 0.05). Additionally, after eliminating factors with SMC values
less than 0.4 (EE2, EE6, EE7), all remaining factors satisfy the requirements (p <
0.01).

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H. P. Zhang et al.

Table 2. Results of exploratory factor analysis.

Varimax rotation loadings (n = 305)

Cronbach’s
Factor 1 Factor 2 Factor 3 Factor 4 Alpha
(AL) (DT) (EE) (IB)
AL3 0.778 0.197 0.102 0.183
AL2 0.750 0.077 0.151 0.161
AL6 0.748 0.147 0.214 0.165
AL7 0.728 0.087 0.126 0.260
0.909
AL8 0.721 0.163 0.142 0.076
AL1 0.702 0.182 0.144 0.140
AL4 0.697 0.167 0.094 0.264
AL5 0.696 0.298 0.202 0.162
DT6 0.042 0.757 0.186 0.144

DT4 0.125 0.756 0.067 0.088

DT5 0.173 0.750 0.054 0.127

DT3 0.199 0.749 0.155 0.094

0.908
DT8 0.165 0.742 0.085 0.196

DT7 0.202 0.728 0.252 0.071

DT2 0.150 0.723 0.253 0.151

DT1 0.171 0.705 0.194 0.047

WE4 0.183 0.037 0.750 0.106

WE8 0.022 0.155 0.713 0.181

WE1 0.074 0.111 0.706 0.125

WE5 0.094 0.212 0.702 0.095
WE3 0.155 0.125 0.672 0.196 0.876
WE9 0.116 0.213 0.669 0.126

WE7 0.191 0.107 0.598 0.172

WE2 0.186 0.185 0.586 0.103

WE6 0.137 0.076 0.585 0.259

IB1 0.162 0.138 0.187 0.799

IB3 0.250 0.141 0.236 0.732
IB5 0.226 0.213 0.258 0.715
0.894
IB2 0.377 0.114 0.101 0.707
IB4 0.183 0.162 0.337 0.695
IB6 0.194 0.134 0.248 0.688

Note: DT = digital transformation, AL = authentic leadership, WE = work engagement,

IB = innovative behavior, N = 305.

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 H. P. Zhang et al.

Table 3. Results of confirmatory factor analysis.

Estimate
Construct and indicators SMC S.E. C.R. P
B β

DT8 1 0.738 0.545

DT7 1.027 0.765 585 0.078 13.133 ***

DT6 0.983 0.735 540 0.078 12.592 ***

Digital DT5 1.053 0.725 526 0.085 12.417 ***

Transformation DT4 1.045 0.704 496 0.087 12.037 ***

DT3 1.045 0.758 574 0.080 13.008 ***

DT2 1.004 0.759 576 0.077 13.028 ***

DT1 0.994 0.700 490 0.083 11.969 ***

AL8 1 0.685 469 .

AL7 1.095 0.736 542 0.094 11.677 ***

AL6 1.041 0.761 578 0.087 12.024 ***

Authentic AL5 0.982 0.750 563 0.083 11.879 ***

Leadership AL4 1.027 0.721 520 0.090 11.462 ***

AL3 1.087 0.792 627 0.087 12.466 ***

AL2 1.002 0.712 508 0.088 11.335 ***

AL1 0.962 0.696 484 0.087 11.091 ***

WE1 1 0.669 447

WE3 0.957 0.683 466 0.095 10.080 ***

Work WE4 0.980 0.717 515 0.093 10.491 ***

Engagement WE5 0.935 0.695 483 0.091 10.230 ***

WE8 0.958 0.674 454 0.096 9.973 ***

WE9 0.947 0.665 443 0.096 9.869 ***

IB1 1 0.774 599

IB2 0.964 0.738 544 0.074 13.104 ***

Innovative IB3 0.958 0.771 594 0.070 13.775 ***

Behavior IB4 0.885 0.756 571 0.066 13.472 ***

IB5 0.890 0.772 595 0.065 13.789 ***

IB6 0.832 0.692 480 0.068 12.193 ***

CMIN/DF = 1.684, p < 0.001 comparative fit index [CFI] = 0.947, Tucker-Lewis’s index
[TLI] = 0.942, incremental fit index [IFI] = 0.947, root mean square error of approxima-
tion [RMSEA] = 0.47

Note: DT = digital transformation, AL = authentic leadership, WE = work engagement,

IB = innovative behavior N = 305, *p ≤ 0.05, **p ≤ 0.01, ***p ≤ 0.001.

