How does transformational leadership promote innovation in construction? The mediating role of innovation climate and the multilevel moderation role of project requirements

Innovation plays a critical role in the sustainable development of the construction industry. This research aims at examining transformational leadership's role in shaping employees' innovative behavior by analyzing the mediating effect of innovation climate and the cross-level moderating effect of innovativeness as a project requirement. To achieve this aim, a questionnaire survey was conducted with 300 construction industry professionals in China and 251 valid replies were received. Data collected by the questionnaire were analyzed using the method of hierarchical linear modeling (HLM). The results showed that transformational leaders could nurture a mutual climate for innovation to motivate employees' innovative behaviors. In addition, innovativeness as a project requirement at the project level strengthens the indirect link amongst transformational leadership and innovative behavior via the innovation climate. Therefore, in the presence of higher innovativeness as a project requirement, transformational leadership is more prone to exert a positive influence upon an individual's innovative behavior via the perceived innovation climate. The research findings improve understanding of the roles of leadership and innovation climate in affecting individual behavioral outcomes, and could help project managers and leaders encourage innovative ideas within project organizations.