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H. P. Zhang et al.

All remaining variables had significant correlations. Table 4 summarizes the

mean, standard deviation, and correlation coefficients for the variables. Accord-
ing to these findings, respondents identified the presence of real leadership
(mean = 3.18). Work engagement (mean = 3.30) was the second-highest ranked
variable overall. Digital transformation received the highest grade (mean = 3.40),
followed by innovative behavior (mean = 3.22). As expected, authentic leader-
ship was associated with innovative behavior (r = 0.560, p < 0.01), work en-
gagement (r = 0.433, p < 0.01), and digital transformation (r = 0.451, p < 0.01).

4. Analyses and Results

Hypothesis Testing
The fit of the structural model is CMIN/DF = 1.611 < 2, p < 0.001, comparative
fit index [CFI] = 0.953, Tucker-Lewis’s index [TLI] = 0.948, incremental fit in-
dex [IFI] = 0.953, root mean square error of approximation [RMSEA] = 0.45,
confirming that the model is at a satisfactory level. As a result of hypothesis
analysis, it was found that authentic leadership was analyzed to have a positive
(+) effect on innovative behavior (β = 0.474, t = 7.954, p < 0.001). Hypothesis 1
was supported. Authentic leadership had a positive (+) effect on work engage-
ment. was analyzed to have an effect (β = 0.304, t = 4.662, p < 0.001). Therefore,
Hypothesis 2 also was supported (Table 5).
The results of the tests of hypotheses 3, 4, are presented in Table 6. Hypo-
theses 3, which predicted that digital transformation would moderate the rela-
tionship between authentic leadership and innovation behavior, was supported
(Step 3, b = 0.106, t = 2.245, p < 0.05). A plot of the interaction (illustrated in
Figure 2) showed that excluded employees with high levels of digital transfor-
mation reported higher levels of innovation behavior than excluded employees

Table 4. Mean, standard deviations and correlations.

Mean S.D. 1 2 3 4 5 6 AL IB WE DT
Age 4.29 1.655 1
Gender 1.53 0.500 −0.261** 1
Education 2.92 0.568 −0.277** 0.068 1
Career 3.82 1.559 0.895** −0.241** −0.261** 1
Functional 4.48 2.028 0.115* −0.081 −0.061 0.076 1
Industry 3.08 1.365 0.136* −0.052 0.046 0.138* 0.243** 1
AL 3.18 0.806 0.025 −0.111 0.053 0.033 0.051 0.081 1
IB 3.22 0.681 0.035 −0.066 0.040 −0.020 −0.009 −0.026 0.560** 1
WE 3.30 0.733 0.073 −0.105 0.010 0.028 −0.082 −0.005 0.433** 0.539** 1

DT 3.40 0.782 0.035 0.003 −0.005 −0.029 0.038 0.050 0.451** 0.417** 0.434** 1

Note: DT = digital transformation, AL = authentic leadership, WE = work engagement, IB = innovative behavior N = 305, *p ≤
0.05, **p ≤ 0.01.

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 H. P. Zhang et al.

Table 5. The results of H1 and H2.

Estimate
Hypothesis S.E. C.R. p
B β
H1 AL→IB 0.474 0.538 0.051 7.954 ***
H2 AL→WE 0.281 0.304 0.064 4.622 ***
CMIN/DF = 1.611 < 2, p < 0.001 comparative fit index [CFI] = 0.953, Tucker-Lewis’s index [TLI] = 0.948, incremental fit index
[IFI] = 0.953, root mean square error of approximation [RMSEA] = 0.45.

Note: DT= digital transformation, AL = authentic leadership, WE = work engagement, IB = innovative behavior N = 305, ***p ≤
0.001.

Table 6. The results of moderating role of digital transformation.

Innovation behavior Work engagement

Variables β t p VIF β t p VIF

0.088 0.930 0.906 0.366

Age 0.026 0.515 0.607 1.083 0.063 1.173 0.242 1.083

Step 1 Gender 0.000 0.007 0.994 1.088 −0.050 −0.932 0.352 1.088

Functional −0.041 −0.843 0.400 1.018 −0.115 −2.213 0.028 1.018

AL (centering) 0.562 11.683*** 0.000 1.014 0.431 8.323*** 0.000 1.014

0.372 0.710 1.343 0.180

Age 0.018 0.363 0.717 1.085 0.051 1.000 0.318 1.085

Gender −0.013 −0.268 0.789 1.093 −0.070 −1.361 0.175 1.093

Step 2
Functional −0.044 −0.933 0.351 1.018 −0.120 −2.418 0.016 1.018

AL (centering) 0.467 8.871*** 0.000 1.277 0.292 5.264*** 0.000 1.277

DT (centering) 0.207 3.950*** 0.000 1.262 0.305 5.540*** 0.000 1.262

0.566 0.572 1.576 0.116

Age 0.019 0.404 0.687 1.085 0.053 1.054 0.293 1.085

Gender −0.020 −0.411 0.681 1.098 −0.078 −1.538 0.125 1.098

Step 3 Functional −0.045 −0.961 0.337 1.019 −0.121 −2.467 0.014 1.019

AL (centering) 0.465 8.874 0.000 1.278 0.288 5.251*** 0.000 1.278

DT (centering) 0.188 3.559 0.000 1.297 0.282 5.092*** 0.000 1.297
AL*DT 0.106 2.245** 0.025 1.044 0.131 2.630** 0.009 1.044

model R2 ΔR2 F P R2 ΔR2 F P

1 0.316 0.307 34.661 0.000 0.206 0.195 19.440 0.000
2 0.350 0.339 32.199 0.000 0.280 0.268 23.228 0.000
3 0.361 0.348 28.035 0.000 0.296 0.282 20.893 0.000

Note: DT = digital transformation, AL = authentic leadership, WE = work engagement, IB = innovative behavior N = 305, *p ≤
0.05, **p ≤ 0.01, ***p ≤ 0.001.

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H. P. Zhang et al.

Figure 2. Relationship of authentic leadership to innovation behavior for two levels of

digital transformation.

with low digital transformation. Thus, Hypothesis 1 was partially supported. Simi-
larly, Hypotheses 4, which predicted that digital transformation would moderate
the relationship between authentic leadership and work engagement, was sup-
ported (Step 3, b = 0.131, t = 2.630, p < 0.05). A plot of the interaction (illustrated
in Figure 3) showed that excluded employees with high levels of digital transfor-
mation reported higher levels of work engagement than excluded employees with
low digital transformation. Thus, Hypothesis 4 was partially supported.

5. Discussion and Conclusion

5.1. Discussions

This study was conducted to determine the impact of authentic leadership on

employee innovation behavior and work engagement. It also aimed to establish
the moderator role of digital transformation.
First, we found that authentic leadership has played a vital role in enhancing
employees’ innovative behaviors. It also has been verified in the research of other
scholars (Ribeiro et al., 2019). Second, we also found that authentic leadership
positively affects work engagement. Authentic leadership increases followers’
hope, trust, and positive emotions, resulting in improved work engagement
(Winton, Whittington, & Meskelis, 2022). Third, digital transformation moderates
the relationship between authentic leadership and innovation behavior. It means
digitization is not merely a context for innovation and entrepreneurship. Increa-
singly, digital technologies can assume the role of an operant resource and be an
active ingredient in fueling innovative initiatives (Nambisan, Wright, & Feld-
man, 2019). Finally, digital transformation moderates the relationship between

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 H. P. Zhang et al.

Figure 3. Relationship of authentic leadership to work engagement for two levels of digi-
tal transformation.

authentic leadership and work engagement. Although there is no more direct

prior research to prove the relationship between digital transformation and em-
ployee innovation behavior, some scholars have confirmed that deepening digi-
tal transformation is beneficial to improving work engagement (Syahroni, 2021).
The findings of this study will provide theoretical support for future scholars to
study the relationship between digital transformation and employee innovation
behavior and leadership.
While there are many studies exploring the positive effects of true leadership
on work engagement and innovative behaviors (Adekanmbi & Ukpere, 2021;
Fateh et al., 2021). But there is not much literature examining the actual context
of digital transformation, exploring true leadership and employee-perceived dig-
ital transformation in both work engagement and innovation. The findings of
this paper will have positive academic and theoretical implications for research
on leadership and employee behavior in the context of digital transformation.

5.2. Conclusion
We obtained data from Chinese employees in Zhejiang province SRUI Giants
SMEs who work for various Chinese enterprises in the information technology,
media, service, and manufacturing industries to determine the relationship be-
tween digital transformation, authentic leadership, work engagement, and inno-
vative behavior. Calderon-Mafud & Pando-Moreno (2018) study shows that au-
thentic leaders could stimulate the creativity and innovative capacity of the em-
ployees by increasing the amount of autonomy that fosters creative freedom in
their partners. Higher levels of authentic leadership also report greater work en-
gagement and a more significant labor implication (Bamford, Wong, & Lasching-
er, 2013). In this study, the findings reveal the growing importance of digital
transformation in the fabric of our economy. The impact of digital transfor-

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H. P. Zhang et al.

mation and the epidemic has caused many employees to shift from on-site
work to online and off-the-job work. Research has proved that better working
methods and modes in digital transformation can allow employees to use their
resources flexibly to show more positive professionalism and innovative beha-
viors.
The research results will enlighten enterprises in the digital transformation era
and the post-corona era’s background. First, companies should think about why
they should do digital transformation. In the tide of digital transformation, com-
panies that remain unchanged will face being abandoned, surpassed by compet-
itors, marginalized by the market, and eventually eliminated. On the other hand,
digital transformation can capture new market opportunities, try new business
models, and help companies prepare for competition in future markets. Second-
ly, the core competitiveness of enterprises in the digital economy era has changed
from the traditional manufacturing capabilities of the past to digital capabilities
and innovation capabilities. Enterprises must be able to carry out technological
research and innovation and accelerate the transformation of industrial produc-
tion to intelligent, flexible, and service-oriented. In addition, enterprises must
have the ability to cooperate across borders and promote the innovation system
from a chain-based value chain to a flexible, real-time interaction and multi-party
participation. Authentic leadership characteristics of authentic leaders can also
help employees adapt to the new work mode as soon as possible, allow employees
to improve their self-confidence, and continue to innovate their practices.

5.3. Limitations and Future Research

The study also had several limitations. First, in terms of data surveys, we selected
employees in various fields to conduct online surveys, and the number of valid
samples did not meet expectations. Due to the limitations of the online survey,
only 349 of 600 potential respondents responded. Therefore, the final effective
sample size is 305. Our expected adequate sample size is 450, and if the IT field
can account for more than 50% of the sample number, it will better confirm this
research’s importance in the leading digital transformation field. In the follow-
up research, we will expand the sample’s scope and explore the relationship be-
tween digital HR, digital transformation, and employee behavior. The question-
naire design about digital transformation is the perceived degree of employees to
the digital transformation of the company (department) may deviate from the
digital transformation situation of the actual company. In later research, we will
continue to increase the number of valid questionnaires to improve the reliabili-
ty and validity of the paper. Not only that, but we will also continue to add some
employee psychological variables in follow-up research to explore the impact of
leadership and digital transformation on employee psychology. For example, how
does digital transformation affect employee psychological safety and work stress?
What is the mediating effect of psychological safety between authentic leader-

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 H. P. Zhang et al.

ship and employee innovation behavior?

Funding
This paper was supported by Foundation of Zhejiang Educational Committee
[Grant No. Y202250485].

Conflicts of Interest
The authors declare no conflicts of interest regarding the publication of this pa-
per.

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